CHILE Chiloé Island Wrestles With Free Market Forces

September 25, 2007

Like anyone who makes a living from the sea, Arnoldo Raimilla is no stranger to outside forces. On Chilod island in southern Chile, some 700 miles from Santiago, strong winds and storms often blow over the horizon without warning. But now, new market-made hazards are buffeting Raimilla and the subsistence-level seaweed harvesters he represents. Rachel Schurman is a doctoral student at the University of Wisconsin. Beth Sheehan worked with the federation of seaweed-growers unions in 1991. Wearing a homespun woolen sweater to protect him from the cold and black rubber boots to keep his feet dry, Raimilla walks from his house along the peninsula that divides the estuary from the open sea. Now in his mid-forties, he points toward the snowcapped Andes across the water, where as a young man he worked on a sheep ranch in Argentina for a few years. Six years ago, he came back to try to make a living on the 3,088-square mile island where he was born and where 120,000 people eke out a living from the sea and the poor earth. Turning his back to the mountains, Raimilla surveys the inlet where tall, sturdy poles rising from the shallow waters mark off the freshly harvested seaweed fields. Raimilla was part of the great tide of islanders and outsiders who rushed to supply a new demand for ChiloC's seaweed and shellfish. New- comers worked alongside island farm- ers who cultivated potatoes in the tradi- tion of their forebears. That was four years ago. "But now," he says, raising his voice over the near-deafening noise of the torrential rains so common in Chiloy, "the only thing we can live by is seaweed. Potatoes aren't worth grow- ing for the market because of the high cost of fertilizer, and everyday we have to go farther to find shellfish and fish." The high price of fertilizer and the depletion of marine resources are part and parcel of the economic model that has generated rapid growth (over 5% a year) in Chile since 1984, faster than any other country in Latin America. Following the recommendations of its Chicago-trained economic advisers, the Pinochet government devalued the peso (making Chilean goods cheaper abroad), streamlined the export pro- cess, and provided institutional sup- port to would-be exporters. Spurred on by these and other measures, Chilean entrepreneurs began exporting what their country had to offer: fruit, fish, wood and minerals for markets as far- away as Japan, Taiwan and Spain. Arnoldo Raimilla and his fellow "Chilotes" have experienced more rapid and radical changes in the past six years than their ancestors did over the pre- ceding four hundred. They are prob- ably better off in material terms than before the recent export boom. But the economic strategy that brought short- term prosperity has had social and en- vironmental consequences that threaten to make islanders more vulnerable in the long run. Winds of Change For centuries, Chilotes lived on tiny farms (minifundios), generally too small to support an entire family. Islanders farmed potatoes, raised sheep and cows, and fished. They used the island's red- wood trees to build their houses, its cypress to construct their small fishing boats, and other hardwoods to fuel their REPORT ON THE AMERICAS u .. 3ti;Srr '` c I YIF 'wood stoves during the long winters. To provide the family with cash in- come, a husband or son would often work on a sheep ranch in Patagonia, leaving the women to run the farm as well as the household. In those days, Chilod's pristine bays, abundant ma- rine life and expansive hardwood for- ests did not attract attention from out- siders. After the 1973 coup, as part of its free-market economic program which struck down trade barriers and pro- moted private business as the motor for economic growth, the military govern- ment curtailed credit and technical as- sistance to small-scale farmers. Instead, it supported medium and large-scale agribusiness which exported products such as grapes and berries to the United States and Europe. Although the Chilotes had never produced much for the market, they felt the impact of Pinochet's policies. The rising cost of fertilizer and credit drove islanders to produce less and sink deeper into debt. Between the early 1970s and mid- 1980s, the numberof acres planted with potatoes in Chilo6 fell more than 50 percent. Chilote farms were simply too small and their production methods too antiquated to survive in the increas- ingly competitive environment. The unleashing of market forces also turned the island's marine wealth into valuable commodities. In the late 1970s, Mack trucks began arriving from Santiago daily to load up with fresh fish, shellfish, and seaweed to supply new export markets. According to Chile's National Fishing Service, the number of processing plants grew from two in 1976 to 21 a decade later, and to 38 by 1989. Between 1976 and 1985, the seafood extracted in and around Chilo- more than tripled from 36,000 to almost 129,000 tons. Rather than continuing the tradition of subsistence agriculture or migrating off the island to look for work, the sons of Chilote farmers turned toward the sea. Many became full-time divers and fishermen, while their sisters left the family farms to work as laborers in new fish-processing plants, canneries and salmon farms, or as maids in the rapidly growing port towns. Fishermen sup- plying the processing plants also began to earn a good, steady income for the first time in years. Diving for shellfish, particularly abalone, became so profit- able that a good diver could earn $1,500 in two months-a year's salary for an island teacher. But in Chilo's subsistence econo- my, where money and its management were never an important part of daily life, few Chilotes invested their new income. Much of their earnings went to liquor, prostitutes, and name-brand blue jeans and sneakers. Another popular item was color T.V.s-and the car bat- teries needed to run them. The divers and fishermen weren't alone in failing to invest in the island's development. Because the government did not com- pel businesses to reinvest any of their income, nor tax them for their resource use, little of the fish industry's profit stayed in Chilod. "The only thing that the fishing industry has brought to Chilod is demand for unskilled labor," a rural development expert commented wryly. "Everything else they've taken out: natural resources and the tax rebate for employing Chilotes. What they will leave when they go will be a few tin warehouses which aren't even good enough to use as schools." According to a study done by Agraria, a national research institute, the value of natural resources extracted from the island equaled $27 million in 1987. That same year, public invest- ment amounted to $1.5 million. The 150-mile road, started 30 years ago, that runs the length of the island is still not completely paved. Most families don't have running water or electricity, and a high-school education for their children remains a luxury. Natural Resources Depleted Chile's export boom has taken a serious toll on the island's natural re- source base. The case of Chilean abalone-"locos" in the local vernacu- lar-provides a telling example of what happened when Chilo6's marine re- sources suddenly took on commercial value. Before 1980, islanders claim, it was impossible to wade into the water with- out stepping on these large, grayish shellfish. Known for their savory meat, locos are well worth the time it takes to prepare them: first they must be beaten with a wooden stick to make them ten- der, and then boiled for a couple of hours. Until recently, this beloved and famous plate was affordable to all but the poorest Chileans. When the Japanese discovered that the loco could substitute for its increas- ingly scarce abalone-and were will- ing to pay Japanese prices for it-they set off a reaction that no one ever imag- ined. In 1978, boats from the north began arriving by the fleet. Anyone who could don a wetsuit went diving. "It wasn't abalone I saw when I dove turned to gold, and in a modern reincar- nation of the California gold rush, na- tional investors, foreign companies, and under- and unemployed Chileans flocked to this once-isolated island. "We came to Chiloi in 1986," says Maria Angelica, "because my father couldn't find work in Santiago. One day a relative wrote saying things were good here and you could make a lot of money in pelillo. So we packed up and came." From 1980 to 1985, the extraction of pelillo tripled, as islanders and mi- grants began spending more time waist- deep in the ice-cold water gathering the plant. Within a few years, the principal natural beds were stripped bare. "They came for the brown gold, pulled every- thing up from the roots, and now we are left with nothing," complained the presi- dent of one of Chilod's new seaweed growers organizations. Fortunately, as natural pelillo banks began to diminish, researchers at Chile's Fisheries Development Institute (IFOP) found a way to grow it. Pelillo is now cultivated in a variety of ways, depend- ing on location and a grower's financial resources. Most larger growers have fully equipped diving teams that plant and harvest their seaweed crop under- water. Medium-sized growers gener- ally harvest their seaweed by raking it for locos," one Chilote recalled nostal- gically. "It was dollars." Dozens of entrepreneurs, mainly from Santiago, set up processing plants in whatever building they could find. Overnight, the islanders awoke to find themselves competing with national investors and foreign consumers for the rights to the island's natural bounty. Before long most nearby loco banks were wiped out. Some firms became so desperate they hired $500-a-day heli- copters to fly in and buy locos from divers in remote areas. When the loco stock reached a critically low level in 1989, the Pinochet government was forced to give up its anti-regulation posture and impose a three-year ban on loco harvesting. The pattern repeated itself with the seaweed, pelillo (gracilaria). This long stringy brown plant grows in protected coves, bays and backwaters upand down the coast of Chile. It takes root in the sandy ocean floor, and with the right amount of sunlight and nitrogen, grows as fast as field grass. Wild pelillo used to be so abundant in Chilo6 that island- ers used it to fertilize their potato fields. As Chile's international trade picked up, however, some clever soul recog- nized the seaweed as the very same stuff used to make agar-agar, a com- mon food preservative. The brown 10 REPORT ON THE AMERICAS aI I 1 onto small boats with long-necked pitchforks. And the smallest and poor- est growers, including most islanders, plant and harvest each row by hand, awaiting the full moon and low tides when they can wade out into the shal- low water. Because of its low capital require- ments, pelillo cultivation is an impor- tant economic alternative for islanders and migrants alike. But the shift to cultivation created its own set of prob- lems, most significantly the tensions that have arisen from the establishment and allocation of water rights. In order to cultivate pelillo, one must petition for a "concession," or the exclusive right to use a specific area of the beach. Consistent with the laissez-faire prin- ciples of its economic model, the gov- ernment granted concessions on a first- come, first-serve basis, with no special consideration given to the people whose land abuts the shore. Outsiders and some Chilotes snapped up the best con- cessions before the rest of the popula- tion knew what hit them. Islanders Unionize Determined to get in on the conces- sion mania before there was nothing left to give out, islanders formed 54 seaweed growers organizations, called sindicatos. Arnoldo Raimilla and 25 families organized one called Los Arrayanes (the name of a common lo- cal tree). In 1987, 19 of the unions founded the Provincial Federation of Seaweed Cultivators and Collectors. Member unions gather once a month in the main port town of Ancud to discuss federation matters, except dur- ing the harvest when they meet at the beach and compete for buyers. Last May, the federation voted unanimously to establish a marketing cooperative to sell their seaweed. "The organization of the future will be the cooperative," wrote new Federation President Juan Aedo. "The outcome of this vote repre- sents the most sustained expression of solidarity in Chilod, continuing the co- operative tradition of the Huilliche minga." (The Huilliche is one of the indigenous populations that lived on the island for centuries; the minga is a traditional form of collective work.) Out of their small second-floor of- fice equipped with an old manual type-writer, two desks, a phone and a kero- sene heater, the federation is waging a cooperative education campaign to en- sure full membership participation. It is training union members to analyze their costs, evaluate their production and monitor market prices. And through weekend workshops, radio programs and regional meetings, it is laying the groundwork for the transition from in- dividual to cooperative marketing. The federation is also taking up the battle over resource access. In a local radio interview during Chile's "Month of the Sea," Aedo discussed the impor- tance of giving Chilote communities priority in the future allocation of con- cessions. More controversially, the fed- eration is asking for the reallocation of areas already concessioned but not in use. The federation has attempted to woo more buyers to the island and to establish purchasing agreements that will insure a stable, fair price for its members. And it is setting up a fund so that sindicatos can keep their seaweed off the market when prices are low. It's too soon to tell whether or not these organizational initiatives will al- low Chilotes to defend themselves against the new economic forces that international market integration has brought. Right now, prospects for the federation and its member unions look decidedly dim. After a dramatic fall in seaweed prices last May when the larg- est buyer in Chilo6, Algas Marinas, declared a moratorium on purchases, some unions opted to sit on hundreds of pounds of wet seaweed they had har- vested rather than sell at half of last year's price. Making the future appear even more unstable, a new synthetic substitute for agar-agar, developed by the San Diego-based Kelco division of the Merck company, has received lim- ited approval from the U.S. Food and Drug Administration. If this substitute turns out to be cheaper than cultivated seaweed, Chilo6 growers may find they have lost their market permanently. Seaweed-grower Arnoldo Raimilla now spends a good part of the week away from home, looking for work in the port town or on a fishing boat head- ing south in search of shellfish. While he and many others have learned that the benefits of international trade can be great, the risks may be bigger than they can afford to take.

Tags: Chile, Chiloe, resource exploitation, neoliberalism, islanders union

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