2013

Microcredit Evaluation among Shrimp Cooperative Participants

Brent Hassebrock, Morgan Rogge, and Sarah White

Team El Salvador 7 February 28, 2013

Acknowledgements We would like to extend a thank you to all those involved in the planning, organization, and execution of this project, as well as to those community members who participated in the interviews we conducted. The shrimp cooperative leaders interest, openness, and attention to detail allowed us to gather valuable data that would not have been obtained if not for the time and consideration of these producers. We would also like to extend a special thanks to Juan Luna, Humberto Rosa, Maria Elena Vigil, Erica, Amilcar Cruz, Leo, David Marroquin and Jose Dolores Rojas for sharing their knowledge and for connecting us with local communities. Their efforts in providing information, mediation and transportation were invaluable in making this project a reality. Our interpreter/translator, Kayla Gilchrist, was a wonderful asset and went beyond her duties to fulfill the role of communicator, facilitator, and liaison. The support and accommodation of the Coordinadora staff, as well as of our host families, ensured that our time in the community was comfortable and filled with delicious Salvadorian food. Finally, we would like to thank the rest of Team El Salvador and Adele Negro for their unwavering support.

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Table of Contents
1.1 Executive Summary ................................................................................................................................ 3 1.2 Introduction ............................................................................................................................................. 4 2.1 Project Scope .......................................................................................................................................... 5 2.2 Methodology ........................................................................................................................................... 5 2.3 Introduction of Indicators........................................................................................................................ 7 2.4 Indicators of Success: ............................................................................................................................. 7 2.5 Explanation of Indicators ........................................................................................................................ 8 2.6 Interview Summaries .............................................................................................................................. 9 2.6.1 Fauna Silvestre ................................................................................................................................. 9 2.6.2 San Francisco ................................................................................................................................... 9 2.6.3 Salvadorea .................................................................................................................................... 10 2.6.4 Santa Rosa...................................................................................................................................... 10 2.6.5 Sara y Ana ...................................................................................................................................... 10 2.6.6 San Hilario ..................................................................................................................................... 11 2.6.7 Dr. Armando Navarrete, Biologist ................................................................................................. 11 3.1 Evaluation ............................................................................................................................................. 12 3.2 Challenges & Lessons Learned ............................................................................................................. 16 4.1 Recommendations ................................................................................................................................. 17 4.2 Looking Forward .................................................................................................................................. 18 5.1 Appendices............................................................................................................................................ 20 5.1.1 Appendix I: Key Informants .......................................................................................................... 20 5.1.2 Appendix II: Interview Questions for Cooperative Leaders .......................................................... 21 5.1.3 Appendix III: Interview Questions for Environmental Expert ...................................................... 23 5.1.4 Appendix IV: Relevant Photos ...................................................................................................... 25

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1.1 Executive Summary

The relationship between the Monterey Institute of International Studies and La CoordindoraAsociacin Mangle is continually strengthened and renewed each year through valuable cooperation and skills-based learning experiences among the two organizations. This year marks the sixth year of team El Salvador project work in the Bajo Lempa and the Bay of Jiquilisco areas, and the fourth year of collaborative projects within the framework of a Memorandum of Understanding with La Coordinadora-Asociacin Mangle. During the three weeks of project work in the region between January 7 and January 25 of 2013, the team examined the functioning and impact of the microcredit program of Asociacin Mangle within the shrimp farming credit line based on reported high rates of loan repayment in that sector. Through interviews with local cooperative leaders and members, the microcredit team determined a need to develop and define the rules and techniques of the Production and Commercialization Program for the shrimp farming sector in order to help strengthen appropriate and consistent management and monitoring of the shrimp production credit line. The team recommended that Asociacin Mangle work with cooperatives to develop a group savings plan that would eventually lessen dependence on loans, and that the organization provide information through workshops and trainings to assist cooperatives in improving their operations both in terms of production and environmental sustainability. The microcredit team held interviews for two weeks with cooperative leaders to ascertain current economic, social and environmental trends within the cooperatives and their communities. These interviews also enabled the team to examine the impact of Asociacin Mangle loans as a broader development program according to various predetermined indicators of success of within various categories. The specific categories and indicators will be introduced later in this report. The interviews provided substantial information for a more in-depth understanding of the nature and the history of the relationship Asociacin Mangle maintains with communities and the shrimp cooperatives in the area. The report includes a summary of each interview as well as an overall evaluation of all cooperatives interviewed based on pre-determined indicators. Given the interview data, discussions with Mangle representatives, and review of pertinent program documentation, the report also includes recommendations for how to strengthen the microcredit program. Lastly the team has provided suggestions for how future delegations may carry forward this project. This collaborative experience has provided the students of the microcredit team with a substantial professional experience that enhances aspects of their academic pursuits and career aspirations, while also deepening their cross-cultural understandings.

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1.2 Introduction
The microcredit program of Asociacin Mangle provides small loans to producers for the purpose of purchasing the inputs necessary for a cycle of production. The program aims to give producers a means of income that will ultimately improve the quality of living of the community. From an annual portfolio of $150,000 of funding that comes from the Inter-American Foundation, this program provides low interest loans to three different production sectors in the Jiquilisco Bay: shrimp farming, agriculture and livestock. Mangle differentiated shrimp farming as a separate line of credit from the broader category of agricultural loans within the last year. As such, the organization has yet to develop a microcredit administration and regulation plan specific to this sector. Although the shrimp farming line of credit is relatively new and unregulated, it reports excellent rates of repayment. It is for this reason that we, in conjunction with the board members of Asociacin Mangle, chose to use the shrimp-farming sector as the basis for a model framework. After meeting with the members of the board and program coordinators on January 7th, 2013, the microcredit team started working to evaluate the success and impact of the Mangle microcredit program among shrimp farming cooperatives in the Salinas del Potrero hub. The teams objective was to present a framework of indicators of success that could be used for future evaluations of other sectors under the Mangle microcredit program. To facilitate a more comprehensive evaluation and understanding of the programs effectiveness, the team devised indicators of success within six distinct categories, as follows: Impact of Microcredit on Production of Shrimp Farm Cooperatives Quality of Mangles Organizational Relations with Shrimp Farm Cooperatives Short-Term Community Development as a Result of Microcredit Long-Term Community Development and/or Investment as a Result of Microcredit Sustainability of Microcredit Program Impact of Microcredit on Environmental Sustainability of Production

The team selected these categories in order to facilitate an evaluation that goes beyond defining the programs success as simply heightened shrimp production or excellent microcredit loan repayment rates. This evaluation also considers the programs effects on quality of life for shrimp cooperative members and their families; investment in production-related and community-related infrastructure; Mangles organizational relations with community members and an understanding of their needs; and the ability of the program to help beneficiaries become economically independent as well as minimize the environmental impact of production. The team hopes that this evaluation will provide a more comprehensive understanding of the

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potential success of the microcredit program as an integrated development program within the community rather than as solely a credit system.

2.1 Project Scope

This project evaluated the functioning and management of the microcredit loan program administered by Asociacin Mangle in the shrimp farming sector. The emphasis was on the roles assumed by the lending program as part of a community-wide, sustainable development strategy in the area of the Bajo Lempa and the Bay of Jiquilisco. The lending program contains three lines of credit currently, those being: shrimp, livestock and agriculture. According to Mangle, the lending program overall has exhibited a low reimbursement rate of less than 30%. However, the shrimp sector boasted a much higher rate of repayment, which Asociacin Mangle viewed as a success. The team analyzed the relationship between Asociacin Mangle and shrimp farming cooperatives in the region that participated in the microcredit lending program. The team also examined shrimp farming production and commercialization strategies to understand how cooperatives utilized loans and to measure the economic, environmental and social sustainability of the lending program. The team then extrapolated the data to form recommendations for Asociacin Mangle to improve the sustainability of its microcredit lending program as a whole.

2.2 Methodology
Prior to Team El Salvadors arrival in the Bajo Lempa, the microcredit team submitted its project proposal to the board members of Asociacin Mangle for review. After an initial discussion of the merits of the proposal, the team met with Production Program Coordinator, Juan Luna to finalize the methodologies and deliverables of the project, and then created a work schedule for the weeks that followed. In order to gather the necessary information on cooperative success within Mangles credit structure, the microcredit team conducted qualitative research based on three methodologies: semi-structured interviews of cooperative leaders using open-ended questions; a review of loan documents and scientific literature pertaining to the Bay of Jiquilisco shrimp sector; and, when possible, the direct observation of shrimp cooperatives production practices and attitudes. Juan Luna and Humberto Rosa, Microcredit Program Coordinator, scheduled interviews with cooperatives leaders, credit administrators, and an environmental expert in the shrimp production sector. In the days before the first cooperative meeting, the team developed a series of 37 interview questions for cooperative leaders (see Appendix II) based on the indicators of success, in order to
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gather qualitative data from each cooperative and to later categorize this information by indicator. The team then devised open-ended interview questions in order to obtain in-depth, unbiased responses with respect to some of the impacts of the microcredit system that were not previously considered or that were incidental effects or externalities. By allowing the interviewees to answer the questions freely and engage in an open conversation about their experiences in the microcredit program, the team aimed to gather more data and with greater reliability. When possible, team members supplemented the information they received from the interviews with direct observations of the cooperatives operations, such as: the use of floodgates and reservoir canals; the proximity of mangrove forests and the use of buffer zones; and the number and state of any tanks showing signs of being affected by shrimp disease. The team had already conducted a general literature review of the shrimp farming sector prior to its arrival in El Salvador, then gathered additional scientific resources specific to the region after meeting with the Mangle board. During the three weeks in-country, Humberto Rosa provided the team with available loan documents for shrimp cooperatives participating in the microcredit program. The team met with representatives of six shrimping cooperatives located near the Bay of Jiquilisco between Wednesday, January 9 and Friday, January 18, 2013. Five of the cooperatives are located in the Salinas del Potrero hub, while the sixth, San Hilario, is located in the Salinas El Zompopero hub. Interviews conducted at the cooperative site generally lasted between sixty and ninety minutes. Four of the cooperatives interviewed either had previously received or currently receive microcredit loans from Mangle: Fauna Silvestre, San Francisco, Santa Rosa, and Sara y Ana. The other two cooperatives, La Salvadorea and San Hilario, had never received shrimp microcredit loans from Mangle; however, both expressed interested in participating in the program. These cooperatives answered questions pertaining to how they perceived the microcredit program and how they believed that a microcredit loan from Mangle would impact their shrimp production in their cooperatives. Additionally, the team met with Armando Navarrete, a biologist and expert on the environmental impact of shrimp production, as well as with microcrdit coordinator Humberto Rosa.

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2.3 Introduction of Indicators

The team chose its indicators to reflect the dimensions of a successful microcredit lending program that enables inside-out (as opposed to outside-in) community development and improves economic development and independence as well as environmental sustainability while also maintaining strong relationships with communities. They are divided in the following six categories with specific indicators for each category:

2.4 Indicators of Success:

Category I: Impact of Microcredit on Production of Shrimp Farm Cooperatives Indicator 1: Microcredit has allowed for increased production Indicator 2: Microcredit has allowed for investment in operational capacities Category II: Quality of Mangles Organizational Relations with Shrimp Farm Cooperatives Indicator 3: Cooperatives prefer Mangle microcredit loans over bank loans Indicator 4: Cooperatives feel they have strong relations with Mangle Indicator 5: Mangle microcredit system accommodates individual cooperative needs Category III: Short-Term Community Development as a Result of Microcredit Indicator 6: Microcredit boosts income for basic needs Category IV: Long-Term Community Development and/or Investment as a Result of Microcredit Indicator 7: Microcredit allows for improved investment in communities Category V: Sustainability of Microcredit Program Indicator 8: Cooperatives are not dependent on microcredit program Indicator 9: Cooperatives feel they could not produce without microcredit in the future Indicator 10: Cooperatives are not vulnerable to economic or natural shocks Category VI: Impact of Microcredit on Environmental Sustainability of Production Indicator 11: Microcredit restricts use of watershed polluting inputs Indicator 12: Microcredit facilitates infrastructure that lessens environmental impact

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2.5 Explanation of Indicators

I. The impact of the microcredit program on production is indicative of the programs economic sustainability for the cooperatives. Since the loans fund inputs for shrimp production, the team assumes that if this leads to increased production and investment in operational capacities, the income for families of producing cooperatives would increase, thus advancing their economic stability. II. The quality of the relationship between Asociacin Mangle and the cooperatives is instrumental to the success of Mangles microcredit program since the program is based on an honor system framework. Here, quality of relationship is demonstrated by cooperative preference for Mangle as a lender over a bank, the stated quality of relations by the cooperative members, and the ability of Mangle to understand and respond to the situation of each community and the respected challenges they face. The team evaluated the programs accessibility to cooperatives and provided an understanding of individual cooperatives perceived quality of relationship with the organization. III & IV. The lending programs impact on short- as well as long-term community development demonstrates the outcomes that access to financing is achieving or not achieving in the cooperatives communities. It is important that short-term and long-term needs both be met and that the satisfaction of one does not restrict the fulfillment of the other. Some short-term needs often also represent long-term needs, such as investment in education. The team evaluated how cooperatives utilized their incomes from production to meet short-term needs in the community such as providing for basic needs, and how cooperatives invest their incomes from production in long-term targets for the community, such as infrastructure, health, education, etc. V. The ability of a microcredit program to continue to operate over time would indicate the programs economic sustainability, which in turn affects the economic viability of individual cooperatives. For the lending program to continue to operate in the longer term, however, it is important that at some stage the cooperatives no longer require loans; this would therefore enable Asociacin Mangle to devote funds elsewhere in the area as needed. To measure this, the team evaluated whether or not cooperatives felt that they could become independent of microcredit loans in the future. It is also important that Asociacin Mangle have the capacity to recover loaned money. The team also evaluated how the cooperatives respond or plan to respond to market shocks and natural disasters that could prevent them from being able to pay back their current loans. VI. The last indicators of success ensure that microcredit loans do not directly fund practices that are harmful to the environment. Since shrimp farming occurs in tanks near mangrove swamps, the team assessed the degree of use of inputs that pollute the watershed. Furthermore, certain
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production infrastructure improvements can have positive or negative impacts on the surrounding environment; therefore, the team assessed the infrastructure improvements cooperatives had made and the reasons for them In considering environmental sustainability, the team recognizes the severe challenges cooperatives face in any production process. Therefore, the team does not view sustainability as a rigid, defined, end goal, but rather a continuing process of improvement which strengthens the resiliency, stability, and adaptability of the cooperatives.

2.6 Interview Summaries

2.6.1 Fauna Silvestre
The interview with Mr. Romeo took place at the cooperative. He stressed the significance of the cooperatives involvement with Asociacin Mangle following the governments demobilization of its armed forces, and stated that the cooperative has an exceptional relationship built on trust with Asociacin Mangle, like brothers. The team discovered microcredit loans significantly increased the cooperatives production levels, and that subsequent higher yields positively correlated with the cooperative members abilities to support their families. Unfortunately, the cooperative perceives significant risk of the Mancha Blanca virus lowering its yields. Mr. Romeo did not believe that the cooperative could produce without microcredit loans and stated that deeper and more structurally sound tanks would allow them more economic independence in the future. The cooperative uses various chemical inputs in production alongside natural fertilizer and employs a mono-culture system, and does not have a water and nutrient cycling system. Following the interview, Mr. Romero gave the team a tour of the shrimp tanks.

2.6.2 San Francisco

The interview with Rogelio Arriaga took place at his home. Mancha Blanca virus currently lowers the cooperatives production level, but Mr. Arriaga revealed that the cooperative improved its production methods to increase yields. The cooperative uses the microcredit loans to purchase production inputs, specifically larva and concentrated feed, and Mr. Arriaga emphasized that if the cooperative can buy more larva, then its yields will increase. The cooperative never used microcredit loans for infrastructure improvements, but is considering the option and mentioned needing a loan to deepen the tanks. The cooperative worked with Asociacin Mangle years ago and lost contact for some time, but began working with Asociacin Mangle again last spring. Hub President Mauricio Cruz helped them regain their credibility with the organization after the cooperative could not repay a microcredit loan. The cooperative enjoys the ability to apply for multiple microcredits at once to guarantee that it acquires all the production inputs it needs each cycle. The cooperative does not anticipate successful production
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cycles without the microcredit loans. The cooperative applies 15-15-15 fertilizer and employs a mono-culture system, and does not have a water and nutrient cycling system.

2.6.3 Salvadorea
The interview with Jos Martinez took place at the cooperative and another cooperative member also participated. Half-way through the interview, the team learned that the cooperative has interest in participating in Mangles microcredit program, but has not actually received loans to date. The cooperative cannot currently obtain a microcredit loan because its production permit expired. As a result, the team reframed some interview questions to identify how the cooperative would hypothetically utilize a microcredit loan, and omitted questions that were not relevant to the cooperative as a non-participant in the microcredit program. The cooperative wants to expand its infrastructure, i.e. wants to improve their tanks and install reservoir canals, and also has interest in receiving training to increase their production capacity. The cooperative uses the various and commonplace chemical inputs in production alongside natural fertilizer and employs a mono-culture system, and does not have a water and nutrient cycling system. Mr. Martinez gave the team a brief tour of the shrimp tanks following the interview.

2.6.4 Santa Rosa

The interview with Jos Isabel Rivera took place at the cooperative in the company of another cooperative member. The team discovered that the production levels were relatively low and that overall, the strategies of the cooperative were similar to others interviewed such as selling to intermediaries, spending microcredit on production inputs and using concentrated feed in production. The loans from Mangle have increased production capacity substantially and overall the relationship between the cooperative and the lender is good. The loans have provided a higher standard of living for the cooperative and their families, and Mr. Rivera highlighted the need for Mangle to continue working with the cooperatives in the future. Mr. Rivera pointed out that in order to produce independently in the future, the cooperative would need financing to invest in infrastructure improvements. Finally, the cooperative uses the various and commonplace chemical inputs in production alongside natural fertilizer and employs a monoculture system, but has a water and nutrient cycling system in place. Following the interview, Mr. Rivera showed the team around the production ponds.

2.6.5 Sara y Ana

The interview with Mauricio Cruz took place at the Asociacin Mangle offices in San Nicolas, where the team learned that Mr. Cruz is also president of the Salinas del Potrero hub. The cooperative has some level of production-increasing infrastructure already in place due to
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microcredit loans, and one tank now operates independently of loans. The loans enabled the cooperative to transition into a semi-artisanal production type. Mr. Cruz explained that the cooperative has set production goals with specific requirements to reach a monetary goal for the other tanks to be able to operate independently from Mangle loans in the future. These plans rely upon more loans, which the cooperative needs for infrastructure improvements. The cooperative currently wants loans to install pumps. The cooperative uses synthetic chemical inputs, concentrated feed and natural inputs. Mr. Cruz closely related the cooperatives environmental impacts and limitations to production issues, such as maintaining the optimal density of shrimp in the ponds to avoid spreading disease while producing at a higher intensity.

2.6.6 San Hilario

The interview with Delmy Josefina Viera took place at her home in San Hilario. The cooperative is at a higher production level than cooperatives in Salinas del Potrero and wants to install infrastructure that both increase production and the value of the product. Ms. Viera specifically mentioned wanting to build a warehouse and a processing plant to be able to store the product and avoid some of the price-setting incurred by intermediaries, and to derive added value to increase the price of the product. During the interview, the team discovered that San Hilario cooperative does not receive loans from Asociacin Mangle. Ms. Viera notified the team that the cooperative seeks training from the organization and has requested a loan. The cooperative currently receives loans from a local church, but that without any loans production could not continue. The cooperative uses significantly less chemical inputs in production, and wants to integrate tilapia into the production system.

2.6.7 Dr. Armando Navarrete, Biologist

The interview with Dr. Navarrete took place at his residential laboratory in San Hilario. From his experience working with local shrimp as a biologist with ICMARES and ITCA, Dr. Navarrete deeply understood the challenges that shrimp producers faced and gave the team an in-depth list of these issues. The team discovered that many of the economic challenges that producers faced directly implicated environmental sustainability shortcomings. For example, poor water quality is a problem that can affect the production of the shrimp, since the shared water sources used to fill the tanks are often already highly polluted. In addition, erosion caused by deforestation can reduce the depth of the shrimp ponds, which significantly increases shrimp mortality. Dr. Navarrete shared many valuable insights regarding ways that producers can increase production and can improve the sustainability of their operations. He stated that the use of lime is damaging to the environment and to production because it prevents the decomposition of organic material in the tanks, which can affect shrimp quality and increase the incidence of disease. In fact, he noted that MARN recommends that producers stop using the compound. In addition, Dr. Navarrete believes that the local production of more sustainable shrimp feed would be possible
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with increased training and technical support. If local producers could manufacture a viable feed from local sources, they would be able to reduce dependence on imported fish feed that has a carbon footprint from transportation as well as being sourced from other fish species. Dr. Navarrete also stated that molasses is an effective substitute for conventional fertilizers. It can produce an equivalent algal bloom to feed shrimp and shade the tanks, while having other important benefits: reduced organic waste materials left in the tanks, reduced incidence of disease, and reduced eutrophication of waterways. In addition, Dr. Navarrete believes that closed-cycle production is the best way to increase production while reducing the incidence of disease. In the current form of production, the incidence of disease increases significantly once intensification of production surpasses 8-10 shrimp per meter squared. Finally, Dr. Navarrete stated that the industry would benefit from the creation of a green labeling system to differentiate sustainably farmed shrimp from those farmed using more conventional methods.

3.1 Evaluation
Indicator 1: Microcredit has allowed for an increase in yield from production Successful. Among all cooperatives interviewed, all informants acknowledged a significant increase in production due to access to microcredit. Informants stated microcredit guarantees and augments the inputs needed for cultivation which increases their production. It is clear from the interviews that the microcredit program is most successful in allowing cooperatives to increase their production levels. Indicator 2: Microcredit has allowed for investment in operational capacities Minimally successful. Cooperatives primarily used microcredits for production inputs rather than infrastructure or operational technology. However, individual cooperatives reported that microcredit loans facilitated extra profits that enabled the construction of guard houses and general maintenance of tanks. In addition, two cooperatives within Salinas de Potrero received microcredit loans for infrastructure. In general, cooperatives have an interest in improving their infrastructure but prioritize obtaining microcredit loans for production inputs. This shows a trend toward shortterm solutions to ensure the success of a cycle rather than long-term investment in operations.

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Indicator 3: Cooperatives Prefer Microcredit Program to a Bank Loan Successful. All cooperatives interviewed prefer the Asociacin Mangle microcredit program to a bank loan due to the lower interest rates offered by the organization. Because the cooperatives do not have collateral in the form of land, they are ineligible for a bank loan. One cooperative stated that the organizations efficiency in loan disbursement is an advantage compared to the lengthy process of obtaining a bank loan. Asociacin Mangle successfully provides greater credit access to the community while quickening the process to adapt to the communitys needs. Indicator 4: Cooperatives feel they have good relations with Asociacin Mangle Successful. All cooperatives interviewed stated they have good relations with Asociacin Mangle. Noted quotes are, They are our brothers, and, We are their sons. Two out of six cooperatives interviewed stated that Mangle providing the necessary funds and training to establish their operations. Two cooperatives expressed positive experiences with Asociacin Mangle, but noted that room for improvement remains. Related to the previous indicator, cooperatives enjoy a positive relationship with Mangle due to mutual trust and understanding of community challenges. This unique relationship allows greater flexibility for repayment and strengthens community relations. Indicator 5: Asociacin Mangle microcredit system accommodates individual cooperative needs Successful Cooperatives appreciated that the Asociacin Mangle microcredit program allowed them to apply for multiple microcredits needed for production inputs simultaneously. Individual cooperatives also expressed gratitude for the level of flexibility and understanding for unpredictable circumstances or difficulties during production cycles and the possibility of refinancing. The cooperative leaders commonly considered the adaptability of the Mangles microcredit approval and regulation system to reflect the strength of the program. Indicator 6: Microcredits improve the ability of community members to meet basic needs Successful In all cooperatives currently receiving credits from Asociacin Mangle, microcredits improved
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the ability of the community members to meet basic needs, such as food, clothing, shoes and supplies for home gardening and animal husbandry. Cooperatives stated that the microcredit allowed them to purchase a larger quantity of larva and concentrated feed, leading to increased production and thus increased income. Indicator 7: Microcredits allow for improved long-term investment in communities Unsuccessful A few of the cooperatives stated that the microcredit loans allowed for increased investment in long-term community development. Those that did indicate that they used funds for long-term development cited more consistent schooling for local children and the construction of access roads that made it easier for buyers to reach the producers. The Sara y Ana cooperative used microcredit loans to install a potable water system, reflecting a longer-term investment in the community as a result of having the microcredit financing. Indicator 8: Cooperatives are not dependent on Microcredit Program Unsuccessful All interviewed shrimp farming cooperatives participating in the Asociacin Mangle microcredit program remain dependent upon microcredits for their production with the exception of one tank in the Sara y Ana cooperative which now operates without loans which Ms. Viera attributed to extensive infrastructure and greater economies of scale. In general, cooperatives relied heavily upon microcredit loans to purchase every input necessary for a cycle of production, notably for larva, feed, and lime. Indicator 9: Cooperatives feel they could produce without microcredit in the future Unsuccessful Cooperatives generally doubted that future production could be sustained without microcredit loans. However, two cooperatives supposed that economic independence could be feasible with training and improved infrastructure. Given the general dependence on loans for production inputs each cycle, as well as the involvement of loans in almost all future plans, cooperatives do not envision producing independently from loans in the future.

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Indicator 10: Cooperatives are not vulnerable to economic or natural shocks Unsuccessful Vulnerability to the white-spot (mancha blanca) virus concerns most of the shrimp cooperatives, as do natural disasters. Cheaper contraband shrimp from Honduras and Nicaragua also limit the cooperatives ability to compete economically in the region. Overall, cooperatives remain highly vulnerable to these disruptions that can hinder their abilities to repay microcredit loans in the future. Indicator 11: Microcredit restricts use of watershed polluting inputs Minimally successful Mangle gives loans specifically for lime but not for synthetic or natural fertilizer such as Melaza. All interviewed cooperatives in Salinas del Potrero apply lime and granulated chlorine, as well as fertilizers to the tanks as this is not restricted by the microcredit program. All cooperatives purchase imported concentrated feed using Mangle loans. Although the loans for these inputs substantially increase production, they fund practices that ultimately pollute the watershed for reasons explained above from the interview with Dr. Navarrete. Indicator 12: Microcredit facilitates infrastructure that lessens environmental impact Unsuccessful The cooperatives in Salinas del Potrero, with the exception of Santa Rosa, do not have reservoir canals to recycle nutrients and circulate water; this exacerbates water quality conditions and the health of the ecosystems associated with the watershed. In all cooperatives, loans were used for production inputs, rather than for infrastructure that lessens environmental impact. Overall, the majority of microcredit loans fund inputs that harm the ecosystems both inside and outside the tanks rather than circulation projects that alleviate the damage to these ecosystems.

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3.2 Challenges & Lessons Learned

As with any project, the team faced several challenges. In some cases, those challenges delayed the projects momentum or hindered the validity/reliability of the data collected. This section is meant to pinpoint such aspects in order to better inform future evaluation expectations and to provide recommendations for what can be improved upon by both Team El Salvador and Associacin Mangle in the future. A. Interview questions should be as clear and concise as possible. The team found that the first set of interview questions the team drafted was too complex and required additional explanation by team members and the interpreter, which took up more time during interviews. The final draft of interview questions was established through trial and error. While a similar strategy will likely be required should future evaluations be developed, it should be noted that the language and the framing of questions should be clear and simple. It is important to note that cooperative and community members may not share the same terminology as Monterey students or may have their own terminology that Monterey students are not aware of. These details should be noted and incorporated in interview questions when possible. B. Inconsistent communication between team El Salvador and Asociacin Mangle prior to Team El Salvadors arrival in the Bajo Lempa limited effective preparation and caused confusion between the two parties regarding the project scope during the teams first few days in the Bajo Lempa. Establishing clearly designated contacts in September/October would allow both parties to better communicate so as to create a project plan that would employ the areas of competence of Monterey Institute students and at the same time serve the needs of Asociacin Mangle. C. Three weeks go by quickly. Scheduling as many community meetings and interviews as possible in the first few days helps guarantee that the group will have sufficient time to gather necessary data and add meetings/interviews as necessary. D. Shrimp farmers do not necessarily know the varieties of shrimp species that they cultivate or other related technical or scientific terminology. It is best not to rely on interviews to obtain this information, but instead, conduct research ahead of time, when possible. E. It is essential to ask the interviewees permission before recording. Furthermore, interviewees do not generally answer interview questions in just a few words; therefore, it is very helpful to have the interview recording in order to listen to responses again when compiling and analyzing data

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F. When requesting documentation or assistance from Asociacin Mangle, project teams should specifically indicate the information they are seeking (documentation or an interview) and specify their objective in doing so, in order to eliminate any misinterpretation. It may not always be obvious to Asociacin Mangle what teams are seeking or why.

4.1 Recommendations
A. Develop a Best Practices and Techniques Document

Given that the shrimp line of credit is relatively new and that currently Asociacin Mangle has no written protocol specific to the shrimping microcredit program, a priority would be to establish a process to facilitate appropriate and consistent management and monitoring of this line of credit. The written protocol should list specific eligibility requirements, as well as outline and define the best practices and regulations of the production and commercialization program for the shrimp sector. It is further recommended that the best practices outlined in this document include measures to improve the sustainability of operations, such as reductions in the use of chemical fertilizers and lime. We suggest using the Reglamento de Credito Agropecuario as a framework for developing this document. This document is important for establishing written standards to effectively monitor the program. B. Require Financial Planning for Microcredit Applicants

The team recommends that Asociacin Mangle require producers applying for a microcredit loan to meet with the organizations accountants prior to the disbursement of the funds in order to develop a financial business plan. This plan would include both short-term and long-term goals and strategies, with the final objective of reaching economic self-sufficiency. In addition, this business strategy should include contingency plans to help producers better manage those problems that could negatively affect production, such as flooding or disease epidemics. The requirement would ensure that the beneficiaries of the microcredit see their operation as a business with a future, so that every decision is made with the final objective of financial independence in mind. The team anticipates that additional financial planning would also limit the risk of default or refinancing. C. Require Microcredit Beneficiaries to Participate in a Group Savings Plan

A key characteristic among all cooperatives interviewed is their dependence on microloans for the purchase of major production inputs at each production cycle, a dependence compounded by the general consensus that production would not be possible without access to microloans. Considering this dependence on loans for the purchase of inputs, the lack of funding for maintenance and infrastructure, and the high vulnerability to economic and natural shocks, the
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team believes that a group savings plan would relieve the combined financial stress that these three factors present. The incorporation of a group savings plan could: Encourage and facilitate improved financial planning Mitigate or alleviate losses due to epidemics or natural disasters Provide funds for general maintenance of infrastructure Provide funds for expansion and improvement of operations (such as improved technology, infrastructure, and training)

In the case that Asociacin Mangle does not have the capacity to develop this feature in-house, a solution may be to add a prerequisite that the cooperatives have and contribute to a group savings plan with a local bank. This aspect could operate on an honors system or, alternatively, cooperatives receiving credit could show proof of having and contributing to a group savings plan by providing bank statements with each new credit application. D. Provide Knowledge Sharing & Training to Bolster Production

Upon interviewing biologist Armando Navarrette of the Central American Institute of Technology working with the Business Foundation for Educational Development (ITCAFEPADE), it became apparent that shrimp cooperatives lack knowledge and training on how to produce in a manner that will not only increase their yield but also minimize their impact on the environment. This interview highlighted a number of techniques that would improve production and lower costs. Asociacin Mangle, as a creditor, should not necessarily have to stipulate how cooperatives conduct their operation. However, given the organizations position and credibility in the community, the Mangle could successfully facilitate knowledge sharing. We suggest that it bring in experts and host workshops or trainings for the benefit of both the Mangle staff and cooperative members. The team also notes that cooperative leaders expressed an interest and need for additional training to improve their production levels.

4.2 Looking Forward

The indicators used in this evaluation can be expanded upon to reflect the needs and the structure of other sectors receiving microcredit. This would allow future Team El Salvador project teams to use the same framework of indicators to assess those sectors. While the background research, interview questions, and the dimensions of each indicator will differ between lines of credit, the outcome of this project should offer a reliable foundation for future evaluations of Asociacin Mangles microcredit program; furthermore, it is hoped that future student delegations will assist in the implementation of our recommendations.

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Lastly, the project team strongly believes that an overall assessment of the accounting structure used in the microcredit program would be valuable, but it should be noted that this type of evaluation will require a specialized team with training in accounting and financial management. By increasing the involvement of MBA students in future Team El Salvador delegations, we believe that an accurate and in-depth evaluation of the administrative and financial divisions of the microcredit program of Asociacin Mangle could be achieved.

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5.1 Appendices
5.1.1 Appendix I: Key Informants
Who Where Jos Amilcar Cruz, president of San Nicolas Mangle Board of Directors; Erica, Mangle accountant; Humberto Rosa, Coordinator of Microcredit Program Juan Luna, Production Program Coordinator and liaison setting up meetings with cooperative leaders Romeo, leader of Fauna Silvestre Shrimp Cooperative Rogelio Arriaga, leader of San Francisco Shrimp Cooperative Juan Jos Martinez, leader of Salvadorena Shrimp Cooperative and Rigoberto, member Jos Isabel Rivera, leader of Santa Rosa Shrimp Cooperative Mauricio Cruz, leader of Sara y Ana Shrimp Cooperative Dr. Armando Navarrete, biologist Delmy Josefina Viera, Administrative Manager of San Hilario Shrimp Cooperative Humberto Rosa, Coordinator of Mangles Microcredit Program Mangle Board of Directors and Project Liaisons (Presentation of Preliminary Findings) San Nicolas Date 1/7/2013 Time 2:00 pm

1/8/2013

2:00 pm

Salinas el Potrero

1/9/2013

9:00 am

Salinas el Potrero

1/10/2013

9:00 am

Salinas el Potrero

1/11/2013

9:00 am

Salinas el Potrero

1/15/2013

9:00 am

San Nicolas

1/16/2013

9:00 am

San Hilario San Hilario

1/17/2013 1/18/2013

9:00 am 9:00 am

San Nicolas

1/22/2013

9:00 am

Ciudad Romero

1/24/2013

9:00 am

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5.1.2 Appendix II: Interview Questions for Cooperative Leaders

Introduccin Esta entrevista ser ms bien como una encuesta, porque sabemos que su tiempo es muy valioso. Por eso, nos gustara que nos d respuestas completas pero precisas para poder abordar todas las preguntas y para no malgastar su tiempo. Antes de nada, muchas gracias por su participacin, su ayuda en cuanto a responder estas preguntas nos permite entender mejor por qu su cooperativa ha tenido xito en cuanto al programa de microcrdito de Asociacin Mangle para el sector camaronero. Esperamos que esta informacin pueda ayudar a Asociacin Mangle mejorar la gestin de su programa para serviles mejor a ustedes como participantes tanto como a la comunidad. Como lder de la cooperativa, nos gustara que conteste usted estas preguntas de parte de la cooperativa entera. Preguntas de Produccin 1. Cuantos miembros tiene su cooperativa? De estos cuantos participan en el cultivo? 2. Cuantos quintales de camarones se cosechan durante cada ciclo? 3. Cuantos estanques utilizan ustedes actualmente para la produccin? 4. De qu tamaos son los estanques? 5. Cuantos ciclos hay durante un ao entero? 6. Cules especies de camarn cultivan ustedes? 7. Qu es el porcentaje de su cosecha que venden ustedes? 8. A quin(es) venden su producto? 9. Adnde lo venden? 10. A qu precio se venden sus camarones? 11. El microcrdito les ha permitido aumentar su produccin? Por cuanto ha aumentado su produccin? 12. El microcrdito les ha permitido ampliar su operacin? En el caso que s, cmo? 13. Les interesa la expansin? Si la respuesta es s, que tipo de expansin les interesa? Preguntas de Administracin 14. Con cuanta frecuencia reciben ustedes un microcrdito? Cuantos microcrditos se les han otorgado hasta ahora? Cundo saco usted su primer micro crdito? 15. Existen cuotas o lo pago usted en una vez? 16. De qu manera invierten ustedes su micro crdito? 17. Cules son los requisitos que tienen satisfacer para obtener un crdito? 18. Despus de recibir el cheque de Mangle, hay algn requisito ms con lo que cumplir para la asociacin? 19. Qu tipo de obstculos les impedira reembolsar su microcrdito?
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20. Cules son las dificultades (o retos) que enfrentan ustedes como beneficiarios y que tendra que tomar en cuenta Mangle para poder mejorar su programa de microcrdito? (Tienen ustedes su herencias de cmo funciona mejor el programa de mangle?) 21. Cmo evala usted la experiencia que han tenido con el programa de microcrdito de Mangle? 22. Cmo describira usted la relacin entre mangle y ustedes? Han tenido buena experiencia trabajando con Mangle? Preguntas del Desarrollo de Comunidad 23. Cmo ha mejorado este micro crdito la vida de ustedes y/o sus familias? 24. Cmo han utilizado las ganancias de la produccin de camarn? 25. Han utilizado las ganancias de la cooperativa para mejorar la infraestructura de la comunidad (por ejemplo, para construir un camino o un canal de agua)? 26. Tienen ustedes otra fuente de ingresos aparte del cultivo de camern? 27. Cules son las ventajas de participar en el programa de Mangle en vez de sacar un crdito de un banco tradicional? Preguntas de la Sostenibilidad del programa 28. Si no hubieran sacado el microcrdito, podran, actualmente cultivar el camern (en este momento por ejemplo)? 29. Qu es lo que les permitiran en el futuro cultivar sin ayuda financiera (por ejemplo: recursos, herramientas, tecnologa, infraestructura)? Preguntas de la Sostenibilidad del Medio Ambiente 30. El cultivo de camarones sin hacer dao al medio ambiente, o sea, de manera sostenible, es una prioridad para los miembros de la cooperativa, o la produccin es lo principal? 31. Sabe usted de leyes ambientales que de alguna manera afecten su capacidad para cultivar el camern, ya sea de forma positiva o negativa? (Por ejemplo, hay lmites que se imponen?) 32. Alguien viene peridicamente para monitorear la produccin? 33. Qu tipo de qumicos se utilizan en el cultivo del camarn? Por ejemploCal hidratada, Cloro granulado o Hipoclorito potsico 34. Se utilizan fertilizantes tales como Triple 15, 16-20-0, Urea granulada 46%, Melaza? 35. Se utilizan concentrado? Y de qu tipo y de dnde viene? 36. Siembra usted un cultivo aparte del camarn? Hay especies diferentes en un estanque? 37. Qu tan lejos est(n) ubicada(n) su(s) estanque(s) de los manglares? 38. Obtienen ustedes la post-larva de un laboratorio o es silvestre? Y de qu porcentaje viene del laboratorio? 39. La cooperativa utiliza algn tipo de sistema de circulacin de nutrientes? Por ejemplo, canales reservorios? Les parece que funciona bien?
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5.1.3 Appendix III: Interview Questions for Environmental Expert

1. Cules son los impactos ambientales del cultivo de camarones en la zona de incidencia de mangle? 2. Cules son los retos ms grandes que enfrentan los camaroneros al intentar producir de manera ms sostenible? 3. Todos los camaroneros de la zona cultivan la misma especie de camern? Hay restricciones (climticas, legales u otras) con respecto a qu tipo de especie(s) de camarn se puede(n) cultivar? 4. Hay camaroneros en la zona que obtienen larvas silvestres, o las consiguen exclusivamente de laboratorios? A. Cules son los efectos que el cultivo de larva de laboratorio tiene en el medio ambiente? 5. Cules son los impactos ambientales de utilizar concentrado? A. De dnde proviene el concentrado que usan los camaroneros de la zona? De qu est compuesto el concentrado? B. Hay tipos de concentrado que son menos dainos para el medio ambiente que otros? C. Hay cooperativas en la zona que alimentan a los camarones con algo que no sea concentradoo sea, de alimentacin natural? 6. Hay cambios que usted recomendara a los camaroneros para reducir la incidencia de enfermedades entre los camarones? A. Es factible la incorporacin del policultivo (la incorporacin de otra especie de camern, por ejemplo)? B. Qu tipo de infraestructura tendran que construir los camaroneros en el caso de que incorporaran el cultivo de otras especies (de camarn, o de cangrejo o tilapia)? 7. Aparte de la Mancha Blanca, hay otros agentes patgenos que afectan la produccin del camarn en la zona? 8. Qu porcentaje de la cosecha total del camarn, en un ao normal en esta zona estimara usted que se pierde por causa de enfermedades? 9. Hay ms incidencia de la Mancha Blanca entre la larva que proviene de los laboratorios? 10. Cmo se propaga la Mancha Blanca de una cooperativa a otra? (a travs de las aguas residuales, el uso grupal de la misma fuente de agua, en los laboratorios, etc.) 11. Cules son los efectos ambientales negativos causados por el uso de cal hidratada en los estanques de camarn? 12. Cules son los efectos ambientales negativos causados por el uso de cloro en los estanques? 13. Cules son los efectos ambientales negativos causados por el uso de abonos o fertilizantes en los estanques? 14. Cul es el propsito principal del uso de abonos/fertilizantes?
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15. Para disminuir la penetracin de la luz solar, hay otro mtodo de crear sombra en los estanques? 16. Como fuente de alimentacin para los camarones: Si se usa algas para alimentar a los camarones, se reduce la cantidad de concentrado en los estanques? 17. El uso de abono reduce el oxgeno disuelto en los estanques (tal y como pasa con la floracin de alga)? 18. Se ha comprobado que el uso de abono afecta de forma negativa a los ecosistemas ms all de los estanques (en el manglar)? 19. Ya entendemos que no hay mucha informacin sobre las descargas producidas por las cooperativas camaroneras, pero cmo afectan estas aguas residuales las cercanas, por ejemplo, el manglar? 20. De ser posible, de qu manera podran las cooperativas llegar a reducir el uso de qumicos o abonos? 21. Considera que el uso de abonos o desinfectantes orgnicos es una alternativa viable al uso de los qumicos sintticos? Qu alternativas se podran utilizar? 22. Segn su pericia y experiencia, qu tan eficaces son los abonos o desinfectantes orgnicos ? 23. Sabe usted cuantos camaroneros de la zona estn utilizando actualmente abonos o desinfectantes orgnicos? 24. Sabe usted si el nivel de produccin de una cooperativa de la zona se ha visto afectado de alguna manera por las aguas residuales producidas por otra cooperativa cercana? 25. Cul sera la distancia que se recomienda establecer entre una camaronera y el manglar? 26. Qu tamao o tipo de zona de amortiguamiento protegera mejor la naturaleza en las cercanad de los estanques? 27. Cundo los funcionarios del Ministerio del Medio Ambiente (MARN) monitorean las cooperativas camaroneras, qu tipo de muestras toman? Qu es lo que buscan? Hay un nivel especfico de qumicos que no se puede exceder en el cultivo? 28. Tiene usted recomendaciones para mejorar la sostenibilidad de las operaciones camaroneras en general? 29. Usted ha visitado alguna vez las siguientes cooperativas? A. Faunas Silvestres (Salinas de Potrero) B. Salvadorea (Salinas de Potrero) C. San Francisco (Salinas de Potrero) D. Santa Rosa (Salinas de Potrero) E. Sara y Ana (Salinas de Potrero)

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5.1.4 Appendix IV: Relevant Photos

Seor Romeo demonstrating how a sluice gate works, Fauna Silvestre Cooperative, January 9, 2013.

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Sluice gate, Fauna Silvestre Cooperative, January 9, 2013.

Tanks at La Salvadorea Cooperative, January 11, 2013.

[26]

Sluice gate at Salvadorea Cooperative, January 11, 2013.

[27]

Casting the net, Santa Rosa Cooperative, January 15, 2013

Shrimp harvest, Santa Rosa Cooperative, January 15, 2013.

[28]

Shrimp harvested at Santa Rosa Cooperative, January 15, 2013.

Monterey Microcredit team with Jos Isabel Rivera, Santa Rosa Cooperative, January 15, 2013.
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