you need to purchase level 2 of your chosen faction, magic or nature. Then, combine that herb with various others (i did magic, it was rose-rose-berry), grab a villager (not a nursing mom) and they will carry the vial to the ocean. Then, rainbows will appear on the surface of the sea and you'll be able to drop villagers into the sea to catch fish.
nature gets rid of the sharks and magic charms/tames them. i think it should be the other way round