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Monday, September 05, 2005
The tuna industry at the crossroads
By Edwin G. Espejo
JUST last year, the local tuna industry was agog over new market prospects, record catches, and easing of tariffs and customs duties in the United States and European Union.
Those three factors, including increased export revenues, have industry insiders saying the tuna production will continue to substantially contribute to the gross domestic product of the Philippines as well as provide employment and entrepreneurial opportunities to the people dependent on the industry.
Yet in just a year after tuna producers, processors, and exporters held its 6th National Congress, major players in the industry, including government officials are raising alarms over declining catch, shrinking fishing grounds and stiff competition from foreign competitors in the global market.
It is not without reason why most of the issues and concerns raised during the recently concluded 7th National Tuna Congress tackled on pressing matters such as the expiration of bilateral fisheries agreement between the Philippines and Indonesia, formulating a long term tuna management plan, renewed lobby for increased share in the international market for processed, canned and fresh Philippine tuna products.
Marfenio Tan, newly inducted president of the Socsksargen Federation of Fishing and Allied Industries (SFFAI) Inc. that hosted the national tuna confab, hastens to add that they are likewise bearing the brunt of increased production costs, with rising fuel prices and the impending implementation of the controversial expanded value added tax (E-VAT).
House of Representative Darlene Antonino-Custodio even told Tan that she was in the dilemma. Whether "to congratulate or to express condolence" to Tan for taking over the reigns of SFFAI during these trying times.
So what ails the industry?
Tan said the industry is now forced to look into alternative fishing grounds and institute measures for sustainable development of tuna stocks and sanctuaries in this part of the world.
"I have to admit that our fishing grounds have been over fished (through the years)," Tan told reporters covering the annual congress of tuna industry players.
Years of over fishing and wanton destruction of fish sanctuaries are now taking its toll.
Poaching and illegal fishing methods using fine mesh nets just "years ago" have disrupted the food chain and have led to fewer and declining catch compared to the 80s when the tuna production started to evolve as a major industry.
This year's production, he also revealed, should be substantially lower than the record catch of 2004 which totaled to over 520,000 metric tons.(Last year's catch generated over $150 million in revenues for the country)
He also attributed the decline in production to the changing weather condition in the Pacific as well as Indian Ocean, where the so called "tuna belt" lies.
Last year's tsunami that hit the Indian Ocean, according to him, may have also disrupted the migratory pattern as well as spawning schedule of tuna and tuna-like specie.
This year's successive fuel price increases also drove quite a number of Philippine fishing fleets to aground.
Tan says fuel costs alone eats up 40 per cent of their operational costs. This year alone, fuel prices jumped more than P10 per liter. With the impending implementation of the expanded value added tax, Tan sees at least another five per cent increase in production and operational costs.
"Some will have to cease or reduce operation," Tan says.
But the more serious problem besetting the industry is the ever-changing alliances and configuration of tuna producing countries and increasing pressures from traditional markets of Philippine tuna.
Added to this is the entry of new tuna producing countries such as Ecuador and other countries Africa and Central America and the aggressive political and economic maneuverings of traditional Philippine competitors such as Thailand and countries in the Andean region (Ecuador, Peru, etc). Also, there is the emergence of Vietnam as new player in the region.
The US, for example, is into several rounds of talks with the Central American countries such as Colombia and the Dominican Republic which have laid down a ten-year tariff reduction plan that will be reduced to zero by 2014, to the exclusions of Association of South East Asian countries (Asean) of which the Philippines is a member.(Philippine tuna products are levied six to 12 per cent tariff in the US and 20 per cent in the European Union countries)
This year, the Philippines opted not to file a petition for the inclusion of tuna products under the general system of preference, obviously for political and economic reasons.
The European Union, on the other hand, is imposing strict quality standards and is giving preferential treatment to tuna-producing member countries such as Spain.
Although Philippine tuna industry insiders will not openly admit, years of understating the country's tuna catch, whether by purpose or by neglect, may have contributed to the decline in the market share of the country in the global market.
And although the Philippines officially ranked fifth largest producer of tuna in the world renowned tuna authority Dr. Anthony Simon bared that the Philippines is probably the largest producer in the Western and Pacific areas and most of its vessels are unregistered and therefore unaccounted for.
Newly appointed Department of Agriculture Secretary Domingo Panganiban says they are now in the process to establishing accurate data of Philippine tuna catch over the last two decades.
This statistic is very important in the light of recent moves in the international arena to introduce quotas on catch and exports based on historical data catch of each tuna producing countries.
All is not lost
Ambassador Alberto Encomienda, chief of the Maritime and Oceanic Affairs Center of the Department of Foreign Affairs said in a speech delivered during the 7th National Tuna Congress that the government has been doing its best to help the industry.
"In its pursuit of additional access to tuna resources, the Philippines' approach is a combination of the private and government efforts," he said.
The country, he added, is actively lobbying and presenting the Philippine case in various international for a and conferences.
The country, at present has bilateral fishing agreement with Indonesia, which incidentally would expire on December 2 this year.
Some private sector initiatives have also enabled several local fishing companies to access the rich fishing grounds of Palau and Papua New Guinea.
"In regard to plans of getting access to the resources of other exclusive economic zones (EEZs) aside from Indonesia, the Philippines has two options: (1) through bilateral agreement; and (2) through business arrangement.
Marfenio Tan agrees.
He said, joint ventures between Filipino and Indonesian companies have ensured continued access to fishing areas in the country's neighboring countries.
In fact, two Filipino-owned canneries have been put up in Indonesia during the last few years.
Tan also allayed fears small tuna producers will not be able to access the rich Indonesian waters. He said with the devolution of powers in the Indonesian Republic, regional principalities in the said countries are allowed to grant permits to Filipino fishing vessels with a gross tonnage of less than 60 tons.
But he also urged the government to explore avenues of forging bilateral fishing agreements with countries in the Pacific area such as Palau, Papua New Guinea and Mauritania. He also asked the government to continue to negotiate with neighboring Australia for possible outlet of Philippine tuna and tap the mainland China market.
While government officials continue to exude optimism, industry players are bracing for the tough times.
Tan said the federation is already considering asking subsidy from the national government for their fuel requirement.
"Otherwise," he warned, "15 to 20 per cent of the labor force in the tuna industry might lose their jobs."
(September 5, 2005 issue)
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