Tuna in Transition

Troubles in the global economy catch up with Soccsksargen’s main industry
Once considered a backdoor entrance to the Cotabato region, General Santos City has risen to become one of the key cities in Mindanao. In many respects, it has outpaced its peers. And when one thinks about General Santos—or the neighboring province of Sarangani for that matter—tuna comes to mind.
The tuna industry has been responsible for the vibrancy of Soccsksargen’s economy.
The country produces over 400,000 metric tons of fresh, canned, and processed tuna every year, generating more than US$280 million in annual export revenues. It accounts for 4 percent of the country’s Gross Domestic Product.
General Santos City annually produces 100 to 200 metric tons of fresh yellow fin tuna, which are exported to Japan, the United States, and Europe. The industry directly and indirectly employs 120,000 workers.
But these figures belie the gloomy outlook of the industry.
Recent developments in the world economy have caught up with the business of catching, storing, and canning tuna. They threaten the growth of not only General Santos, but of the neighboring provinces as well.
The tuna industry, which is export-oriented, has naturally fallen prey to the surging costs of fuel. Worse, the waters in which fishermen can catch tuna have become limited, considerably decreasing the industry’s output. Stiffer competition from countries that are also in the business of catching, canning, and exporting tuna has not helped either.
The industry is not yet in panic mode, but it is raising the alarm due to rising fuel costs. “We are raising this alarm because the volume of landed catch has dramatically declined in the first semester of this year,” said South Cotabato Boat Owner and Tuna Association president Domingo Teng.
Fuel costs alone eat up 45 to 75 percent of the production overhead, depending on the engine, size, and make of the ship, according to Jerry Damalerio of Damalerio Fishing.
Richie Rich Tan, vice president for operations of San Andres Fishing Industries Inc. (SAFI), said that their company consumed about 600,000 liters of diesel and gasoline products per month before the fuel crisis. SAFI owns several of the more than 70 registered large purse seine ships, which have over 100 service boats among them. (There are also a number of small- and medium-sized purse seine owners that account for 750 more fishing vessels. These numbers exclude the tuna handline fishing vessels, which number close to 4,000.)
Many vessels have been grounded, further reducing the amount of fish caught.
Even as oil prices have recently gone below $100 per barrel, tuna industry stalwarts have proposed a number of measures aimed at mitigating the negative effects of the sharp increases in the price of fuel commodities. For one, big tuna producers and small fisherfolk here are asking the government to extend a P5-per-liter discount on petroleum products to keep the tuna industry from collapsing.
The volume of catch from January to June has dropped by 34 percent, year-on-year. The output for 2007 also paled in comparison to the year before that. Industry players pointed to the increase in global temperatures as the culprit for the decline in 2007.
If tuna producers are granted a discount of P5 per liter on fuel products, the industry could save as much as P1.2 billion in operating costs in one year.
The tuna producers are also looking into directly importing and supplying the fuel needs of the vessels, according to some industry insiders. However, some oil companies have shot down the idea. Officers of an oil company operating in General Santos said that while they welcome the move to allow tuna producers to import their own fuel requirements, they doubt if it will be viable from the standpoint of business.
In a deregulated environment such as ours, the tuna producers’ idea is possible. There is a downside, however: the tuna industry “will have to put up their own depot facilities and distribution network,” said a marketing official of a big oil company, who requested anonymity due to lack of authority to speak on behalf of the company and the oil industry.
The same marketing official said that if tuna producers are allowed to import fuel, they should be made to also pay the corresponding taxes and import duties that all oil companies are paying the government. The same market forces that govern oil companies should govern tuna producers as well.
Oil companies are understandably threatened. They stand to lose a major share of the market if producers can independently import their fuel requirements. Bureau of Fisheries and Aquatic Resources (BFAR) director Malcolm Sarmiento said that the tuna industry consumes between 18 and 20 million liters of petroleum products a month, making it the single largest consumer of fuel products in the whole of Soccsksargen region.
But there’s a flipside to the issue of rising fuel costs. Japan, another major player in the tuna market, recently announced the suspension of its tuna fishing operations. As of August 1, all its 233 member vessels have suspended operations.
Masahiro Ishikawa, president of Japan Tuna Fisheries Cooperative Association (Tuna Japan), said that they “cannot make profit at all from fishing operations because of the prohibitively high fuel prices.” The suspension will run from two months to two years, according to Infofish Trade News.
The Japanese decision drove up the prices of Philippine yellow fin tuna to record levels this year. Local landed price of sashimi-grade yellow fin tuna reached P350 per kilo at the General Santos City Fish Port complex immediately after Japan made the announcement. In lean months, yellow fin tuna goes for as high as P250 per kilo (usually during the months of July to early November); when in abundance, it can go for as low as P180.
This rise in prices may help the local industry temporarily, but many players are saying that not all stakeholders can take advantage of the increase because of the prohibitive price of fuel. So far, many local fishermen have had to stay at home, severely affecting the livelihood of some 50,000 residents in General Santos who are dependent on the tuna industry.
The shortage in fisherfolk catching and hauling tuna has left some companies without tuna to can. Canneries, such as Philbest, have resorted into importing frozen tuna to keep up with its export supply contracts in the US and Europe.
The problem of not being able to catch and haul tuna is not exclusive to the small fisherfolk. For big operators, the high cost of fuel simply means that their ships cannot sail into the high seas. “Fewer vessels going out to the high seas means less catch,” Teng said. These ships have to sail far in order to catch the tuna in their natural migratory avenues.
But going out to the high seas isn’t as simple as it used to be. Before 2006, Filipino companies or small fisherfolk were able to venture into the overlapping exclusive economic zones (EEZ) of Indonesia and the Philippines in the Sulawesi Sea.
Today, that is no longer the case. Since the expiration of the bilateral agreement between the two countries, the Philippine government has been having problems in setting up an arrangement with Indonesia. The termination of the agreement has been blamed as one of the causes of declining tuna catch landed at the General Santos City Fish Port complex.
It appears that it is not only with the Spratly Islands that the government has to concern itself when it comes to the delineation of the national baseline and the EEZ. Tuna fishing fleet operators are asking the Philippine government to immediately delineate the country’s territorial waters to protect fishermen from being apprehended in traditional fishing grounds, which they share with neighboring countries in Southeast Asia. “We have a deadline to meet on May 9 next year to define our territorial waters,” Teng said.
Not only that, there appears to have been a mix-up in the payment of membership dues to the Western and Central Pacific Fisheries Commission (WCPFC). Teng said the Philippines had been prevented from fully participating in policy discussions due to its failure to pay its annual dues.
This, however, has been remedied by the government. Agriculture Undersecretary Jesus Emmanuel Paras said the Department of Agriculture, through the BFAR, has assumed the payment of required WCPFC fees, which the government reportedly thought should be covered by the private sector.
The WCPFC has both binding and nonbinding powers over its 26 member countries and eight participating territories in the Western and Central Pacific Region. The governing body defines regulations in managing international fishing grounds in the region.
Among the measures adopted by the commission was the identification and subsequent authorization of fishing vessels operating in the area. The Philippines is also committed, under another WCPFC measure, to the conservation and management of big eye and yellow fin tuna in the Central and Western Pacific Region.
Paras said that despite the many problems that the tuna industry has to deal with, the government is confident it will weather the storm. “There is reason to remain bullish on the future of the tuna industry.”
The story isn’t that bad when compared to other major tuna-exporting countries such as Thailand, where canneries have started to close shop. So far, this hasn’t happened in the Philippines.
He said the Arroyo government has been addressing the clamor for wider access to more fishing grounds for the country’s tuna fishermen and purse seine operators.
“Our government has recently signed a bilateral fishing agreement with Timor Leste,” he told some 250 delegates attending the annual tuna conference.
According to him, efforts to forge similar arrangements with the governments of Palau, Solomon Islands, Papua New Guinea, Marshall Islands, and Kiribati are ongoing. More immediately, measures that will address high fuel costs have to be in place if our tuna industry has to sail again toward distant seas.
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