PNG industry, Frabelle hope MSC certification can boost processing sector

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Scene from the port of Alotau, Milne Bay, Papua New Guinea. Credit: Marina Riley/Shutterstock.com.

by Neil Ramsden

Republished from Undercurrent News, 24 May 2019

Papua New Guinea (PNG) has commenced the process of getting its tuna fishery Marine Stewardship Council (MSC) certified, and it is already looking ahead to the benefits it hopes certification can bring. 

Key among those is boosting the on-shore processing sector, which has had some difficulties in achieving its full potential in recent years. There are six plants on PNG, including Filipino firm Frabelle’s own operation and its joint venture with Thai Union Group, named Majestic Seafood.

There is also RD Processing, IFC, Nambawan Seafood, and South Seas Tuna Co.

Frabelle president Francisco Tiu Laurel has previously told Undercurrent News of the difficulties in realizing the company’s potential on the island. This time last year the two plants it is involved with had been forced to lay off employees, and were considering closing entirely, apparently because the government had ended subsidies for foreign companies.

Already, though, the situation is looking brighter, Tiu Laurel said. 

“For our plants Majestic and Frabelle PNG we are again up and running at about 70% of our capacity, and we have rehired about 800 workers per plant as the government of PNG has approved to give us some refund for the fish that PNG-flagged vessels unload and process on shore-based facilities,” he said.

The government’s final decision on these regulations is yet to be determined, and once it is, Frabelle will be hoping PNG’s national fisheries authority signs it as soon as possible. 

“Once we get this we will be running the factories at full capacity, and hire more workers hopefully in the near future,” said the Frabelle boss.

PNG tuna processing industry. Graphic: Undercurrent News.

Presenting at the recent Seafood Expo Global in Brussels, Belgium, PNG Fishing Industry Association (FIA) chairman Sylvester Pokajam noted the island’s six plants are currently operating at around half capacity; Frabelle at 90 metric tons (of a possible 120t) per day, and Majestic at 80t of a possible 250t.

In total, the processing sector is operating at 7,125t/ day, compared to its full capacity of 15,000t. Pokajam and Tiu Laurel both told Undercurrent that gaining MSC would help bring that utilization up.

“If PNG gets its own MSC it will definitely help the plants, as demand for MSC fish is increasing in several markets around the world,” said Tiu Laurel.

How will MSC help?

PNG’s government originally set up its “domestication policy” to attract downstream investment to the island, FIA told Undercurrent

This policy incentivized shore-based investments from fishing operators already working on PNG, like RD and Frabelle, by discounting fishing license fees to compensate for the higher production costs of processing in PNG. This meant tuna canned there could compete on the global export market (mostly Europe). “Canned products from PNG had to compete with high volume, low-cost products from South America (Ecuador) and Thailand, which were also going into the EU market, and still is.”

The policy attracted overseas investors too, leading to the construction of five of the plants now operating (IFC initially set up shop in PNG to can imported mackerel for the domestic PNG market, FIA added”.

However, before all processing plants were able to fully reach their processing capacity there was a shift in the application of the domestication policy, whereby the fishing license fees were calculated on the basis of the “vessels day scheme” (VDS) rate, on a par with a region-wide benchmark price. “This benchmark price was two-to-three times the discounted rate,” FIA noted.

“The PNG government then further changed the policy application and introduced the regional VDS rate across the board on all fishing vessels (both domestic-based and distant-water fishing nations). This again further compounded the production cost of a unit of canned tuna produced in PNG.”

So, now PNG’s domestic vessel operators feel there’s no incentive to produce a cost-competitive product in PNG if they are paying the same licensing fee rate as the distant-water fishing fleets, “who have not sacrificed and taken on risk on any shore-based investment, as PNG domestic investors have done”.

The industry lobbied, and the PNG government tried a new line; a rebate scheme on both the processing sector — calculated per metric ton of value-added — and on the fishing sector (per ton of fish landed into a PNG shore-based plant). “This rebate scheme is having its share of challenges in implementation to date, and rebates haven’t been paid as and when due,” said FIA.

Hence, FIA said, processors are not currently inclined to utilize their full capacity. But:

“With the MSC fish, it attracts a premium price compared to the current non-MSC fish products. Hence, with certification, the same volume of fish produced by PNG processors will attract the premium price, and this would enable a viable return for the processors to produce more in PNG. Eventually, the MSC value becomes the incentive to attract the volume to be landed and produced in PNG, and the plants processing volume will progressively improve towards their full capacity.”

Extra volumes too

Tiu Laurel also noted PNG’s ongoing MSC process encompasses an area of fishery not currently covered by the PNA certification.

“Plus it [would] also make catches from the archipelagic waters of PNG MSC certifiable, [volumes] which currently are not included in other MSC approved areas,” he added. At present PNG is part of the Parties to the Nauru Agreement MSC certified tuna fishery, but it is looking to break away from this organization as the sales are controlled by Dutch organization Pacifical, which parts of PNG’s sector have fallen out with.

Tuna catches of the PNA islands 2018. Photo: Undercurrent News.

“The archipelagic waters produce a lot of fish annually, and [are] very near the ports of Lae and Madang, where most of the factories are located, thus making it very important for the factories to get a constant supply of fish to process,” Tiu Laurel said.

Historical catch records suggest archipelagic catches would add around 90,000t more MSC certified tuna per year, the FIA told Undercurrent.

From a high of 506,413t of tuna caught in 2013 in PNG waters, volumes dived to 135,687t in 2015. That has since been on the rise again, to 316,278t in 2018, according to FIA data. Importantly, said Pokajam, this has always been made up just 1% bigeye tuna, a species there are concerns for in terms of biomass. Skipjack made up 65% of the total, and yellowfin 34%, in 2017.

“Landings in PNG are actually up, in my opinion, except for the first three months [of 2019] when catches were down, mainly due to bad weather. But from April onwards I think it will be okay,” Tiu Laurel told Undercurrent.

Looking ahead

Based on Tiu Laurel and Pokajam’s comments, PNG’s tuna sector is now waiting on what it hopes will be a successful MSC certification and a more favorable government approach.

“We need this additional refund to make us really competitive, as we are now paying full VDS [vessel day scheme] fees — the same as other overseas fishing companies fishing in PNG, which is not fair,” said Tiu Laurel of the possible changes in regulation.

Other Pacific Island nations grant the locally-flagged fleets a 40-50% discount on VDS rates, and allow them to fish for free in the “eastern high seas”, managed under the Western and Central Pacific Fisheries Commission, he claimed. 

“This is a terrible disadvantage to the PNG-based fleet. The difference in cost of operation per vessel is about $1 million per annum versus other vessels,” said Tiu Laurel. “Due to this many have actually left the PNG registry, and if not addressed soon many more will leave.”

In 2018 there were 226 vessels licenses to fish in PNG’s exclusive economic zone — 61 reefers carriers and 165 purse seiners. In 2019 there are 61 vessels either PNG-flagged or locally-based foreign vessels licensed, affiliated to five companies; see the slide to the right.

PNG Flag & Locally Based Foreign Vessels by PNG Based Fishing Companies 2019. Graphic: Undercurrent News.

Any new regulations for PNG will have to wait for the time being, though. As the Diplomatreports, a vote of no confidence was slated to take place on May 16 to remove prime minister Peter O’Neill from office. O’Neill had rejected calls to resign earlier in May.

O’Neill disrupted the opposition’s plans by obtaining a parliamentary adjournment on May 7. Following the adjournment, opposition members of parliament can now only table a no-confidence motion again once parliament resumes operations on May 28.

Tiu Laurel has, in the past, told Undercurrent of Frabelle’s ambitions to expand its processing to other Pacific Islands, namely Kiribati and the Federated States of Micronesia (FSM).

The latter remains on the cards, though plans have been delayed, he said. 

“We intend to build one more loin and pouch plant in FSM, Pohnpei state, and we are now working on a state agreement with the fisheries department. But recently there has been a change in leadership as there is a new president, and we are waiting for the new cabinet to be chosen and continue the negotiation.”

Frabelle hopes to finalize talks this year, and to begin construction next year, he said.

Contact the author neil.ramsden@undercurrentnews.com

Tri Marine affiliate authorized to use Fair Trade logo on tuna products

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Republished from Seafood Source, 26 March 2019

by Madelyn Kearns

Tri Marine affiliate National Fisheries Developments (NFD), Ltd., has been authorized to use the Fair Trade logo on its yellowfin and skipjack tuna sourced from the Solomon Islands, the company announced earlier this month. 

Fair Trade certification was bestowed upon the Solomon Islands yellowfin and skipjack tuna fishery as of 14 March. NFD’s five medium-scale purse seiners and four pole-and-line vessels that source tuna from the fishery are now permitted to use the Fair Trade logo on their catch.

The certification matches current customer interests, according to Tri Marine, which anticipates that consumers using its U.S. sales arm, the Tuna Store, “will now want to see Fair Trade Certified tuna on retail shelves.”

Fair Trade’s assessment of the fishery took more than a year, with NFD working “diligently to meet the rigorous Fair Trade standards for worker welfare and safety, as well as environmental sustainability,” Tri Marine said. The NFD Fishers Association was established during the process to ensure that the value of Fair Trade catch benefits the local communities around the Solomon Islands.

“We are proud to achieve Fair Trade certification and hope we can share the story of our fishery here in the South Pacific with customers around the world,” said Cynthia Wickham, the NFD’s pole-and-line fleet manager and local Solomon Islander, in a press release. “Fair Trade has helped our fishermen be better organized, ensure crew and stevedore safety, and improve overall community well-being.”

Neighboring cannery SolTuna was also included in the Fair Trade certification, and plans to process and pack Fair Trade-certified products from the fishery for the global marketplace. The products disseminated by SolTuna are “an important part of domestic food security in the Solomon Islands,” Tri Marine said. Key export markets reached by SolTuna include the European Union and the United States. 

The new Fair Trade certification further bolsters the sustainability credentials held by both SolTuna and NFD, which are already Marine Stewardship Council (MSC) certified. Additional social accountability and organized worker protections are promoted by the entities’ Fair Trade status. 

“We have been promoting responsible labor practices in our global tuna supply chains for years, including the application of World Bank/International Finance Corporation performance standards, and now Fair Trade standards in the Solomon Islands,” said Matt Owens, director of sustainability at Tri Marine. “Fishermen and fish processors are the backbone of our business and the economic drivers in their communities. Fair Trade certification provides an additional layer of worker benefits.”

“Tri Marine and NFD’s commitment to Fair Trade is a powerful example of responsible practices in the fishing industry,” added Julie Kuchepatov, seafood program director at Fair Trade USA. “We are proud to share the common goal of empowering Fair Trade fishermen and look forward to seeing more Fair Trade seafood available to consumers.”

Approximately  2,400 Solomon Islanders are employed by NFD and SolTuna, in effect making them the largest private sector employer in the country and an important contributor to economic growth, the companies said. Regional tuna resources are sustainably managed by the Solomon Islands Ministry of Fisheries and Marine Resources, Parties to the Nauru Agreement, and the Western and Central Pacific Fisheries Commission.

First fishery achieves MSC certification for bigeye tuna

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PRESS RELEASE – Marine Stewardship Council, 7 March 2019

A Chinese owned longline yellowfin and bigeye tuna fishery in the Federated States of Micronesia has achieved Marine Stewardship Council (MSC) certification for its bigeye tuna catch. This is the first time that bigeye has been certified to the MSC’s globally recognised standard for sustainable fishing.

The fishery, owned by three Chinese fishing companies, Liancheng Overseas Fishery (Shenzhen) Co. Ltd (SZLC), China Southern Fishery Shenzhen Co. Ltd (CSFC) and Liancheng Overseas Fishery (FSM) Co. Ltd. (FZLC), achieved MSC certification for yellowfin in October 2018.  Following an independent assessment by conformity assessment body, Control Union, bigeye can now be added to the list of certified species caught by the fishery. 

The latest stock assessment for bigeye in the Western Central Pacific Ocean (WCPO) shows that stocks are healthy and being fished at a sustainable rate. In order to ensure that the fishery can respond to any changes in the health of the bigeye stock, certification is conditional upon the adoption of harvest strategies including harvest control rules, by all member states of the Western Central Pacific Fisheries Commission (WCPFC) by 2021. 

Bill Holden, Senior Fisheries Outreach Manager for the MSC in Oceania & South East Asia said: “We congratulate Liancheng and their partners for becoming the first fishery to be eligible to sell MSC certified bigeye tuna. They are demonstrating true leadership in sustainable fishing. To maintain their certification, Liancheng will need to work with other fishing organisations and the WCPFC to agree to important management measures to safeguard bigeye tuna stocks. As a result, this certification could influence the sustainability of bigeye fishing across the entire WCPO.”

Sam Chou, President of Liancheng Overseas Fishery (Shenzhen) Co. Ltd., the parent company of the three fleets certified said: “We are extremely proud to have the first bigeye tuna fishery to be certified to the MSC Standard.  It is a distinct honor.  Liancheng is the largest Chinese fleet to achieve MSC certification. We are dedicated to achieving certification for all our fisheries.”

Liancheng is also responsible for the Cook Islands South Pacific albacore and yellowfin longline fishery which achieved MSC certification in 2015. Its yellowfin and bigeye tuna fisheries in the Republic of Marshall Islands are also undergoing MSC assessment, with a conclusion expected by the end of 2019.

Joe Murphy, Senior Vice President of Marketing for Liancheng said:“Our customers and consumers recognize the value of MSC certification, and our ability to provide fish for sale with the blue MSC label. We hope to market MSC certified bigeye catch in China, Japan, Asia, the United States and Europe.”