A shift in policy from the government of Papua New Guinea has the country’s tuna companies scrambling.
In January 2018, Papua New Guinea canceled a fishing subsidy and replaced it with a rebate for local seafood processors. The new program pays local companies PGK 1,300 (USD 400, EUR 333) per metric ton of fish that they land and process in the country.
Two of the country’s major tuna firms, Frabelle PNG Limited and Majestic Seafood Corporation Limited, have struggled to adapt to the new scheme. More than 840 workers were laid off at the Frabelle facility in Lae, Papua New Guinea, in early May, according to The National, one of the country’s largest newspapers. The processing plant, built in 2013, is a joint venture between The Philippines-based Frabelle, The Philippine-based Century Canning Corp., and Thai Union Corp.
The Majestic Sea plant in Lae has closed its doors entirely and is up for sale at an asking price of USD 45 million (EUR 38.7 million), according to the PNG Fishing Industry Association Executive Officer Jonathan Manieva. Manieva said he also expected the Frabelle plant to shut down operations soon.
“It is a sad occasion to witness the industry’s focus and effort to grow employment through local participation destroyed by a sudden change of policy direction,” he told The National.
Frabelle PNG Limited Manager Daniel Noble told The National that the company was studying a possible merger with Majestic Seafoods to boost capacity, which the newspaper confirmed with Majestic General Manager Napoleon Benitez.
“We are studying how to be more viable and competitive including a possible merger with Frabelle and inviting investors. The nature of the tuna industry requires economies of scale to compete against other tuna producers around the world. By pooling resources and facilities with other companies or investors, we may be able to bring our cost down and stay competitive,” Benitez said. “Admittedly, there is a considerable slowing down of the business and the company is trying its best to get additional orders. However, current European Union market conditions are very competitive with low demand and very low prices.”
Not all seafood processing companies in Papua New Guinea are struggling under the new policy, however.
RD Tuna Canners, based in Madang, Papua New Guinea, praised the new rebate system, according to the Parties to the Nauru Agreement’s Tuna Market Intelligence 18 May newsletter.
“The rebate given by the National Fisheries Authority and the government to manufacturers is very good,” General Manager Erwin Ortiz said.
The company has upgraded its fishing vessels and plans to revamp its cold storage facilities, Ortiz said. Low global prices, and not the change in domestic policy, is to blame for industry troubles, he said.
“What we need to do is stock fish for three months,” Ortiz said. “With that we can plan well, do forward bookings effectively and be protected from any changes of price.”
Photo courtesy of RD Tuna
