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2020 Tuna Outlook Down: PAFCO CEO

Relocation of the tuna processing plant is best suited for the plant in Levuka, Mr Singh said, with the Fiji Revenue and Customs Authority (FRCS) declaring PAFCO’s wharf as a port of entry.
19 Oct 2019 15:45
2020 Tuna Outlook Down: PAFCO CEO
Loin processing and fish canning at the Pacific Fishing Company (PAFCO). Photo: PAFCO

Pacific Fishing Company Limited (PAFCO) is projecting another year of declined tuna supply in 2020, the company’s chief executive officer has said.

Bhan Pratap Singh made the comment during PAFCO’s submission on the 2016-2017 Audit Report on Statutory Authorities to the Parliament’s Standing Committee on Public Accounts on Thursday.

Responding to questions by the standing committee, Mr Singh said the supply of tuna, mainly albacore, has been their biggest challenge for this year.

“2019 has been a pretty bad year for PAFCO, we have been faced with various issues, supply issues mainly, the level of supply of albacore has been quite low this year and we have been running quite low on the factory throughout the year.”
Forecast

Mr Singh said their tuna supplier, Bumblebee, has forecasted another decline next year.

“Tuna is seasonal, it’s available in other regions, but it’s not available with the agent we buy our tuna from at the moment, tuna is a migratory fish but there are price issues as well.

“There’s a lot of competition for tuna as well, we know that there are companies buying tuna in Fiji as well so tuna is landed in Suva, but not processed here but other factories in the region, so price is also a factor in the availability of tuna to the factory.

“The arrangement we have as part of the processing agreement that we do on behalf of Bumblee is that Bumblebee actually buys the tuna and supplies to us, PAFCO does an intermediate process where we convert the tuna into loins.

“So Bumblebee has a buying agent in Fiji, which is FCF (Fong Chun Formosa Fishery Company), they have contracted supplies that supply tuna to them.

“So when we have issues with supply, we go back to the agents and the reasons we get is that the catch is low, so the catch is low, therefore the supply is low.”

Mr Singh said at times Bumblebee does buy tuna from other regions and supply to them but it has not been the case this year.

“We are now in the strategies of investing and improving our canning operations to supplement our revenue.

“So in the last few years we have brought in a few new machines, we have more plans to invest in some more loining machines.  Canning is mostly sold locally and in the region.

“The design of the plant is such that it is designed to be a loining plant. We have increased the canning operations to about 10-15 per cent.

“By 2020, our plan is to at least increase by 50 per cent that will bring us the added revenue, the revenue that is lost if the loining process is ended by way of supply of tuna. We think that supply may be low as there other countries in the region that tuna is slowly moving to.”

Mr Singh said PAFCO does not deal directly with the suppliers, as the suppliers are contracted through FCF to Bumblebee.

“80 per cent of the production is albacore tuna and those vessels that supply are mostly owned by Chinese and Taiwanese vessels, less local companies supply tuna to PAFCO. So that arrangement is mostly with third parties.

“It’s the provision in the processing agreement that we have that hinders us from buying directly. We do an intermediate process, Bumblebee and other agents supply the tuna to the factory and we convert the tuna into loins and the loins belong to Bumblebee, so we get paid a processing fee, that’s the bulk of the operations.
Relocation

Relocation of the tuna processing plant is best suited for the plant in Levuka, Mr Singh said, with the Fiji Revenue and Customs Authority (FRCS) declaring PAFCO’s wharf as a port of entry.

“Relocation was something that was discussed in 2011-12. I think that Bumblebee had put a proposal to the government to relocate the loining operations to a location in Suva, but we believe that PAFCO is the best location for processing tuna.

“It has the workforce, facilities, it can continue as a good loining plant provided the supply of tuna is there.

“We can now receive tuna directly at the wharf in Levuka instead of previously receiving the tuna at the government wharf, and then the vessels were transferred to the PAFCO wharf.”

Mr Singh said they continuously invested in plant equipment, which will improve their operations.

“In 2019-2020 we are investing in two new precooker machines, the six precooker machines we have were there for a long time.

“We are replacing two with stainless steel modern type of precookers. That will cost us about $20 million, and we will replace some more at the end of 2020.

“We have improvements in the building as well. Because of its location near the sea, we have a lot of salt water on the buildings, and we are investing in the buildings as well. We have just recently invested in a new cold storage costing about $16 million, which will replace the old cold storage that we have which has been used for more than 20 years.

“In terms of insurance, the difficulty we have is insuring buildings for cyclones and the reason is that the buildings are not cyclone certified and the insurance companies need the engineers’ certificate for the new building.

“We don’t have cyclones certification for the old buildings, so that’s the difficulty with insurance and that remains.

“There’s no risk to the employees and premises, but if there’s a cyclone then insurance is not covered for the damaged buildings.”

In the aftermath of Tropical Cyclone Winston in 2017, the factory was closed for about eight weeks.

“Major damages to the factory were mostly electronic controls and equipment due to seawater surge. We recovered insurance of close to $60 million.”

PAFCO employs about 60 per cent male and 40 per cent female and also operate on-the-job trainings for graduates.

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