SUNBIZ

The Economic Heartbeat Of The Old Capital

Ask anyone in Levuka about how important Pacific Fishing Company (PAFCO) is to them, and they will tell you that without PAFCO, Levuka would be a dead town. Today, PAFCO
04 Aug 2018 10:00
The Economic Heartbeat  Of The Old  Capital
PAFCO Chairman Ikbal Jannif (left) with Prime Minister Voreqe Bainimarama (facing camera) after officiating of the commissioning of the new cold storage 4000 metric tonne freezer in Levuka earlier this week. Photo: Waisea Nasokia

Ask anyone in Levuka about how important Pacific Fishing Company (PAFCO) is to them, and they will tell you that without PAFCO, Levuka would be a dead town.

Today, PAFCO remains the heartbeat of the old capital of our nation – Levuka.

Levuka is located on the island of Ovalau in the Lomaiviti group where early European settlers first arrived in the mid-1800s.

The town was founded by sandalwood and beach-der-mer traders.

It became the first colonial capital of Fiji on October 10, 1874, when Fiji was ceded to Great Britain.

Levuka on June 21, 2013, some five years ago was listed as UNESCO World Heritage Site.

It was recognised as a specific and rare type of colonial port town that reflects the 19th-century stages of maritime colonisation by European naval powers, into a Pacific social, cultural and topographic environment.

Historically, the downturn of the copra industry in the late 1950s led the then Colonial government to investigate some new economic activity for Levuka.

Initially, a factory to produce sweets was suggested, but when the many challenges of transporting raw material to Levuka were considered, they quickly abandoned this idea.

A tuna transhipment facility was then mooted as a joint venture with the Japanese Government.

However, the idea of a JV with the Japanese did not go down well with many locals who had fought in the 2nd World War against the Japanese.

They sent the late Ratu Sir Edward Cakobau, who had been the commanding officer of the troops, to Levuka to convince the locals.

Fortunately, Ratu Sir Edward succeeded, and they established PAFCO.

 

PAFCO was born

PAFCO began its operations in 1964 with 12 staff.

Their first job was to unload the catch from the small tuna fishing vessels when they arrived in Levuka and store the fish in the small cold store until the mother ship came by to transport the fish to Japan for processing and canning.

It soon became clear that a better approach was to start to do the processing and canning operation in Levuka.

A small can manufacturing plant was established in the 1970’s also, but that closed because of high costs.

Among the pioneer staff was Tuvou Verekawa of Vugalei, Tailevu, who got married in Tokou village.

“We were searching for work and in the 1970’s canning started,” Ms Verekawa said.

“We would set the cans, fill it with fish which was cooked and the seamer would seal the cans.

“It is interesting now with big machines and a lot of women are employed compared to our days,” she said.

“It was tough in those days. We would cut the loin of the fish.”

Virisine Namata, 64, of Tokou village said: “We were lucky to have found ourselves a job in those days. That opportunity granted us to use our hands, in filling fish in the cans, adding of salt and we know it well of the proportion as there was no machine compared to this day.

“What we did were the number one product in the world at that time, Sun Bell and it came all the way from the old capital,” she added.

PAFCO’s tuna is now proudly stocked on the shelves of supermarkets all over America.

 

The twist and turns of PAFCO

PAFCO exported its canned products but soon ran into cash flow problems.

PAFCO Chairman Ikbal Jannif said: “It needed a lifeline and Bumble Bee provided this. Bumble Bee signed an exclusive processing agreement with PAFCO in 2000 and soon became PAFCO’s main customer.

“The initial agreement was beneficial to both parties and was extended several times.

“They signed a new 10-year agreement last year. Although Bumble Bee is not a shareholder in PAFCO, it has become a very important stakeholder for us,” Mr Jannif said.

“In 2013, an influential group of local and

overseas stakeholders pushed for PAFCO to move its operations to Suva.

“However, good sense prevailed, and, with the government’s decision that providing

employment in this area was also an important element to be considered.

“We were able to convince everyone that PAFCO should remain in Levuka where it is today employing around 1100 persons of whom about 70 per cent are women.

“PAFCO pays around $8m annually in wages and is indirectly supporting nearly 5000 people.”

 

New 4000 metric tonne Freezer plant

Last Tuesday, Prime Minister Voreqe Bainimarama officiated the new cold storage 4000 metric tonne freezer.

The Cold Store project started in 2015 with financial assistance from the Government, and their friends from Bumble Bee Foods.

The boldest step yet in the Government’s support of PAFCO. This new cold storage facility, worth $16.4 million dollars, was co-funded through a $9-million-dollar Government loan, a $6-million-dollar loan from Bumble Bee, and a contribution of $1.4 million dollars from PAFCO.

Mr Jannif said: “Planning took more time, with logistics being the biggest problem.

“After a lengthy delay due to the extra civil works required to remove the foundations of the original cold store destroyed in a fire in 2008, the project started well enough.

“However, the destruction of the Venu Shipping barge during the height of Cyclone Winston, and all other available barges were needed to transport cyclone relief supplies hence we lost our means of transporting all the building material to Levuka,” Mr Jannif said.

“The many days of rain and the closure of the two cement factories in Suva only added to our woes.

“This Cold Store normally operates at around -25C, and it took them nearly two months from the time they completed it to bring the temperature down from around +28C to that level,” he said.

“After some trials to test that the temperature would hold, we moved fish into the new facility in early May 2018.

“The blessing of the facility, in the form of multi-faith service, was held and well appreciated.

“This is a 4000 metric-ton freezer. We now have to ensure that we source sufficient fish to fill it.

“We ensure that through a planned maintenance programme, we can replace our ageing equipment, upgrade our buildings, and make new investments to diversify the range of products we produce today,” Mr Jannif said.

“Bumble Bee Foods have been our very loyal friends and main customer for nearly 20 years. While we are grateful for their support both financial and technical, PAFCO must diversify to ensure long-term sustainability.

PAFCO’s challenges do not end there

According to Mr Jannif, their cost of diesel fuel has increased from $1.42 per litre to $1.58per litre.

“Port Charges have gone up from an average of $2,000 per vessel to $4,700 per vessel.

“This discourages vessels from coming to discharge fish in Levuka. They go and unload in Suva, and the cost of putting the fish into the containers and transporting to Levuka have to be borne by us,” Mr Jannif said.

“We then also have to pay to return the empty containers to Suva. Fish landed in Levuka remains in Levuka and is processed in Levuka.

“Fish landed in Suva is open to being exported to processors in other countries.  The most recent threat to PAFCO is the influx of low quality, imported canned tuna that has flooded the market,” he said.

“Challenges will not stop us. With the support of our very responsive government, our friends from Bumble Bee Foods, The Ministry of Public Enterprises, the Ministry of Fisheries, the Vanua, and our hardworking workers, PAFCO will go ahead and succeed.

“This Cold Storage facility is proof of what we can achieve if goodwill prevails and we work together.”

“We have been waiting for this day for some time, and you cannot imagine my relief that it has arrived,” said Mr Jannif.

Ownership

Just like its operations, the history of PAFCO’s ownership and management has also evolved.

Initially, a joint venture between the governments of Fiji and Japan, the Fijian Government gained almost full ownership of the company in 1987.

The government now hold a 99.6 per cent ownership stake in the company.

Mr Bainimarama said: “Over the last 54 years, PAFCO has been the primary driver for employment in not only Ovalau but also the entire Lomaiviti Province, providing socio-economic benefits to the people in the region for over five decades.

“It has become a pillar of this community, and it’s a pillar that my Government proudly supports, as we see today, that support will continue in new and innovative ways.

 

“In recent years, the FijiFirst Government has assisted PAFCO by:

 

  • Providing a loan of $9 million in 2015 to assist in the construction of this new cold storage facility.
  • Supporting the company’s request for a Government guarantee of 11.3 million dollars for a loan that is being utilised for factory renovations and upgrades, which was subsequently approved by Parliament in 2015.
  • Allocating $1.7 million in the 2017/2018 Budget for the repair of PAFCO’s seawall, which was destroyed by Tropical Cyclone Winston in 2016. This work is in progress and is expected to be completed by mid-October.

 

“And it’s not only financial assistance; by working hand-in-hand with tuna industry stakeholders, Government has worked to address the policy issues facing PAFCO and the fish that are its lifeblood,” Mr Bainimarama said.

“In last year’s Budget, Govt removed VAT for PAFCO’s tuna suppliers and granted an Export Income Deduction incentive to those local suppliers looking to export and process PAFCO’s tuna.

The government has also given a one-year extension on duty concessions for imported items critical for PAFCO’s operations.

Investment on livelihood

“PAFCO Chairman Ikbal Jannif said: “We have recently purchased a piece of land on which to build staff housing, which we hope will alleviate the housing shortage we are facing. We are looking at a Public/Private Partnership to progress this.”

How many acres land is being acquired by PAFCO?

“PAFCO owns two blocks closer to town. The total area is 3400 square metres. This is not very big, but enough to do a small housing project, to begin with.

“PAFCO also has a larger piece of land in Draiba, which is also being considered for additional housing.”

Where is it situated?

“The two blocks are near to the entrance of the PAFCO container yard.”

Total investment PAFCO is looking at (in $) for this housing project?

“This will be determined once a feasibility study has been done.’

When will the project commence and when it shall end?

“The project will begin as soon as planning is completed, and funding has been arranged.’

How many houses and other building will be erected to be part of this said project?

“These will not be luxury apartments, but basic housing. They will try to fit a many as possible and will also need to allow for some green area.”

You seem to have a lot of passion for Levuka? the motivation drive behind it.

“I have paternal connections with Levuka. My father was born and educated there. My grandfather worked as a cook at the Royal hotel before the family moved to Suva.

“When I was approached to go on the Board of PAFCO, I saw an opportunity to give something back to where my roots were.

“The biggest challenge was when there was immense pressure to move PAFCO to Suva. I had to spend many hours at meetings, putting up arguments based mainly on the cost of relocation and employment for the people, to keep PAFCO in Levuka.”

Are there any comments you wish to set it right for the PAFCO workers?

“After the losses sustained in 2011($4,346,358) and 2012 ($549,376), it took several years to rebuild the working capital and make up for the loss.

“Staff salaries were adjusted as per ERP. Staff were also paid bonuses in 2013 and in 2015.”

 

Feedback:  rachnal@fijisun.com.fj

 

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