RP’s tuna capital reels from soaring oil prices

GENERAL SANTOS CITY, South Cotabato – The country’s tuna capital is reeling from soaring oil prices.

"In the last year, our operating costs have gone up drastically because of the incessant rise in fuel and power costs and a lot of tuna industry players are experiencing great difficulty sustaining operations," said Marfenio Tan, chairman of the 8th National Tuna Congress being held here.

Tan, who is also president of the Socksargen Federation of Fishing and Allied Industries composed of seven organizations involved in tuna fishing, tuna canning, processing and aquaculture, said several tuna fleet operators have started to downsize.

He said that previous comfortable margins earned in the last 10 years because of lower operating costs are being eroded at a pace that could force the smaller players to suspend or worse, completely shut off their business.

"In the last decade, the cost of fuel comprised just 10 percent of our operating expenses, but now fuel cost alone is already 50 to 65 percent of our total operating costs, and of course, it is starting to hurt our bottom line. If the oil price hikes continue at such a pace, you can expect that it will heavily impact on our fish catch, and subsequently, the tuna supply, both for the domestic and export markets," noted Tan.

Francisco Buencamino, executive director of the Tuna Canners Association of the Philippines (TCAP), said while the local tuna industry can still cope because of its established tuna fishing grounds that are near the tuna processing centers here, the final impact is the final cost of fish delivered to the canneries.

"The fact is that because our canneries have to maintain their advantage in the face of the increasingly hostile competition, tuna processors cannot change their selling prices, they have to absorb the added production costs, otherwise, they will lose out to competition."

The local tuna industry is currently the world’s second biggest producer in terms of fish catch with an estimated harvest of 400,000 metric tons yearly and is the third largest canned tuna processor.

But based on TCAP data, the country‚s tuna catch is dwindling at an alarming rate: it grew just 18.58 percent from 2002 to 2003, then lower to 8.76 percent in 2004, and practically no growth in 2005.

On the other hand, processed tuna exports, both canned and frozen tuna, declined by 36 percent in value and 40 percent in volume from 2004.

"This is particularly worrisome because tuna exports have accounted for about 50 percent of total exports from the Philippines for the last two years. Surveys from canneries confirmed the reduction in canned tuna exports, although they invariably claim that this should not be more than 20 percent."

Buencamino said part of the blame is the higher cost of fishing.

"The most notable factor is the cost of fuel which has seen an increase of 140 percent from 2003 to 2006. When fish is landed at higher costs to canneries, buyers will think twice before contracting the delivery because prices of canned tuna in the world market may not have enjoyed the same level of increases. In fact, export prices have remained so competitive that our quoted prices are even softening."

Tan said that the industry is coming up with proposed measures to help members cope with soaring oil prices.

These measures include consolidating the purchase of fuel supplies from oil companies and possibly, getting discounted prices.

"We have to be more creative in coming up with survival strategies because of all the adversities facing our industry," said Tan.

Meanwhile, tuna fishers in South Cotabato, Sultan Kudarat, Sarangani and General Santos City (Socsksargen) area hailed the government for initiating "bilateral agreements" with other countries in the Southeast Asian region to expand the tuna’s fishing grounds and for working to improve the industry’s market access in the European Union (EU) and the US.

"It’s a move that deserves to be appreciated. It would boost the tuna export revenues and would mean a new window of opportunity for the players of the local tuna industry," Tan told The STAR.

Agriculture Secretary Domingo Panganiban, who spoke at the Tuna Congress, said initial talks have already been initiated with their counterparts in Palau, Micronesia, Malaysia, Papua Guinea to expand the fishing grounds for tuna.

"Our government agencies, like the Department of Agriculture, Department of Foreign Affairs and the Mindanao Development Council, are doing their best in convincing them to allow the Philippine tuna fishing boats and ships to have access on their tuna-rich fishing grounds," Panganiban said. 

At least 300 participants, including tuna players from Japan, Indonesia and European Union, attended the two-day tuna conference, which started Friday morning. The tuna convention is intended to assess country’s P18-billion tuna industry and to draw strategies for its future. — With a report from Ramil Bajo