Nicola Mawson
27 June 2008
Johannesburg — FISHING companies are under pressure as rising fuel prices translate into more costly catches in a market where price is determined by levels of supply and demand.
However, despite the rising fuel prices, Oceana Group and Foodcorp aim to catch their quota this year even if both companies face squeezed margins.
News agency AFP reported last month that one-third of ocean-going longline tuna fishing boats across the world could be forced to stop fishing due to rising fuel costs.
About 140 boats from Taiwan, China, South Korea and Fiji were not in use at the end of last month, the wire service quoted Yuichiro Harada, MD of the Tokyo-based Organisation for the Promotion of Responsible Tuna Fisheries, as saying.
Long-line open-ocean fishing mostly catches big-eye and yellowfin tuna , mainly for the Japanese market. Fishing of bluefin tuna is restricted by fears of extinction. The halt was expected to cause a supply shortage in raw tuna meat used for sashimi slices.
Oceana, which catches and processes fish, said the rising fuel price had affected export and domestic pilchards as well as exported horse mackerel.
Mbuyi Mtsheketshe, group corporate affairs and transformation manager, says the "increase in fuel prices has had the most significant effect on the cost of catching in our horse mackerel and pelagic (pilchards and anchovy) businesses". The group has seen an increase of 45% since April, he says.
However, this will not affect catch sizes as fishing companies in SA are allowed a quota of catches a year. "We have a fixed quota , which we intend to catch regardless of the increase in the cost ," Mtsheketshe says.
Horse mackerel, which is exported, has seen rising prices on supply shortages, which has benefited Oceana, he says.
With canned pilchards, marketed under the Lucky Star label in southern Africa and the Glenryck label in the UK, the higher cost of catches has been passed on by price increases. Mtsheketshe says this has also covered other input cost increases.
Oceana's sales volumes have, so far, not been affected and sales of canned fish have risen .
Foodcorp, which operates in the marine setting through its Marine Products arm, has also felt the effects of fuel hikes.
Foodcorp CEO Justin Wil-liamson says most of the company's fish produce is exported, so despite rising input costs, the group is not able to increase selling prices.
Foodcorp' s fleet of four vessels used for catching pilchards and anchovies and three deep-water hake vessels uses 4-million litres a year of diesel and it has absorbed R16m in additional costs during the past year.
The weaker rand has helped the group, although it has not seen higher selling prices as a result of higher input costs .
Higher prices have been achieved on the international market, but this is a result of supply and demand dynamics.
Despite rising costs, Foodcorp also does not intend cutting back on catches. "We catch every fish we can," Williamson says. The quota for pilchards, for example, is now 90000 tons, down from 160000 tons a year ago and 280000 tons three years ago. "There is a shortage of fish," he says.
Foodcorp also faces a competitive anomaly, says Williamson. While diesel used for fishing received a Road Accident Fund rebate from the government, prices are based on crude oil prices, while international competition pay a delayed price, he says.
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