Starting from scratch in 1997, R D Tuna Canners has lead the way towards value-adding in PNG’s fisheries sector, turning a greenfield site in Madang into one of the region’s major sources of canned tuna.

Madang Harbour, home to R D Tuna Canners

‘I think the fishing industry has always been underrated, especially in terms of the contribution to the economy and its potential,’ said R D Tuna Canners’ Managing Director Pete Celso in his address the 2013 PNG Advantage international investment summit.

R D Tuna Canners’ Pete Celso

Celso was talking about the creation of PNG’s first and only integrated tuna fishing and canning operation, which the Philippines-owned company started in Madang on PNG’s northern coast almost 20 years ago, along with its sister company, R D Fishing.

Now employing 3,500 people and with an annual turnover of K271 million (US$106 million), the venture represents a huge success story for PNG. Celso estimates that RD Tuna Canners has boosted the economy by roughly K600 million, while working at some point with 90% of local businesses.

Costs benefits

Operating from Madang provides vital geographical and cost benefits to R D Tuna. Most importantly, it provides easy access to PNG’s fishing grounds, which are just a half-day’s sail away, thereby lowering fuel and transportation costs and ensuring maximum freshness in the fish. Madang is also sufficiently populous to provide an affordable workforce.

However, there were also obstacles to overcome, such as inadequate and inconsistent infrastructure, which has affected the cost of doing business.

To address the issue of inconsistency, R D Tuna invested in its own comprehensive infrastructure, based around a cannery complex capable of processing up to 200 metric tonnes of fish per day. The complex is served by its own steam plant, waste water treatment plant, ice-making facilities, cold storage facilities, microbiology and chemistry laboratories, fishmeal plant, can making plant, carton making plant—even a six-colour printing press for labels.

The company has also invested heavily to protect its own energy supplies by establishing a 5.2 megawatt power plant—a plant that might one day sell excess power to state utility, PNG Power.

‘For the manufacturing sector, one of the major challenges in a place like PNG is the high cost of doing business, and the lack of economies of scale is one of the reasons you cannot achieve low costs’

R D Fishing complements these facilities by operating a fleet of 17 purse seine fishing vessels from a privately owned wharf, which is supported by a small dockyard and slipway facility.

Transformational investment

Despite having massive tuna resources, accounting for between 12% and 17% of the world’s tuna catch, PNG had historically imported a large amount of the canned product, worth about K100 million a year.

While PNG still imports some canned tuna, import volumes have dropped substantially as R D Tuna, and other new entrants, have developed the industry. Local R D Tuna brands such as Dolly and Diana now proliferate on local supermarket shelves as market leaders.

The company’s export market, however, is its primary source of trade and makes up 63% of company sales. The bulk of this trade is with the European Union, which has an Interim Economic Partnership Agreement with PNG that allows for tariff-free imports. Much of the exported tuna is branded under the labels of R D Tuna’s overseas customers.

Future directions

Celso believes R D Tuna will continue to grow, especially on the back of the PNG Government’s proposed construction of an industrial zone north of Madang, which, he explains, will further improve infrastructure and deliver a lower cost base for industry.

‘For the manufacturing sector, one of the major challenges in a place like PNG is the high cost of doing business, and the lack of economies of scale is one of the reasons you cannot achieve low costs,’ says Celso, who is also Chairman of the PNG Fisheries Industry Association.

‘This exercise has a lot of merit for the industry to continue to be competitive.’