As part of its effort to diversify the economy, Papua New Guinea’s government has shifted to a rebate for fish processed, rather than subsidising the catching of fish. The change is transforming the industry. But manufacturers say expanding the market is still one of the biggest challenges.

Tuna processing plant. Credit: RD Tuna

In December 2017, it was reported that Prime Minister Peter O’Neill had announced that PNG will move from ‘a system of selling discounted fishing days to domestic and foreign-flagged fleets to providing rebate on foreign fleets that process their fish onshore’.

Chey Scovell, CEO of the Manufacturers Council of PNG, says the change in the subsidy regime has sharply stimulated fish processing.

‘Within six months we saw a doubling of the output and, on the process side, we are now between two and three times (the previous level).

‘Some of them have gone to almost 24 hour production. It has been a huge success, creating more labour and money going through.’

Many business challenges remain in the sector, however.

The Vice President and General Manager of RD Tuna Canners, Erwin Ortiz says that, ‘as with any other large scale manufacturing business’ the company keeps a close eye on fluctuating conditions.

‘We need to make sure that we are ready for what lies ahead,’ he says.

‘The biggest challenge for the business is expanding the market.’

‘So much positive change has taken place in 2018, but we are continuously working on areas to better improve.

‘We remain optimistic that business will only thrive from here on.’

Chey Scovell Credit: BAI

Expansion

Ortiz says the biggest challenge for the business is expanding the market.

‘Capturing and exporting to other international markets apart from Europe, has been a recurring concern that we are determined to overcome.

‘In hindsight, we also face domestic issues with local spending capacity.

‘Utilities are an ongoing challenge in terms of both reliability and price.’

‘We have placed a premium on the consumer price points of our RD Tuna Canners brands.

‘Target marketing and niche promotions can be implemented to be able to attain our aim of a wider local customer base.’

Ortiz says creating new support facilities will be one of the goals for RD Tuna Canners in 2019 and 2020.

‘We envision an additional US$10 million cold storage facility and other manufacturing upgrades to help our brand live up to being the best quality products in the market today.

‘We believe that, because we maintain our responsible fishing process to fulfil corporate social responsibility and promote the safety of the environment and our consumers, the seas have been on our side in terms of availability and abundance of fish.

‘The diversification in our line also sets us apart from other brands.

‘Our continuous drive to create new products and services that ensure sustainability and compliance with all regulatory requirements keeps us at the top of our game.’

Challenges

Poor roads and expensive internet connection remain a challenge for the fishing industry. Credit: RD Tuna

Ortiz notes that the local canned tuna market has experienced minimal growth.

‘Foreign canned tuna products continue to flood the domestic retail markets.

‘We are still observing the effect of the increase in duty that is being implemented at the start of the year 2019.

‘Slow and expensive internet connections also remain a challenge in PNG, especially in Madang where our business operation is based.’

He says it is too early to comment of the effect of the PNG’s increasingly improving internet connectivity.

Infrastructure shortcomings also remain a challenge for the fishing industry.

Melinda Ragudos, General Manager for Cannery Operations at Frabelle PNG Limited, says the road between the company’s facility in Lae and the wharf is in bad condition.

‘Utilities are an ongoing challenge in terms of both reliability and price.

But she says the company nevertheless remains committed to PNG.

‘We have raised our production levels this year and are planning to increase our capacity.’

Potential

The long term potential of the sector is great, according to Wayne Golding, a member of the APEC Business Advisory Council for PNG’s hosting of APEC in 2018.

He said that an APEC working group established that the industry could employ 250,000 more people.

The APEC group’s examination of demand, price elasticity and industry direction led to the conclusion that production from wild fisheries will not catch up with demand.

The emphasis, says Golding, should be on adding value, which includes processing the fish.