Opinion Page

THE EFFECT OF THE WTPO MEASURES
(By Henk Brus, Feb 25, 2003)

Many tuna professionals all over the world have been waiting for the outcome of last weeks WTPO meeting in Korea. Some assumed that a price increase from the current level of about USD 580 -600 CFR Bangkok would be evident, while others were not so sure and preferred to take a wait-n-see position.

Despite the presence of tuna associations from Philippines, Japan, Korea, Taiwan, China, France and Spain, this was still a WTPO Asian Group meeting. The goal of this meeting was mainly to address the price decline of whole round frozen skipjack over the past 2 months from USD 700 per M/T to a level as low as USD 580 CFR Bangkok last week.

Although the WTPO was initially considered a strong organization, recent inability of the tuna boat owners organization to prevent such price decline, and over-supply have spurred doubts over the ability of the WTPO to tackle its most important issues. Probably the organizations biggest problem is the so-called “ Bangkok Bottleneck”, which refers to the almost consistent over-supply of frozen skipjack tuna to the canneries in Bangkok. When prices in Bangkok decline, it pulls skipjack tuna prices down around the globe.

When during the last quarter of last year the Spanish and French fleets experienced very good catches in the Indian Ocean, they contributed to such an increase in supply to Thailand, that prices in Bangkok dropped steadily. During that same period catches in the Western Central Pacific Ocean were slow, which initially had led to higher prices. But because fisherman active in the Indian Ocean wanted to sell and unload their fish fast, they immediately looked at the nearby high volume Bangkok market, although their traditional sales channels are canneries along the shores and on the islands of the Indian and Atlantic Ocean.

With this new Seoul resolution the WTPO tries again to eliminate or at least reduce the effects of the Bangkok bottleneck. They use two tools: catch reduction by increasing the days in port and secondly they agreed with part of the Spanish and French Indian Ocean fleet they will not undercut prices in Bangkok. There are still Spanish and French vessels that do not belong to the WTPO.

Although the intentions are good, the results are expected to be limited. Considering that the unloading capacity in many ports is already limited and slow, a 10 day period in port for a vessel over 1700 M/T, in the end comes down to about 5 days reduction on a 4 –5 weeks trip. Also there are only very few vessels active in the WCPO with this tonnage, most boats are below 1300 M3. For these boats the time in port will be 8 days.

However the good thing about the days-in-port measure is, that if vessels catch a lot and fast, they will need to go to port faster as well to transfer their fish in a reefer carrier. Automatically they will spend more days in port when catches are good, unless they avoid going to port. They can do that by transshipping their fish on the high seas, straight from the purse seiner into their own carrier. It is not clear how the WTPO deals with this last issue.

Although Orthongel (France) and OPAGAG (Spain) have signed the recent WTPO resolution, still several important EU boat owners active in the Indian Ocean are not part of the WTPO. These operators have proven to be an uncertain factor in the past.