Opinion Article
Where Is Our
Tuna Business Heading? (Part 1)
(By Henk Brus, January 21, 2005, henkbrus@atuna.com
)
Putting your thoughts on paper
on where you think your business is heading is always a challenge, and a wild
guess. At the end of last year, I was asked to give a presentation at the
European Tuna Conference in Spain, before the European tuna processors and
fishermen, about the future outlook of our industry. I found it a good
opportunity to make a projection of what the tuna sector may face within the
next 2 to 10 years.
Unfortunately I do not have a crystal ball, which makes me feel confident that I will be wrong on many points. Therefore I invite all those of you who read this, to react at the Tuna Discussion Group. Your input and information might enable us, to exchange and share views and ideas, and together draw a clearer picture of the future of our industry and businesses.
This opinion article is the first one in a series of four on the future of our industry. First I wish to share with you the assumptions that I made, to base my ideas about the future on. If you disagree, please let us know your views!
ASSUMPTIONS about the future of our global tuna industry:
Most tuna stocks around the world will reach their maximum sustainable yield. In some regions we will even reach over-exploitation levels within the coming 2-3 years. Even skipjack stocks might reach their MSY within the next 2 years.
The focus of the EU fisheries policy will move from supporting fishing activities to preserving resources. Financial support to developing nations will only be given in the form of technical equipment and assistance in guarding and monitoring fishing within their tuna-rich EEZ. Eradication of IUU fishing, and managing their highly valuable tuna resource will become a top priority for developing island nations. Instead of money, the EU support might switch to delivering high tech patrol vessels, stationing EU planes, and educating local staff to monitor and protect their tuna resources.
Nations with rich tuna resources will start to demand higher fees for their tuna fishing licenses. Bi-lateral fishing agreements will disappear. We will see more high value commercial agreements between local governments and foreign fishing companies. This will drive the price of these licenses up, and will make them very valuable assets for tuna fishing companies, and an essential source of income for the local population. Tuna rich nations have experienced that their economy benefits much more by selling licenses at a high price to foreign companies, than against minor fees to small local joint venture companies.
Regional Tuna management organizations in all oceans will gain power, and by using Satellite technology they will be able to get a better grip on IUU fishing. Despite their good intentions they will possibly be unable to stop a further decline of tuna stocks. Political play between powerful member nations might paralyze these organizations, keeping them from taking conservation measures in time.
Demand for tuna, especially fresh and frozen raw tuna will continue to increase. As part of the rapid westernization China will soon emerge as a huge fast growing market, mostly for fresh and frozen yellowfin but also for canned skipjack. Also Europe’s appetite for frozen yellowfin steaks will grow explosively in the coming 5 years.
Due to increasing scarcity, and the higher costs for obtaining the fish, prices of frozen skipjack and yellowfin will rise to consistently higher levels then in the past 5 years.
Further Globalization combined with Free Trade policies enforced by the WTO, will make trade barriers eventually crumble, and gradually disappear. In Europe the 12% import quotas of the Asian nations will be substantially increased each year. Within a decade also Asian nations will also have 0% duty on canned tuna in Europe, but also the U.S.
Asian economies and especially China will grow, but labor costs in Asia will remain dramatically lower then Europe and the USA. Due to its surplus of 800 million workers, labor prices in China will remain very cheap. The majority of the Spanish female tuna workforce will approach retirement age, and younger European women will not show much eagerness to enter our industry.
Global Retail Groups such as Wal-Mart, Carrefour, Tesco, Aldi and Lidl will continue to strengthen their position. They want to create a global buying policy for canned tuna for all their markets. Consequently they will look for strategic partners who can serve their enormous volumes of canned tuna for their private labels all over the world.
The majority of the world’s leading tuna brands will stop the production of private label canned tuna. They will concentrate solely on marketing and strengthening their brand.
Some of these expected trends are actually already in progress and will only become stronger in the years ahead. In the next Opinion articles on atuna.com I will share with you, what changes these trends might cause in the way our tuna business could be run, and organized in the future. Please share your ideas on the future of our tuna industry on our tuna discussions groups!
To be continued…
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