Tuna Barons Strike It Rich In Port Lincoln ff

It is like a mirage. After the dusty hinterland with its occasional farming settlement and withered eucalypts, out of nowhere suddenly appear Mediterranean-style villas, gardens bursting with bright flowers and cypress trees on the hillsides. Below, a new marina snakes around the water's edge surrounded by luxury apartments and a hotel development, its berths already filled with fishing boats and yachts.

Little more than a decade ago Port Lincoln, at the tip of South Australia's Eyre Peninsula, was no different from traditional fishing towns the world round: with fish stocks dwindling, it seemed in terminal decline.

Now this remote settlement is home to more millionaires per capita than any other part of Australia. This is because it built on trading ties with Japan and the so-called "bush engineering genius", or practical skills, of its fishermen to develop the world's first tuna farming industry.

South Australia has a much-needed new export industry worth A$261m ($180m, €150m, £99m) last year, with aquaculture now the state's fastest-growing primary industry, Tokyo's sushi restaurants have a reliable source for the prized Southern Blue Fin tuna and tuna stocks have been rebuilt.

“In the late '80s, Port Lincoln was broke. Fishing licences were worth next to nothing. There was tuna fishing for two or three months,” says Jason Shephard, a local skipper. “It was good money, but you had to make it last. There was no other work.”

Stocks were in serious decline. To halt the over-fishing, the government introduced quotas in 1984, only to slash them by 67 per cent in 1988 to just 5,300 tonnes a year.

To avoid ruin, the fishermen, who had used their quotas as bank collateral, began to experiment with tuna farming.

“I thought they were drunk” with their idea to farm tuna, says Joe Puglisi, one of the original fishermen who sold his business to the Norwegian Stolt group for nearly A$100m in 2000. “But once it started, it developed very quickly because of the way we all play off each other. If you get an new idea, you only have it for a very short time, then everyone else gets it.”

The breakthrough came in 1993 when Dinko Lukin - like many local fishermen he is of Croatian origin - developed the modern “purse seine” system. This enables the tuna to be caught and transferred into underwater cages with a single net.

“We went from being able to catch 70 fish at a time to 100 tons without even touching the fish,” says David Ellis, research manager at the Tuna Boat Owners Association (TBOA). Once sold to canneries for 80 cents a kilo, the tuna now fetches Y2,800 a kilo when supplied fresh. Licences, meanwhile, now change hands for about A$150,000 a tonne, says Brian Jeffriess, TBOA’s president.

The tuna are not bred in captivity but caught at sea from November to February when they mass to feed in the Great Australian Bight. The nets are then slowly towed to just off Port Lincoln where they are fattened in large pontoons for three to six months. Hand-fed on pilchards twice a day, their average weight at harvesting is 36kg, up from 18kg at capture.

The key to success is the industry's close relationship with Japanese buyers and its ability to supply fresh fish to the market within 72 hours of the tuna leaving the water. About 95 per cent of local production is exported to Japan, one third of it fresh.

Behind Rick Kolega's processing plant, three Japanese buyers cut small sections from the tails of the cleaned tuna. By examining the flesh for a just few seconds, they can grade the fish. The tuna are then boxed, sent by truck to Sydney or Melbourne and flown to Japan. “We decide in partnership with the Japanese how many pieces to send. If you send too much you crash the market,” Mr. Kolega says. But the Port Lincoln tuna barons have to learn to live with more volatile markets.

Their success has not gone unnoticed and tuna farms have sprung up from Croatia and Spain to Mexico and Thailand. The new supply made prices crash last year, although they have since staged a partial recovery.

Mr. Jeffriess says the new competition is a challenge but Port Lincoln still has an edge because of its lower cost structure, its use of financial instruments such as hedging and its pristine environment.

Meanwhile tuna companies, mainly family-owned, are reducing their dependence on the industry by investing their profits in new areas such as abalone and lobster. “The boom, the big money is over,” says Mr. Puglisi. “If the Mediterranean becomes as efficient as we are, there will be problems. Tuna will lose its attraction if everybody can get it.”