2015 ECONOMIC INDICATORS REPORT. Prepared by the Forum Fisheries Agency

Transcription

1 2015 ECONOMIC INDICATORS REPORT Prepared by the Forum Fisheries Agency

2 Contents 1 Introduction Global tuna production By species By ocean Lightmeat canning grade tuna Whitemeat raw material (albacore, principally longline- caught) Sashimi bigeye tuna (longline-caught) Sashimi Yellowfin tuna (longline caught) WCPFC-CA tuna fisheries Estimated catch and values Purse seine catch and values Longline catch and values Economic conditions Fish prices Catch rates (CPUE) Fishing costs Economic conditions indices for purse seine, southern longline and tropical longline fisheries Contribution to domestic economies Local and domestic-based foreign vessels Domestic processing Volumes Cost comparisons between FFA members and Bangkok/General Santos Employment Exports EU market imports US market imports Japan market imports Access fees paid by foreign vessels Economic benefits from domestic tuna sectors Contribution to GDP of the harvest sector Economic benefits to domestic economies from the tuna harvest and on-shore processing sectors Summary and discussion Appendix: Measuring value added... 28

3 1 Introduction The Economic Indicators Report is produced on an annual basis to provide FFA members with an overview of trends in: global tuna production; catch, catch values and economic conditions in the major WCPFC-CA tuna fisheries, and; the contributions to the domestic economies of FFA members of domestic and locally based fleets and onshore processing facilities. The catch and effort data provided in this report for WCPFC-CA and FFA member waters are based on that provided by SPC-OFP, noting that there have been important revisions to previous data used and that these data may change further, especially for Data from other RMFOs are also used. Economic data are based on publicly available data and data collected by FFA from FFA member government and industry as part of a program to monitor and develop indicators of domestic development of tuna related industries in FFA member countries. These indicators are primarily based on data collected through national agents with additional data from other sources used to supplement the collected data. This data collection process has been carried out since 2009 and in a data verification process, funded by the Japan OFCF, was implemented to improve the veracity of the data. This process entails visits to selected FFA member countries to verify data that has been provided by collectors and/or collect additional data. While this process has improved the veracity of the data collected it is important to note that some crucial data from important tuna industry players such as in Fiji, Papua New Guinea and Solomon Islands remains difficult to collect. This report, the 10 th in the series, includes for the first time indices of economic conditions for the purse seine, southern logline and tropical long line tuna fisheries which provide a measure of relative economic conditions in these fisheries and the drivers behind changes to economic conditions over time. In addition the methodology for calculating the tuna harvest sector contribution to GDP has been adjusted based on feedback received from individuals with expertise in national accounts and calculating contributions to GDP of the fishery sectors. 2 Global tuna production 2.1 By species Global tuna catch of the four major tuna species (albacore, bigeye, skipjack and yellowfin) rose to 4.78 million tonnes in 2014, 4.2% higher than the previous peak in 2012 of 4.57 million tonnes (Fig. 1). The rise from the previous year was driven by a 7% (179,430 tonnes) rise in the WCPO and a 2.2% (13,761 tonnes) increase in the Eastern Pacific catches as catches in the Indian and Atlantic oceans were assumed at same level as last year. The increase in the WCPO catch occurred as the purse seine fishery recorded its highest catch ever with skipjack at record levels (Fig 2), possible due to strong recruitment. Environmental conditions were dominated by El Nino type conditions resulting in increased purse seine effort in the east. The total annual global catch has been above 4.5 million tonnes since Metric tonnes (Millions) SKJ YFT BET ALB Figure 1. Global production by species Sources: WCPO and EPO from SPC (2015), Atlantic Ocean from ICCAT Indian Ocean from 1

4 2.2 By ocean The distribution of catch by ocean area since 2005 has changed considerably with the WCPO share increasing, the Indian Ocean declining and Atlantic and Eastern Pacific Oceans remaining relatively stable. In 2014 the WCPO share of global catch was 60% (49% in 2005), Indian Ocean 17% (27%), and Atlantic and Eastern Pacific Oceans respectively at 10% (9%) and 14% (15%). The rise in the WCPO share is driven by increases in the purse seine catch. Metric tonnes (Millions) Western Pacific Indian Eastern Pacific Atlantic Figure 2. Global tuna production by Ocean Sources: WCPO and EPO from SPC (2015), Atlantic Ocean from ICCAT Indian Ocean from Figure 1. Global catch by ocean area ( average) Sources: WCPO and EPO from SPC (2015), Atlantic Ocean from ICCAT Indian Ocean from Lightmeat canning grade tuna Raw material for lightmeat canned tuna (that is, canned skipjack or yellowfin) is sourced primarily from purse seine and pole and line fisheries. The global production trend for lightmeat raw material by ocean area is provided in Fig 4. Supplies more than doubled between 1983 and 1998 from below 1.5 million tonnes to more than 3 million tonnes and has exceeded 4 million tonne mark since The long-term trend of lightmeat production is underpinned by purse seine production trends in the WCPO that in 2014 commanded a 57% share of total global production (Fig 5). This represents 2.6 million tonnes with a value of $3.5 billion. FFA member waters have accounted for a steady 36-38% of global supplies between 2010 and 2014, up from less than 30% in prior years Metric tonnes (Millions) FFA Region Indian Atlantic Figure 3. Lightmeat raw material production by ocean area Sources: WCPO and EPO from SPC (2015), Atlantic Ocean from ICCAT Indian Ocean from Atlantic 10% Indian 20% Eastern Pacific 13% Western Pacific Eastern Pacific WCPO 57% WCPO Non- FFA 19% WCPO FFA Region 38% Figure 2. Lightmeat raw material distribution by ocean area ( average) Sources: WCPO and EPO from SPC (2015), Atlantic Ocean from ICCAT Indian Ocean from 2

5 2.2.2 Whitemeat raw material (albacore, principally longline- caught) The global catch of albacore rose from 154,600 tonnes in 1991 to a peak of around 267,400 tonnes in 2002, driven primarily by increases in the North Pacific Ocean catch which over this period rose more than three-fold from 32,300 to 97,000 tonnes (Fig 6). Over the same period the South Pacific albacore catch doubled from 35,600 tonnes to 73,200 tonnes. After peaking in 2002, global catches were on a downward trend until 2009 with catches in the North Pacific declining significantly. Since 2009 global production has rebounded driven by significant increases in the catch in the South Pacific with productions in other oceans reaming broadly steady. Albacore catches in the South Pacific Ocean broadly were generally stable at below 50,000 tonnes between 1991 and 2000, increasing to more than 60,000 tonnes between 2001 and Since 2009, however, catches have exceeded more than 80,000 tonnes. This recent increase was driven by increases in the catch of the Chinese and Taiwanese longline fleets. Between 2012 and 2014 global catch of albacore has exceeded more than 250,000 tonnes. The decline in catch from the North Pacific in recent years and the corresponding increase in catch from the South Pacific Ocean has resulted in a significant change in the composition of global catches with the relative share by ocean area (in Fig 7) Sashimi bigeye tuna (longline-caught) Between 1991 and 2004, longline 350 bigeye production was broadly stable 300 within a range of 270,000 to 300, tonnes and an average of 287, From 2005, however, there is a clear 100 downtrend from more than 290, tonnes in 2003/2004 to a low of just 0 183,000 tonnes in Since then catches, with the exception of 2012, have remained below 200,000 tonnes about one third lower than that taken over the same period in the previously decade (Figure 8). Metric tonnes ('000s) Metric tonnes ('000s) South Pacific Ocean North Pacific Ocean Atlantic Ocean Indian Ocean Figure 4. Whitemeat raw material production by ocean area Sources: South Pacific and North Pacific Oceans from SPC (2015), Estimates of Annual Catches in the WCPFC Statistical Area (2015); Atlantic Ocean from ICCAT Indian Ocean from ww/w.iotc.org/english/data.php Atlantic 19% Indian 13% South Pacific 33% North Pacific 35% Figure 5. Whitemeat production distribution by ocean area ( average) Western Pacific Indian Ocean Atlantic Ocean Eastern Pacific Figure 6. Longline bigeye production by ocean area Sources: WCPO and EPO from SPC (2011), Atlantic Ocean from ICCAT Indian Ocean from ww/w.iotc.org/english/data.php 3

6 The WCPO and Indian Ocean combined contribute between 60 and 70% of the global longline catch of bigeye (Fig 9). Prior to 2008 the Indian Ocean was the largest source, however, since then the catches from the WCPO exceeded those from the Indian Ocean in 2009 to 2011 and again in Production in the Indian Ocean rebounded in 2012 and 2013 as Taiwanese vessels that had previously left due to piracy concerns returned. WCPO 33% Eastern Pacific 17% Atlantic Ocean 17% Indian Ocean 33% Figure 7. Longline bigeye distribution by ocean area ( average) Sources: WCPO and EPO from SPC (2014), Atlantic Ocean from ICCAT Indian Ocean from ww/w.iotc.org/english/data.php Sashimi Yellowfin tuna (longline caught) Between 1991 and 2005, longline yellowfin sashimi-grade longline production averaged around 240,000 tonnes but with exceptionally high catches in some years, such as, 1993 (more than 300,000 tonnes) and 2004 and 2005 (more than 260,000 tonnes). Since 2006, however, there has been a clear downward trend with catch falling from more than 270,000 tonnes in 2005 to a low of around 158,000 tonnes in This was driven primarily by declines in the Indian Ocean catch (down 63%) although the Atlantic and Eastern Pacific also saw declines after Global longline yellowfin catch in 2014 rebounded to 190,700 tonnes largely due to a 21% increase in the WCPO catch. Prior to 2007 the Indian Ocean traditionally was the major source of longline caught yellowfin, accounting for 40-55% of annual catches. However, with the sharp declines in Indian Ocean over the last decade Metric tonnes ('000s) Western Pacific Indian Ocean Atlantic Eastern Pacific Figure 9. Longline yellowfin production by ocean area Sources: WCPO and EPO from SPC (2014), Atlantic Ocean from ICCAT Indian Ocean from ww/w.iotc.org/english/data.php Western Pacific 50% Atlantic 10% Indian Ocean 33% Eastern Pacific 7% Figure 8. Longline yellowfin production distribution by ocean area average) Sources: WCPO and EPO from SPC (2013), Atlantic Ocean from ICCAT Indian Ocean from ww/w.iotc.org/english/data.php while catch in the WCPO remained reasonably flat, has seen the WCPO share of global yellowfin production increase to more than 50% while that of the Indian Ocean reduced to just more than 30% (Figure 11). 4

7 3 WCPFC-CA tuna fisheries 3.1 Estimated catch and values In 2014, the total tuna catch in the WCPFC-CA catch continued to increase rising by 6%. This follows a 1% increase in 2013 and a 14% increase in The total catch in 2014 of the four key tuna species (albacore, bigeye, skipjack and yellowfin), at almost 2.9 million tonnes was a new record (Fig 12 and Table). Despite the record catch level in 2014, the estimated delivered value declined 12% to $5.8 billion following a similar decline of 11% the previous year from the 2012 of $7.4 billion. The total catch level in 2012 at 2.7 million tonnes was actually 7% lower than in 2014, however, the all tuna composite price per tonne has been on the decline in the last two years, driven by a downturn in the lightmeat raw material prices as prices fell from the record of 2012 (Fig 12). Table 1. WCPFC-CA estimated catch and delivered values, (i) By water (ii) By national fleet (iii) By fleet within FFA water (iv) By Gear (v) By species Source: Catch (tonnes '000s) Estim ated delivered values (U S$ m illions) PN A 1,495 1,373 1,582 1,497 1,661 2,315 2,792 3,791 3,265 2,927 Other FFA waters Su b-to ta l 1,535 1,441 1,668 1,570 1,739 2,445 3,034 4,109 3,477 3,135 Other national waters ,527 1,821 2,178 2,286 1,884 International waters ,035 1, To ta l 2,514 2,336 2,665 2,687 2,857 4,963 5,890 7,451 6,595 5,785 PN A fl e e t , Other FFA fleets Su b-to ta l ,022 1,423 1,158 1,224 Oth e r fl e e ts 2,061 1,869 2,113 2,188 2,231 4,181 4,869 6,028 5,437 4,561 To ta l 2,514 2,336 2,665 2,687 2,857 4,963 5,890 7,451 6,595 5,785 PN A fl e e t , Other FFA fleets Su b-to ta l ,353 1,098 1,128 Oth e r fl e e ts 1, ,132 1,091 1,157 1,732 2,084 2,756 2,379 2,008 To ta l 1,535 1,441 1,668 1,570 1,739 2,445 3,034 4,109 3,477 3,135 Lo n gl i n e ,816 2,014 2,068 1,431 1,685 Pu rs e s e i n e 1,738 1,581 1,871 1,937 2,066 2,350 2,878 4,095 4,038 3,171 Pole and line Tro l l Oth e r To ta l 2,514 2,336 2,665 2,687 2,857 4,963 5,890 7,451 6,595 5,785 Al b a co re D istribution Catch by gear (tonnes '000s) Composite price (US$ per Mt) 3,000 2,500 2,000 1,500 1, Purse seine Longline Pole and line Other gears Composite price (LHS) Value (RHS) Figure 10. WCP-CA catch and estimated delivered values, all gears, B i ge ye ,017 1, Ski p ja ck 1,696 1,539 1,772 1,840 1,956 2,229 2,661 3,828 3,767 2,897 Ye l l o w fi n ,544 1,859 2,020 1,715 1,762 To ta l 2,514 2,336 2,665 2,687 2,857 4,963 5,890 7,451 6,595 5,785 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Delivered value (US$M) Purse seine catch and values The purse seine fishery is the largest contributor to total catch volume in the WCP-CA with the importance of the fishery continuing to grow over time. The purse seine fishery share of total catch over the period 1997 to 2014 period rose from below 60% to more than 70% recently (Fig 13). As a result of this increase in purse seine catch share and increases in the relative per unit value of purse seine caught product the purse seine fishery s contribution to total catch value. 5

8 Prior to 2005 while fluctuating from year to year the average value of the longline and purse seine catch was similar over time, however, since 2012 the value of the purse seine fishery has on average been double that of the longline fishery (Fig 14). Figure 11. WCP-CA catch trends by gear Figure 14. WCP-CA catch value trends by gear Similarly, the contribution of the different species to the overall catch values has also shifted in relative significance over the years as a result of changes to the composition of the catch and the relative value of each species. For example, skipjack contributed just under 61% of total catch between 2001 and 2005 while between 2009 and 2014 it contributed just over 67% (Fig 15). In value terms skipjack contributed around 37% of total value between 2001 and 2005 while between 2009 and 2014 it contributed around 50% (Fig 16). Catch (tonnes) 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 - Value (US$ millions) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Skipjack Yellowfin Bigeye Albacore Figure 15. WCP-CA catch trends by species Skipjack Yellowfin Bigeye Albacore Figure 16. WCP-CA catch value trends by species In 2014, the estimated value of the purse seine produced lightmeat of 2.1 million tonnes was $3.2 billion, down 21% from 2013 when the value also declined, albeit marginally, from the preceding year. These trends were in contrast to the 7% increase in catch in 2014 to record levels at 2.1 million tonnes. The contrasting trends in catch and value is driven by declines in lightmeat raw material prices since This decline in prices occurred against a backdrop of generally favourable fishing conditions resulting in higher catch rates and high inventories resulting from the slow movement of final products at end markets. The distribution of catch and values in the WCPFC-CA purse seine fishery by area, fleet and species over the past five years are shown in Table 2 below. 6

9 Table 2. Purse seine estimated catch and delivered values, D istribution Catch (tonnes '000s) Estim ated delivered values (US$ m illions) PN A 1,418 1,309 1,510 1,446 1,575 1,932 2,391 3,306 3,011 2,431 Othe r FFA w a te rs (i) By w a te r S u b- to ta l 1,431 1,341 1,554 1,484 1,622 1,947 2,446 3,401 3,089 2,501 Othe r na tiona l w a te rs Inte rna tiona l w a te rs T o ta l 1,738 1,581 1,871 1,937 2,066 2,350 2,878 4,095 4,038 3,171 PN A fl e e t Othe r FFA m e m bers (ii) By fle e t S u b- to ta l , O th e r 1,356 1,179 1,386 1,490 1,520 1,851 2,163 3,036 3,089 2,336 T o ta l 1,738 1,581 1,871 1,937 2,066 2,350 2,878 4,095 4,038 3,171 Alba core B i g e ye (iii) By s pecie s S k i p ja ck 1,337 1,203 1,438 1,514 1,628 1,695 2,039 3,041 3,070 2,359 Y e l l o w fi n T o ta l 1,738 1,581 1,871 1,937 2,066 2,350 2,878 4,095 4,038 3,171 Source: and Distribution of catch and catch values by species Skipjack is the dominant catch species in the WCP-CA purse seine fishery. Figures 17 and 18 illustrate the catch and catch values proportional shares by species based on averages. The yellowfin tuna share of total values at 22% is higher than the corresponding share of catch of 19% while for skipjack the values share of 75% is lower than the catch share of 78%. This arises from a higher price per unit being paid for yellowfin compared with skipjack. SKJ 78% YFT 19% SKJ 75% YFT 22% BET 3% Figure 12. WCP-CA purse seine catch distribution by species ( average) Distribution by water The national waters of FFA members provide the major purse seining grounds for the fleets. FFA members waters typically accounts for around 80% of the total purse seine catch or catch value, most of which being from PNA waters. Over the period , 78% of the purse seine total delivered value was accounted for from PNA waters with only 2% by other FFA member waters (Fig 19). Figure 18 WCP-CA purse seine delivered values distribution by species ( average) Other national 15% International 5% FFA 80% BET 3% PNA 78% Other FFA 2% Figure 19. WCP-CA purse seine value distribution by area ( average) 7

10 Distribution by fleet The distribution of catch by purse seine fleet in the WCP-CA or within FFA EEZs is dominated by fleets other than those of FFA members, accounting for between 70% and 80% of the catch or catch values (Fig 20). Although there has been gradual build-up of FFA-flagged vessels over recent years the FFAflagged fleet share of catch or catch values in the last decade has risen only moderately. Other 75% FFA 25% PNA 23% Other FFA 2% Figure 20. WCP-CA purse seine catch value distribution by fleet ( average) Longline catch and values In 2014, the estimated value of the longline production of 269,000 tonnes was $1.7 billion. This catch value is 18% higher than the previous year s when catch was 243,000 tonnes. The increase in the catch value in 2014 resulted from increases in both the average longline price (6%) and catch volume (11%). The 6% price increase in USD prices for longline caught product was driven by strong increases in JPY prices for sashimi caught product which more than offset the 8% depreciation of the JPY. The distribution of catch and values in the WCPFC-CA longline fishery by area, fleet and species over the past five years are shown in Table 3. Table 3. WCP-CA Longline estimated catch and delivered values, (i) By water (ii) By fleet (iii) By species Distribution Source: Catch (tonnes '000s) Estimated delivered values (US$ millions) PNA Other FFA wa ters Sub-total Other na tional wa ters Interna tiona l wa ters Total ,816 2,014 2,068 1,431 1,685 PNA fleet Other FFA members Sub-total Other ,556 1,746 1,748 1,250 1,316 Total ,816 2,014 2,068 1,431 1,685 Albacore Bigeye Skipja ck Yellowfin Total ,816 2,014 2,068 1,431 1, Distribution by species The distribution of longline catch between species compared to the corresponding distribution of values differ significantly in the longline fishery. For example, over the period albacore accounted for 38% of the catch with yellowfin contributing 34% and bigeye 28%. In contrast over the same period, based on indicative market prices, the corresponding distribution of the catch value saw albacore at 17%, yellowfin at 42% and bigeye at 41% (Figs 21 and 22). 8

11 ALB 38% BET 28% ALB 17% BET 41% YFT 34% YFT 42% Figure 21. WCP-CA Longline catch distribution by species ( average) Figure 22. WCP-CA Longline catch value distribution by species ( average) Distribution by water On the basis of the recent three-year period data, the distribution of the longline catch in the WCP-CA is broadly even with FFA waters at 31%, international waters 32% and other national waters 34%. In terms of values distribution, other national waters contributions become marginally higher at 36% while FFA waters still account for 31% (Figs 23 and 24). Other national 34% International 32% FFA 31% PNA 21% Other FFA 13% Other national 36% FFA 31% International 33% PNA 22% Other FFA 9% Figure 23. WCP-CA Longline catch distribution by water ( average) Figure 24. WCP-CA Longline catch value distribution by water ( average) Distribution by fleet Longline catch in the WCPFC-CA, as in the case of purse seine, is dominated by fleets other than those of FFA members, typically accounting for 80% of the catch or 83% of catch values based on recent three-year data (Figs 25 and 26). Other 80% FFA 20% PNA 7% Other FFA 13% Other 83% FFA 17% PNA 7% Other FFA 10% Figure 14. WCP-CA Longline catch distribution by fleet ( average) Figure 13. WCP-CA Longline delivered value distribution by fleet ( ) 3.2 Economic conditions In this section information is presented on trends in fish prices, fishing costs and catch rates. These factors are the major determinants in the economic conditions prevailing in a fishery and changes to these conditions over time. In addition, indices are presented that provide a measure of relative economic conditions over time for the purse seine, tropical longline and southern longline fisheries are provided. The tropical longline fishery is defined as the longline fishery between 10⁰N and 10⁰S in the WPCFC-CA excluding the waters of Indonesia, Philippines and 9

12 Vietnam and the southern longline fishery is defined as the longline fishery south of 10⁰S in the WPCFC-CA. The indices are based on relative fish price, fishing costs and catch rates and do not provide an absolute measure of economic conditions in the fishery in a given year but rather a relative measure between years, that is, for example, how do economic conditions in 2014 compare with those in 2013, are they the same, better or worse. The indices are calculated as follows:, =,,, 1 (1) Where Ef,y represents the index for economic conditions in fishery f in year y, C f,y represents the composite fish price index in fishery f in year y, CPUEIf,y represents the catch rate index in fishery f in year y and CIf,y represents the fishing cost index in in fishery f in year y. The components of the economic conditions indices (that is, costs, fish prices and CPUE), their trends and relative importance in defining the overall trends in each fishery s index are outlined below. The cost and fish price component of the indices are based on changes in their real USD value. As such, all prices that are not specified in US dollars (USD) are converted using the exchange rate prevailing during the relevant time period. 2 In addition to account for inflation, which results in the real value of a USD changing over time, nominal USD prices (that is, the price at a given point of time) are adjusted using US CPI data to obtain real prices which are expressed in 2014$s Fish prices Prices received by operators (that is, ex-vessel prices) vary depending on the market that the product is destined for and the costs of transporting the product to market, particularly in the longline fisheries. As such, there is no single price that will provide a perfect reflection of trends in the price received by operators for the various species caught. In this report, prices on certain specific markets are used as indicators of the trends in the price received by operators, these are: for the purse seine fishery Thai frozen import prices for skipjack, yellowfin and bigeye; for the tropical and southern longline fisheries Japanese fresh import prices for bigeye and yellowfin and Thai frozen import prices for albacore. The nominal and real price trends for selected major species in each fishery are presented in Figures 27 and 29. Real prices are presented in 2014 USD obtained by adjusting nominal USD prices with US CPI data as previously outlined Purse seine prices Thai frozen skipjack import price is used as the main indicator of market conditions and trends for the purse seine fishery as almost 90% of WCPO catch goes to Thailand for processing into loins and/or canned products. Yellowfin also plays an important contribution to the value of the fishery given its higher unit value although comprising a significantly lower composition of the catch. After declining significantly between 1997 and 2000 prices were relatively stable through the period , albeit at relatively low levels. Nominal annual skipjack prices between 2001 and 2006 ranged between $700/mt and $918/mt and real annual skipjack prices (2014$s) between $700/mt and $1,114/mt. Since 2006 prices have shown greater volatility with nominal annual skipjack prices ranging between $1,154/mt and $2,117/mt and real annual skipjack prices (2014$s) between $1,273/mt and $2,183/mt. While prices have been more volatile in recent years have generally being above that averaged since 1997 reflecting the trend of increasing prices over the period. While prices in 2014 were down significantly from the record level seen in 2012 (by 32% in nominal terms) against a backdrop of oversupply the real skipjack price (2014$) in As developed in Reid C. & Raubani J., (2015), Trends in economic conditions in the southern longline fishery, WCPFC-SC /MI WP-03-Rev1 2 Currency conversions are based on the interbank exchange rates from 3 The CPI measure used is for All Urban Consumers from 10

13 at $1,447/mt was around average levels although. Over the first half of 2015 they are around 20% lower. Figure 27. Nominal and real USD prices for Thai imports of frozen whole round skipjack and yellowfin Note: 2015 prices for period to May 31. Source: Figure 28. Variation in real USD prices for Thai imports compare with long-term averages Southern and Tropical longline prices For albacore Thai import prices are used as the trend indicator as the main use of longline caught albacore is for canning, Thailand is a significant producer of canned albacore and that this is the longest data series available. As can be seen in Figure 29 while nominal prices since 1997 have fluctuated considerably over time the level around which they fluctuate has increased with peaks and troughs tending to occur at higher levels resulting in nominal prices trending upwards. In contrast while prices in real terms (2014$s) also see significant fluctuations the level that it fluctuates around has remained relatively stable over time at around $2,900/mt. Real prices were at their highest in 2012 (26% above the level average over the period ) and lowest in 2007 (23% below). Since 2008 only in 2013 was the price significantly lower (12%) than the long term average. For yellowfin and bigeye the price of fresh imports from Oceania into Japan was used as the indicator series. As can be seen from Figure 29 real USD prices for both products follow a similarly steady trend over time as for albacore although trend real yellowfin USD prices increased marginally and trend real USD bigeye prices fell marginally. While the trend was similar as that for albacore the pattern of variation from the average price over the period differed in that real USD yellowfin and bigeye prices spent significant periods at lower/higher than average levels while albacore prices fluctuated between levels lower and higher than average more frequently (Figure 30). 11

14 Albacore Albacore Yellowfin Yellowfin Bigeye Bigeye Figure 29: USD real and nominal prices by species for selected market Note: 2015 prices for period to May 31. Source: and Figure 30: Variations in annual USD real prices by species for selected market Composite price indices The real USD price series outlined above were used to construct a composite fish price index for the each fishery. This was done by first obtaining species specific price indices as follows:, =,, (2) where PI is the price index for species s in year y, Pr is the real price of species s in year y and AvPr the average real price of species s over the period 1997 to The prices index for other species was assumed to be the same as that for albacore and the composite price index specified as:, =100+!",, 100# $,, %& $, ' (3) 12

15 where ComPI is the composite price index for fishery f in year y, PI is price index for fishery f of species s in year y, C is the catch in fishery f of species s in year y and TCy the total catch in fishery f in year y. The composite price indices for each fishery are shown in Figure 31. Figure 31. Composite price indices Note: The 2015 purse seine price index is based on data to July 31 and assumes the same catch composition as that for The 2015 longline price indices are based on data to May 31 and assumes the same catch composition as that for Catch rates (CPUE) Catch rates by species for all three fisheries are shown in Figure 32 with the purse seine CPUE expressed in terms of catch per fishing day and the longline fishery in kilograms per hundred hooks. As can be seen purse seine total CPUE is on a marginally upward trend driven by an increase in skipjack CPUE. On the other hand longline CPUE in both the southern and tropical fisheries have trended downward over time although for the tropical fishery there was a significant rebound in CPUE in Figure 33 shows the catch rate indices for each fishery. 13

16 Figure 32: Annual catch rates by species by fishery Source: SPC CES database, September 2015 Figure 33: Catch rate indices Fishing costs The only available time series in relation to fishing costs is for fuel. This restricts the ability to estimate a fishing cost index as fishing costs are determined by a number of factors besides fuel including wages, provisions and, in longline fisheries, bait. However, fuel is the single most important operational cost across all fleets, subject to the largest fluctuations across all cost category and, hence, a major determinate in the change in fishing costs over time. Given these factors the approach used in this study is to assume that nominal fishing costs aside from fuel have increased at the same rate as US CPI, that is, that real non-fuel fishing costs have remained constant over time. If this is not the case and real non-fuel costs have risen faster (slower) than the CPI rate the economic conditions index will be lower (higher) in more recent years than would actually be the case Fuel costs The Singapore marine diesel oil (MDO) price is a good indicator of prices paid for fuel by purse seine and longline vessels operating in the region and is used to examine fuel cost trends. As can be seen by Figure 34 fuel prices from March 2011 to June 2014 were consistently between $900 and $1,000 per metric tonne ($ per US gallon/$0.98 to 1.09 per litre) before beginning 14

17 a sharp decline over the remainder of Prices in 2015 to mid-july have averaged around $540/mt ($2.22 per US gallon/$0.59 per litre). Figure 34: Singapore marine diesel oil (MDO) nominal and real price series Source: Figure 35: Variations in Singapore marine diesel oil (MDO) real USD price against its long term ( ) average Fishing costs index As previously outlined the fishing cost index using information on the proportion of total production cost that relate to fuel to develop a constant factor to represent real non-fuel costs (which as previously outlined are assumed to remain constant over time) and then combined with the Singapore MDO real price index series to determine a total real cost index. Information on fuel cost relative to total production cost over the period were obtained from several sources 4. For the purse seine fishery the information obtained had 15% during 1997, 52% in 2006, and 33% in For the southern albacore fishery 15% in 2001, 40% in 2006 and 27% in Based on this information a constant factor of 200 was derived for the purse seine fishing cost index while for the southern albacore longline fishery 225. The latter was assumed to be similar to that for the tropical longline fishery. Figure 36 shows the total real cost indices obtained. Figure 36: Cost indices 4 Including Krampe, P. (2006), Rising fuel prices and its impact on the tuna industry, Paper presented to Bangkok Tuna 2006; 4 Arita, S. and Pan, M. (2013), Cost-earnings Study of the American Samoa longline fishery: based on Vessel Operations in 2009, WCPFC-SC9-2013/MI-WP-06, 15

18 3.2.4 Economic conditions indices for purse seine, southern longline and tropical longline fisheries The economic conditions index (ECI) for each fishery calculated using equation 1 and the values for their various component outlined above are shown in Figure 37. An illustration of the influence of each of the component indices on each ECI in a given year is provided in Figure 38.Taking the southern longline fishery, for example, from Figure 37 it can be seen that in 2012 the economic index was at 80, 20% below that averaged over the period As shown in Figure 38 this decline occurred despite prices being 24% higher than average as fishing costs were 22% higher and catch rates 20% lower than average. For the southern logline fishery it can be seen that economic conditions in 2011 and 2012 were relatively poor as a result of low catch rates and high real fuel prices despite the fact that real fish prices were, respectively, at the second highest and highest levels over the period. In 2013 and 2014 with fish prices around or below average levels economic conditions deteriorated to period lows. While there is significant variability in economic conditions in the fishery the reductions in catch rates seen since 2011, if sustained, are likely to see future relatively good economic conditions occurring at levels around that averaged between 1997 and 2014 at best and economic conditions in future relativity poor years at levels around or below that seen in 2013 and With recent significant declines in fuel prices, which has returned fishing costs to around their period average, and fish prices also being around the period average significant improvements in economic conditions in 2015 are likely. However, if the reductions in catch rates seen since 2011 continue then future relatively good economic conditions will likely occur at levels that to date would have been deemed average and future relatively poor economic conditions at levels around or below that seen in 2013 and If good economic conditions are what used to be average economic conditions and poor economic conditions occur more frequently, as is likely if relatively low catch rates continue, many fleets from PICTs will likely struggle to be economically viable. The tropical longline fishery shows a picture similar to that of the southern longline fishery with a continued decline in economic conditions as CPUE declines over time with the exception of 2014 which saw a rebound as catch rates rose above their long term average for the first time since While the economic conditions in 2014 remained below long term average conditions, with fuel prices and fish price around long term average levels in the first half of 2015 if 2014 catch rates continue in 2015 the ECI for the fishery in 2015 is likely to return above its long average level. The purse seine fishery, however, display a different picture to that of the longline fisheries with movement in fish prices appearing to be the greatest determinant of changes to economic conditions in the fishery and catch impacts having the least impact and unlike the longline fishery not displaying a consistent downward trend that drives down economic conditions over time. The purse seine index also illustrates the exceptionally good economic conditions that existed in the fishery between 2012 and 2013 which was driven by high prices which more than offset higher costs due to the elevated price of fuel. The index also shows the return to average conditions in 2014 as fish prices declined. With prices over the first half of 2015 being around 20% below the long term real annual price unless above average catch rates are achieved economic conditions in 2015 will likely fall below its long term average despite lower cost due to the decline in the fuel price. 16

19 Figure 37: Economic conditions indices by fishery Figure 38: Variation in economic conditions from period average and the influence of different components 4 Contribution to domestic economies In this section a range of data is presented with regard to the contribution of tuna fisheries and fleets to the domestic economies of FFA members, including employment, exports, foreign access fees and the contribution to GDP of the harvest sector. First, however, information is presented on trends in the number of local and domestic based foreign vessels operating in the fishery, the volume of catch processed locally and the cost competitiveness of on-shore processing in FFA member countries compared with Bangkok and General Santos. In presenting this data it is important to note that in a number of instances data was not provided by industry or government departments/authorities as part of the economic indicators data collection process or through alternative sources and in such case best estimates have been made by FFA based on institutional knowledge and anecdotal information. 17

20 4.1 Local and domestic-based foreign vessels The FFA fleet grew substantially from the early 2000s until around 2011/12, facilitated by domestication policies that resulted in the growth of domestic and locally-based foreign purse seine and longline vessels (Figs 39 and 40). Since 2012 total vessel numbers have declined for both vessel types. In the case of purse seine vessels, the decline was driven by reductions in the number of Solomon Island charter vessels and Vanuatu flagged vessels with other fleets increasing in size (Kiribati, FSM and PNG) or remaining stable (Marshall Islands and Tuvalu). For 2015 it is understood that 4 new vessels have been flagged in PNG and one vessel has joined the FSM fleet (with another vessel expected in the next few months and 2 others in 2016) while 12 purse seine vessels are currently under construction (4 for Kiribati, 4 for PNG, 3 for Solomon Islands and 1 for Tuvalu). No. of vessels No. of vessels Figure 39: Local and locally-based foreign purse seine vessels in FFA member countries Source: WCPFC Science Committee Counrty Annual Reports Part 1 (various) Figure 40: Local and locally-based foreign longline vessels in FFA member countries Source: WCPFC Science Committee Counrty Annual Reports Part 1 (various) 4.2 Domestic processing Volumes The estimated annual volume of tuna processed in the FFA member countries was around 100,000 tonnes prior to 2013 but has doubled to be around 210,000 tonnes in The greater volume of processing relates to loining and/or canning of the purse seine catch. Other value added fresh/frozen products are, however, increasingly being produced and exported from the longline catch. The volume presently processed in FFA member countries is anticipated to increase further in the short to medium term as a result of a number of currently implemented and planned investments, particularly in PNG. Despite this significant growth in the onshore processed volume, the latter represents just more than 10% of the catch presently harvested in FFA member waters. The total volume harvested in FFA member waters in 2014 totalled 1.7 million tonnes of which lightmeat raw material 1.5 million tonnes, whitemeat 42,000 tonnes and sashimi grade products 60,000 tonnes. Table 3. Annual volume of processed tuna in FFA member countries (Mt) C o o k Is F S M F i j i 1 4, , , K i r i b a t i M a r s h a l l Is 5, , , P a l a u 2, , , P N G 6 3, , , S a m o a 2, , , S o l o m o n Is 1 2, , , T o n g a , , V a n u a t u T o t a l 1 0 1, , , Proximity to the raw material, the major comparative advantage over other processors, especially those in Asia, has not proven to be a sufficient advantage by itself to generate an expansion of domestic processing. Country specific and regional impediments include, but are not limited to: a lack of raw material supplies, logistical issues, small domestic markets, lack of appropriate 18

21 infrastructure resulting in market access issues, the lack of economies of scale and generally higher costs of production Cost comparisons between FFA members and Bangkok/General Santos The cost associated with labour per unit of product processed (that is, the combination of wage rates and labour productivity), utilities, transportation and other services in the FFA member countries are generally higher or significantly higher than in competitor countries (Fig 41 and Table 4). The comparisons show that the costs can be several times those in Thailand or General Santos, for example: 9.00 Labour cost: can be up to 15% cheaper but can also be as much as eight times higher. Electricity: higher in all FFA member countries by as much as a factor of five. Fuel: The minimum reported cost by FFA member is 90% of competitors but the maximum is about twice the cost. Water: More than twice those of competitors Unloading: slightly higher in FFA members Tin can: higher in FFA countries by 6% Carton: almost four times higher in FFA members Efficiency: Labour efficiency in FFA member countries as low as only 56% relative to competitors. Table 4 Comparative tuna processing cost 4.3 Employment Multiple of Thai or Gen San costs / efficiency Figure 41: Multiple of costs / efficiency of FFA member countries in Thailand / General Santos Sources: Pacific Tuna Forum, Honiara, Solomon Islands, 2013 Total tuna related employment (including government and industry) increased steadily between 2008 and 2014 rising from around 12,000 to 18,000 in 2013 and 22,736 in 2014, underpinned by growth in the onshore processing sector employment whose force comprises mostly of women at 0.85 Labour Electricity Fuel Water Minimum cost in FFA Maximum cost in FFA 2.50 Unloading Tin can Production facility location Thailand Solomon Is Wew ak, PNG Fiji Marshall Is Pohnpei China 1 China 2 Vietnam Indonesia Ecuador Cost per day cleaners (full) Cost per day non-cleaners Ratio Non-cleaners : Cleaners 127% 140% 64% 140% 194% 68% 88% 87% 66% Cleaning per 8 hour shift per cleaner (Kg) Labor per tonne processed How many days to finish 1 tonne Labour cost based on this (Cleaner + non-cleaner) Difference from the figure in line Electricity cost per Kw h Per tonne fish processed (Kw h) Cost of electricity per tonne processed Fresh w ater cost per cu mt Per mt fish processed (cu mt) cost offresh w ater per mt processed Boiler fuel cost per litre na na Per mt fish processed (litres) na na Cost of boiler fuel per mt processed Total cost per mt fish processed Source: Pacific Tuna Forum, Nadi, Fiji, September 2015 Carton 0.56 Efficiency

22 between 70% and 90%. This sector accounts for more than 50% of total tuna related employment. The onshore processing sector is currently employing almost 12,000 as compared to less than 9,000 in PNG accounts for 64% of employment in the processing sector with Fiji 17% and Solomon Islands 12%. It is noted that the rise in total employment figures in 2014 reflects not only new investments in PNG but also inclusions of previously excluded enterprises in the data surveys. Greater opportunities are opening up for employment especially in the processing sector. For example, in PNG, several new canneries/loin factories recently commenced or are about to commence operations and a total of 13,500 direct jobs are expected to be created. 4.4 Exports No. of employees 25,000 20,000 15,000 10,000 5,000 Figure 42: Tuna industry related employment in FFA member countries Source: FFA database Estimates of exports from FFA member countries are based on import data from the three major export destinations for tuna from the region, that is, the EU, US and Japan markets. The annual trends between 2000 and 2014 show steady growth in export values between 2005 and 2011 followed by substantial growth in 2012 and then successive declines (6%) in 2013 and 2014 (Figure 43). Imports into the different markets showed mixed trends in 2014 with EU imports declining 14% reversing the growth seen in 2013 which followed a dramatic increase of 65% in 2012; US imports declined by 15% in 2014 as against its stability in 2013 following a substantial 68% increase in 2012; Japan imports recovered 13% following a significant 51% in 2013 following a 25% increase in Loin and canned tuna products dominate the trade between FFA member countries and the three major partners. All products registered declines in 2014; loins by 9%, canned tuna products 14% and non-canned tuna products 10% (Fig 44). - Tuna industry employment by sector * Processing Offshore (foreign vessels) crew Govt Administration Table 5. FFA Employment in on-shore tuna processing facilities and on vessels by country Local crew Observers (Nat'l& regional prog) FFA member Processing and ancillary Local crew Cook Is FSM Fiji 1,225 1, ,018 1,063 1,452 2,000 1, ,227 1,667 Kiribati Marshall Is Niue Palau PNG 6,715 5,783 5,600 5,962 6,640 7,000 7, ,102 1,102 1,153 1,509 1,776 1,776 Samoa Solomon Is ,602 1,361 1, Tonga Tuvalu Vanuatu Total 8,588 8,302 7,797 8,888 10,213 10,641 11,811 2,067 3,742 2,798 2,926 3,698 4,878 5,852 20

23 US$ (millions) EU US Japan Figure 43: Tuna products imports by market from FFA member countries, Sources: Eurostat; Personal communication, NMFS; Figure 44: Total EU, US and Japan tuna imports by product from FFA member countries, Sources: Eurostat; Personal communication, NMFS; EU market imports The principal EU imports from FFA member countries is canned tuna and increasingly loins. Fiji, Papua New Guinea and Solomon Islands are the main suppliers. There have been minimal imports of fresh and frozen tuna products. Total value of imports into the EU market in 2014 was $185 million, $93 million (51%) of which was value for tuna loins, $89 million (48%) canned products and $3 million (1%) fresh/frozen products (Fig 38). The EU imports from current FFA member sources presently enjoy duty free access under the Interim Economic Partnership Arrangement (IEPA - Fiji/PNG) and Everything But Arms (EBA Solomon Islands). Nonetheless, complexity of RoO requirements under different tariff regimes, IUU Regulations, Competent Authorities, Free Trade Agreements (with Philippines and possibly Thailand), WTO rules, Doha conclusion and competitiveness issues for Pacific Island Countries point to many challenges and imminent preferential tariff erosion US market imports Figure 45: EU tuna imports from FFA countries, Source: Eurostat US imports (f.a.s.) rose quite sharply between 2000 and 2004 from $28 million to almost $80 million and stabilised there until 2008 when it rose to an average of $90 million over the next six years despite the sharp decline to $43 million in Some decline occurred in 2014 falling to $81 million (Figure 46). Tuna trade with the US is presently dominated by tuna loins worth $66 million in 2014 with Fiji as the principal supplier. Solomon Islands and Marshall Islands are also important suppliers. The substantial drop in tuna loins from Fiji in 2011, due to the temporary suspension of PAFCO loining operations because of compliance issues with the United States Food and Drug Administration (USFDA), was the driving factor of the decline in the values of imports in Major works to storage facilities in 2014 also resulted in declines of imports from Fiji and total imports. Canned tuna imports comprise only of albacore (not in oil) and have been minimal and only occurred between 2000 and 2006 with PNG the sole supplier. This is because of prohibitive tariffs. Prospects of expanding canned tuna trade to US market is limited under present tariff 21

24 protections accorded to domestic processors. Even for Compact States with preferential access to this market, developmental internal constraints do not favour canned tuna processing. The sashimi/non-canned exports to the US consist of fresh/frozen albacore, bigeye and yellowfin and other value added tuna products. The value of these in 2014 was $15 million, lower than the previous year by more than $2 million. There has been noticeable growth in the value of these imports over the years, with Fiji as the main supplier Japan market imports The Japanese market, as the major destination for tuna sashimi grade products, is of great importance to countries with longline fleets targeting sashimi grade product. Japan imports (c.i.f.) from FFA member countries to Japan trended up from $31 to $107 million over the period but then declined significantly to be $60 million by 2014, a trend consistent with Japan s global imports of fresh tuna products. Palau and Fiji account for the greater supply of fresh products to Japan. This is on account of the locally-based foreign Figure 46: US tuna imports (f.a.s.) from FFA countries, Sources: Personal communication, NMFS Figure 47: Japan fresh and frozen tuna imports from FFA countries, Source: longline fleet in these countries and the relatively developed infrastructure to facilitate airfreight of fresh products to this market. 4.5 Access fees paid by foreign vessels In the section the contribution to government revenues of the access fees paid by foreign vessels is examined. Foreign vessels are defined as vessels that are based outside of the country in question, whether they are based in a DWFN or another FFA member. Thus, it includes fees paid by FSMA vessels to countries that are not the vessel s Home Party but not the fees paid to the home Party itself. Government revenues generated by local and domestic based vessels are examined in Section It is also important to note that while the estimation of the contribution of access fee to government revenue has been improved in recent years gaps remain in some of the data sets and best estimates based on institutional knowledge and anecdotal information have been made. For example, whereas the estimates for the bilateral purse seine fleets is relatively now robust under the VDS, estimates for the longline fleets remain relatively weak and are simply based on 5% of the landed catch value. In summary foreign access fee revenue is calculated as follows: Foreign longline vessels: 5% of the value of the catch taken in an FFA member s EEZ. 22