CROW's Nest is the first monthly in-depth report on the status of the Tuna Industry. For a copy of the publication, please send your name and address to: Casamar Group, Inc., and advise them that you would like to get a hard copy of the report.

Tuna prices at their lowest level this year

Fishing continues to be excellent in the Western Pacific and Indian Ocean.

Prices of raw tuna have slipped downwards again, as fishing continues to be good and most canneries are still full. Most canneries have already filled up their requirements until the endofthe year.

Recently, Bangkok paid US$500 per metric ton for skipjack from Taiwanese vessels. New price offers of skipjack in Bangkok, Ecuador, and Samoa have reportedly slipped further below US$500.

The InterAmerican Tropical Tuna Commission estimated the bigeye catch in the EDP would reach 40,000 tons on September 29th. Therefore, a ban on fishing on all kinds of floating objects will be effective on September 30. It was also announced by the IATTC that the yellowfin quota of 240,000 metric tons (see Crow's Nest August 1999) will be reached on about October 14th (estimated date). After this date, no fishing on yellowfin will be allowed inside the CYRA . Mexico is trying to get the IATTC to increase the yellowfin quota by another 15,000 to 30,000 metric tons. Ecuador believes the bigeye quota has been overstated by the observers and canners, and that some of the yellowfin landed was erroneously counted as bigeye. According to IATTC reports, the total 1999 EDP tuna catches through September 27 are ahead of last year by 171,135 tons (484,282 metric tons for 1999 versus 313,147 metric tons for 1998).

The long line albacore price in Samoa for September was US$2160 per short ton, but the October price has not yet been agreed on. The long line albacore price in Puerto Rico has softened to about $2200 per short ton. The jig boat albacore price offers for the end of September are still around US$1400 per short ton, exvessel, for the North West Coast. The jig boat price offers in Samoa for direct deliveries have gone down to around US$1800 per short ton.

International Home Foods announced the appointments of Mark A. Koob as Chief Executive Officer and Christopher Lischewski as President and Chief Operating Officer of Bumble Bee Seafoods. Mr. Lischewski previously served as Managing Director, Heinz European Seafood and as Group Vice President, Global Procurement and Operations of Heinz's StarKist subsidiary. Prior to joining Heinz, he was a consultant with A.T. Kearney in its Mergers and Acquisitions practice group. IHF said Mr. Koob will focus on Bumble Bee's global expansion strategy and acquisition consolidation. Mr. Lischewski will be responsible for the daytoday operations of the company, pursuing growth initiatives and further improving the profitability of IHF's Seafood unit.

H.J. Heinz Company, the parent company of StarKist Foods, also had some major announcements. It will consolidate all of its U.S. grocery and food service businesses, which include StarKist Foods, Inc., StarKist Seafood and Heinz Pet Products. Mr. William Johnson, president and CEO of H.J. Heinz Company announced that by ringing Heinz's North American brands together, "it will position Heinz to deal effectively with the rapid consolidation of the U.S. grocery trade,"

Peter L. Bowen, currently president and COO of StarKist Foods, Inc. will continue to head StarKist's tuna, pet food and pet treats operations.

In September H.J. Heinz Co, reported that fiscal firstquarter earnings rose 6.1 percent, the smallest gain in three years, as petfood sales sagged and higher tuna costs hurt profits at StarKist. Heinz said tuna sales were even with last year. It was reported that StarKist's sales are being hurt more than expected by steeper discounting with its rivals, which include International Home Foods' Bumble Bee unit and Chicken of the Sea. It was also reported that a change in the way Heinz accounts for its tuna inventories means its older products are still tallied at higher prices, depressing profits. The report also said that in April of 1999 the company became aware of operational and accounting irregularities in its Ecuador tuna processing facility and expensed $10.0 million as an estimate of the losses. In the first quarter, the company recognized an additional $20.0 Million of expenses related to this facility.

StarKist is the leading brand of canned tuna in the United States, followed by Bumble Bee and Chicken of the Sea. The competition among the three brands in the U.S. market has been fierce. It has been announced that StarKist will be advertising for the first time in 10 years to reinforce brand loyalty.

In the U.S. canned-tuna industry, much effort has been made to move away from the commodity sector to premium snack food variations. The U. S. market has traditionally been the 50-cents-a-can tuna. Today, there is the premium albacore (white meat) in water retailing for about $1.25 a can. It has been reported that the albacore market has seen doubledigit growth within the last 3 years. More flavored and premixed tuna are also appearing on the shelves. Emphasis has been made on customer convenience. StarKist announced that it will use more of the "Smooth pull easy open end" cans for some of its product. They have also been designed so that customers can eat directly from the can. Chicken of the Sea has recently launched a 1.2 kg pouch, which can be torn easily for convenience.

Although the canned tuna industry in the U.S. has matured with only a 1% increase last year compared to 2.5% worldwide, some experts believe that there is a tremendous growth potential seen in the premium end of the market and for value added products such as snack packs and tuna salads.

Returning out to sea ... many boat owners are deeply disturbed by the new vessel monitoring system (VMS) currently in operation in Peru called ArgoNet. The VMS is the largest in operation in the world. It is unlike the GPS (Global Positioning System), in that the GPS (Global Positioning System) is a positioning device working as a receiver of data on the boat. It tells you where you are at any time. "ArgoNet" and "ARGO" are making this data (position and also other data) available remotely, in a government monitoring office, for instance. In the case of ArgoNet, the positions are processed by the GPS receiver and sent by the ARGO's transmitter located in the same box as the GPS.

Governments are increasingly using this satellitebased system for monitoring fishing zones. This will allow the governments to monitor fishing vessels' locations, routes, speeds, and catches, and to identify coastal zones with the largest concentration of vessels. This is only part of a total vessel monitoring and surveillance system.

The ICCAT (Atlantic Ocean) government authorities are preparing themselves for the VMS. The Republic of Panama has issued a law for the installation of the ARGO system on every tuna boat. The U.S. NMFS has published a notice asking longliners to be equipped by January 1, 2000 and quoting ARGO as the first choice.

In Europe, there was a change of ownership for the three 56meter-long ACF purse seiners: Ile Tristan built in 1975, Santa Maria built in 1982, and Armen, built in 1983. INTERMACHE has taken over these vessels from ACF. INTERMACHE has a tuna cannery in France and owns the premium brand Captaine Cook. This follows a strategy of disengagement of the industrial fisheries by the French Maritime Cooperative which has been plagued with heavy debts. COMASUD, a maritime division of the big distribution group INTERMACHE, takes over the operation. INTERMACHE has launched direct investments including the purchase of the familyowned companies "Petrel" and "Sparfel" (Lorient French Brittany) in the industrial fish trawl business. Their boats catch white fish around the British isles and Scotland, which are regularly transhipped on board a shuttlereefer vessel, called the Petrel, which stems to and from Lorient. The fish, packed in boxes with flake ice, is readily dispatched to some of the 1600 supermarkets of INTERMACHE. The deal between INTERMACHE and ACF does not include the purse seiner Lady Sushill, a coownership with the French Cooperative and the Maunician group IBL. However, the vessel will be managed by COMASUD.

There was a vessel collision at the Port of Victoria (Mahe, Seychelles). Saupiquet's jumbo processor boat Via Gawlarn, a 105 meter vessel and Armen of COMASUD, a 55 meter vessel, in midSeptember. Saupiquet's vessel was delivering fish to the local cannery alongside the quay and unloading the frozen loins for export, when the Armen, while maneuvering full astern was unable to stop the main engine. Armen was perpendicular to Via Gawlarn. The collision made a 5meter high cut in the hull below the sea surface and flooded one brine tank. Fortunately, no one was injured. After some provisional repairs, both vessels will be repaired in DiegoSuarez (Saupiquet) and Mauritius (COMASUD).

Filipino officers will replace the French in running 2 reefers: Styval and Breizel Clipper of Cobrecaf. The registers of these two reefers will be transferred to "St and Grenadines". The French officers who were relieved will however be offered jobs on the Cobrecaf's large fleet of seiners.

Some serious discussions on the moratorium of catches on logs (whether artificial or natural) are going on in the Atlantic. The artificial logs are called FADS (see Crow's Nest Insert June 1999) by the scientist. The voluntary moratorium was instituted 2 years ago in the Atlantic Ocean and 1 year ago in the Indian Ocean. It consists of absolutely no setting of the net on the FADS where there are large concentrations of small, immature, and juvenile yellowfin and bigeye tuna. Both species are considered fully exploited. To control the operation, observers are placed on board during the season (November till March) and the major part of the charges are borne by the governments of Spain and France.

Apparently, there have been no official government budgets for the surveillance. The Spanish boat owners have countered that there is no way that they will pay for the observers to go during the winter! If no solution is found, it is possible that the moratorium will not take effect this year. At the present time, this is only a recommendation issued by ICCAT to the governments. Therefore, unless the law is changed, there is no legal basis to oblige the fishermen to bear the cost of the observers.

These are difficult times for the Spanish pole and line albacore fishermen of the Bay of Biscayne. The catches have been excellent for the French and Irish boats but very bad for the 6000 Spanish fishermen. At midSeptember, catches fell 27% compared to last year. It fell 60% .for the Atlantic bluefin alone. Bluefin feed abundantly on anchovy. For some reason, they are not eating the bait at all. The situation even gets worse: Despite the poor landings, prices have fallen.

In the southern bluefin farms of Australia, scientists have made some progress in their experiments to develop commercial feed for the tuna. The industry has always relied on sources of baitfish, that include sardines and anchovies, for feeding the captive southern bluefin tuna. Although some sardines are produced locally in Australia, a major portion is imported from other countries, including the United States. The risks of having to import large quantities of the feed were demonstrated in a dockside union dispute in 1998, when thousands of tons of imported bait were held. Farmers were forced to ration their supplies. One of the solutions to the problem was to develop a commercial feed produced locally in Australia.

Use of manufactured feed has many advantages including control over the quality of the product and its marketability. The manufactured feed is designed with greater protein and fat content than the regular bait-fish. The most significant impact in the development of manufactured feed is that it will stabilize the economics of production and establish longterm security for the southern bluefin tuna industry.

Past Issues of the Crow's Nest

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