Warning Signs For The Local Tuna Industry!
Tuna Market Report - EU - July 2007
Tuna prices sky-high
The phenomenon of global warming in the Atlantic Ocean, which causes glaciers in Greenland to thaw, is the main cause for the current worldwide scarcity of tuna. According to scientists, the phenomenon will remain until April of 2008 and as such, would have disastrous consequences for the tuna industry.
The global tuna market continues to experience a shortage of supply of both yellow-fin and skipjack. EU purse seiners operating in the Indian Ocean are reportedly experiencing the worst fishing season in 20 years. Due to a combination of high prices and low demand, as well as the seasonal closing down of canneries in some areas such as the EU, canneries around the world are reducing their production. Yellow-fin frozen raw material was reported at US$ 2500/tonne in Italy, about double the normal price. Should the shortage continue over time, proper environmental measures (such as those aimed at protecting juveniles, introducing minimum catch size, etc.) have to be introduced or re-enforced in order to facilitate the recovery of tuna stocks.
As widely forecast, canned tuna prices in Europe moved upwards in the opening months of 2007. However, the negative effect on the European consumer is widely mitigated by the strength of the euro and the pound against the US dollar. Further price hikes are more than likely, especially in view of the sky high skipjack price in the Bangkok market, where recently the US$ 1 400/tonne mark has been reached.
Côte d’Ivoire is back as important supplier
The EU and Côte d’Ivoire initialled a new fisheries partnership agreement in Abidjan, on 5th April 2007. In line with the philosophy of partnership agreements, the focus will be on providing full support to Côte d’Ivoire in working towards achieving sustainable fishing in its waters. The new protocol, also agreed for a period of 6 years, will exclusively concern fishing possibilities on tuna. These have been reduced from 9 000 to 7 000 tonnes per year. Licences have been agreed for 25 seiners and 15 surface long liners. The annual financial contribution, which will amount to a total of 595 000, will be entirely allocated to the establishment of responsible and sustainable fishing in the waters of Côte d’Ivoire... The licences for tuna vessels have been reduced from 34 to 25 for seiners but increased from 11 to 15 for the surface long liners. Given the overall reduction in fishing possibilities, the financial contribution has been decreased by almost 50% per year.
The country in the EU most interested in this new fishing agreement is France, which has important investments in the Côte d’Ivoire tuna canning industry. This industry has recovered from the difficulties experienced during the civil war, and managed to double its exports to the French market during the first four months of 2007. All other major exporting countries lost ground, and total French canned tuna imports stayed stable at 36, 000 tonnes. The only exception was Ecuador.
The tariff issue on canned tuna in the EU continues to stimulate discussion. The present canned tuna tariff is 12% for all countries except Thailand, Indonesia and the Philippines. Obviously there is also a long list of countries with zero or a reduced rate of tariff. For the above mentioned three countries the tariff is 20.5%, but a certain reduced tariff quota of 12% is applied to some quantities of canned tuna exports. This quota is 13 390 tonnes for Thailand, 9 270 tonnes for the Philippines, and 2 833 tonnes for Indonesia. This reduced quota has been kept the same for the past four years; it is opened on the 1 July of each year. This year, on 23.7.2007 already the full reduced tariff quota of Thailand and Indonesia was used up, while the Philippines still have some 6 000 tonnes open.
UK reports higher imports in 2007
UK canned tuna imports grew strongly in early 2007. Traders took stock, in expectation of even higher prices later this year. The Seychelles Indian Ocean Tuna cannery is the main supplier to the UK market, reporting 30% higher sales. All other suppliers kept their positions, with only the Philippines reporting substantially higher exports. Imports in the UK are likely to go down in the closing months of 2007, as the market reacts quickly to high prices.
German traders careful
National statistics for Germany give the true country of origin, which explains the sudden emergence of Ecuador among the top suppliers to the German market. This market is the most price sensitive among all the EU markets, with consumers asking for a cheap canned tuna product. Similar to the UK, traders took stock in early 2007, in expectation of even higher prices later this year. Imports grew in the first four months by almost 10%. However, once the high raw material prices are passed on to traders, a more conservative buying attitude is likely to emerge.
Spanish canners start to dominate Italian market
The Italian canned tuna market continues to grow, as some of the major trade marks are owned by Spanish canneries, or at least Spanish canneries are the exclusive producers under this trade mark. The quality of these Spanish products is very high, giving back a good image to some traditional Italian trade marks. Still the presence of Asian products on the Italian market is close to nil, as the main species consumed in Italy “yellowfin”, is not the top species canned in Asia, and in addition almost all the canned tuna has to be canned with olive oil, a very expensive ingredient for the Asian canners.
High prices and lower sales likely
Canned tuna prices are expected to go up strongly over the coming months. Though some of the impact will be mitigated by the high value of the euro or the pound, traders will be reluctant to buy at this high price, hoping that during the coming months more tuna on the market will result in lower raw material prices. This hope is most unlikely to materialize, as the forecast for tuna catches remains bleak at least for another year.
