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Slowing US Sales Hit Philippine Tuna Industry

Lito Vargas surveys the day’s catch of yellowfin tuna as they slide down the steel gutting table at the bustling port at General Santos city in the southern Philippines.

”We used to haul them in such big numbers once but now the catch has dropped right off,” Vargas sighed as the first batch of cleaned tuna was sent to the processing plant to be frozen, packed or canned before being shipped across the world.

There are many reasons for the falling catch, among them changing water temperatures that mean fewer tuna traverse these seas on their migration routes, and volatile crude oil prices.

But the main culprit, said Vargas and others in the local industry, is a massive slowdown in demand from the crisis-hit US, which used to account for more than 50 percent of General Santos’s tuna market.

”I used to own over 100 fishing boats,” Vargas told AFP. “Now I operate only half that. It’s just become too expensive to keep the entire fleet floating.”

From a lowly fish broker in the 1980s, 51-year-old Vargas rode on the crest of the tuna boom in the past two decades to become one of the top local fleet owners using traditional lines to catch the great fish.

He now owns luxury cars and homes, and attends boxing matches in Las Vegas with his political friends.

But his fortune, along with the livelihoods of tens of thousands who rely on the tuna industry, has been dented by the crisis in the US.

The yellowfin tuna is found in deep parts of the Pacific Ocean, as well as in the Moro Gulf and Celebes Sea straddling the border of the Philippines and Indonesia.

The fish that sits atop the oceanic food chain is considered gold in General Santos, where the industry accounts for 60 percent of the local economy, and practically all aspects of life for the half a million residents are impacted by the fish.

The city is home to seven of the country's major tuna canning factories, with an average daily capacity of about 750 tons for both the local and export markets.

”If there is no tuna, there will be no food, no jobs, no money to send our children to school,” said Rosy Barinan, who supervises port operations for the Philippine Cinmic Industrial Corp., which exports tuna to fish brokers in Los Angeles.

City mayor Pedro Acharon said the local government has held crisis meetings with the major tuna fishing associations and canneries in an effort to avert economic disaster.

”Production lines were affected when the demand slowed down. The factories cannot produce and produce without any outlets. There were some downsizing of workers, and reduction of manpower shifts,” Acharon said.

The industry, worth 180 million dollars a year, directly employs between 60,000 and 80,000 people in General Santos alone. Nationwide, it employs about a million people, and contributes around four percent to annual GDP.

Vargas said the family business -which has had to retrench some key staff, though he won’t say how many- lost about 22 million pesos (nearly half a million dollars) in the last quarter of 2008.

Vargas is hoping that when things pick up, former employees can return. In the meantime, he’s falling back on family to help run the company.

Mariano Fernandez, president of the local tuna canners’ association, said the industry can survive the slowdown by exploring alternative markets in Europe and the Middle East.

At the Ocean Canning Corporation's factory in the outskirts of the city, where he is general manager, Fernandez said the US market “remains at a standstill”.

”We still get orders but not as much as before,” he said, adding that after the shock of slashed US orders in December, the company was now selling 70 percent of its product to Europe, and wanted to expand exports to China and the Middle East.

”We came back strong at the start of January. We still have a good future in tuna. After all, people need to eat to survive,” he said.