Catching on: The fishing industry is maturing

As one the Pacific Ocean’s largest fishery zones, encompassing some 2.4m sq km of exclusive water territory, PNG is home to more than 10,000 identified species of fish, molluscs and crustaceans. The country currently operates six primary fisheries, the most productive being the tuna catchments, along with prawn, lobster, sedentary, inshore and aquaculture/inland categories taking on smaller but growing roles. The primary export destinations for PNG seafood include Hong Kong, Japan, Australia and the EU, the latter of which benefits from a tariff-free Economic Partnership Agreement.

A wide variety of participants run these fisheries, from small-scale artisanal communities to locally based small and medium-sized enterprises (SMEs), with a few larger vessels all the way up to large-scale international purse seine operations. Generally based out of local fishing villages, small operations work a variety of different fisheries depending on their location. Coastal projects include finfish, prawns, lobster and barramundi, as well as sedentary resources such as beche-de-mer (BDM, better known as sea cucumber), trochus shells, pearl shell and green snail. Freshwater inland fisheries are concentrated more around the fledgling aquaculture sector, primarily with raising and harvesting of food stock fish such as tilapia, trout and carp.

SMEs fill a niche in between small fishing villages and large-scale operations; they fish primarily with long-line vessels for tuna and other pelagic species as well as operating prawn trawlers. The large-scale commercial purse seine operations are dominated by international tuna fleets operating within PNG’s exclusive economic zone (EEZ) under the authority of a number of international agreements.

CHICKEN OF THE SEA: Home to some of the world’s most productive tuna runs, PNG supplies roughly 10% of total global tuna production each year and pulled approximately 750,000 tonnes from its waters in 2010. This is somewhat higher than the usual average of 450,000-500,000 tonnes of tuna each year. Nearly all of the domestic output, which generally encompasses around 20% of the total catch, is exported in the form of canned tuna, the processing of which is based primarily around the northern coast of the PNG mainland in the Madang province. Currently, there are three large tuna processing plants there. The Frabelle plant has a capacity of 120 tonnes per day and is located near the town of Lae. RD Tuna processes 200 tonnes per day, as does the South Seas Tuna Corporation based in Wewak.

Attracted by the perennially productive harvest and steady demand for tuna, five new downstream tuna processing plants are scheduled within five years. With a combined capacity of 600 tonnes per day of canned tuna, the country’s output will hit record levels. The government is also developing the 87-ha Pacific Marine Industrial Zone near Madang to serve as a centre for seafood processing. Work on the project, estimated to cost approximately PGK300m ($142.8m), partially financed through Chinese loans, is expected to begin in 2012, with tenants up and running by 2015, according to the National Fisheries Authority (NFA).

INTERNATIONAL RELATIONS: In addition to the value of exported tuna, PNG also benefits from the cooperative fishing treaties allowing other countries access to its bountiful waters in exchange for financial compensation. PNG takes in PGK30m-40m ($14. 28m-19.04m) annually from these bilateral agreements with Distant Waters Fishing Nations (DWFN) such as China, Japan, Korea, the Philippines and Taiwan.

The US-Pacific Islands Multilateral Tuna Fisheries Treaty was under scrutiny in 2011 and 2012 as the PNG government mulls renewing the contract upon its expiration in mid-2013. Under the existing terms of the deal, the US pays treaty members $18m per year for the right to use their waters. In May 2011, the government, led by then Prime Minister Michael Somare, announced its intention to withdraw from the treaty, contending that the compensation and other terms of the deal were not equitable for PNG. In December 2011, under the leadership of Peter O’Neill, it rescinded the statement but renegotiated the terms of the contract.

Among the primary contentions of the agreement are the amount of monetary compensation the US gives treaty members and the blanket immunity that is granted to US-flagged vessels fishing within PNG’s territorial waters. Meanwhile, other ships are subject to sovereign laws and regulations. The implementation of a duty-free, quota-free agreement with the US is similar to a recently forged deal with the EU. Indeed, the EU directive giving PNG’s tuna duty-free access to European markets has been an important step in making PNG a regional fishing and processing centre.

INSHORE FISHERIES: Behind tuna, there is a significant drop-off in the production of other seafood. A number of challenges in the fishing industry, such as increased fuel costs, depressed market prices, access to financing, overfishing and fishery closures, have restricted growth and investment in these areas.

Lobster and prawn fisheries are active predominantly in the southern regions of the country, with lobster concentrated in the Torres Strait. The lobster is fished primarily by independent, artisanal fishermen and then sold to commercial exporters for processing and transportation. The country’s lobster catches average approximately 100 tonnes each year, according to the NFA, and are fished exclusively through diving. PNG’s annual prawn production, meanwhile, totals about 1000 tonnes and is concentrated around three fisheries of Western Prawn Fisheries, Orangerie Bay Prawn Fishery in Milne Bay and the Gulf of Papua Prawn Fishery, an NFA representative told OBG.

The profitable dried sea cucumber fishery is on hiatus in PNG until at least 2013 after a ban on BDM in 2010 to allow stocks to replenish themselves following a period of overfishing. Depending on the species, the product can fetch up to PGK300/kg ($142.80/kg) according to the NFA, which estimates the total domestic BDM export market will reach 550m tonnes per annum once harvesting is resumed. The primary export destinations for BDM are affluent East Asian countries such as Singapore, Hong Kong, Taiwan and China.

Other profitable but smaller niche markets include live reef fish and the aquarium fish trade. The live reef fish segment is primarily made up of species of grouper, cod, trout, wrasse, emperor and snapper, which are captured and transported live to high-paying markets such as Hong Kong and southern China for display before being consumed on-site. PNG is also home to a wide variety of aquarium fish, which has an estimated global retail trade of $3bn ($1.43bn) according to the NFA. Additional popular catches in PNG include shark, reef fin fish, crab and shell fish.

AQUACULTURE: Aquaculture is still relatively underdeveloped in the country, although recent small-scale efforts to grow the segment are now under way. The NFA estimates around 20,000 small aquaculture farmers are currently active in the country, 80% of which are located in the highland territories and primarily farm food stocks such as tilapia, carp or trout.

According to the NFA Policy and Projects Management Unit’s trade and investment officer, Rodney Kirarock, the greatest challenge to this rapidly growing segment is attaining sufficient quantities of expensive feedstock, nearly all of which is imported from Australia. A new PNG government effort to raise domestic feedstock for these fish farms, including providing seed capital for fingerlings, is hoped to bring down the costs for aquaculture projects.

There are also a number of fledgling commercial operations spread across PNG, including a prawn farm business in East New Britain province, an oyster pearl farm in Samarai Island, and a seaweed farming and processing project in Milene Bay.

SUSTAINABILITY: While the large fisheries zone available to PNG provides great opportunities and a wealth of resources, it also presents a daunting challenge in terms of monitoring, control and surveillance. The primary legislation governing the sector is the Fisheries Management Act of 1998 and the Fisheries Regulations of 2000, both of which are managed by the NFA. Among other duties, the NFA is responsible for export certification and regulation, managing fisheries resources for sustainable growth, and regulating and overseeing the industry’s development.

In addition to domestic legal framework, PNG is also bound by regional cooperative agreements including the Western and Central Pacific Fisheries Commission and the Parties to the Nauru Agreement, which address over-fishing of tuna stocks. Part of these regulatory efforts involves policing PNG’s extensive EEZ to maintain enforcement of sustainable catchment laws. Due to the complete observation and monitoring coverage on all fishing vessels licensed to ply national waters, sustainable fishing practices are fairly well maintained.

Vessels operating outside the legal system are more cause for concern. Despite the efforts of PNG national defence force and the Australian and New Zealand naval forces patrolling the water, the vastness of ocean territory makes it difficult to monitor all unlicensed fishing boats entering restricted waters. Violators, many of which come in from Indonesia, face stiff penalties if they are caught, including the forfeiture of their boat.