Fishing prospects still good

Press, 17 July 1979, Page 22

Fishing prospects still good

The current upsurge of New Zealand’s interest in fishing dates from the establishment of the 200mile zone, which made us aware as never before of the enormous resource we have on our doorstep. While earlier we had been content to leave the exploitation of this resource to foreigners — partly as a result of some abortive ventures such as N.Z. Sea Products — many firms became inter-, ested in fishing as a commercial prospect, and many joint-ventures were started — mainly to take advantage of foreign expertise.

The local company, Feron Seafoods, Ltd, as one of the older in the industry, was right in the middle of these developments.

This period ended in the winter of 1977, which coincided with the start of a rapid increase in supply from New Zealand-owned trawlers, which has carried on through the current years.

As a result, trading was relatively simple. Australia was in short supply and took all our trawlfish at good prices, and eels and crayfish sold them- - jives. As most of the year was a rising market as far as sellers were concerned. Feron Seafoods, Ltd, profited accordingly.

The remainder of the year carried on in much the same way as the previous year, but in January

it became apparent that it was going to be a record year as far as New Zealand fish landings were concerned.

At about this time also, a large local gemfish resource was discovered in Australia, the significance of which was overlooked by most New Zealand traders. This was probably because with pending 200mile zone legislation, Japan was buying quite steadily trawlfish for the first time other than snapper.

By the end of July jsf last year Japan had stockpiled enormous quantities from all over the world, and ceased buying overnight. Australia had become a definite buyers’ market, and trading conditions were extremely difficult.

As with most other companies, Feron Seafoods had experienced a record catching season, and at balance date had accrued record stock levels to its disadvantage. In the light of current export prices, stock values were written down substantially at balance date to retain a profit level when sold in the forseeable future. This had an adverse effect on the profitability of Feron Seafoods, which resulted in a loss situation. For the next financial year (ending July 31), it was hoped that the normal winter shortage of supply would ease the high stock

position on hand at the start of the current financial year. This in fact did not happen as the record catching trends continued through the normally quiet winter period. Pressure on the Australian market became severe instead of easing and weak sellers started to sell at considerably lower prices than the company’s adjusted stock values at the end of the previous financial year.

This put Feron Seafoods in a very difficult position, as stocks of perishable product continued to rise and considerable costs for outside storage and back accommodation were being incurred. At this stage, Feron Seafoods reduced prices to suppliers, reduced intake, and concentrated . on breaking away ‘ from the traditional Australian market.

At the new buying price levels, this proved to be most successful, particularly in Italy, Spain, and the United States — which have now become the company’s most important trawlfish markets. One unfortunate aspect was common to all new markets: they were not the slightest bit interested in Australian-style export packaging, which peaked at a record 40,000 cartons by September 30, 1978. Each market wanted its own peculiar style which for the United States is completely skinless and

boneless packed in lbs weight, Italy “dressed style,” and Spain shatterpacked, both of the latter in metric weights. As fish is highly perishable, it is not possible to thaw and re-process such product. Accordingly during the current year Feron Seafoods has been forced to meet the market for old stocks, which has resulted in a return of 40 per cent less in some cases compared with the previous year.

As a result up to January 31 values of old stock were written down at the end of each month in line with rapidly falling Australian market prices. This position levelled out in February/March. As no new stocks were being packed for this market, demand started to exceed supply, and although prices did not rise, they also ceased to fall.

The present position is that with forward orders held, Ferons is now almost completely out of the old stock packed specifically for Australia. It has been made very clear to the Australians that because of alternative markets developed in the meantime, subsequent packing will only be against firm orders at reasonable price levels.

There is little doubt that Australian traders exploited the New Zealand situation, because in many cases the lower prices were not passed on. How-

ever, as often happens an adverse situation is sometimes necessary to force a solution, and in this particular case Ferons’ export manager has just completed a most promising European visit.