Expansion continues but honeymoon is over

Press, 25 September 1980, Page 21

Expansion continues but honeymoon is over

The honeymoon for the fishing industry, if ever there was one, is well and truly over.

A superficial analysis of the results for the last year would indicate that the industry has continued its rapid expansion and is well on the way to achieving the aim of obtaining maximum economic benefit for New Zealand from the 320 km zone. There was more investment in vessels and shore-pro-cessing facilities, total production reached 140,000 tonnes last year, an increase of 40 per cent over 1978, and exports grew to almost SIOOM, an increase of more than 50 per cent on 1978.

However, a number of major difficulties apparent for some time increased their impact. There was an enormous escalation in the costs fc. the fuelintensive catching sector and much greater capital costs required for expanding into under-ex-ploited species, which, being unfamiliar, can be expected to have initially lower market realisations. These problems were compounded by a continuing stagnation in world fish prices and a comparatively poor season last year because of seasonal factors and, in some fisheries, the inevitable result of excess pressure on the resource.

Unless these problems are overcome, it is considered that not only will the pace of development falter, but the existing industry could receive some serious set-backs.

One of the major features of the last year has been the substantially-in-creased involvement of joint venture operations in the development of the industry. Joint ventures, using charter vessels, have been engaged in the tuna and squid fisheries for two or more years; but in 1979 there came some major joint ventures with West Germany, Japan and Korea in the demersal fisheries. These will be added to this year by ventures with the U.S.S.R.,

Poland and Spain. In 1979 joint venture activities in all fisheries contributed 40,000 tonnes to the total catch and approximately S26M to' the export figures.

The joint venture programme has not been without its difficulties, and a number of important policy issues have not yet been resolved. Nevertheless, the joint ventures have had the advantage of increasing “New Zealand’s” presence in our 320 km zone and providing substantial quantities of fish to New Zealand processers which has enabled slack processing capacity to be taken up and facilitated important export market development.

In some cases joint ventures have provided additional information on the extent of the zone’s resources. However, while joint ventures are prepared to use foreign-crewed charter vessels for the fishing and, in the future, to invest in storage and processing facilities, it has

yet to be demonstrated that they will want to invest in fishing vessels suitable for New Zealand conditions and to be crewed by New Zealanders. Until the long-term role of joint ventures in the New Zealand industry has been decided, moves in this direction cannot be expected.

There is no doubt that from the national view, the greatest benefits are to be gained by having the resource caught by New Zealand-manned and operated vessels and processed in New Zealand shore facilities. However, if this is not as attractive to commercial enterprises as using foreign-crewed charter vessels, which probably is not tenable in the long term, then adequate inducement will need to be offered to ensure that development proceeds in the desired manner. The joint venture issue emerged last year as an important one affecting the future development

options for the industry.

A brief economic scenario of the domestic industry for the last year shows that no sector did particularly well. The inshore fleet fishing the trad i t i o n a 1 high-valued species, has found that over-exploitation of some resources and increasing costs have undermined profitability and caused over-capitalisation. The larger vessels, capable of fishing the deeper-water species acquired by the domestic industry, almost all being imported, are achieving high productivity, but the market realisations for the species caught are onlv marginal or resulting in losses. The processing sector, with under-utilised capacity and static price levels, would not have had a good year. However,

with substantially-in-throughput and export prices improving, the outlook for the coming year is brighter. In spite of these conditions, the industry invested approximately SIOM in vessels, of which 55.4 M was for imported vessels; and another S4M in upgrading and extending shore processing facilities.

A short-term price support scheme was one of the innovative moves in 1979. It was introduced to inject funds into the hardpressed sections of the catching sector, and was in the form of a supplementary payment on exports of barracouta and mackerel to all markets except Australia . and Papua-New Guinea. Approximately $250,000 has been paid out under this

scheme. As well as proing much-needed support to the industry, it encouraged market diversification. A more elaborate price support scheme of this type may be required to give the industry the stability it needs, and is being investigated. Market and product development are two areason wnich future growth will be dependent, and considerable effort will need to be directed in the immediate future. This is realised by the industry and last year there was an increasing range of products exported, and a continuing spread in export markets. Air-freighted, chilled fish exports earned SI2M in 1979. The attached map shows the destination of New Zealand’s fisheries produce by value in 1979.

There are good opportu- , nities for fisheries devel- ■ opment, but the events of I the last year or more have | brought the problems j sharply into focus, tern- > pered some of the ex- : cessive optimism of pre- j vious years, and rein- i forced the view that i growth will not be easy. I There is not a fishing in- i dustry in the world today that is not experiencing ! difficult times.