Monday, April 24, 5 pm CET
What's stopping M&As?
The tuna market has historically been a strong scenario for M&A transactions.
However, over the past three years, we have seen limited transactions -- not for lack of appetite, said Jose Antonio Zarzalejos, but for other reasons.
In a very segregated market like Spain, the family-owned business model is a con.
“There is massive complexity in integrating small businesses into large corporates,” Zarzalejos said.
In the case of small companies, they often look for high EBITDA valuation, not considering elemental factors such as the participation in the targeted business, or the international reach of it.
Other deterrent can be the low interest to acquire a vertically integrated business – people want the product, not the fleet.
There are four main factors to take into account, he said:
1. Market share concentration in mature market poses a challenge from a competition perspective.
2. Small add-ons might not deliver the growth.
3. The acquisition of sizeable businesses in regions where there are available targets might imply a reconsideration of the business model.
4. Europe is a good a region for small to medium size deals. Africa and Latin American are still showing big independent players to go for.
But in this case, there are two challenges: they are mostly vertically integrated businesses, they have vessels; and their financial reporting is very poor.
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Monday, April 24, 4.30 pm CET
Redefining taxing
US President Donald Trump's proposal to reduce corporate taxes from 35 percent to 20 percent has a big but, said Gorjan Nikolik, senior analyst at Rabobank.
“Trump is proposing an equation by which taxes are domestic sales minus domestic costs," he said. "This is only cost incurred in the US, which means effective tariff on imports will be slightly below 20 percent.”
This is a huge increase, which will eventually be reflected in prices -- and will impact the sector considerably as demand is set to drop, he said.
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Monday, April 24, 4.00 pm CET
Brexit, EU politics and tuna
Brexit is happening and it has an impact, it seems, on every aspect of our lives.
While it may not have a huge impact on the tuna sector per se -- the UK hardly buys any tuna from European suppliers -- Brexit may have triggered something entirely else, Gorjan Nikolik, senior analyst at Rabobank, said.
The French elections are one of the most important ones in the EU history. The results will define whether France will be pro-Europe or anti-Europe, he said.
The European Union is the most important market for tuna imports, and a stronger Europe will imply further cooperation, and a positive trend for tuna.
But a disintegration of Europe would be critical for global employment, currency fluctuations, which of course, would have a real negative impact for the tuna industry, Nikolik said.
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Monday, April 24, 3.30 pm CET
Have we considered MEY?
Maximum economic yield (MEY) is a very simple concept that aims to maximize the difference between revenue and costs.
Patrice Guillotreau, professor of Economics and Management at the University of Nantes, showed this afternoon how the tuna sector could make use of it.
"The fishing effort could be reduced, and the biomass level could be increased, with less catches there are more prices, and better revenue of fisheries," he said
"Of course, this is just an exercise to a different management approach," he told attendees.
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Monday, April 24, 2:50 pm CET
Chemical abuse is not helping anyone
The EU treated defrosted tuna market remains in an unclear regulatory situation.
There are misinterpretations of laws, and processors, particularly in Spain, use nitrites to change the look of their tuna products.
This is a 20,000-metric ton market, with 95 percent of the production happening in Spain and later sold to Europe and other markets abroad.
The financial gain is huge as wholesale loin prices average between €7.50 and €10.50 per kilo, much lower than prices of fresh or defrosted tuna.
Philippe Loopuyt, head of the European Commission's health and safety department, was very clear.
“The use of nitrites is prohibited, and the use of tuna that was intended for the canning sector -- frozen at minus 9 degrees [Celsius] -- cannot be used in any other processing category. All fish for other categories has to be quickly frozen to minus 18 degrees [Celsius],” he said.
The European Union is taking action to prevent the practice. Among others, the commission has created the EU Food Fraud Network and has managed to reduce the practice from 30 percent to 20 percent.
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Monday, April 24, 2.14 pm CET
Mercury concerns? Eating tuna is safe
University of North Dakota's Nicholas Raltson assured delegates at today's tuna conference that the consumption of tuna is not the cause of mercury toxicity, suggesting it rather “prevents it.”
It’s all about the affinity between mercury and other elements, he said, for instance, mercury and sulphur have a binding affinity of 10 to the 39th, a huge and risky affinity.
However, mercury has a higher binding affinity with selenium, an essential element important for brain and endocrine tissue.
The affinity between the two is 10 to the 45th, this is six million times higher than the mercury-sulphur toxic combination.
Skipjack tuna, for instance has 2 micromole of mercury for every 20 micromole of selenium; hence the consumption of skipjack is safe and it is preventive for mercury intoxications, he said.
Studying the amount of mercury disregarding the amount of selenium gives a wrong picture of the effects eating fish has, Raltson said.
Of the species reported to cause intoxication and affect unborn children, Raltson said Pilot Whale is one example of a dangerous combination, since it has 15 micromoles of mercury for every 2.5 micromole of selenium.
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Monday, April 24, 12.45 pm CET
Not just a passing FAD
"We are all responsible for raising awareness," Greenpeace's Francois Chartier told delegates this afternoon.
Chartier said there was a dangerous “proliferation of FADs” that is limiting the responsible management of fisheries.
“There is a clear lack of management, particularly on the use of FADs. The industry and the markets are responsible for improving the trends and increasing awareness of the situation."
“However, although we are on a starting point, there is not enough ambition from the market to shift from FADs to free school or pole and line,” he said.
In addition, there is an “illusion of certification processes; we have seen that sometimes some products that could meet certification in a number of years from now are marketed as sustainable, creating confusion for consumers.”
There is a clear responsibility for all stakeholders to address those key issues, he said. There is a common understanding, but the urgent action needed is not being applied.
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Monday, April 24, 12.15 pm CET
Small is big
Ingrid Kelling from the International Pole and Line Foundation (IPNLF), called on international tuna businesses to use one by one tuna fishing methods.
“One fishermen, one hook, one fish at a time,” she said. The method has a small environmental impact and allows for high returns.
Giant companies such as Waitrose and Subway have committed to support and source their tuna from one by one fisheries because small is big business, small is big returns, and small is big impact, she said.
“This way of fishing allows for very, very little bycatch; it doesn’t imply coast fishing and it leads to responsible management, not overfishing,” Kelling said.
On behalf of IPNLF, Kelling called businesses to rely on pole-and-line fisheries, claiming it also has an impact on small communities, and consumers’ attention is drawn into a product when they are buying and contributing to the welfare of others.
“This is your moment as an industry to step up and show leadership,” Kelling said.
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Monday, April 24, 11.52 am CET
Demand for FAD-free tuna growing and growing
There is a growing preference for FAD-free tuna in global markets, said Henk Brus, general manager of Pacifical cv.
The first FAD-free product was introduced four years ago – and the German market has led the way to drive the increase in production, he said.
Along with that comes an expansion of MSC free school, and there has been growing demand for Pacifical co-branded MSC from PNA.
In 2016, about 55,000 metric tons of free school certified tuna were produced in Bangkok, up from 15,000 metric tons in 2015, Brus said.
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Monday, April 24, 11.00 am CET
World tuna stocks: Uncertainty reigns
Taking a look around the world’s four oceans, different stocks of tuna migrating make for a difficult assessment of all major species. In addition, overcapacity of tuna fleets remains a great challenge.
Skipjack stocks have experienced a moderate increase in the Atlantic, and stable catches in other oceans, said Alain Fonteneau, scientist of the Institute de Reserches pur le Developpement.
The maximum sustainable yield (MSY) for the species is still increasing today, a trend indicative of quite good status everywhere, except for the Indian Ocean.
Fonteneau said the “gold medal” goes to the Western Pacific and its 2 million metric tons of annual catches, which is lower than the MSY.
However, there are “unknown uncertainties” in skipjack assessment, which he described as the “most difficult” one to assess.
Bigeye stocks have shown declining trends due to a combination of management measures, and stocks are exploited close to their MSY, which are estimated similar levels in the world’s four oceans.
The bigeye stock in the Western Pacific is estimated to be the worst one, but this is wrong, according to Fonteneau.
Stock biomass and MSY is “widely underestimated,” he said, while mortality is overestimated.
“I will not be pessimistic on this stock,” Fonteneau said.
Albacore tuna stocks are showing a moderate increase, and are moderately fished, but also show a low potential MSY, compared with tropical tunas.
There is little hope for large stock increases of this species, and in the north Atlantic, there is likely to be a decline on the total allowable catch (TAC).
Bluefin tuna, the most valuable tuna and most endangered species, continues to be in decline, although good management and a responsible approach to tackle the problem means there is “no reason to believe the stocks will disappear.”
The three stocks are showing low total catches with 100,000 metric tons worldwide, they all are under heavy pressure and overfished but quite well-managed at the moment, Fonteneau said.
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Monday, April 24, 10.35 am CET
Just to clarify, discards are not banned by the MSC
The MSC does not ban discarding, said David Agnew, science and standards director of MSC.
“It has to be fully reported, it has to be counted for as landing, but it is not banned just as such,” Agnew said.
“Discard can lead to illegal practices and to unreporting of landings, we require that all discards are counted as landings.”
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Monday, April 24, 10.15 am CET
PNA tuna fisheries, a complex network for certifiers
The Marine Stewardship Council (MSC) is celebrating its 20th anniversary. “A lot has changed in these two decades, I think we have been very successful,” said David Agnew, science and standards director at MSC.
There are 310 certified fisheries, over 20,000 certified products and 3,500 chain of custody certificate holders.
Currently, there are longline fisheries, Antarctic fisheries, tuna fisheries in all three oceans. Six tuna fisheries are under assessment, and the process of certification normally lasts between nine months and one year.
The PNA tuna fisheries are particularly complex, said Melino Bain-Vete, PNA Office MSC and Policy Research.
“The objective of the chain of custody is to ensure that consumers know they’re buying from a certified source, sounds simple and straightforward but it can be complicated,” said Bain-Vete.
“A single vessel can fish both MSC and non-eligible tuna on the same day with the same gear, this is one of the complications, also almost all catch is transshipped, ungraded and in bulk by fish carrier.”
To address a comprehensive and robust chain of custody, there are 100 percent third party monitoring trips, in addition, the PNA fisheries’ chain of custody (CoC) overlap with factory CoC checking to ensure coverage from set to factory, maintaining eligibility from set though to the factory.
Nothing is certified until final sorting of MSC eligible catch, mass balances and species composition, he said.
“For a fishery to be certified, segregation has to be maintained, the overlapping point with the factory chain of custody is particularly important,” said Bain-Vete.
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Monday, April 24, 9.50 am CET
Sustainability and businesses should go hand in hand
Indonesia complies with several regulations toward sustainable fisheries management, Susi Pudjiastuti, minister of marine affairs and fisheries of Indonesia, told delegates.
"The multi-billion dollar businesses need to sustain, and that can only happen by making sure that next generations can rely on the resources," Pudjiastuti said.
The country has enforced several regulations enacting sovereignty and the sustainable use of marine resources including a moratorium of foreign fishing, and the prohibition of transhipments in the country’s EEZ’s.
“I hope the tuna commission is able to bring this message that the industry and the businesses have to work towards sustainability, and take climate change and population growth as a serious matter, otherwise one day, tuna will be gone," Pudjiastuti warned.
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Monday, April 24, 9.40 am CET
Sinking vessels is the law
Indonesia is committed to sinking foreign vessels detected by radar systems illegally fishing in the country’s waters, said Susi Pudjiastuti, minister of marine affairs and fisheries of Indonesia.
Tasked with one of the most challenging positions three years ago, Pudjiastuti decided to turn around the fishing industry in the country and apply a constitutional measure: “to sink every illegal fishing vessel in the country.”
After meeting with businesses and officials both in the country and abroad, Indonesia kicked off the much controversial practice.
“I couldn’t do anything else, our fisheries have been destroyed for decades with the support of governments, it was enough, we could allow the practice no longer,” said Pudjiastuti.
The country’s fisheries sector is being restructured and biomass is in recovery, although it is still far from being correctly managed.
“Success is still to be accomplished, the system still needs loads to be restructured, but the biomass of our oceans has increased by 240 percent,” Pudjiastuti said.
“Next year we have 11 million metric tons for sustainable catch recommendation, a very clear recovery.”
The minister requested recognition from the European Union, particularly in import duties, which are according to her higher in Indonesia than they are for many other countries exporting to the continent.
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Monday, April 24, 9.29 am CET
Moving to a new era of tuna fishing
“It is true, we are moving to an era where technology and research in tuna fisheries will be key,” Conchita Sierra, managing director of Atuna, said at the opening speech of the sixth European Tuna Conference held Monday.
Stefaan Depypere, director of the European Commission DG Mare, talked on behalf of Karmenu Vella, commissioner of fisheries and aquaculture of the EU, and highlighted the need of cooperation between authorities to improve management.
Illegal, unreported and unregulated (IUU) fishing will be a central issue on today’s talks, Depypere said, and added technologies of communication and better management, including the introduction of fish aggregating devices (FADs) will also be central.
“Commissioner Vella is fully committed, the ongoing negotiations and talks with third countries has been very successful,” Depyrpere.
“You must expect that the commissioner will continue with the card system to encourage third party countries to comply with international standards.”
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Monday, April 24, 9.00 am CET
Rethinking tuna
The sixth European Tuna Conference kicks off in Brussels this morning, with industry leaders from all over the world descending on the city's Crowne Plaza Brussels-Le Palace hotel to discover and discuss the main trends and challenges facing the sector.
During the day-long conference, 20 speakers will talk about the major changes set for the global tuna industry and discover how this will influence tuna sourcing and marketing policy.
The theme this year is ‘Rethinking Tuna -- moving into a new era’, and the one-day agenda will cover a whole host of topics, including the state of the world's tuna stocks, the future of fishing, market and pricing challenges, as well as the consequences of geopolitical changes such as Brexit on the global tuna industry.
Click here to see the full program.
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