The national fishing company of the Maldives strives to balance its social responsibility towards fishermen and the industry with its own financial sustainability. Investment into new processing infrastructure will make the company more competitive and profitable, but the real game changer lies in convincing the international market of the value of consuming eco-friendly sustainably-produced fish.
What is MIFCO’s role in the Maldives fisheries sector?
MIFCO is a leader in the fish processing and export sector. Further, as a state-company, we also have the mandate of helping sustain the industry and the livelihoods of the people that live from fishing the Maldivian seas. It is also our responsibility to uphold the standards of the industry, as the Maldives have the most sustainable and eco-friendly fishing in the world.
How are the low international prices for fish affecting MIFCO’s operations?
The structural problem with fish pricing arises from very low international market prices in recent years, which poses a problem with our production costs. The Maldivian pole and line type of fishing, which is amongst the most sustainable in the world, comes with higher costs than mass net-fishing and that is reflected in our day-to-day activities. Furthermore, we support fishermen by sustaining high prices for the fish we buy from local producers, while selling it in the international market at near cost, with obvious financial implications.
What solution is there for this challenge?
We will increase our processing capacities to can 100% of our fish production, since processed fish grabs a higher price in the international market. Currently we process only 20%, while the rest of the production is exported to Thailand as frozen fish, with a much reduced profit margin. We have been negotiating with the government and have been promised the necessary funding for facility expansion.
Of our four processing facilities, currently only the Felivaru plant is capable of canning, with a processing capacity of 50 metric tons per day. We have already started to invest in new machinery that will progressively expand the plant’s capacity to 65 metric tons by April 2019, and eventually to 100 metric tons. On average, we collect 180 metric tons of fish per day, mainly skipjack tuna. With a processing capacity of 100 metric tons per day, our business will be considerably more resistant to external shocks. We estimate that USD$21 million would be sufficient to update current facilities and expand our capacity. It would also allow us to renovate our fleet to increase daily collection, which will open another challenge, namely finding consumer markets for our fish.
What are your main export destination markets?
Beyond Thailand, we mainly serve the United States and the European Union. With the fall in international prices, those markets are not as profitable for us, particularly since the Maldives ascended into a Middle income country status, bringing significant levies to our exports. Currently we pay between 18 and 20% in taxes to export to the EU, making our prices less competitive and shredding our profit margins. The government is trying to negotiate lower tariffs within the framework of sustainability that our fishing industry upholds.
Nevertheless, international markets still don’t not value the sustainable aspect of our fishing industry and tax us in the same way as everyone else. We have to learn how to promote our traditional sustainable fishing at the same level as our tourism industry.
How competitive is the Maldivian fishing fleet?
There is room for improvement. We lack capacities to keep the fish fresh for long periods while vessels are out at sea. The government invested in a number of ice-making facilities around the country, but our geography and the shifting fishing zones make it difficult to streamline access to ice. MIFCO is responsible for maintaining those ice plants and the cost is considerable. The government is now incentivizing fishermen to install ice-making machines on the vessels, which will allow them much more flexibility in keeping the fish fresh while at sea, thus reducing our costs with the ice-plants.