Market and Industry Dynamics in the Global Tuna Supply Chain

Amanda Hamilton I Antony Lewis I Mike A. McCoy Elizabeth Havice I Liam Campling June 2011

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ACKNOWLEDGEMENTS
This study would not have been possible without the kind assistance of hundreds of people who made time available to meet with members of the consulting team during in-country visits and who provided valuable insights and data. Analytical and research support was also provided by several international fisheries experts, as well as logistical support from a number of industry representatives. The consultants and the FFA Secretariat gratefully acknowledge and extend their sincere thanks to all persons who assisted Pacarrying out this study. ce for in cif

ic P eo ple A In particular, special thanks is extended to the following people who provided assistance over s r Sli aire F

and above the norm: Phil Roberts, Hugh Walton, Masao Nakada, Len Rodwell, Peter Terawasi, Marco D’Agostini, Rick Heroux, Kwame Mfodwo, Isamu Murakami, Taro Kawamoto, Ken Banwell, David Webb, Jamie Birch, Alfonso Beitia, Alberto Quinteiro, Vicky Franco, Liu Xiaobing, Davy Chen, Zhao Gang, W.H. Lee, Chris Hsu and Jerry Tsai.
2011 - production of this report was provided by the Funding for the assignment undertaken for the2014 Government of Japan through the Overseas Fisheries Cooperation Foundation.

OFCF
Funding for the publication and distribution of this report has been provided by the European Union through the DevFish II project. e for Pacific Pe r Slic op aire F le

A

s

2011 - 2014

OFCF

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DISCLAIMER
The content of this report (including all analysis and opinions) are solely the responsibility of the consultants and do not necessarily reflect the position or thinking of the FFA Secretariat or its members.

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TABLE OF CONTENTS
EXECUTIVE SUMMARY 18

1 INTRODUCTION 1.1 1.2 1.3 1.4 Background Intended Project Benefits to FFA Members Defining ‘Industry Intelligence’ and ‘Market Intelligence’ Methodology

47 47 48 50 51

PART 1 – THE CANNED TUNA INDUSTRY

53

2 CANNED TUNA FISHING FLEETS 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 General Overview Japan Taiwan Korea United States Philippines China Papua New Guinea European Union Indonesia Others – Eastern Pacific Ocean Others – Western and Central Pacific Ocean Longline-caught Albacore (White Meat) for Canning Implications for PICs

53 53 60 67 75 79 87 92 98 104 114 119 123 129 133

3 CANNED TUNA TRADING COMPANIES – THE ‘BIG THREE’ 3.1 3.2 3.3 3.4 3.5 Overview Tri Marine FCF Itochu Implications for PICs

137 137 139 145 149 152

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4 CANNED TUNA PROCESSORS 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 4.16 4.17 4.18 General Overview Thailand United States - Mainland Unites States - American Samoa European Union Ecuador Philippines Korea Japan China Indonesia Vietnam Papua New Guinea Solomon Islands Others – Western and Central Pacific Others – Eastern Pacific Ocean Others – Sub-Saharan Africa Implications for PICs

154 154 158 169 178 183 193 202 207 210 214 218 222 225 229 232 233 234 237

5 PRINCIPAL CANNED TUNA MARKETS 5.1 5.2 5.3 5.4 5.5 5.6 5.7 General Overview European Union United States Others - Japan Others - Middle East Others - China Implications for PICs

241 241 243 252 256 259 260 261

PART 2 – SASHIMI TUNA INDUSTRY

263

6 SASHIMI TUNA FISHING FLEETS 6.1 6.2 6.3 General Overview Japan Taiwan

263 263 266 273

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6.4 6.5 6.6 6.7 6.8 6.9 6.10

Korea China Indonesia United States Others – Indian Ocean Others – Western and Central Pacific Implications for PICs

279 282 288 290 292 294 299

7 PRINCIPAL SASHIMI MARKETS 7.1 7.2 7.3 7.4 7.5 General Overview Japan United States Emerging Markets – China Implications for PICs

302 302 304 313 317 318

PART 3 – VALUE-ADDED & OTHER TUNA PRODUCTS

320

8 FRESH & FROZEN VALUE-ADDED PRODUCTS 8.1 8.2 8.3 8.4 General Overview European Union United States Implications for PICs

320 320 320 326 327

9 OTHER PRODUCTS – KATSUOBUSHI

330

PART 4 – OTHER RELEVANT ISSUES

337

10 SUSTAINABILITY MOVEMENT 10.1 10.2 10.3 10.4 10.5 10.6 Overview Sustainability Certification Schemes International Seafood Sustainability Foundation Environmental Non-Governmental Organisations Consumer Recommendation Campaigns Implications for PICs

338 338 339 343 344 345 346

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11 DEVELOPMENTS IN THE INTERNATIONAL TRADE REGIME 11.1 General Overview EU – Economic Partnership Agreement EU – IUU Fishing Regulation WTO Fisheries Subsidies Negotiations Direct and Indirect Preference Erosion Pacific Agreement on Closer Economic Relations (PACER)

348 348 348 352 355 359 361

11.2 11.3 11.4 11.5 11.6

12 CONCLUDING COMMENTS

363

APPENDICES Appendix 1 - Persons Consulted Appendix 2 - Canned Tuna Processing: Key Terminology Appendix 3 - WCPO Purse Seine Catch Disposal and Cannery Receipts 2009 Appendix 4 - EU Tariffs for Selected Fish Products Under HS Code CODE 0304/3035

364 364 371 373 375

REFERENCES NOTES ON CONTRIBUTORS

377 393

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LIST OF TABLES Table 1.1 Table 2.1 Table 2.2 Table 2.3 Table 2.4 Table 2.5 Table 2.6 Table 2.7 Table 3.1 Table 4.1 Table 4.2 Table 4.3 Table 4.4 Table 4.5 Table 4.6 Table 4.7 Examples of Global Tuna Industry and Market Intelligence Major Japanese Purse Seine Fishing Companies Number and Ownership of Functionally Chinese Purse Seiners (2010) Total purse seine catch (‘000 tonnes) in PNG waters (2005-2009) Total purse seine catch (‘000 tonnes) by PNG fleet in WCPO (2005-2009) Volume (mt) and Value ($US million) of PNG Tuna Exports (2004-2009) EU-owned tropical tuna purse seine fleet in 2010 Total WCPO Albacore Catch by Fleet (2009) Overview of Tri Marine’s Global Operations Global Processing Capacity (Whole Round) - Canned Tuna and Loins, 2008 Top Ten Canned Tuna Processing Countries, 2008 Comparative Labour Costs for Canned Tuna Processing, 2010 Company Overviews of Three Major Thai Tuna Processors Thailand Canned Tuna Exports (‘000 mt), 2005-2009 Company Overview of the ‘Big Three’ US Brands (2010) Production Capacity and Supply of US-Based Tuna Processing Facilities, 2010 Table 4.8 Table 4.9 Table 4.10 Table 4.11 Table 4.12 Table 4.13 Table 4.14 Table 4.15 Table 4.16 Table 4.17 Table 4.18 Table 4.19 Table 4.20 Table 4.21 Table 5.1 Table 5.2 US Imports of Cooked Tuna Loins by Supplier (‘000 mt), 1998-2009 ‘Big Three’ US Tuna Companies: Investment in Third Countries 2010 American Samoa Tuna Processing Operations, 1954-2010 Top Five Spanish Canned Tuna Firms Europe’s Top Four Non-Spanish Canned Tuna Branded-Processing Firms Ecuador Tuna Production Summary (Whole Round), 2009 Ecuador Export and Market Access Regimes Overview of Philippines Canned Tuna Processors, 2010 Overview of Korean Canned Tuna Processors, 2010 Overview of Indonesia’s Tuna Canning Operations, 2010 Overview of Existing Canned Tuna Processing Operations in PNG, 2010 New/Proposed Canned Tuna/Loin Processing Investments in PNG, 2010. Major Eastern Pacific Ocean Canned Tuna Processors, 2010 Overview of Tuna Canneries and Loining Plants in Sub-Saharan Africa Total Global Tuna Consumption by Region, 2008 EU Import Market for Canned Tuna by Supplier Country (% unless otherwise specified), 2000-2009 246 172 173 174 180 187 190 194 199 203 208 219 226 228 233 235 241 51 61 93 100 101 102 107 130 141 154 155 156 160 164 170

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LIST OF TABLES cont. Table 5.3 Table 5.4 Table 5.5 Table 5.6 Table 6.1 Supermarket Concentration in Major EU Markets for Canned Tuna EU Canned Tuna Consumption (kg per capita) US Canned Tuna in Brine Imports by Supplier (‘000 mt), 2002-2009 Japanese Canned Tuna Consumption (mt), 1995 & 2007 Number of Distant Water Longline Vessels Registered with OPRT, 2002-2010 Table 6.2 Table 6.3 Classification and Operational Capabilities of Taiwanese Longliners Estimated Catch by Species and Gear Type of US Vessels in the WCPFC Convention Area, 2009. Table 6.4 Table 7.1 Table 7.2 Table 7.3 Table 8.1 Maldives Total Tuna Catch By Species and Gear (mt), 2007 Estimated Global Sashimi Consumption, 2010 Total Supply of Sashimi-Grade Tuna to Japan, 2005-2009 US Imports of Fresh Tuna (‘000 mt), 2004-2009 EU Non-Canned Tuna Market – Retail Sales Value ($US million) and Market Penetration (% Households), 2008 Table 8.2 Total Seafood Consumption in France by % Share of Distribution Channel, 2008 Table 8.3 Table 8.4 UK Non-Canned Tuna Sales in Value and Volume, 2007-2009 US Imports of Fresh and Frozen Tuna by Volume (‘000 mt) and Value ($ US million), 2006-2009 Table 8.5 US Production of Tuna Fillets and Steaks by Volume (mt) and Value ($US million), 2006-2009 Table 9.1 Japanese Domestic Katsuobushi Production, 2004-2009 326 331 326 321 322 321 290 294 304 305 315 265 276 250 252 253 257

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LIST OF FIGURES Figure 2.1 Price Index for Crude Oil, Canning-Grade Frozen Skipjack and Sashimi-Grade Frozen Bigeye, 2000-2011 Figure 2.2 Figure 2.3 Figure 2.4 Figure 2.5 Bangkok Canning-Grade Tuna Prices ($US/mt), 2000-2010 Profile of ‘Functionally’ Taiwanese Purse Seine Fleet (2010) Estimated Global Taiwanese Longline Albacore Catch by Ocean, 2008 Estimated WCPO Catch by Taiwanese Purse Seiners by Country of Registration (2009) Figure 2.6 US Purse Seine Catch (MT) and Percentage of Total WCPFC Catch, 2000-2009 Figure 2.7 Network of EU Marine Territories and Fisheries Partnership Agreements in 2009 Figure 2.8 Figure 2.9 Figure 3.1 Figure 4.1 Figure 4.2 Total Annual Catch By Species (All Gear Types) in the EPO, 2001-2008 Distribution of the South Pacific Albacore Catch, 1988-2009 FCF Global Tuna Marketing Volumes Thailand Skipjack Imports by Vessel Flag, 2009 US and Thailand Canned Tuna Production (‘000 mt, net finished weight), 1982-2007 Figure 4.3 Figure 4.4 Figure 4.5 Bumble Bee’s Global Sourcing and Production Strategy EU Production of Canned Tuna by Country and Volume, 1998-2007 Ecuador Canned Tuna Production (‘000 mt, Net Finished Weight), 1982-2007 Figure 4.6 Ecuador Loin Exports to the US and EU (‘000 mt, Net Finished Weight), 2000-2009 Figure 4.7 Figure 5.1 Japan’s Canned Tuna Production (‘000 mt, net finished weight), 1982-2007 Domestic Production vs. Imports in Total Supply of Canned Tuna to EU, 1996-2008 Figure 5.2 Figure 5.3 Figure 5.4 EU Import of Pre-Cooked Tuna Loins in Value and Volume, 2000-2009 EU Import of Tuna Loins by Major Supplying Countries, 2000, 2009 Brand and Private Label Share in Value and Volume of US Canned Tuna Retail, 2009 Figure 5.5 Thailand Canned Tuna Export Volumes to Egypt and Saudi Arabia, 2004-2009 Figure 6.1 Figure 6.2 Global Bigeye Catches by Chinese Longliners, 2008 Top Ten Tuna Importers from Sri Lanka ($ US million) 260 283 293 255 244 247 248 195 211 195 171 175 184 109 120 131 146 162 82 71 59 59 68 70

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LIST OF FIGURES cont. Figure 7.1 Figure 7.2 Average Annual Price for Fresh Sashimi-Grade Tuna (JPY/kg), 1995-2010 Average Annual Price for Frozen Sashimi-Grade Tuna (JPY/kg), 2000-2010 Figure 7.3 Figure 7.4 Figure 7.5 Figure 7.6 Figure 8.1 Figure 8.2 Volume and Value of Household Tuna Consumption in Japan, 1993-2009 US Fresh Tuna Import Prices ($US/kg), 2000-2010 Market Share of US Imports of Fresh Bigeye By Volume, 2009 Market Share of US Imports of Fresh Yellowfin By Volume, 2009 Total EU27 Imports of Frozen ‘Fillets’ of Tuna, 1995-2009 France Imports of Frozen Tuna ‘Fillets’ by Major Supplying Country ( 2002, 2007, 2009) Figure 8.3 UK Imports of Frozen Tuna ‘Fillets’ by Major Supplying Country (2002, 2007, 2009) Figure 9.1 Comparison of Bangkok and Yaizu Skipjack Prices, 2000-2010 325 336 325 307 311 314 315 316 323 307

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ACRONYMS 3IA AAFA ACP ALB ALTI ANABAC Third Implementing Arrangement of the Nauru Agreement American Albacore Fishing Association African, Caribbean and Pacific Group of States albacore Tuna Longline Association – Indonesia AsociaciónNacional de BuquesAtunerosCongeladores y la Organización de Productores de TúnidosCongelados ANZ APTA ASCM ASEAN ASPIRE ASTUIN ATL ATPA BE BF BFAR BIMPEAGA CA CAFTA CCSBT CDS CEIPA CH CITES CMB CMM CNADGC CNFC CNM CO COSI CRA Australia and New Zealand Asia-Pacific Trade Agreement Agreement of Subsidies and Counterveiling Measures Association of Southeast Asian Nations American Samoa Protection of Industry, Resources and Employment Bill Indonesian Tuna Association Atlantic Ocean US-Andean Trade Preference Act bigeye bluefin Bureau of Fisheries and Aquatic Resources (Philippines) Brunei Darussalam-Indonesia-Malaysia-Philippines East Asia Growth Area competent authority China-ASEAN Free Trade Agreement Commission for the Conservation of Southern Bluefin Tuna catch documentation scheme Cámara Ecuatoriana de Industriales y Procesadores Atuneros China Convention on the International Trade of Endangered Species Chevannes-Merceron-Ballery conservation and management measure China National Agricultural Development Group Corporation China National Fisheries Corporation cooperating non-member carbon monoxide Chicken of the Sea International Citra Raja Ampat

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DFZ DG Fish DG Trade DG-SANCO DWFN EBA EC EDF EEZ ENKATSUKYO EPA EPO EU FAD FAO FCF FFA FFC FMA FOS FPA FRP FSM FSMA FTA GAPPINDO GRT GSP GT HS code IATTC IBL ICCAT ICSI IEPA

declared fishing zone EC - Directorate General for Fish EC - Directorate General for Trade EC - Director General for Health & Consumers distant water fishing nation Everything But Arms Agreement European Commission Economic Development Fund exclusive economic zone National Ocean Tuna Fishing Association of Japan Economic Partnership Agreement Eastern Pacific Ocean European Union fish aggregation device UN-Food and Agriculture Organisation Fong Cherng Fishery Company Ltd. Pacific Islands Forum Fisheries Agency Frabelle Fishing Corporation Fishery Management Areas Friend of the Sea Fisheries Partnership Agreement fibreglass reinforced plastic Federated States of Micronesia FSM Arrangement free trade agreement Indonesian Fisheries Industry Association gross registered tonnage EU Generalised System of Preferences gross tonnage Harmonised System code Inter-American Tropical Tuna Commission Ireland Blyth Ltd. International Commission for the Conservation of Atlantic Tunas Investment Corporation of Solomon Islands Interim Economic Partnership Agreement

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IO IOT IOTC IPDCP ISSF IUCN IUU JFA JTEPA JV KINKATSUKYO KOFA KR KTI LDC LL LTFV MAFF MCS MFMR MFMRD MIFCO MIMRA MMAF MSC MSG MSY mt NAFTA NAMA NFD NGO NIKKATSUKYO NMFS NOAA

Indian Ocean Indian Ocean Tuna Ltd. Indian Ocean Tuna Commission Indonesia Philippines Data Collection Project International Seafood Sustainability Foundation International Union for Conservation of Nature Illegal, unreported, unregulated fishing Japan Fisheries Agency Japan-Thailand Economic Partnership Agreement joint venture National Offshore Fisheries Association of Japan Korea Overseas Fisheries Association Korea Indonesian Tuna Commission least-developed country longline Luen Thai Fishing Ventures Ministry of Agriculture, Fisheries and Forestry – Japan Monitoring, control and surveillance Ministry of Fisheries and Marine Resources – Solomon Islands Ministry of Fisheries and Marine Resources Development - Kiribati Marshall Islands Fishing Company Marshall Islands Marine Resources Authority Ministry of Marine Affairs and Fisheries – Indonesia Marine Stewardship Council Melanesian Spearhead Group maximum sustainable yield metric tonne North American Free Trade Agreement Non-Agricultural Market Access National Fisheries Development non-government organisation Japan Tuna Fisheries Co-operative Association National Marine Fisheries Service (US) National Oceanic and Atmospheric Administration (US)

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NORMA NPF O2 OCTA ODA OPAGAC OPRT ORTHONGEL P&L PACER PACPs PAFCO PCA PFC PFCI PFOI PFS PH PICs PIPs PMIZ PNA PNG PPF (RMI) PS PS-SP PTM RCCF RCCF RDTC RFMO RMI RoO RSW S&DT

National Oceanic Resource Management Authority - FSM National Provident Fund oxygen Office of the Trade Advisor overseas development assistance Organización de ProductoresAsociados de GrandesAtunerosCongeladores Organisation for the Promotion of Responsible Tuna Fishing Organisation des Producteurs de Thon Congelé pole and line Pacific Agreement on Closer Economic Relations Pacific ACP States Pacific Fishing Company Partnership Cooperation Agreement Pioneer Food Cannery Pêche et Froid Côte d’Ivoire Pêche et Froid Océan Indien Pêcheries frigorifiques du Sénégal Philippines Pacific Island countries Pacific Island Parties Pacific Marine Industrial Zone Parties to the Nauru Agreement Papua New Guinea Pan Pacific Foods (RMI) Ltd. purse seine purse seine special Princes Tuna Mauritius Research Centre for Capture Fisheries - Indonesia Research Centre for Capture Fisheries - Indonesia RD Tuna Canners Regional Fisheries Management Organisation Republic of Marshall Islands Rules of Origin refrigerated sea water special and differential treatment

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SAFAII SBF SCODI SFGCG SIDS SKJ SNDCS SOE SOLAS SOVETCO SPS SSTC SVEs TAFTA TAGS TCAP TOG TTP TUF TVMA TW UAE UK ULT US VASEP VDS WCPFC WCPO WIO WPEA OFM WTO WTPO WWF YF

Soksargen Association of Fishing and Allied Industries Inc. Southern bluefin tuna Société des Conserves de Côte d’Ivoire Shanghai Fisheries General Corporation (Group) small island developing states skipjack Société nouvelle des conserveries du Sénégal state-owned enterprise International Convention of Safety of Life at Sea Société de Vente de Thon Congelé sanitary and phytosanitary standards South Seas Tuna Corporation small vulnerable economies Thailand-Australia Free Trade Agreement Tuna Canners Association General Santos Tuna Canners Association of the Philippines Thunnus Overseas Group Trans-Pacific Strategic Economic Partnership Thai Union Frozen Foods Te Vaka Moana Arrangement Taiwan United Arab Emirates United Kingdom ultra-low temperature United States of America Vietnam Association of Seafood Exporters and Producers Vessel Day Scheme Western and Central Pacific Fisheries Commission Western and Central Pacific Ocean Western Indian Ocean West Pacific East Asia Oceanic Fisheries Management Project World Trade Organisation World Tuna Purse Seine Organisation World Wildlife Fund yellowfin

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EXECUTIVE SUMMARY
As major stakeholders in the global tuna industry, it is critical that Pacific Island countries (PICs) have a comprehensive understanding of supply chain dynamics. An enhanced understanding of how industry drivers and market dynamics shape the global tuna supply chain and influence the major industry players is particularly critical to PICs in achieving stronger control and deriving greater economic benefits from their tuna resources. Over a series of ten chapters, this report provides an overview of the current status of the global tuna industry in terms of major tuna fishing fleets, tuna trading companies, processing sites and principal markets. It is intended to serve as a platform in the development of a systematic approach to improving the ongoing provision of accurate and useful global tuna industry and market information to Pacific Island countries.

THE CANNED TUNA INDUSTRY
Canned Tuna Fishing Industry – Major Fleets
Annually, at least 2.5 million metric tonnes of the global tuna catch is destined for canning; the majority of which is caught by purse seine vessels. Given canned tuna is a price competitive and nutritional source of protein, overall demand has increased markedly over the past three decades and remains strong. To match this growing demand, the canned tuna fishing industry has experienced massive growth in terms of vessel numbers, vessel catching capacities and total catch. The level of complexity of the canned tuna fishing industry has also deepened due to factors such as resource sustainability issues, stricter regulatory requirements, increasing operating costs, developments in consumer demand, changing preferential market access regimes, to name a few. Globally, there are currently at least 580 industrial-scale tuna purse seine (PS) vessels in operation in four major ocean regions - Western and Central Pacific (257), Eastern Pacific Ocean (226), Indian Ocean (55) and Atlantic Ocean (40). At present, global annual purse seine catch is around 2.7–2.8 million tonnes, accounting for around 66% of total global tuna catch (4.2 million tonnes in 2009). Total capital investment in purse seine fishing vessels is in the order of US$ 5.8 billion, representing over 30%