Bumble Bee Seeking Tariff Concessions at Levuka Port
PAFCO employs more than 1000 local staff, making it a vital part of Ovalau’s small economy.
Bumble Bee Foods, Pacific Fishing Company Limited’s (PAFCO) largest customer, says a tariff concession should be considered for vessels directly delivering raw materials to the Port of Levuka.
Company general manager operations Brett Parker told the Standing Committee on Economic Affairs yesterday that they were committed to keeping operations on the island.
But he said the costs of operating in Levuka was creeping up to the extent that PAFCO was no longer the American seafood leader’s best low-cost producer. PAFCO employs more than 1000 local staff, making it a vital part of Ovalau’s small economy.
Committee Chair and Assistant Minister for Local Government, Housing and Environment Lorna Eden asked Mr Parker if a concession had been sought
Ms Eden also queried whether it was PAFCO or Bumble Bee who would have to seek the concession.
Bumble Bee supplies Albacore tuna to PAFCO which is processed into tuna loins at the factory and sold back to the American company.
Policy makers see the link between the majority Government-owned company and Bumble Bee as critical to PAFCO’s survival.
According to Mr Parker, PAFCO produces 11,200 or so tonnes of fish loins for Bumble Bee.
Mr Baker said this accounted for 50 per cent of the company’s albacore tuna business which had a global revenue of US$982 million (FJ$2,016.1m) in 2016.
Mr Parker heads a team of five who carry-out an influential consultancy role from Levuka, it was revealed to the committee. The team comprises a quality consultant, an engineering manager, a production consultant and an operations consultant. While Bumble Bee does not manage the plant, Mr Parker said, it provides support in the form of preparing PAFCO for audits, availing capital loans and improving information technology infrastructure.
In 2013, it issued a US$3 million (FJ$6.16m) loan to PAFCO, which Mr Parker said was paid last July. The company later issued a $US5.5 million (FJ$11.29m) loan, of which US$3m Mr Baker said was used to partly finance the construction of a new cold storage facility.
Challenges on the island
But the company faces its fair shares of challenges on the island,the committee was told.
Mr Parker said the remoteness of the island, which is located 63 kilometres from Suva, sometimes made it difficult to get raw materials in and finished products out. Another challenge was the inability to replace skilled labour, something Ms Eden believed policy makers would need to address with innovative ideas.
Utility infrastructure on the island and the company’s relationship with unions were also highlighted as issues for the company.
Another recurring concern raised by Mr Parker during the meeting was what he called “disadvantageous direct deliveries” to the Port of Levuka.
Mr Parker said there needed to be an arrangement where 60 per cent of the fish was delivered by vessels and 40 per cent transferred in containers from Suva. He said transporting a surplus number of empty containers back to Suva was contributing to his costs.
Influential role
The committee asked Mr Parker if Bumble Bee would be interested in becoming a PAFCO shareholder if it decides to divest shares in the future.
“Without getting into detail, the short answer is yes,” said Mr Parker.
Mr Parker also chose not to elaborate on committee member and Assistant Minister for Infrastructure and Transport Vijay Nath’s query about how the finished product processed in Fiji compared with products from other customers.
Mr Parker said the product had historically been superior, but was now on par with the rest.Bumble Bee holds an influential role in PAFCO.
But Mr Parker is adamant that they did not interfere with the running of PAFCO. “PAFCO manages the facility and we are only there to ensure that the product is produced and delivered to the specifications that we have outlined,”Mr Parker said.
In other words,Mr Parker and his team, while providing advice to PAFCO’s senior management, only steps in to ensure Bumble Bee’s interests are protected in terms of product quality and delivery.
Committee Reactions
Oppositon MP Viliame Gavoka called the arrangement between the two companies “phenomenal.”
Committee member and National Federation Party MP Prem Singh said Bumble Bee’s input was valuable to the survival of PAFCO.
Ms Eden said the “unusual” relationship needed to be nurtured.
Mr Nath also praised the link, saying Government was ready to work with Bumble Bee to ensure PAFCO’s progress.
Mr Parker has been in the position for the last four years.He said Bumble Bee was working with PAFCO on opportunities to further grow and diversify the business. Mr Parker said under him,Bumble Bee - who “historically used to manage the plant” - pull back to a more consultancycentred role had intensified.
On reform, Mr Parker said Bumble Bee would support any changes that benefitted both them and PAFCO.
He said Bumble Bee would not tell PAFCO how to reform or run their business but believed there was opportunity for PAFCO to diversify its business.