Start­ing from scratch in 1997, R D Tuna Can­ners has lead the way to­wards value-adding in PNG’S fish­eries sec­tor, turn­ing a green­field site in Madang into one of the re­gion’s ma­jor sources of canned tuna.

Business Advantage Papua New Guinea - - Contents -

‘Ithink the fish­ing in­dus­try has al­ways been un­der­rated, es­pe­cially in terms of the con­tri­bu­tion to the econ­omy and its po­ten­tial,’ said R D Tuna Man­ag­ing Direc­tor Pete Celso in his ad­dress the 2013 PNG Ad­van­tage in­ter­na­tional in­vest­ment sum­mit.

Celso was talk­ing about the cre­ation of PNG’S first and only in­te­grated tuna fish­ing and can­ning op­er­a­tion, which the Philip­pines-owned com­pany started in Madang on PNG’S north­ern coast al­most 20 years ago, along with its sis­ter com­pany, R D Fish­ing.

Now em­ploy­ing 3,500 peo­ple and with an an­nual turnover of K271 mil­lion (US$106 mil­lion), the ven­ture rep­re­sents a huge suc­cess story for PNG. Celso es­ti­mates that RD Tuna has boosted the econ­omy by roughly K600 mil­lion, while work­ing at some point with 90% of lo­cal busi­nesses.

Costs benefits

Op­er­at­ing from Madang pro­vides vi­tal ge­o­graph­i­cal and cost benefits to R D Tuna. Most im­por­tantly, it pro­vides easy ac­cess to PNG’S fish­ing grounds, which are just a half-day’s sail away, thereby low­er­ing fuel and trans­porta­tion costs and en­sur­ing max­i­mum fresh­ness in the fish. Madang is also suf­fi­ciently pop­u­lous to pro­vide an af­ford­able work­force.

How­ever, there were also ob­sta­cles to over­come, such as in­ad­e­quate and in­con­sis­tent in­fra­struc­ture, which has af­fected the cost of do­ing busi­ness.

To ad­dress the is­sue of in­con­sis­tency, R D Tuna in­vested in its own com­pre­hen­sive in­fra­struc­ture, based around a can­nery com­plex ca­pa­ble of pro­cess­ing up to 200 met­ric tonnes of fish per day. The com­plex is served by its own steam plant, waste wa­ter treat­ment plant, ice-mak­ing fa­cil­i­ties, cold stor­age fa­cil­i­ties,

mi­cro­bi­ol­ogy and chem­istry lab­o­ra­to­ries, fish­meal plant, can mak­ing plant, car­ton mak­ing plant—even a six-colour print­ing press for la­bels.

The com­pany has also in­vested heav­ily to pro­tect its own en­ergy sup­plies by es­tab­lish­ing a 5.2 megawatt power plant—a plant that might one day sell ex­cess power to state util­ity, PNG Power.

R D Fish­ing com­ple­ments th­ese fa­cil­i­ties by op­er­at­ing a fleet of 17 purse seine fish­ing ves­sels from a pri­vately owned wharf, which is sup­ported by a small dock­yard and slip­way fa­cil­ity.

Trans­for­ma­tional in­vest­ment

De­spite hav­ing mas­sive tuna re­sources, ac­count­ing for be­tween 12% and 17% of the world’s tuna catch, PNG had his­tor­i­cally im­ported a large amount of the canned prod­uct, worth about K100 mil­lion a year.

While PNG still im­ports some canned tuna, im­port vol­umes have dropped sub­stan­tially as R D Tuna, and other new en­trants, have de­vel­oped the in­dus­try. Lo­cal R D Tuna brands such as Dolly and Diana now pro­lif­er­ate on lo­cal su­per­mar­ket shelves as mar­ket lead­ers.

The com­pany’s ex­port mar­ket, how­ever, is its pri­mary source of trade and makes up 63% of com­pany sales. The bulk of this trade is with the Euro­pean Union, which has an In­terim Eco­nomic Part­ner­ship Agree­ment with PNG that al­lows for tar­iff-free im­ports. Much of the ex­ported tuna is branded un­der the la­bels of R D Tuna’s over­seas cus­tomers.

Fu­ture di­rec­tions

Celso be­lieves R D Tuna will con­tinue to grow, es­pe­cially on the back of the PNG Gov­ern­ment’s pro­posed con­struc­tion of an industrial zone north of Madang, which, he ex­plains, will fur­ther im­prove in­fra­struc­ture and de­liver a lower cost base for in­dus­try.

‘For the man­u­fac­tur­ing sec­tor, one of the ma­jor chal­lenges in a place like PNG is the high cost of do­ing busi­ness, and the lack of economies of scale is one of the rea­sons you can­not achieve low costs,’ says Celso, who is also Chair­man of the PNG Fish­eries In­dus­try As­so­ci­a­tion.

‘This ex­er­cise has a lot of merit for the in­dus­try to con­tinue to be com­pet­i­tive.’

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