Fishy business

Tuna canner sees good times ahead

Managing the price of fish is the biggest manufacturing challenge, according to Erwin Ortiz, general manager of RD Tuna Canners. He says the company intends to increase its storage capacity as part of its strategy to deal with price volatility.

Ortiz says 2017 was “a decent year” for the fishing group.

“We need to really catch the free-school fish. That is why we have upgraded our fishing vessels. We were able to see the benefits.”

Ortiz says the company is now vertically integrated and does not need to buy fish from external players.

This has helped partially with foreign exchange challenges.

“We have to pay in kina and the fishing companies want US dollars. But now that our fleet is upgraded we all get our fish from our own fishing group.”

Ortiz says there are two elements to manage: the volume and the price of the fish.

“In 2017, we improved on the volume in the second half of the year because of the new vessels,” he says.

But the price of fish, which is set internationally, got very high.

Ortiz says the average fish price last year swung in a 25–30 per cent range against 2016.

The price of fish greatly affects the company’s profit margins, he says. “You buy more fish when the price is low but when the price is up you have to be very careful.”

The way to deal with the volatility is to use cold storage to increase the inventory.

“What we need to do is stock fish for three months. With that we can plan well, do forward bookings effectively and will be protected from any changes of price.

“In 2019, we will be building additional cold storage in the manufacturing compound.”

Seventy per cent of RD Tuna’s revenue comes from exports, with the remainder sold to the domestic market.

Ortiz says he is “very, very optimistic about the future,” noting that the upgrading of the fishing fleet is paying off.

“The rebate given by the National Fishing Authority and the government to manufacturers is very good,” he says.

“We have been in the business for 20 years. RD Tuna Canners is the pioneer in tuna processing in Papua New Guinea and we believe, given the right support from the National Government, doing business here is still profitable.”

In 2019, we will be building additional cold storage in the manufacturing compound.