Threat of war adds to fishing concerns

By IRENE CHAPPLE

Eric Barratt is keeping a close eye on the United States' threats of war with Iraq.

Should the superpower attack, the impact on oil prices will have a significant impact on Sanford, the listed fishing company he heads.

As oil prices creep up - and they have leapt from around US$26 ($47) a barrel to more than US$33 in the past few months - he needs to negotiate ways to recover the increased costs.

Sanford uses about 40 million litres of oil a year, and the recent price rises have already meant the company has had to raise its prices.

Customers had to be persuaded increased costs were outside Sanford's control.

If supply becomes critical, Barratt says, those in the fishing industry may need to use the limited oil to fish only the high-value species.

Concerns that oil prices could crack US$40 a barrel are just speculation, but are niggling at Barratt's accounts as the year begins.

Another issue already dominating Barratt's business agenda is aquaculture, as the industry battles with the Government over the sector's draft legislation.

The Seafood Industry Council has estimated aquaculture - currently worth around $210 million - could reach $1 billion in export sales by 2020.

Barratt says aquaculture is a vital sector for the seafood industry, and wants the new year to bring stability for the marine farmers. A two-year moratorium put in place late in 2001 to control rampant growth of the sector is clamping down on new marine farms while the law reforms are nutted out.

Sanford is not opposed to the moratorium, which Barratt believes is necessary, but he is furious at some proposals cropping up around the law reform.

The industry is battling suggestions that the existing marine farms' waterspace could be tendered for in order to maximise its use.

It is also negotiating how fishermen and marine farmers can share the waterspace.

"There is no clear path on how we resolve these issues," Barratt says. "The existing marine farmers are very nervous about some of the proposals."

This year, Barratt predicts an increase in premium New Zealand product being sold into markets such as Asia, where treats such as crumbed hoki are snaffling the fast-food spend.

Severe decline in foreign whitefish fisheries - Barratt cites Argentina, the European markets and Canada - have opened opportunities for New Zealand also.

Barratt believes buyers are becoming more discerning, favouring products with sustainability marks.

That is supporting capital injection into New Zealand also, he says, with investors wanting to know the fishing environment will be stable.

Indeed, the fishing industry is hoping this year will bring better publicity than last.

Allegations of corruption were the headline hog of last year, prompting investigations into the behaviour of officials and fishing industry players. Barratt says the media coverage was worse, and more vicious, than ever before.

Sanford is the industry's biggest publicly listed company, one that produces triple bottom-line reports, markets much of its product through sustainability stamps and recently cracked markets in Jordan, the Czech Republic and Poland.

Last year it increased profits by almost $7 million to $37 million, with a further increase of 20 or 30 per cent hinted at for the forthcoming year. Sanford is healthy, but around it media coverage has deflected the industry from doing its job, Barratt says.

"It is extremely frustrating. It is a waste of resources."

Allegations of corruption that were aired throughout last year were unfounded and harmful to the industry, he says.

"It is fair to say that we are concerned over some of the selective reporting of some of these [issues]," Barratt told a sympathetic audience during the company's annual general meeting.

The worst case of this had been coverage on the scampi fisheries, which alleged a $1 million payout for a fisheries official involved in investigations.

That figure was later, through parliamentary questions, reduced to $13,100 and Barratt says publicity over the correction was minimal.

The Ministry of Fisheries also found itself in deep water in November.

Fisheries levies collected since 1994 and worth at least $240 million were found to be suspect.

Parliament passed retrospective legislation validating the move after it was revealed there were procedural failures with the levies which, if confirmed by a court, could make the Government liable to repay the fishing industry.

A highlight of last year was the Treaty of Waitangi Fisheries Commission agreement to allocate $700 million worth of assets which have been in limbo since the Sealord deal of 1992.

The breakthrough gives Maori huge commercial clout within fishing, and among the wider business community.

The deal will create a new fishing company, Aotearoa Fisheries, as an umbrella for existing Maori fishing interests.

The operations of the six companies part or fully owned by the commission - including Sealord, Moana Pacific and Prepared Foods, - will be streamlined, leading to redundancies but an expected increase in efficiency.

The new company will earn almost 40 per cent of the fishing industry's export income, currently sitting at around $1.5 billion.



Figures produced by the Seafood Industry Council show the industry's year to September topped $1.5 billion in export earnings, up from $1.4 billion two years ago.

Asia was the biggest market, taking almost half the value. North America came in at 21 per cent and Europe 17 per cent.

Hoki earned $307 million and mussels were the second biggest earner at $179 million.

Barratt noted that the swing toward products with added premium and the need to work within the quota limitations have revamped the industry's entire attitude.

"It has gone from kill it, freeze it, export it to let's protect our resource and maximise its use," he says.