In a time when many tuna professionals have started doubting the strength of the WTPO (World Tuna Purse Seiner Organization), the tuna boat-owners organization took steps to get its act back together. An urgently complied amended resolution has been passed and penalties have been assigned for the period April 21st – June 20th to stop the recent oversupply of skipjack.
Over the last two months the price of skipjack has plunged from over USD 600 per M/T to as low as USD 450 CFR Bangkok two weeks ago, for frozen skipjack 1.8kg-up. This despite the intention of the WTPO to keep the price levels over USD 600 and to actively reduce fishing.
The last two months however a conflict within the Taiwanese Tuna Boat Owners Association did not lead to any of the agreed reduction efforts by most of the Taiwanese members. Also other Asian fleets did not feel obligated to execute the policy of reduction, when other members were fishing full capacity.
The result of this inability of the WTPO to control its members is known to us all now, a large over-supply of skipjack to Bangkok, and a price decline to USD 450 CFR about two weeks ago.
With the amended Seoul Meeting Resolution, the WTPO intends to reduce over-supply on the short term and move prices in the reverse direction. The immediate effect of the new measures has already been that prices within a week’s time moved up by about 10% to USD 490 CFR Bangkok.
In order to solve the problems among Taiwanese boat-owners, and the unwillingness of some members to stay in port according to agreed schedules, the WTPO installed a special negotiation team a few weeks ago to solve the disagreements. A special delegation, made up by representatives from all Asian WTPO member associations, had several meetings with Taiwanese boat-owners. The final result has been that all Taiwanese boat-owners have each now made a USD 140,000 cash deposit to the Taiwan Deep Sea Tuna Boat owners and exporters association as part of the fine system, in case reduction is not executed according to signed agreements.
The WTPO members have been convinced by Taiwan that in case of any breach of the reduction agreement, the boat-owner will automatically and instantly lose his USD 140.000 deposit. In the past, the association has proven to actually execute these measures.
In a response of solidarity also the Philippine boat-owners agreed to a guarantee deposit of USD 100,000 per tuna purse seining company. In the amended resolution the WTPO now writes that any member not complying will automatically lose his deposit of min. USD 100,000. All other tuna associations have signed and agreed to apply similar penalties in case of non-compliance.
The new system of reduction is related to the tonnage of the boat. Boats below 1,300 M/T will stay in port minimum 8 days, while boats from 1,300-1,700 M/T will stop 10 days and 1,700 M/T up 12 days. It is expected to result in a volume reduction between 10 and 20%, depending on how good the catches are.
With these reduction measures in place the WTPO members expect that the decline of skipjack prices has been stopped and will slowly but gradually reverse to USD 550 within the next month. However no exact target price level was agreed among members.
The new amended Seoul Resolution, and the efforts made by the Asian group to re-install discipline, will prove to be crucial for the future credibility of the organization. If this time this resolution should also fail, and prices would again fall to levels below USD 500, the suffering and damage for the skipjack boat-owners will be extensive. A failure of this resolution could also mean the end of the WTPO. The Tuna boat owners eventually want to bring prices back to a stable level between USD 650 and USD 700, which seems the best option in the current market, and proved to be quite workable the last 2 years. A next WTPO meeting is planned in Nadi, Fiji, on May 2nd where most tuna associations are expected to gather for the MLHC prep-con conference.