US Economic Slowdown Affecting Philippine Canned ff

Written by Romer S. Sarmiento

The economic slowdown in the United States may have started affecting demand for imported canned tuna — a development that could force factories in the Philippines “to stop operations” if it persists, an industry leader said last Sunday.

Mariano M. Fernandez, president of the Tuna Canners Association of General Santos, said canned tuna have been piling up in local warehouses due to a sudden lack of orders.

“The orders [from the US] have stopped. There’s no more order for us from November. Our warehouse is getting full. We may be forced to stop operations if this trend will continue,” he said in an interview.

Mr. Fernandez, also the manager of the Ocean Canning Corp., said that local canning factories are worried they would have to lay off workers if US orders do not resume.

General Santos City hosts six of the country’s seven tuna factories, which also export to Europe aside from the United States.

Canned tuna is the top export earner for Central Mindanao, where General Santos acts as economic hub with its facilities such as sea and air ports, communication and banking institutions.

The US accounted for around 24% of total canned tuna exports in the first half, according to data of the Department of Trade Industry-Central Mindanao.

Philippine canned tuna exports to the US actually declined 20% in value to $27.9 million in the first half this year from $35 million in the same period last year, the same data showed.

The same exports to the US dropped 33% in volume to 11.6 million kilograms from 17.3 million kg in the same comparative periods.

Total Philippine canned tuna exports rose to $70.6 million in the second quarter this year from $46.9 in the first quarter, bringing the first half total to $117.5 million, the same data of the Trade department’s regional office showed.

The European Union (EU) was the top destination for Philippine canned tuna exports in the first half with a value of $70.8 million at a volume of 24.6 million kg, the official data showed further. This means that EU accounted for 60% of value of total Philippine exports in that period.

But if the canned tuna sector may now be reeling from effects of the US economic slowdown, it is different for producers of mature or large tuna, particularly the yellowfin variety.

The US is a major market for local producers here of fresh whole yellowfin tuna, aside from Japan.

“Demand has not slowed down since the financial turmoil hit the US,” said Roger R. Lim, Sr., chief executive officer of GenSan Aqua Traders.

Dubbed as the city’s “Tuna King,” Mr. Lim’s company sells fresh round yellowfin tuna to the US caught through the traditional handline or hook and line fishing.

Industry data showed the handline sector has an estimated annual value of P4.5 billion. It is composed of 2,500 handline boats and employs at least 40,000 fishermen, with an estimated annual landing of over 30,000 metric tons of high value tuna.

Mr. Lim, also the vice-president of the Alliance of Tuna Handliners, warned that their sector may feel the impact of the spreading financial crisis next year.

An indicator that American demand for fresh whole round tuna remains unchanged is the continued stable demand for frozen cut tuna parts there, Mr. Lim said.

US national John Heitz, export chief of GenSan Aqua Traders, also said that fresh whole tuna demand in the United States is still unaffected by the financial crisis there. “Consumption of fresh tuna in the US is still good. In fact, demand outweighs the supply,” Mr. Heitz said in a separate interview, attributing the supply shortfall to overfishing.

He noted that price of export-grade fresh whole tuna at the fish port complex here has risen in the past weeks by about 25%.

The buying price of fresh whole tuna, which used to be P220/kg, now ranges from P280/kg-P300/kg, he added.