Saturday, Dec 16, 2017
Industry & Trade | Fishing | Asia-Pacific | Fiji

Fiji Fish Marketing Group

Fiji’s pioneering fishing company becomes ‘snapper sniper’


2 years ago

Grahame Southwick, Executive Chairman of the Fiji Fish Marketing Group
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Grahame Southwick

Executive Chairman of the Fiji Fish Marketing Group

Fiji’s staple tuna industry has come under pressure in recent decades from declining fish stocks and a proliferation of foreign vessels. Legendary fisherman Grahame Southwick, founder and Executive Chairman of the Fiji Fish Marketing Group, explains how he diversified his business to survive, with exports to the USA now flourishing.

 

What is your opinion on the progress being made towards the creation of a united, modern Fiji under the current government and constitution?

For a long time there has been a perception that there is this great divide in Fiji between the ‘Indians’ and the ethnic Fijians. It is really not true. The population is divided roughly 50-50 along ethnic lines. That has always been at the political level, not at the level of ordinary people. The people all live and work together and are respectful of one another’s cultures.

The interesting thing is that in recent years – since the coup – the divide between ‘Indians’ and ‘Fijians’ has almost disappeared for economic reasons, because the Indians are all happy that for the first time in 200 years, they are being considered as Fijians and they have an equal vote.

Most people are now happy and they don’t want any disruptions. The only dissension today is from a minority of ethnic Fijians, who for various historic reasons and political reasons have a different agenda but it’s much the same in most countries; in fact it is much worse in many.

 

Fiji has made remarkable economic progress in recent years, with growth this year expected to exceed 4% for the third consecutive year, the first time this has happened since the 1970s. What do you see as the foundations of this ongoing positive economic performance?

Political stability has brought economic stability. This happens everywhere in the world. There is a huge amount of investment happening in Fiji at present and land prices are going up.

The Prime Minister is a military man who tends to see things in black and white, and not tolerate fools or negative thinkers. His tough style of leadership and personal involvement in problem solving has brought about obvious economic benefits to all sections of the economy, so most people are with him. In what country of the world can a businessman, or indeed the man in the street, call a Prime Minister and be listened to? Only in Fiji I would say.

There was gross misunderstanding of the reasons behind the 2006 coup in some countries, especially Australia and New Zealand. China moved into the gap vacated by Australia and New Zealand and I think those countries regret their stance of the time now, but they are currently busy rebuilding their relationships.

 

You have been very blunt about fate of the tuna industry, saying that it is dying due to the pressure from Asian fishing boats. Approximately 75% of the domestic fleet has ceased operation in the last five years, with most fleets catching less than 50% of the amount of fish needed to break even. In your opinion, is there anything that can be done realistically by the government to salvage the Fijian tuna industry?

Yes there is. The focus has to be on protecting the industry, as well as protecting the resource. What is the point of protecting the resource alone if the industry is dying? The first indication that there is a problem with the resource is when the fleets start dying, and I have heavily criticized the management methods employed which have at times indicated that the “stock is healthy” – i.e. there are enough fish left to breed - but ignored the fact that the fishing fleet is no longer viable.

The bottom line is that a fleet fails economically long before the fish stock fails biologically. So the lead indicator is the health and viability of the fleet, not the counting of tagged fish!

It is like an engine. Long before the engine blows up, you see the engine is running hot and the oil pressure is going down. That is what the fishing industry has been like for the last 15 years – it is telling you that there is a problem. You don’t have to wait till a piston blows out the side of the block before you say you have a problem. It has taken years for fishery ‘managers’ in the Pacific to understand that if they concentrate on having a viable fishing industry, the primary indicator, all the other things will follow. It is no good focusing on the secondary indicators, the fish count, when the primary indicators, fleet losses, are staring you in the face.

At long last there is general recognition that the Pacific needs help and the things we were talking about 15 years ago are true. Fishery ‘managers’ have grown accustomed to rear-view management using data that is three or four years old. This is like sitting in the back of a pickup at 100mph trying to steer by gazing into the rear vision mirror! We are not approaching problems with the Pacific fleet; we have been in serious trouble for the last five to 10 years.

Now answering your question: is there any hope for the industry? Yes, but we have to look forward and not back. We can’t afford another five years of talking before we make serious efforts to cut the numbers of fishing licenses and reduce the fleet. The things that need to be done today should have been done 10 years ago. The Pacific fleet – both domestic and high seas – needs to be slashed today by 50%. It is not going to be done because Pacific island countries lack the political will. The major threats to the Pacific tuna industry are the state-subsidized fishing boats from Asia and elsewhere that are plundering the resource when it is plainly uneconomical to do so.

 

How do you see the Fijian commercial fishing industry evolving over the next 10-15 years if it is going to stay relevant?

I brought the first tuna boat to Fiji in 1979. There was nobody fishing here except me in the beginning, but as people caught onto the potential, more and more boats arrived. The floodgates opened and the Department of Fisheries never believed that problems would arise. They kept issuing more and more licenses, sending more buckets to a drying well.

In 1982 there was a worldwide collapse of the skipjack tuna industry similar to today. The price of skipjack today – $1,200 per ton – is the same as what it was in 1982. The problems are exactly the same: too many boats catching too many fish in a short space of time that the market cannot absorb. The whole thing is imploding. Companies are tying up their boats everywhere so there is a big problem. The same thing was happening in 1982.

Some of the worst people in the ‘fishery management’ business are luckily reaching retirement age, and the younger generation are much more responsive, but unfortunately they are still the junior or middle managers and not the senior managers.

The Fijian government can control what happens within Fijian waters, but we are still battling with them to abandon the old ideas of thinking that the oceans and stocks are limitless. They have to also abandon the old ideas of promoting expansion in our fisheries. And they have to focus regionally on the over-capacity in the high seas and work collectively to reduce the activities in the waters of the Pacific generally. Will they? I fear they will just keep on talking! Unfortunately more talk will not save the current players in the industry. I see a solution in about 20 years, when the process has run its course and today’s carnage and today’s operators are part of history.

 

You have made the decision in recent years to withdraw from tuna fishing altogether, and you are now focused primarily on deepsea snapper and other species. In your book you talk about an economical and environmentally friendly way to catch the snapper. What is the potential of this species to be a sustainable and profitable resource for your company and the Fijian fishing industry in general?

For my company it is okay, but not for many others. It is quite a small resource and very fragile and can only take a few boats. It is a very expensive fish and the market can only absorb a certain amount. All of our catch is exported to Honolulu. Maybe if we crack into the Chinese market we could talk about growth, but the resource is pretty fragile.

This resource is protected and can only be caught by 100% Fijian-owned boats because this is a domestic fish, it is not a migratory fish. This was agreed with the government of 20 years ago and the Prime Minister recently confirmed this and also said there would be a limit on the number of boats who could catch it. We are okay. We will keep out of the tuna ‘dog fight’.

The red snapper live on the sea mountains and the sea mountains are all within the exclusive Fijian fishing zone. Those sea mountains constitute less than 5% of our total area. Our waters are very deep – up to 2000 meters – and these fish live at depths of 300 meters. The little pinnacles that are at 300 meters are very few, so you have to be very careful about how many fish you take. You have to be very skilled in order to make a living from this fish. It is equivalent to being the number one sniper in the world. Everybody can shoot a gun but not everyone can hit the target. You have got to be really something special to be able to make a living out of this fishery.

So in answer to your question, is there room for other types of fisheries for fishing companies in Fiji to expand into? Probably not. The water is too deep. We don’t have any continental shelves. We don’t have any plateaus. There is only tuna or niche fisheries.

 

How has the shift away from tuna and towards snapper impacted on your company in terms of your fleet, employees, and profitability?

We persevered with tuna for a few years, despite the warning signs, because we have 400-500 people employed here that rely on us for their livelihoods. Most of these guys have been with me for 20 years or more. They are approaching the end of their working lives too, so it was not good for them to be told to go home indefinitely.

I had the belief that I could work it out. I would find something. I would find an answer somewhere as long as I could keep going. At that point we were burning off all our financial reserves from the good years.

Eventually I chose to pay heed to the writing on the wall and I moved onto snapper and other species, such as Mahimahi.

 

Japan was once a major export market for you but I understand from our meeting last week that you are now focused on the American market. Why has the US market emerged as the dominant destination for your exports and which geographic areas of the US are you focused on?

We export to Hawaii, and LA has been good for us over the years. San Francisco has also become important. Japan was a tuna market, and as we departed the tuna fishery, so we departed Japan as well.

 

Do you see potential for growth on the US mainland?

Yes definitely. We used to send half our fish to Japan and half to the US. That’s when the Japanese economy was strong, the yen was strong, and they would take the best fish and the lesser quality fish would go to the States. The Japanese at that point were paying quite a bit more than the Americans.

Now, we have not sent a fish to Japan for four years, and the yen is in the pits. The US dollar is strong and their economy has picked up, but I think the main factor is that supply has reduced, so there’s much more demand. Also, the market is growing, and I know generally speaking that we can pretty much sell every fish we catch in the United States.

The American market has always been good and stable. The prices have been workable. The airfreight to Los Angeles and Honolulu is frequent and affordable.

Right now there are not so many fishing companies supplying Hawaii. Our growth is going to be in the States if we are going to grow at all.

 

You’re called the Fiji Fish Marketing Group. What is your sales and distribution approach in the US? I read in your book that at one point you decided to bypass the fish market in Hawaii and you went straight to the customers…

Yes. We still do that in Hawaii but not so much on the mainland. Hawaii has got a giant auction, and the companies don’t really bid for the fish, they just share them out. I went to the auction and I would sit there drinking my coffee, and I would see a dozen fish buyers standing by the coffee machine, and there would be 20 pallets of fish coming on the floor, and they had already decided that they will take two each so why bid against each other, and they just raked us over in prices.

I said to them all, and to the auctioneer too: “If this is going to continue I’m not going to put any more fish in the auction, and I will go straight to your customers because I know them all, and if we can’t get a fair return for our fish I’ll just bypass the lot of you.” They raked us over again. We then joined forces with a good friend who has been our distributor in Honolulu for 35 years now: Bruce Johnson of Fresh Island Fish. We tell Bruce what we need and Bruce goes to the customers and says, “Hey, we have got to keep Fiji going. This is what they need…”

The reward for him and those customers is that when the markets are dry and there’s no fish around they call me and tell me what they need, and I’ll call the boats in early. Even if all their competitors are calling me for fish, they don’t get any. That’s the trade-off, so we now have a really good relationship with the buyers and Bruce Johnson, who is the main distributor.

In LA we also have a distributor of many years: New Zealand Seafood. They have taken care of our mainland distribution and sales for 25 years.

 

Obviously you’ve had to modify your fleet with the shift away from tuna. Now you’ve returned to profitability, and you have all of your exports going to the US. How do you see your fleet and your company expanding in the years to come?

At this stage it’s far too early to talk about expanding. We’re in a consolidation period. Our fresh boats don’t make a lot of money, but they are making some money. It’s still a tough game producing the highest quality fresh fish for a discerning market.

There’s a very big difference between making a little bit of money and losing money day after day. We are not drowning, but we are just keeping ourselves afloat. We can breathe now, but we know the waters could rise again. Right now are able to put new engines in all the boats, which we were not able to do four or five years ago. The engines were falling apart, the boats were falling apart. We didn’t have any spare parts or anything. We were just tying them up with bits of rubber and wire or whatever we could find just to keep going.

With this change of direction we’re able to re-engine the boats and keep the boats maintained. That’s where we are. We’re in a consolidation period. If the US dollar holds and if the demand keeps up then we’ll look at expanding a little bit, but we’re in no big hurry. We just want to consolidate in the high quality fresh fish side of the business.

 

What about the processing side of the business?

We’ll move more and more into processing because there are times like now when we’re catching more Mahimahi than the market can take, because there’s so much supply coming from Ecuador, so we will be doing some processing and freezing, because there is a period in the year when the market is totally dry of frozen fish, so we’ll just stockpile.

Ironically, we make good money from the very boats that are causing us problems: all the Taiwanese and Chinese boats. We have 55 boats supplying fish to us that we trade, and we sell fuel and bait to these boats and service the whole fleet. The money we make from this supports our own fleet. I have a responsibility to all my staff, and all the countries that we’ve been dealing with for years. If we had to rely solely on our boats we would have shut down.

 

In your book you mention receiving the Queen’s Scouts Award aged 17 and a message from the Queen herself who wished that your life “would be an exciting and joyous adventure”. I have no doubt that it has certainly been such an adventure so far – I have read about close encounters with sharks and rays and your many other thrilling experiences. You are now 71 and seem full of energy. What “exciting and joyous adventures” do you have planned for the years to come?

I will keep fishing until I hit the wall at full speed. I’ll get dragged out of this life kicking and screaming, but my great passion is hobie sailing, and in the last world championship we finished second. We were actually leading for a while until the last race, but that’s another story. That was okay. Hobie sailing has been good for me mentally and physically, because most of the guys I went to school with are now in the ground. The ones that are still alive and kicking are certainly not driving maniac hobie cats, you know?

I’ve got one more big challenge in February this year, because there are three big international long-distance races that are recognized in the world: the Tanzacat in Africa, the Fiji one, and the Philippines one. We won two of them this year. We recently won the Tanzacat and we won the Fiji one, so the Philippines challenge is on in February, and everybody is telling me I have to win it. We’ll see. All the young guys are ganging up on me. All the young guys want to beat me. If they beat me in a race they reckon that’s great. That’s all right.

 

You’ve stared death in the face a few times over the years, especially out there in the deep blue sea. What would you say is the greatest lesson you’ve learned in life?

To surround yourself with good friends and lots of humor. You must have humor in your life, even black humor. I think it’s a lack of humor that kills people or makes them kill people. Don’t take things seriously at all, and don’t waste time with people who are too serious. 



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