Falklands : Falkland Islands Development Board Meeting for March
Submitted by Falkland Islands News Network (Juanita Brock) 26.03.2006 (Article Archived on 09.04.2006)
Find out what happened during this vital board meeting
COMMITTEE NEWS
FALKLAND ISLANDS DEVELOPMENT BOARD (03/15/06)
By J. Brock (FINN)
A meeting of the Falkland Islands Development Board took place in the Liberation Room of the Secretariat at 0900 on Wednesday, 15 March 2006. Present were Mr. Chris Simpkins (Chair), Cllr Cockwell, Cllr. Hansen, Mr. Stuart Wallace (Vessel Owners’ Association), Mr. Ron Binnie (Rural Business Association), Mr. Mike Forrest, Mr. Julian Morris (Gen. Manager FIDC) Miss Sue Gyford and Miss Bernadette Lang (Financial Controller).
After confirmation of the minutes of the meeting held on Tuesday, 14 February 2006 was signed, matters arising from those minutes were discussed.
Stuart Wallace representing the Vessel Owners’ Association, declared an interest in items five and six on the agenda.
Julian Morris, the FIDC General Manager, then gave his report to the board. The latter part of the overseas advertising for a Business Advisor has drawn a strong field of applicants with relevant experience. Initial short-listing interviews have taken place and final interviews are scheduled for 17th March in Edinburgh, with the FIDB chair Andrea Clausen and Charlene Rowland attending in person, using a telephone link to FIDC.
It is hoped that this appointment, coupled with the appointment of Brendan Gara and other specialists identified in the budget, will greatly improve the targeted expert assistance that FIDC can provide to move forward key developments.
There may also be merit in looking to create a more junior post in time to provide a personal development opportunity for a local person. This will be reconsidered when the position of business advisor and the budget are settled.
A good initial report on the feasibility of establishing financial services in the Falkland Islands has been received and input will be sought from relevant stakeholders before bringing to FIDB for formal consultation.
The interim ferry service has been started and whilst at a very early stage, initial reaction has been positive. Tim Cotter has been working on a number of important practical issues and has secured and shipped a bowser to the West to provide fuel delivery. Additionally, Stanley Services have very helpfully agreed to the sale of kero, petrol and gas on the West.
Peter Villa from Apollo Aviation had a useful series of meeting whilst on the Islands and is currently meeting off-Islands stakeholders (BAS, FIGO, etc.) in the UK.
FIMCo is currently operating very well and within previous notified FIDC limits. However the sheep meat market is very difficult and many real and very significant risks remain. The Financial Controller will deal with the overdraft later.
The successful proposal from Continuum Group has been circulated to board members. A visit has been organised by Sue Gyford for the company’s Head Consultant, Tony Docherty, to visit the Islands from 25th March to 1st April. He will be meeting with all stakeholders and hopefully seeing some cruise ship visits during his stay. Estimated delivery time for the final report is six weeks after this visit.
Then there was a brief update on the JDR Report on Aquaculture. JDR Resources were commissioned to carry out a species study to establish which species are most likely to be viable for commercial aquaculture. The board has already received Phase 1 of the report, which narrowed possible species down from an initial longlist to a shortlist of five species.
The draft of Phase 2, which examines the potential for those on the shortlist, has now been received and is attached. This has been circulated to industry for feedback, which has in turn been sent to JDR and is being incorporated into a final copy, but this should result in only minor revisions to the attached document.
· The report highlights the difficulty of aquaculture globally. The Falkland Islands are in a situation that is even more challenging. In particular it does highlight that there would be relatively few options to develop a commercially successful enterprise.
· A key consideration must be to avoid the aquaculture ‘curve’: a species capable of being commercially exploited is identified and developed, then added to by ‘market followers’ to the extent that supply becomes the key driver where the advantages of ‘lowest cost producers’ prevail – as in salmon. The Falklands will always be a high cost producer.
· The report rightly comments on the potential advantages of the Falklands’ remote situation where the lack of pollution and the bio-integrity could be very attractive, particularly as eco-constraints start to limit capacity, even in countries such as Chile. This might be relevant with regard to a hatchery or broodstock production where water quality must be exceptional.
With the appointment of Brendan Gara we now have in place the expertise to properly evaluate these options.
Julian Morris then updated the Board on the Falkland Islands portal and a presentation of a paper written by Tim Cotter. The Falkland Portal is generating worldwide interest in its current format and every effort has been made to make sure that it is up to date. In January 2006, the average number of visitor sessions per day was 805 with each visitor logging on for around 7 ½ minutes. This is slightly up but probably relates to people swotting up on the Falklands before taking a cruise. This is reflected by the information requests for tourism related matters. Pure requests for tourism information should now go directly to tourism but invariably some still come to me.
There is continuing interest from people that are interested in living and working in the Falklands and the FAQ pages have been reviewed to cover this.
The amount of Argentine negativity has declined slightly and practice is now to ignore this and not attempt a response unless there is a serious question.
The most dynamic area is the interactive Stanley Map. Some recent changes relating to local businesses are still pending and we are awaiting some notes so we can upgrade effectively.
The e-store is operating and sales are processed for the Capstan Gift Shop, Phil Middleton, the Pink Shop and Synergy Information Systems. Sales have never been brisk but since August some 60 orders have been received. The addition cost of postage may be a deterrent to some but it does give people a second chance for a souvenir. Falkland Island calendars and ties have been sent to Buenos Aires and banknotes to Turkey and India. Up to the 6th of March 2006, the e-store has been operating at no charge to retailers except for the 5% VISA charge but a scale of FIDC charges has just been introduced.
In order to boost sales of the e-shop, we have taken advantage of a Google Adword campaign. If a Falklands or Malvinas related article is published on the sites that subscribe such as the Daily Telegraph or Channel 4, a small e-store advert appears. These have appeared on web pages alongside President Chivaz’s comments, the Jon Cheek arrest and a news report on a baggage truck colliding with the 747’s engine at MPA. It is too early to note if this campaign is having any effect. We do have the option of extending this to other search engines.
The Falkland Friends newsletter is still popular with around 1070 people signed up. There are difficulties accessing subscribers with AOL internet addresses but we are working on this.
We are continually monitoring the benefit of the Falkland Islands portal and how it impacts on tourism, local business, commerce and international matters. In 2006, with the advent of broadband in the Islands, it may be opportune to review the entire website both in contents and layout.
There was a rather lengthy discussion about the container park after Stuart Wallace left the room. The object of this proposal was to fund set up costs for land at Coastel Road for the development of making the existing container yard into a reefer stacking yard with electrical points moving the containers in the yard to a new holding at the back of Coastel Road and Boxer Bridge Road.
To seek approval from FIDB for £45K, which is allocated in the 2005/06 budget for the purpose of supporting the 1st phase of a new reefer and container yard project.
Since October 1999, FIDC has managed the container park for FIG. A lease was agreed for an area of land of 3,125 square metres at Gordon Lines, which was originally prepared for use as a pipe laydown yard in conjunction with the 1998 oil exploration programme. The lease conditions were that the compound was to be kept clean and tidy of rubbish and vehicles, locked gate and secure fencing. This lease could be taken back by FIG with a 6-month notice.
FIDC currently has 71 x 20’ and 7 x 40’ reefers stored in the container park. These belong to house builders, fishing related business, private individuals, bakers & bankers. A charge of £20 per month 20’ container and £40 per 40’ container is paid quarterly to FIDC. This generates an income of about £20K per annum.
FIDC would seek to obtain a management lease of a 99-years from FIG to enable FIDC to do the following:
Existing container yard at Gordon Lines:
1. Remove all containers to a new container park behind 31/33 Coastel Road with an access road through 13 Boxer Bridge Road.
2. Dig out and hardcore the area.
3. Fence and secure the area.
4. Place security lighting.
New Reefer yard at Gordon Lines:
1. Refence the area (the fence is quite tired).
2. Install about 50 reefer points and lighting.
The new reefer yard would enable the new shipping service to load full and empty 40’ reefers to and from the Falklands with frozen and chilled produce but also enable any Falkland Island business including retail to connect up to reefer points on a meterage basis with a rental charge.
Maps attached for perusal.
Map 1 – Shows the existing layout yard which could be the new reefer stacking park.
Map 2 – Shows the new container park with a road between 33 Coastel Road and 13 Boxer Bridge Road.
Although £45K will not nearly be enough money to complete this project. It is anticipated that more money in the next budget round will be required if approved.
To seek approval from FIDB for the release of £45K for the 1st phase of a new reefer and container park that has been budgeted in this year’s budget and is waiting for approval from the Board.
Next on the agenda was discussion about the double dumping machine. Stuart Wallace also stayed out of the room for this discussion. This paper provides details to meet the board’s request for further information, as expressed at the last board meeting.
This has been further explored with Neil McKay and also discussed with Jon Clark, the FIG Marine Officer.
The attached email shows possible solutions for dealing with the short, medium and long term requirement to move 40’ containers. Clearly these solutions are unproven in any volume and are far from ideal. But if the Falklands are to gain the benefits of the worldwide container structure it is essential that we have the capability to handle 40’ containers.
A loaded 40’ container will weigh approximately 30mt. The deckloadings supplied by Jon Clark indicate barge deck limits for double axle loading of 39mt. The link span loadings are 50mt, not exceeding 12.5mt per wheel, and the causeway is probably the most vulnerable at 35mt vehicle loading for only 1 vehicle at a time. Therefore it would seem that a loaded 40’ container on a flatbed pulled by a tractor unit would be at about this limit. Clearly there will be the need to monitor the situation and to also set up a procedure to make sure that only one loaded truck is on the causeway at a time.
By the date of the board meeting the GM should be able to give the board an update on the second trial shipment.
Discussions have taken place with Riki Evans, the chairman of the RBA, and at this stage the organisation is unlikely to have the structure to be able to take this on. A number of industries and companies have indicated that they would be interested in taking this on but at the time of writing, nothing concrete has been finalised.
The current cost of transferring bales from the wool warehouse and loading on board ship is £2.60. The amount of work and therefore cost to double dump is likely to be commensurate with this activity. Allowing for electricity and a notional cost to recover the cost of the double dumping machine over, say, 10 years, it is possible to estimate a cost of £2.50 per bale for double dumping. It is also possible that these may be incorporated into a single price for handling rather than two separate exercises. Details of this operation have been furnished to a number of individuals.
The current benchmark for wool shipment is £130/mt to the UK. Using this figure and then adjusting it for known costs produces a net estimated yield as indicated in the table below.
Clearly it is for shipping companies to decide what their shipping rates are and on what basis they charge. However what is apparent from the estimates below is that it is not possible to ship to the UK or other markets and provide any form of yield to any shipper unless the wool is double dumped.
These costs all include an estimated charge for double dumping and a notional charge to cover the capital costs.
This initiative is very risky. The principle risks are:
1. Double dumping machine doesn’t work – engineers have inspected the machine and reported it should be relatively straightforward to commission and maintain.
2. Containerisation ends
3. It is not supported by the wider Falklands farming fraternity.
However there are also risks if we do not take this up, in that indicative costs for a brand new double dumping machine installed in the Falklands is £250K and if this option is not supported it will be some time before we again see the opportunity for Falklands farmers to sell their product to end customers.
Further to the last board meeting, we have spoken with the former senior wool broker for Modiano, who has huge experience in this field and thinks that this is an essential next step for Falklands wool exports.
Details of this have been circulated to industry members who may be interested in taking this risk themselves, in which case I think FIDC should then step aside: a company is likely to work an investment harder and FIDC’s limited finances should not be used to shut out private enterprise. Not withstanding this, Rodney Lee has been in dialogue with the sellers for three months and FIDC should now commit to purchase this machine with the expectation that it can find someone to operate it cost-effectively.
Total costing is £40-50K (including shipping, commissioning, etc. - as per previous paper).
After Stuart Wallace came back into the room, a vehicle purchase was discussed. FIDC has currently two 110 Land Rovers for staff use. Since Mr & Mrs Reynolds arrived to operate the dairy, one of these has been in use at the dairy and is currently used for the delivery run, as both the existing dairy vans are in need of repair and we envisage that it will be some time before they are back on the road. Even when these are back in good repair there will be a requirement a general road vehicle for the dairy.
With the new Aquaculture expert (who is expected to be fairly mobile) being employed by FIDC, staff numbers will increase and the existing vehicle pool will be significantly overstretched, particularly if one vehicle remains at the dairy. Staff use pool vehicles on a very regular basis, including daily bank runs and transport to meetings, as well as visiting clients in Camp.
FIDC wishes the Land Rover currently at the dairy to stay there as a farm vehicle.
The second existing Land Rover will be used by FIDC staff, primarily for the aquaculture expert.
A third vehicle to be purchased for other staff use, returning the FIDC vehicle pool to its current count of 2 vehicles.
The most suitable vehicle for this purpose would be a Land Rover 110 at a cost of £17,250
The board to approve the expenditure as described above.
Dr Brendan Gara gave a brief presentation on Aquaculture in which he recommended that no new species be brought into the Falklands to farm but that we farm endemic species. This was followed by a rather tasty presentation by Kevin and Leonie Reynolds about what’s new in the Stanley dairy. The customer base had risen in recent weeks from 115 to approximately 130. New pasteurising equipment and methods means that lysteria would be held in check. New products to be introduced would include Yoghurt and various cheases.
Before the public section of the meeting broke up, the Financial Controller, Miss. Bernadette Lang, gave her report. The budget remains 80% committed for the financial year, with £148,500 remaining to be allocated to projects. The unallocated budget is spread between Fisheries, Commerce and Rural Sectors. The report has been adjusted to show funding approved from reserves through loans and other projects.
The total expenditure to the end of February has been £625,329, this is less than last month due to an error copying approval and expenditure figures across for Tourism Sector in the last report. This is 44% of total funding approved, and of the unspent approvals £131k relates to loans not drawn down and recent approvals not started.
As with last month, most income streams are above budget, due to the increased number of loans and the high bank interest rates. Farm loan income continues to be less than forecast, this is a combination of the effect of loan moratoria and the fact that interest payments are only due quarterly rather than throughout the year.
This shows that of the £1,760k available to FIDC, £944k is reserved to fund unspent approvals and unallocated budget. This leaves £816k to fund loans and approvals made from reserves. It should be noted that the House Building Loan and Farm shortcall accounts are included within this, these have generally been set aside as not available, but there is no reason why this should continue.
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