Falklands : Falklands EDS Public Meeting Report (27.08.09)
Submitted by Falkland Islands News Network (Juanita Brock) 29.08.2009 (Article Archived on 12.09.2009)
A public meeting on the second half of Part “A” of the Economic Development Strategy was held in the Court and Council Chamber of the Town Hall at 1700hrs on Thursday, 27 August 2009.
EDS PUBLIC MEETING REPORT (27.08.09)
Part “A” Second Half
By J. Brock (FINN)
A public meeting on the second half of Part “A” of the Economic Development Strategy was held in the Court and Council Chamber of the Town Hall at 1700hrs on Thursday, 27 August 2009. Present on the panel were David Waugh, General Manager of FIDC, Cllr Mike Summers and Stuart Wallace, President of the Falkland Islands Fishing Association.
Cllr Summers acting as Chair welcomed everyone and said the presentation today was a brief run-down of where we are now in the Economic Development Strategy process, the objective being to develop a sustainable economic future for the Falkland Islands with the public, private and volunteer sections working together so the economy can thrive. The EDS focuses on working with stake holders and the public and to believe in it. “This is not just an intellectual exercise,” said Cllr Summers.
During the series of two public meetings there were presentations by Agriculture, Tourism (Wednesday) Fisheries and Services (Thursday) sectors. Industry groups are now working together for a deeper understanding of where we are now.
Cllr Summers went on to say that it was important to get a wide variety of public views and practical advice to augment the working document. The plan in progress is expected to last from 10 to 15 years.
Thursday’s meeting was divided into presentations on the Fishing Industry by Stuart Wallace and the Services Industries by David Waugh.
The Fisheries Industry:
Stuart Wallace began by explaining that the Falkland Islands Fishing Association consisted of Quota Owners and committee members are Cheryl Roberts, Drew Irvine, Mike Forrest and Stuart Wallace. He went on to say that several sub-groups also were associated with the Association such as the Loligo Producers Group, the Skate and Ray Group and the Illex Group.
Mr Wallace thanked the Director of Fisheries, Mr John Barton, for the work he had done on the statistics in his presentation.
The Provision of Statistics:
There is a levy for a money amount of a percentage of quota owned by members and a draft analysis has been taken to meetings. Members are in touch by e-mail and a law about the provision of statistics an element in this process - is out for consultation amongst members. Proper statistics should show whether the figures are coming from any of the sub-groups and where they slot in to the main report that will be a requirement for quota owners.
A Description of the Industry and where it is now:
Mr Wallace said that the fishing industry was the biggest business success in Falklands’ history and that it affects all of us. “We are a fishing nation,” Mr Wallace said. Prior to 1987 we were an agricultural nation but the introduction of the Falkland Islands Conservation Zone changed all of that and 25 years later we have made more progress than our neighbours.
That reputation means that anyone from the Falkland Islands Fishery added value to conferences where the fishing industry was discussed.
ITQ was introduced in 2006. Compared with New Zealand, the Falklands manage the fishery in terms of effort, where New Zealand manages in terms of tonnage.
Comparatively small amounts of resource £4 to 5Million are spent on managing the Falklands’ fishery and that includes patrolling and enforcement. The fishery has been the main source of funding for transforming the Falklands economy and generating wealth.
Industry Structure:
Falklands’ fisheries run on an ITQ system. Illex is outside the ITQ system and is considered to be a low value fishery in that there are low operating costs and a protected market. The ability to trade quota is a very significant feature of the new system
A joint venture system is also in operation where quota owning companies go into partnerships that range from 25.1% upwards. At the height of the Falklands’ flagged vessel involvement in the Liligo fishery, the 16-vessel fleet had an average local participation of 39%.
Job Creation:
The fisheries industry creates some high value jobs but it is thought that there aren’t enough Falkland Islanders in the industry, either in high value jobs or in the fisheries trade itself. There are 20 registered fisheries vessels (18 Trawlers and 2 Long-liners). The fleet, however, is not at present configured to be fully utilised with little downtime. The financial advantages of having more vessels has yet to be assessed.
Financial Implications:
In terms of the Falklands, huge numbers of fish were caught in 2007 that brought in 60% of the GDP or £65 Million. If revenue were increased it would have a knock-on effect with increased revenue for customs, harbour dues, engineering capacity and telecommunications as well as what crewmen spend ashore. There are also firms that are related to the fishery, providing launches, cold storage and transport ashore, etc.
At present there are 14 ITQ owning companies and 22 Joint Venture companies with 36 companies making profit after tax. It’s important to keep joint venture companies because they generate income for FIG and the community.
Strengths:
SWOT analysis indicated seven strengths of the industry and its affect on the community. These include local political stability, size and management of the fishery, the long-term ITQ system providing security of tenure, joint venture arrangements bringing access to core markets, an increasing world-wide demand for seafood and a developed network of international contacts.
Mr Wallace said that the Falklands have a well managed fishery that operates even though we are now using one patrol vessel and a reduced number of surveillance flights.
Weaknesses:
Continuing the analysis, weaknesses include the regional political situation, no identity and skill base of a fishing nation, diversification of fish stocks with squid being 80 percent of the concentration, straddling stocks with no control over high seas fishing, limited infrastructure ashore, distance to market, communications including telecommunications and air links, access to capital, over-reliance on Joint Venture Companies, and the age of the current fleet.
Mr Wallace said the fishery used vessels built in the ‘80s that were purchased at reduced prices. He listed some of the shore based infrastructure items as lack of an adequate port, inadequate engineering facilities, expensive fuel and services, lack of labour at all levels of skill and knowledge.
“Imaging trying to sell your fish and brokers not being able to get a hold of you,” he said.
Trends:
The Falklands’ fishery has a track record of being well run and managed. All operating costs are paid from earnings and there is significant profit above expenditure. There is a trend to invest money ashore. Plans for investment associated with the deep water port are an example of this. Unlike other fisheries world-wide, especially in the European Union, the Falklands fishery is not subsidised. There is also a trend to grow the industry at a comfortable pace for the community.
Threats:
At the top of the list is climate change. There is also a growing campaign about demersal (bottom) trawling that directly affects our fishing industry. Protected markets, especially in Asia, mean that it would be un-viable to have our own squid fishing industry. Subsidised industries and straddling stocks are also threats. Exchange rates and other currency items as well as credit issues finish the list.
Opportunities:
Mr Wallace mentioned the need for space to organise containers of stock taken off vessels and another to re-pack and categorise product for various markets. We could sell product from the Falklands. It is already potentially cheaper fo send product from here than it is from major European ports. Laying up vessels could also create revenue and jobs. We could find a product – like Mussels – that could be exported. Mr Wallace added that Mussels were New Zealand’s biggest seafood export.
The Next Steps:
The next steps are seen as discussing our opportunities with interested people as well as realising each vessel’s earning potential and the investment needed to bring our fishing fleet up to current world-wide standards. Improved container services are needed now as well as a commitment from FIG. On the wish list is “no tax for the fishing industry.” “We should be putting all of our efforts into improving our fishing industry,” concluded Mr Wallace.
Questions from the audience:
One person asked about processing by-catch into fish oil. Mr Wallace said this was already being done, with a viable product being fish meal. Due to the value of the Omega-3 fish oil business, there was discussion about this within the industry.
Roger Spink brought up Stanley Fisheries and Mr Wallace said that people came in from outside to tell us how to manage our fishery for profit. They made lots of money and left an expensive mess for us to clean up.
Andrea Clausen asked about chartering in vessels for the fishery season. Stuart Wallace said that a variety of approaches had been made for short-term charter. Some companies would look at it but, he added, “whole fisheries should not be run with chartered vessels.”
Mike Summers asked about employing Falkland Islanders in the industry in all skill levels and knowledge levels to create a pool of knowledge. Me Wallace is in agreement with this and he mentioned that we are better off in that area than we were when we first started out in 1987. He mentioned that we needed to create a land based fisheries industry to help make the connection.
Paul Robertson asked if any new vessels would be bottom trawlers and Mr Wallace said that the same vessel can do bottom (demersal) and mid depth (pelagic) trawling. A new vessel would be smaller and more powerful than the ones we have now. All new vessels would be trawlers. Demersal trawling would be a big selling point with fishermen but not with the growing effort to ban bottom trawling.
Emma Edwards asked that with global warming, would there be opportunities for new fish stocks. Stuart Wallace said that no opportunity had been identified as yet. Mike Summers said there was not enough knowledge about ocean currents and there was a huge gap in research at the moment. Mike Rendell asked if global warming would cause us to lose stocks and Mr Wallace said if our waters are one degree Centigrade warmer we would lose our Loligo fishery.
A discussion about satellite surveillance of the fishery will be conducted later.
THE SERVICE INDUSTRY
David Waugh, General Manager of FIDC, mentioned that the 84 companies in the service industry were diverse and this complicated things. His remit covered wholesale and retail, fuel and bunker sales, private and public construction, private and public accommodation and real estate, shipping and transport (marine services) communications, financial services, legal services, utilities, transport and business support services. These contributed 33% to GDP and 34% of Falklands’ revenue. 42% of that figure was fuel and bunkering services.
In comparison the average contribution in other places in the world is 68% and research would help to increase Falklands’ contribution up from 33%
The construction industry has benefited from work in Antarctica and South Georgia.
Strengths:
Benign labour laws, a labour union and good working conditions top the list. Liquid banking sector, healthy personal debt levels and a conservative financial culture also work in our favour. There is niche tourism with long-term potential, relative stability and a benefit from the growth of other industries.
Weaknesses:
The list of weaknesses is a longer one with insufficient financial and political support compared to other industries, restrictive immigration policy, lack of opportunities for trained and educated locals, lack of competition in sole supplier markets, small population, diseconomies of scale, distance from market, high infrastructure and communications costs, relatively high provision for government services, not enough opportunities for the private sector, limited commercial port facilities, lack of FIG support for private sector, lack of housing, excessive and inefficient FIG spending creating unnecessary competition and lack of a business oriented Councillor.
General Opportunities:
Mr Waugh listed opportunities as downstream development of offshore fishing, port development, containerisation, Alternative energy industries, privatisation, MPA outsourcing services to Falklands’ businesses, product/service development (extended tourist season) and a potential in accommodation and tourism housing.
General Threats:
Top of the list is the existing economic climate and economic downturn, followed by a potential depopulation of the Falklands and single suppliers. He went on to say that the economy is highly susceptible to external forces like commodity markets and the lack of infrastructure.
Questions:
Andrea Clausen asked about value added employment and whether there was something wrong with the chart. Mike Poole said he would look into it. Tim Thorogood later said that he had a look at the graph and it was a matter of scale and needs adjusting.
Paul Robertson asked about what other countries were doing to bring service industry averages up to 68% Mr Waugh said there was no information on that yet.
Mike Summers mentioned that if the main industry is offshore then people won’t be spending much money here. Hamish Wyley mentioned that even earners here spent a significant amount of money abroad
Nuala McKay mentioned that FIG was the largest employer and how do we increase their productivity and how do we encourage private sector employment.
Tim Thorogood said that FIG was committed to privatisation where it was sensible but it would take two or three years. Measures are now being taken to increase FIG employee productivity.
Mike summers said that it was an issue with the private sector and FIG to work out how privatisation was to be accomplished.
Sonny Jose mentioned that increased value was added when less productive employees were let go in favour of more productive ones.
Emma Edwards Added that the Community School now had a business studies teacher and people can ask her about the details later.
Mike Forrest said it would be useful if a timeline were published and Mike Summers said there wasn’t any reason why it shouldn’t be covered in the press.
Exports were brought up and David Waugh said he had looked at it and a working group would also explore exports. He pointed out the difficulties of the export business.
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