Frustration mounts among Peru’s anchovy players

Peru's fishing powerhouses are growing increasingly frustrated with the government's regulations on the sector, which are seen as nonsensical and value-destructive, several executives told Undercurrent News. 

Laws limiting the use of products for human consumption, while failing to regulate artisanal vessels or prevent volatile quota cuts have resulted in mounting exasperation among an industry which thrives off the world's largest commercial fishing stock, the Peruvian anchovy.

"The new government of Ollanta Humala started in July 2011, and from the first moment, started to attack the fishing sector," said one industry source.

"No other sector in Peru is as well regulated as anchovy fishing, not even the mining sector, which is by far the most important in the economy," said this source. But in recent years, "the sector and its ministry have fallen into useless discussions through the press, and the situation overall is that the administration doesn't know what to do."

The frustration is seen as one factor that could encourage owners of Pesquera Diamante or Hayduk to sell out, amid talk of interest from Chinese players.

“The value of any company is their cash flow. In the two last years the administration, without any discussion, has restricted the Peruvian quota of anchovy by about 40%," said another executive. "The cash flow reflected the issue and of course the companies’ values are lower than they could be."

“Foreign companies along with high level politicians have achieved what they wanted: Peruvian companies can be sold at a cheap value, since Peruvian politicians have demolished the fishing industry,” said a third executive.

One of the most heated polemics was triggered by a law approved in March last year, which restricted operations of industrial fishing vessels within 10 miles of the shore along Peru's central and northern coast, or within seven miles of its southern shores.

Peruv's government said this would ensure future generations of anchovy, which reproduce and spawn in shallow waters, but the industry complained this measure has hit production.

"As a result [of the law], industrial fishing in the south has sharply dropped from 700,000 metric tons averaged the previous years, to only 240,000t in 2013,”  Elena Conterno, president of the National Society of Fisheries, said in an article from El Comercio published on Jan 13.

“We have a world class fishing sector, with huge potential," Conterno said in the article. "Businessmen need public policies and a favorable climate for investments.”

"The fishing industry has become more complicated, there are no-sense regulations and therefore the fishing business is worth less," another source from the Peruvian fishing sector told Undercurrent, adding politicians "have demolished the fishing industry".

Another big source of frustration is the government's unpopular and controversial limitation on the use of anchovy for human consumption by the industrial fleet.

The large industrial vessels licensed to catch anchovies for indirect human consumption — fishmeal and oil — are not allowed to catch anchovies for human consumption. As a result, Peru’s major seafood companies (Tasa, Copeinca/China Fishery, Diamante, Austral, Hayduk and Exalmar) have to buy from the artisanal fleet for direct human consumption anchovies, as reported previously by Undercurrent News.

However, industrial players have argued that artisanal vessels are not equipped to handle fish for human consumption. "The minor scale fleet has no satellite control devices, they use plastic boxes with ice carried inside the hold to preserve the fish once caught, and they’re small wooden boats not able to navigate too far from shore due dynamic instability," said one source.

"The unloading of these boats is made manually in docks with poor conditions, and not certified for human consumption products."

There is also a lack of processing plants (canning or freezing) ready to process all the catch of such the artisanal fleet -- estimated at roughly 1,400 boats -- for human consumption.

As a result, their catch is currently and mostly sent to residual fishmeal plants, "creating a secondary fishmeal market with selling prices much lower when compare with industry level", said this source.

Unclear regulations

But the litany of complaints is long.

First came the government's claims that the sector had unpaid fines to the tune of several millions, said the first-mentioned industry player. To back up its claim, the ministry "took historical fines from the last 15-20 years and summed up them to show a big number to reporters".

But the truth was that "while some fines were pending to be paid," most of the cases were pending, as many resulted from rules that are poorly defined, said this source, who asked not to be quoted by name.

The key issue here, he said, is the issue surrounding the definition of juveniles.

"Probably more than 80% of [the fines] were related to the capture of juveniles, and this also needs to be clarified," said this source.

"When purse seiners as used by the whole industrial fleet search in fishing zones, they differentiate anchovy from other species. However they can’t know if the anchovy is 12cm long or a little more, or a little less. But the law says that anchovy shorter than 12 cm long is considered juvenile. In the past, we had events where over 90% of the biomass, while adult, has small length on individuals (that happen in 2010)."

"So it’s clear that the limit between juvenile and adult is just a thin line, while it should consider a range or a tolerance."

The assessment of the catch is also flawed, he said. "When these vessels drop their nets, they may catch 100-500t in each try, depending on the situation of the zone."

A haul of 500t could hold around 750m individual fish, but when the government samples the catch to test for juveniles, they take maybe three different samples, of 2 to 3 kilos each. "Probably they size 300-500 individuals to calculate how much juveniles arrive in the hold of the vessel."

Such a tiny sample cannot possibly be representative of the entire catch, argued this source. "So most of the fines sleeping for years at the ministry are the result of an obsolete way to demonstrate juvenile presence on the landings, and remain out of their control, since most cases were presented to the justice ministry, taking years to be finally resolved."

The government is also resented for having cut the budget of Peru's marine research institute, Imarpe. "We’re talking about an entity that received many prices for their wonderful job. In 2008, a study by the university of British Columbia declared the Peruvian anchovy fishing activity as the most sustainable in the world," said one source.

The study in question, authored by Mondoux, S., T. Pitcher, and D. Pauly, gave Peru an aggregate sustainability score of 6.42, with the next highest rated country (Namibia) at 5.10.

"Dialogue is needed," said one source. "However the government lacks skilled technicians to understand the whole problem, while the industry has shown no genuine interest in solving the artisanal fleet issue, as was done with the individual transferable quota (ITQ) law for the industrial fleet [in 2009]."

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