TBY talks to two executives in the fishing industry on Ecuador’s competitiveness and the challenges the country faces against tariffs.
How does Ecuador compare to other countries in terms of investment in the tuna sector?
BRUNO LEONE Tuna is a very capital-intensive industry. To establish a tuna factory that can process 200 tons of tuna per day takes an initial investment of about $30 million. There are three very clear steps in the tuna value chain: fishing, processing, and marketing.
In terms of fishing, I have an Ecuadorean-flagged fleet, which means I need to adhere to quotas and regulations; you cannot just buy a boat and catch fish in Ecuador. Within the area regulated by the Inter-American Tropical Tuna Commission, there is a finite capacity. The only way to get around that limit is to sail to another ocean, which is something Ecuador cannot do because its fleet is almost 40 years old. The Ecuadorean fleet was the first fishing fleet in the Eastern Pacific. A new medium-sized boat, capable of catching 1,000 tons of tuna, would cost about $20 million. Most of our investment has been focused on upgrading our processing capacity. We can process about 400,000 tons of tuna per year, which is a lot. Worldwide, the tuna processing capacity is 4 million tons. Ecuador can process 10% of that, which is significant given our size. We have 13 or 14 facilities capable of processing 150-200 tons of tuna per day. Marketing is a different story, though. The key is to form alliances with big buyers in the EU and US. We produced about $970 million in tuna exports in 2011.
ISABEL ANDRADE Tecopesca was established 12 years ago as the daughter company of a larger enterprise that had been operating in Ecuador for quite some time. The development of the market and its demand, which was constantly growing, led to the establishment of Tecopesca, a 100% Ecuadorean company.
It all started with the establishment of one processing plant. Over the years, we have gained the trust of Ecuadorean consumers, our suppliers, and banks, for they have played a significant role in the expansion of our activities. Our principal activity is the processing of food products with high value-added, and we can proudly say that today we have become one of the leading food companies in South America. When we first started, we were processing 26 tons of fish a week, whereas today we process 78 tons of fish a day, and we have five different lines of products. In 2011, our revenues reached $130 million. We have heavily invested in infrastructure during these 12 years, doubling the plant’s processing capacity and expanding the storage capacity. Right now, we have 13,000 tons of warehousing capacity.
Our main asset is our workforce; we are committed to integrating our staff into our work culture by providing them with the right tools to broaden their professional skills.
What are the main foreign markets your company is active in?
BL The fishing industry in Ecuador provides a lot of aggregate value to the economy. In addition to creating jobs and paying taxes, it is a significant source of dollars for our trade balance. The tuna sector is the most active in the industry.
Our main markets are Europe, which imports about 60% of our tuna, South America, and the US. That is why it is extremely important for us that Ecuador can reach commercial agreements with our main export markets, the EU and the US.
IA Tecopesca currently exports 99% of what it produces, and in this regard we have two main markets: the EU and Latin America—especially Venezuela. The government of Ecuador has positively boosted the development of the industry, and in our particular case, it has done a lot to strengthen commercial relations with Venezuela, our main market in Latin America. The Unitary System of Regional Compensation (SUCRE) has played a significant role in boosting trade relations between Ecuador and Venezuela, and today Tecopesca is the private company with the highest level of commercial transactions between both countries.
For that reason, we believe it would be very important to implement similar agreements with other regional countries. As for Europe, although negotiations on the trade agreement between Ecuador and the EU have been a bit confusing, we believe they are back on track now and we will see positive developments in the near future, especially regarding custom tariffs, which will enable us to have a better position than our competitors.
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