Western Cape Business News

Send  Share  RSS  Twitter  27 May 2012

FISHING: Lobster Players Claw Back


Recent Western Cape Business News

EXPORT markets for lobster appear to be firming – at least that’s what the latest results from Cape Town-based Premier Fishing suggest.

Premier – which is a large exporter of lobster – last month reported a R1.1 million profit for the half-year to end February, a period during which the company (due to its maintenance schedules) traditionally operates at a loss.

What was even more encouraging – and suggests the lobster market is starting to simmer nicely again – is that Premier Fishing reported a strong 10% jump in turnover to R76 million on the back of a strong showing from its pelagic interests and south coast lobster.

Khalid Abdullah, CEO of Premier Fishing’s holding company Sekunjalo, told CBN that the company capitalised on its strong position in the US, where it holds 60% of the market for SA sourced lobster.

He said prices had firmed, and that Premier Fishing was helped by hauling in bigger lobsters. “It’s a simple rule…the bigger the lobster, the better the price.”

Unfortunately, for now it seems most of the improvement is in the export markets is for south coast lobster in the US markets rather than the Cape’s famous rock or west coast lobster.

While the US market is holding up nicely for south coast lobster, the competition in the early part of the season is much greater on the west coast lobster side.”

Abdullah said while there was pressure on west coast lobster pricing as other companies pursued their quotas aggressively, Premier Fishing was managing its catch rates more consistently.

We have a smaller quota in west coast lobster. Basically we can afford to leave our lobsters in the sea for longer.”

He said this could preclude quality issues like high mortality rates due to soft shells on live lobster orders.

Hopefully further encouraging news on the lobster front will be supplied in Oceana’s interim results to end March, which should be released later this month.

Oceana is a supplier of live and frozen west coast rock lobster to Far Eastern and European markets as well as a supplier of live and tailed south coast lobster to European and US markets. The company recently signalled its intention to become a much bigger player in the south coast lobster segment after proposing a buyout of Lusitania.

Last year Oceana’s lobster business landed 99.8% of its 2010/2011 quotas, achieving an average increase of 12.7% in selling prices in foreign currency terms, but a lower total allowable catches (TAC) meant a lower quota for the season and a reduction in tons landed.

Last year Oceana CEO Francois Kuttel bemoaned the likelihood of further reductions in the west coast lobster TAC in 2013, saying “the amount of it diverted away from holders of long-term rights is of concern to Oceana and the industry”.

The acquisition of the Lusitania business – which (see accompanying story) is still up for approval by the Minister of Agriculture, Forestry and Fisheries and the Competition Commission – would effectively increase Oceana’s share of south coast lobster catch from 3.1% to 25.7%.

The Lusitania transaction is a key one for Oceana’s lobster ambitions. Oceana was a big loser in lobster during the transformation of the fishing industry between 1992 and 2000, its overall share of the TAC reducing from around 36% to 15%.

Other than running a very tight ship, Oceana has managed to partly compensate for TAC losses in lobster by procuring additional volumes of raw material by way of acquisitions as well as packing and marketing landings of other rights holders.

Kuttel noted in Oceana’s last annual report that with scientific advice favouring conservative approaches to strengthen the biomass, it was expected that the TAC will be reduced as from 2013.

He said Oceana would continue to seek additional volumes through acquisitions and arrangements with other rights holders – adding that the company’s own catching, processing and distribution infrastructure was in good order.

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