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Send  Share  RSS  Twitter  28 May 2012

FISHING: Waters Get Choppy Again

 



Recent Western Cape Business News

JUST when local fishing companies thought it was safe to profitably trawl the coastal waters again, Minister of Agriculture, Forestry and Fisheries, Tina Joemat-Peterson, has hinted at rocking some boats.

The boats set for a rocking, if reports based on leaked information from closed meetings are to be believed, are the so-called ‘white controlled’ fishing companies.

The indications are that the Minister intends exposing those companies that are not properly black empowered or BEE compliant.

The implied threat – and remember this is based on reports in the daily media – is that inappropriately empowered companies will have their quotas taken away or reduced.

Such a dramatic development would entail the minister wading into a legal and regulatory minefield – which leads CBN to deduce that perhaps the daily media reports may have taken some poetic licence. Nonetheless, fishing industry sources are not entirely washing their decks off the matter…

Transformation in the fishing industry is a non-negotiable, and the sense that CBN gets is that most of the big companies – think Oceana, Premier Fishing and Sea Harvest – have been at the forefront of initiatives to ensure more representative ownership structures.

Has enough been done? That’s always debatable, and there is certainly strong evidence (check Oceana’s latest annual report for confirmation) that transformation efforts are most certainly ongoing.

Still, if there is a move to put fishing back in the hands of communities and black owned fishing entities – in other words give more of the quotas to smaller fishing groups – the minister will have to ensure these players fish their quotas efficiently. Indeed, growing concerns about food security will need to be addressed.

Perhaps more alarming than the rumoured rumblings from DAFF was last months’ court judgement that effectively put Oceana – SA’s biggest fishing company – in the dry-dock as regards deal-making.

Oceana lost its court challenge against the DAFF’s ruling on what constituted black economic empowerment (BEE) in the fishing sector.

Basically the DAFF judges empowerment based on ownership and management control of a company. Oceana had argued that this contradicted the official policy on broad based black empowerment policy which incorporates a wider variety of criteria to gauge a corporation’s transformation merits.

The DAFF’s aims are to make sure transformation in the fishing industry is not undone by fishing quotas being traded between companies that have varying degrees of empowerment ownership. Effectively this means a 90% black controlled fishing company may not sell its fishing rights to a company that is only 40% black owned.

While the ruling may frustrate acquisitive entities like Oceana it also restricts the commercial endeavours of smaller black controlled or owned companies by precluding them from freely trading their quotas.

Naturally highly empowered fishing ventures like Premier Fishing (controlled by Sekunjalo) and Sea Harvest (controlled by Brimstone) could play key roles in consolidating the sector.

Brimstone, significantly, is a significant shareholder in Oceana (with a stake of more than 20%). There must be a more than reasonable chance that Brimstone is looking at buying out Tiger Brands’ shareholding in Oceana. If Oceana wants to trawl the sea for deals, then Brimstone (perhaps steering a community investment effort) will surely need to be hauled on as an anchor shareholder.

Of course, trying to steer ownership into black hands is not always plain sailing. One needs to remember that well funded BEE players (of the ilk of the old Real Africa Holdings and currently Brimstone and Sekunjalo) are hard to come by. Finding a buyer for Real Africa’s Holdings’ stake in Oceana several years ago was a huge hassle, while rumour has it that more recently a potential empowerment partner fell away in a proposed transaction to acquire Foodcorp’s fishing interests.


 
 
 
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