Spend Matters welcomes this guest post from Emma Jayne Smith, of Mintec.
The U.S. tuna fishing fleet announced at the start of March that it has resolved payment issues with the Pacific Island Forum Fisheries Agency (FFA), which had prevented it from fishing in Pacific waters. The U.S. buys fishing days from the FFA, which allows the tuna fleet to fish in South Pacific waters. Low tuna prices at the end of 2015 caused the U.S. tuna fleet to withhold payment of these days and remain in port for over two months. This limited U.S. tuna catch caused an increased reliance on imports from Thailand.
Following a six-year low in December 2015, Thai tuna prices have increased over 35% since the start of 2016 and are up nearly 20% year-over-year in February alone. Prices had previously been falling due to low demand and high stocks of tuna in Thai canneries. The U.S. is the largest global importer of Thai canned tuna, but Thailand is the most important export destination for American raw tuna. On average, Thailand exports 90,000 tonnes of canned tuna into the U.S. per annum, accounting for 20% of its total canned tuna exports.
In 2016, for the first time in 30 years, the U.S. had been blocked from fishing in the Pacific Ocean, blocking approximately 60% of its tuna catch. The American Tunaboat Association (ATA), the body in charge of purchasing fishing days for the U.S. tuna fleet, agreed to purchase around 5,700 days of fishing access in the Pacific Ocean within 2016. However, when the price of skipjack tuna fell in December 2015, some of the U.S. tuna fleet stated that it could not afford the fees and the ATA withheld payment from Jan. 1, 2016. To resolve the issue, the ATA has offered to reduce its agreement to pay for 3,700 days of access. The ATA hopes that lower catches could drive a higher tuna price, increasing the margins and profitability for their vessels.
During the two-month U.S. tuna fishing hiatus, Thai tuna prices have been increasing while the U.S. relied on additional canned tuna imports. Now that the new proposal of 3,700 fishing days has been agreed to, the U.S. tuna fleet is able to head out to South Pacific waters and start fishing again. This will likely reduce some of the demand from the Thai market, as the U.S. will be able to supply some of its own demand. Good news for the U.S. tuna fleet; bad news for a few unlucky tuna in the Pacific.