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Building the Bluefin Market

Primary Industries

Every year, thousands of tonnes of Southern Bluefin Tuna are caught in the wild and fattened in large pens in the open seas surrounding Port Lincoln in South Australia.

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It's one of the biggest fisheries in one of the Southern Hemisphere's largest and most diverse fishing towns – one that harvests everything from abalone to rock lobster to prawns and all sorts of fish.

But the tuna industry here is facing a large problem: an overdependence on their largest market, Japan.

Brian Jeffriess, CEO of the Australian Southern Bluefin Tuna Industry Association (ASBTIA), says this is the reason for developing connections with China.

“We produce about 9,000 tonnes a year, of which we export about 8,600 to Japan. We need to diversify because we have an overdependence, not just on the Japanese market but on the Japanese yen,” Jeffriess says.

Past hedge markets such as the United States have dried up as Mexico has become a larger producer, and other Asian countries such as Korea have their demand met by European suppliers.

“We're focused on China. This is really what the future is about,” Jeffriess says.

There is a problem, however. 

Unlike Japan, China has no tradition of eating high quality tuna. Jeffriess thinks that the initial stepping stones to overcome this problem will be the tourist market in China of visiting Japanese guests and other sashimi eaters.

“From there it's just a matter of building the market,” says Jeffriess. “They say there's a natural will and taste to eat it – but how do you educate people to say this is a product you should eat?”

Jeffriess points to New Zealand's King Salmon as a good example of another fish making a successful push in to the Chinese market.

“There's obviously a market at the five star hotel level, but you would want to pitch it at another level as well. It's a challenge. In Japan, you don't use the clean green image of Australia, but it will be a more important issue in China,” he says.

ASBTIA has been making headway.

Several small orders of 10 tonnes or so have made their way to China, and Jeffriess says that their biggest yet, one about five times that, is a recent breakthrough.

“They've developed a large number of cold stores now which they didn't have before, so now they can import the product and hold it,” he says. “That's a new potential for them and for us.”

The development of the cold stores is heartening to the industry because Chinese consumers are not accustomed to frozen fish.

It's likely that Japan will take all of the Southern Bluefin supply coming out of Port Lincoln for the coming years, but by 2020 there's hope that the market will be diversified.

Given that South Australia supplies about 20 per cent of the world's high quality tuna, it gives the industry a bit of flexibility. A flexibility they currently lack when negotiating on the Japanese market due to their overdependence.

The majority of the fish farmed in Port Lincoln, around three quarters of their supply, are caught and immediately put on large freezer boats in the water, where they're immediately snap frozen and then shipped to Japan.

Almost all of this stock is already owned by Japanese wholesalers by the time it's shipped, employing a many technicians in Port Lincoln to grade the fish and negotiate prices each season.

The remaining quarter is frozen onshore in containers, shipped around Australia and to other small markets – including China.

A very small amount – about 10 per cent of the total catch – is sent fresh by airfreight, and is owned by the industry when it arrives in Japan, though most of that is sold to wholesalers and processors as well. A small amount goes to the famous fish auctions in Tsukiji and elsewhere.

ASBTIA is hopeful that increasing quotas will result in more fish they can push to the Chinese markets. Quotas are tipped to remain steady – and sustainable – after a long period of volatility.

Global over catch in past years resulted in huge crashes of the quota in 1988, 2006 and 2009. The original quota of 14,500 tonnes was cut to 5,265 until 2009, when it was further reduced to 4,000.

“The quota is everything,” Jeffriess argues.

“You've got no collateral with the banks except the quota. You need the banks for two reasons – if you want to expand, you need new equipment capital, new boats.

“Secondly, you put the fish in the farm from December to March and spend all that money between then and the harvest – that's a couple of hundred million. You need to be loaned that operating capital.

“There's a story from when the quotas were first cut by 70%. The industry owed one bank, the ANZ, a couple of hundred million. If you owe the bank 50 bucks, you've got a problem. If you're out 200 million, they've got a problem.”

As research has shown stocks to be returning after an international reshuffling, reduction and enforcement of quotas, confidence is starting to return to the industry.

“You'll hear a lot of fisherman say the quota should never have been reduced. Of course they needed to be reduced,” Jeffriess says.

As it is, the quota is now set by the Japanese catch rate on the high seas, and the CSIRO's aerial surveys of the Australian schools of tuna.

“Being in agreement with Taiwan, Korea, Japan, Indonesia, it's an interesting experience. It can be volatile. But that's the nature of the internationally managed fisheries and you get used to it,” Jeffriess says.

To continue to thrive the Port Lincoln fisheries will have to keep their eye on China.

Joint ventures, consumer awareness and international cooperation will be at the centre of the push.

“It's a matter of thinking strategically all the time. As an industry, you have to have that discussion.”

This is a Creative Commons story from The Lead South Australia, a news service providing stories about innovation in South Australia. Please feel free to use the story in any form of media. The story sources are linked in with the copy and all contacts are willing to talk further about the story.

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