Fisheries sector of Sri Lanka: The Socio-economic importance and impact of GSP+ concession | Sunday Observer

Fisheries sector of Sri Lanka: The Socio-economic importance and impact of GSP+ concession

Minister  meets officials of  the Fish and Fish Production Exporters Association
Minister meets officials of the Fish and Fish Production Exporters Association

The following is an extract of the speech made by the Minister of Fisheries and Aquatic Resources Development, Mahinda Amaraweera, at the meeting of the Minister with the Sea Food Suppliers and Producers Association:

The tsunami disaster in 2004 badly affected the coastal communities and the Sri Lankan fisheries industry. The main segment of the affected community was the people directly and indirectly involved in the fisheries industry.

Aftermath of Tsunami

The fishers who were affected suffered not only material losses but also psychologically due to the death of many family members and colleagues. Hence, the fisheries were forced to build back everything from scratch.

EU “GSP+” scheme commenced on 1 July, 2005 after the tsunami disaster and SL also was among the beneficiary countries under this scheme. Accordingly, significant increased prices for the reduced catch, in the form of EU concessions assisted them to rebuild their livelihoods in the aftermath of the Tsunami.

The coastal fisher communities could be considered as sustaining on the catch and belong to the poorest sector in the country, with increasing numbers because of their high population growth. Many of the unemployed and displaced workers turn to the fisheries industry as a last resort.

The lack of viable livelihood opportunities due to inadequate skills in non fishing activities makes it difficult for the fishers to augment their income from other sources. Fishers are described as non- bankable, and fishing vessels are also not considered as collateral due to the inherent risk of the industry.

Most fishers have a low educational level and lack skills to undertake alternative or supplemental livelihood options. So it can be rationalized that their only sustainable income is derived from fishing activity.

The affected fisher communities which faced the loss of fishing vessels, fishing gear and infrastructure facilities were also faced with declining catches ( hence declining incomes) at the time.

The EU lifting import duty impositions ( GSP+ tariff reductions) in 2005 resulted in a high price being paid to producers ( fishers). The processors benefited in that due to the lower prices in the EU market a greater volume was in demand and new smaller processors paid better prices to the fishers as their fixed costs were lower.

The established processors also followed suit to get a larger percentage of available fish and the combined effect was a surge in boat building/ modifications or modernizing the fishery followed by increased availability of fish and significant improvement of the quality available for export.

Accident Insurance

Due to the better prices paid by EU buyers not only fishers, but employees of processing factories also benefited. The industry introduced better wages (higher than average) based on increased selling prices.

It resulted in export incentives based on the quantity exported, welfare policies of free or subsidized housing for families, fully subsidized food and lodgings for factory employees, full medical and health care, Door to Door Accident Insurance cover, well above that stipulated by the statutory Workman’s Compensation Act. The surplus available enabled managerial, non-managerial and technical personnel to be sent overseas for familiarization and training. The annual bonus to all employees became a NORM.

The surplus was partly diverted to the fishers, partly to processing factory employees and partly to the factories itself in importing more sophisticated machinery, which was the beginning of diversification and added value products ensuring quality.

The majority of the tuna fish export of the country in 2010 was destined for the EU markets. The Tuna Market share to the EU by year 2010 was about 82.5%. Concerning the foreign exchange earnings from our fish exports the market share of the total EU exports by year 2010 was more than 50%. As the market demands rose, sustainable catching methods, traceability and quality control lead to more organized fishing.

With the removal of the EC GSP+ concession in the latter part of 2010, the quantities exported to EU had also been lowered.

In 1999 there had been 13 EU approved fish processing establishments for export. The number increased slowly up to 2004 and after 2005 the trend of export to EU countries increased significantly although processing for the EU market was a costly activity.

At the end of 2004 there were 11 approved fish processing establishments out of a total of 17 in SL. After getting the EC GSP+ benefit to SL in 2005 and when losing the GSP+ concession in the year 2010 the total number of EU approved fish processing establishments had been 28 out of the total of 35 processing establishments showing a rapid increase in the interest to export to EU.

But the construction of the processing establishments targeting the EU market was also discouraged after losing the EC GSP+ concession and by the end of 2016 the total number of EU approved establishments were 33 out of 52, showing a diversification to other Non- EU markets. The table on approved establishments showing the trend to export to EU as follows. (See Chart 1)

During that period, the cost of production had been increasing exponentially due to inflation in the country. The oil price hike at the time had worsened the situation as it directly affected the fishing industry.

Hence, a duty levy made the export far more expensive resulting in reduced prices of raw material. This situation created a burden on the already overburdened fishermen at the time. (See Chart 2)

Sri Lanka Fishery products which need to compete with the Tsunami affected South Asian regional suppliers to the EU was also not competitive after the GSP + benefit was removed.

The EU “GSP+” scheme commenced on 1 July 2005 after the Tsunami disaster, when SL also benefited among other countries, and received the following benefits to the fish exporting industries of the beneficiary countries at the time. (See Chart 3)

Therefore, if Sri Lanka continued to get this GSP + preferences from EC again for a further period of time it would be immensely beneficial to further develop our growing fish export industry while developing the fisheries sector in the country as a whole.

But, during the period January 2015 to June 2016 Sri Lanka lost more foreign exchange from the fisheries sector, the reason being that EU banned our fish export to their countries. Therefore, we have lost at least Rs. 16,000 million during that period.

The writer is the Director- Media of the Ministry of Fisheries and Aquatic Resources Development