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21 Oct 2007
Sectoral Profile Revenue Streams: Marine Products
DAGUPAN Major Products
The fishing industry contributed 3.9% to the country's Gross Domestic Product (GDP) in 2001. Its share to the country's Gross Value Added (GVA) in Agriculture, Fisheries and Forestry Group were 14.5% (P76.3 million, current prices) or 18.8% (P35.8 million, constant prices), respectively. The sector employs 10% of the active labor force in agriculture and 5% of total labor force. 

 


The Philippines ranked 11th among the 30 top fish-producing countries in the world, contributing a total of 387,680 metric tons in 2000. It came 2nd in world production of aquatic plants including seaweeds. The country currently produces 5.7% or 0.66 million metric tons of the world total production of 10.13 million metric tons.Tuna, prawns/ shrimps and seaweeds are high-value marine products in the world market. Demand for these is growing both in absolute terms and in rates of consumption. Europe, Japan and United States are our major markets.Local demand also outpaces supply for many marine products. Filipinos are also consuming big amounts of octopus, crabs, lapu-lapu, cuttlefish/squid and lobster. Also in short supply are cultured pearls and ornamental fish. 

Product Coverage

Tuna

  • Fresh/Chilled/Frozen
  • Dried Smoked
  • Canned Tuna
Shrimp
  • Fresh/Chilled/Frozen
  • Prepared or Preserved

Seaweed

Product and Industry Description

Health food   Fish and sea products are excellent sources of protein. They are increasingly valued for health reasons due to their relatively low-fat and cholesterol content.

Uses    For human consumption, they may be eaten fresh, frozen, canned or preserved or as food additives. They may also be processed in the form of fishmeal. Others are used as fertilizers for industrial purposes and as oil source for medical and cosmetic industries.Tuna/Shrimp/Prawn:

  • Main dish
  • Ingredients for salads and processed seafoods
  • Side dish
  • Snack foods
  • For household consumption
  • For institutional markets like hotels, hospitals, schools, supermarkets and restaurants
Seaweed:
  • As food additives
  • Rubber/textile products
  • Adhesive
  • Pharmaceutical/medicinal and industrial uses
Preservation
Methods of preservation include canning or freezing processes. Both of these require high technology and significant investment in machinery and related equipment. The evolving market requires the products be delivered to the market fresh. This means products that may be chilled, but not frozen. Current preservation technology includes:
  • Conventional chilling/blast freezing
  • Individual quick freezing (IQF)
  • Value-added processing
  • Vacu-thermal canning process
High Demand
Preservation technologies improved in recent years, extending the "fresh" line of marine products. This resulted in a corresponding growth in the value of these products in the domestic and international markets. Demand will also continually rise due to an increasingly health-conscious public.Industry Capacity
The country has hundreds of processors of marine products. But most of them are small-scale operators engaged in drying/smoking of fish. Presently, there are about 33 major firms (+ 14 BOI-registered firms for seaweeds) Major Employment SourceTuna:
  • Employs at least 18,600 people, inclusive of allied and support industries.
  • About 773,000 are engaged in municipal operations and 51,000 in commercial fisheries
Shrimps and Prawns:
  • Directly employs over 120,000 people
Seaweed
  • Seaweed farming employs 80,000 farmers and their families or over 350,000 people
  • Seaweed farming families are widely distributed in the coastal areas in Mindanao, mainly in Bohol, Leyte, Samar, Palawan, Zamboanga del Norte and Sur, Sulu, Jolo and Tawi-tawi
  • About 70% to 80% of seaweed raw material requirements of the industry are sourced from Mindanao
  • The processing industry directly employs 6,500 workers
  • Growth of seaweed industry also means more employment opportunities to be generated
  • Industry growth also means growth for support industries such as shipping, stevedoring, hauling, trucking, and plastic manufacturing

Export Performance

Tuna        Tuna exports in 2001 is valued at US$ 118.6 million. This contributed about 25.8% to the total marine products exports. From 1996-2001, tuna exports exhibited a decline with an average of about 5.9%. One of the reasons for the decline is the increasing demand for fresh tuna in the local markets. Tuna is used as raw material for the booming canning industry in the country. The recorded decline was also a result of the strict competition with other tuna-producing countries in the export market.

Shrimp/Prawn     Shrimp/Prawn contributed a total value of about US$ 125.7 million in 2001. This commodity was recorded to be the highest earner during the said period, contributing about 27.4% to total marine exports.

Seaweed              In 1997, the financial crisis that hit Asia slowed down the growth in export of seaweed because of scarce capital and high interest rate. This resulted to the lower demand by foreign buyers. Also, it was affected by the seaweed production decline brought about by the El Nino and La Nina weather phenomena. Seaweed exports in 2001 totalled US.5 million. According to 2000 FAO Statistics Database, the Philippines is the 2nd top producer of seaweeds. It produced 656,631 mt or 6.5% to the total world seaweed aquaculture production.

Market

Major Export Markets :

Country2001 Market Share (%)
Japan34.5
United States23.9
Hong Kong12.8
Others28.8

Strengths and Opportunities
  • Ideal agro-climatic environment
  • Globally competitive cost structures
  • Established marketing and distribution system
  • Presence of many players
  • Growth in global demand
  • Opening of markets for new applications
  • Entry of new investors in processing
  • Potential for farm productivity enhancement and quality improvements
  • Potential for farm area expansion
  • Potential for new varieties
Financial, Technical and Production AspectsTotal Investment CostAn investment of about P33.3 million will be needed for a processing plant with a production capacity of 500 MTPY of processed marine products, broken down as follows:
  • Land P 1,540,000.00
  • Building 6,000,000.00
  • Machineries & Eqpt. 18,140,000.00
  • Working Capital 7,600,000.00
  • Total: P 33,280,000.00
Manpower Requirement
  • Direct Labor: 24
  • Indirect: 4
  • Administrative: 4
  • Total: 32
Raw MaterialsCanned tuna production. Raw tuna as main raw material is available locally. However, if local supply is not sufficient, the country imports frozen tuna (canning grade) for the production of canned tuna. Other imported inputs include soya oil and tin cans for packaging. Packaging materials account for 60-70% of total production cost.Prawn production. Hatchery operators supply prawn fry as basic ingredient for prawn production. Feeds are manufactured locally, but a percentage of nutritional ingredients are imported. Fresh prawns are processed into frozen blocks and chilled. Different ingredients are also needed to process value-added shrimps.Raw Material Sources:Shrimps/Prawns:
  • Central Luzon (Bulacan)
  • Western Visayas (Negros Occidental, Capiz)
  • Central Visayas (Cebu, Bohol)
  • Mindanao (Zamboanga)
Tuna:
  • Central Luzon
  • Western Visayas
  • Southern Tagalog
Seaweed
  • Autonomous Region of Muslim Mindanao
  • Western Mindanao
  • Leyte
  • Samar
  • Bicol
  • Palawan
Packaging Materials StandardsTuna
  • For fresh/chilled tuna: locally made plastic cartoons and boxes
  • For canned tuna: tin cans (tin sheets are imported), cartons and boxes
  • Packaging materials account for 60%-70% of total production boxes
Shrimps and Prawn
  • For frozen prawns (accounting for 80% of exported prawns): cartons with plastic inner coverings/linings to protect the block ice from being absorbed by the carton cover.
  • Packaging account for 30% of the total production cost.
  • Frozen shrimps/prawns are packed in plastic or styrofoam.
  • Fresh, chilled fish are usually packed in locally made plastic cartons and boxes
  • Frozen octopus, squid, cuttlefish are packed in polyethylene bags (10 kg/bag).
Standards, Requirements and Tariff RatesAustralia
  • Canned tuna has a duty of 5% but no prohibitions on imports. Histamine content allowable is 100/kg.
  • Inspection on mercury contamination on shrimps, crustaceans (cooked, chilled or frozen) is required.
  • Microbiology on cooked, peeled prawns. E-coli allowable limit of 10/g for chilled and 9/g for frozen. Cadmium limit of 0.2 mg/kg.
European Union (EU)
  • The EU imposes a tariff of 24% on canned tuna.
  • The EU requires that all exporters of marine products to the EU be accredited. Accreditation is done by the Bureau of Fisheries and Aquatic Resources (BFAR).
  • Exporters are also advised to observe/comply with labeling requirements, i.e., GMO ingredients, etc.
  • New Food Safety Rules:
    • EU's new proposal vests the responsibility of food safety primarily on food producers/processors
    • Core of the rule allows for tracing from point of origin to the consumers.
    • Introduction of farm-to-table principle to hygiene policy.
    • Food producers have the responsibility of self-checking and implementing programs for analysis of control points.
    • The Hazard Analysis Critical Control Points (HACCP) will become obligatory for all operators once it is implemented. Self-checking is already in existence in some sectors of the food industry especially large factories. But currently, it is not required in the processing level.
    • HACCP is a system requirement that establishes control systems focusing on prevention rather than end-product testing. This ensures that finished products are safe for human consumption. The regulation covers all fishery products.
  • The HACCP system prescribes measures focusing on hazards where control is critical to food safety.
  • Dioxin limit in fishmeal
    • Food experts warn on delaying a decision on setting limits for dioxin in fishmeal. Scientists are still assessing potential risks of dioxin more closely.
    • The EU has asked its Scientific Committee for Animals (SCAN) to advise on dioxin limits for compound feed and its ingredients. This came after the chemical featured in a feed contamination incident in Belgium in 1999.
  • Labeling requirements Commission Regulations 50/2000 on labeling of foodstuffs and food ingredients containing additives and flavorings with genetically modified organisms.
Japan
  • All frozen tuna must be labeled with details of its origin in compliance with recently amended Japan Agricultural Standards Legislation.
    • This law allows for selection of products caught by fishing vessels observing international rules for the conservation and management of tuna.
  • Japan also has carried out its compliance with rules of International Conventions of Atlantic Tuna (ICCAT) and its resource management regulations.
    • Consumers are asked not to buy tuna caught by fishing vessels that have not observed international rules for the conservation and management of tuna.
  • Carbon monoxide in frozen tuna is being monitored.
  • All seafood products (including shrimps) are required to pass a quarantine inspection under the Food Sanitation Law (FSL).
  • Inspection on residual additives described by FSL (i.e. antibiotics) on shrimps & prawns.
Taiwan
  • Compliance with quarantine requirements on all exports of fresh/frozen seafoods accompanied by a duly signed quarantine certificate issued by the authorized agency of importing country.
UAE and other Muslim Countries
  • Compliance to Halal Requirements and Guidelines, these guidelines shall be used together with those on food preparation such as good manufacturing practice, hygiene and sanitation requirements to seek accreditation. (Arab consumers only patronize products with the "Halal" seal on their labels
United States
  • The United States applies a Most Favored Nation (MFN) tariff rate of 35% for canned tuna in oil; in-quota tariff rate of 6% and an out-quota tariff rate of 12.5% for canned tuna in brine.
  • Shrimps (crustaceans) U.S. embargo on imports of wild harvested shrimps without the use of Turtle Extruder Device (TED)
  • Starting December 18, 1997, all exporters must show evidence of HACCP compliance.

Government Support and Incentives
Qualifications for BOI registration with incentives under Executive Order (EO) 226:As export producer:
  • For Filipino corporation: export of at least 50% of local output
  • For foreign corporation (with more than 40% foreign equity) ; export of at least 70% of total output.
As domestic producer in the 2000 Investments Priority Plan (IPP) under:
  • Support to government program:
    • Agricultural/fishery/forestry production, processing and services.
  • Mandatory inclusion
Incentives under EO 226:
  •  
    • Income tax holiday
    • Tax credit on taxes and duties for raw materials/inputs used in the export product
    • Exemption from wharfage dues and any export tax, duty, impost and fee
    • Other applicable non-fiscal incentives
Incentives under Republic Act (R.A.) 8435:
  •  
    • Duty-free importation of capital equipment and inputs

Incentives under R.A. 8550:
  •  
    • Tax and duty exemptions on the importation of fishing vessels not more than five years old, equipment and paraphernalia
    • Long-term loans to finance the building and acquisition and/or improvement of fishing vessels and equipment
    • Duty and tax rebates on fuel consumption for commercial operations.
Available Primary sources of Financing:
  •  
    • Government Service Insurance System (GSIS)
    • Social Security System (SSS)
    • Development Bank of the Philippines (DBP)
    • Philippine National Bank (PNB)

Source:  Department of Trade and Industry

 

Source: Department of Industry,http://www.dti.gov.ph/Investment_OpportunityInBusiness_SectoralProfiles.php?contentID=8

By: PhilCTTIS Data Center
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