The Marine Living Resources Act of 1998 allowed the transfer of fishing rights subject to the approval of the minister. The new policy sets out guidelines and criteria for the transfer of these rights.
“Up until now the lack of guidelines has been a stumbling block to growth,” says Kuttel. “We could not acquire a company and be secure in the knowledge that its fishing rights would be transferred to us.”
Importantly, he says, the policy acknowledges the need for consolidation of fishing rights in the industry — though not at the cost of transformation.
“There is a recognition of the realities of operating in a competitive sector that is affected by things like the price of fuel, fluctuating catch rates and the volatile exchange rate.”
Kuttel is credited with turning I&J, part of the AVI stable, around. However, he recognises that making his mark on Oceana, a diversified, black-empowered fishing company, may not be as straightforward. “The areas for improvement are not as easy to spot. It's more about identifying opportunities for growth.”
According to Old Mutual Investment Group senior industrial analyst Jonathan Larcombe, the opportunities lie in building on the diversified fishing operation Oceana has grown.
“It's big in anchovies, pilchards and mackerel, whose lower-end market has room for growth.” He also believes its operations in Morocco and Namibia have scope for growth.
Oceana has been performing well. In the six months to March, revenue increased 24% and headline earnings rose 59%. Kuttel expects the year to August to be acceptable. “The recession has caused some down-trading to our products,” he says.
The market for white fish (hake) has had a more difficult time. Demand has fallen in Spain and Italy, two of SA's biggest customers. “But I think we are through the worst of this,” he says.
Oceana supplies fresh, frozen and canned fish (pilchard, sardine, lobster, horse mackerel, squid, tuna, hake), but is best known for its Lucky Strike brand.
He hopes to expand this brand into sub-Saharan and Central Africa.
“We are working hard to put in place a global supply chain [to bolster supply] as our current quota level is not sufficient to satisfy demand.”
The pilchard quota, says Shaheen Moolla, a director of natural resources management company Feike, has been declining steadily. “And it's not likely to increase soon.” Oceana has a fishing operation in Morocco and procures pilchards from the West Coast of the US which are processed in Thailand. Kuttel says it is currently feasible for the company to import this product.
Kuttel, who practically grew up on Cape Town's Quay 7 where his father owned Atlantic Fish Enterprises, forerunner to Premier Fishing, has his eye on SA's lucrative hake industry where he says Oceana is underrepresented.
Oceana has a tiny stake in SA's hake fishery. Sea Harvest and I&J are the biggest players in this market.
“The hake fishery accounts for 40% of the total landed value of the SA fisheries,” says Moolla. “In 2006 the value of the catch was roughly R2,2bn.”
Though hake is being managed sustainably in SA and the quota may be increased, Kuttel cannot assume Oceana will benefit. That is why Kuttel was delighted at the gazetting of guidelines for the transfer of quota rights. You can bet that, with a strong balance sheet to work with, he is considering all options.
Source: Financial Mail
Published courtesy of
