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Fish canning industry recovering though slowly. (Industry Profile).

Sea makes up two third of the country's territory with potential natural resources in fish not yet fully tapped. The Indonesian seas are estimated to have sustained yield of 6.1 million to 6.7 million tons a year. The sea resource is not yet fully exploited. So far only an estimated 56% of the potential has been exploited. With the abundant fishery resource fish canning industry could be developed in the country.

Though not yet optimally utilized Indonesia has succeeded in expanding exports to the United States, Japan and the European Union. In the past five years, canned fish exports have fluctuated but tended to rise--from 25,911 tons in 1996 to 46,880 tons in 2000 before declining to 36,194 tons in 2001. The exports value peaked at US$ 115.97 million in 1998 but in 2001 it dropped to US$ 92.6 million.

Indonesia is facing competition in the world market from Thailand, the Philippines, China, Taiwan which have developed integrated industry. Indonesia exports most of its canned fish production, therefore competition in international market determine the development 6f the industry.

Description of product

Based on the Indonesian National Standard (SNI) canned fish is produced from fresh or frozen fish without the head, tail and the belly. The fish is cleaned and then mixed with tomato sauce or other media and then sterilized. The next process is pre cooking using high pressure steam under a temperature of 216-220 degrees Fahrenheit. Canning begins putting fish to a container dosed air tightly to protect it from organism or keep the fish from decaying. The container is then heated under a certain temperature and in certain length of time to kill macro organism such as mushroom, bacteria, enzyme, etc. or at least to prevent them from breeding in the container. Among the products of canned fish are sardine in tomato sauce, mackerel in tomato sauce, tuna in brine and tuna in oil.

The fish species used for canned sardine or mackerel include temuru, tamban, selengseng and red tail fish and canned tuna include albacore, yellow fin tuna, big eye tuna, blue fin tuna, skipjack, eastern little tuna, striped marlin, black marlin, white marlin and sword fish.

The basic material for canned tuna are all type of fresh tuna fish intact or without the belly content and fin. Canned tuna production is mainly for export. Sardin and mackerel are mainly for domestic consumption with only a small part exported.

The basic materials must be clean and fresh Canning needs equipment including compressors, fish washing machines, conveyors, can washing, etc.

Canning plants are generally owned by medium to large enterprises as fish canning needs fairly high technology and large capital. Canned fish is ready for consumption. The waste such as the fish head, fins, tail, entrails could be utilized as animal feed, or used by pharmaceutical industry and chemical industry.

Active producers more than 50%

The country has 63 fish canning plant but according to the Indonesian Association of Canned Fish Companies (APIKI) only 30 of them remain active with an annual capacity of 138,188 tons in 2000. Most of the companies are oriented to export market with export destinations mainly the United States, Japan and Europe.

The other 33 companies stopped or have been closed because of a number of reasons including financial and security problem.

PT General Food Processing Industry was originally the largest producer of canned fish but in the past two years it has stopped operation. The company is a joint venture between a local investor in Medan and NHB Seafood Manufacturing Pte Ltd from Singapore. PT Berlian Mina Sejahtera in Cilincing, Jakarta and PT Karangetang Makmur in Bitung, North Sulawesi are two other major producers which have stopped operation.

Production tends to rise

The crisis has weakened the purchasing power of the people resulting in a decline in sales on the domestic market. In 1997 domestic consumption dropped 25% to 58,016 tons. In 1998, consumption dropped further by 8.1% to 53,662 tons before rising again to 70,330 tons in 2000.

Production has been affected by security problem especially in the regions. A number of major producers were forced to stop operation. Some of the companies also faced problem in obtaining raw material and because of high price of packaging material. The price of packaging material rose by 50% as a result of the rupiah fall as the basic material is partly imported such as tinplate. The price of tinplate soared to Rp 6 million per ton from around Rp 3 million tons before the crisis. The imposition of anti dumping import duty on tinplate resulted in a higher price of tinplate.

In addition many fishermen chose to sell their fish to exporters rather than to fish canning factories as he price exporters offered a better price following the rupiah fall.

The main products of canned fish are. Tuna, mackerel and sardine. Mackerel and sardine which are cooked with tomato sauce are more popular on the domestic market. Most of canned tuna production is exported. Other products canned fish exported by the country include canned flesh of crab.

Exports tend to decline

Indonesia has exported canned fish to a number of countries mainly Japan, the United States and Europe, but the open markets are not fully utilized because of the frequent problem in raw material supply to canning factories.

In the past five years exports of canned fish from the country have fluctuated but tended to rise--from 25,911 tons in 1996 to 39,194 tons in 2001. Exports peaked at 46,880 tons valued at US$ 95.44 million in 2000. The export value peaked at US$ 115.97 million in 1998 when the rupiah felled to the level of 10,000-1,000 per U.S. dollar.

Exports have continued to rise but the value tended to decline lately. Producers attributed the decline to inability to maintain good quality. Major market including the United States and Europe have demanded fighter conditions for fish supply from Indonesia Europe is stricter in quality. Fish processing factories are required to be properly registered and they are inspected by an Exports Inspection Agencies. Similarly the United States has adopted HACCP on all fish products. The impact of issue about tuna purse seine killing dolphins was a decline in the sales of canned tuna from the country giving an opportunity to competitors such as Thailand to strengthen their position in tuna fish market. Thailand uses more sophisticated equipment and it has skilled workers to guarantee good quality to meet the market demand in the world.

Tuna or skipjack accounted for 83.2% of canned fish exports from Indonesia in 2001. Other exported products of canned fish include crab accounting for 4.9%.

United States and Japan largest markets

The United States, Japan and Britain are the largest markets for Indonesian products of canned fish. The three countries accounted for 64.1% of the country's exports in 2000. See the following table.

In the past 4 years the export price of canned fish from Indonesia has tended to decline. From US$ 2,743 per tons in 1998 to US$ 2,036 in 2000 and US$ 2,353 in 1999. The decline was caused by tight competition and a sharp fall in rupiah. Buyers asked for a price discount because of the high value of the U.S. dollar against rupiah. See the following table.

Imports shrinking

Indonesia still imports canned fish such as from Malaysia, Australia, the United States and Japan. Imports, however, small compared with exports. In 2000, imports were valued only at around US$ 1.36 million as against exports of US$ 95.44 million. See the following table.

Imports have come mainly from the United States, Japan, Malaysia and Australia. Imported brands include Delmonte, SW and Heinz. Ayam Brand from Malaysia has established strong market foothold in the country.

Domestic market sluggish

The market of canned fish in the country has remained small as consumers still prefer fresh fish. The market even shrank during the crisis because of the soaring prices.

In the past 10 years there were only 2 or 3 new brands entering the domestic market, which is still dominated by old brands like Botan, Ayam Brand, Promas and Maya.

Botan is a Japanese product produced by PT Maya Muncar under license of Mitsui Co. Maya Muncar also produces its own brand Maya which has gained popularity in the market. Another local brand gaining in the market is Pronas produced by PT Pengembangan Raya which also produces cornet beef.

New local brands incldue Kokin produce dby PT Kokin Indocan and ABC produced by PT Bambalangan Raya on order from PT Heinz ABC and Gaga produced by PT Karya Manunggal Prima Sukses on order from PT Jakarana Tama.

In Medan there is PT Medan Tropical Canning and Frozen Industries which produce canned tun fish with brand Vinisi.

Ayam Brand imported from Malaysia by agent PT Faretina. Ayam Brand is relatively cheaper than other imported products.

Tuna is more expensive than sardine or mackerel. PT Maya Muncar has two brands, Botan and Maya. See the following table.

Price of container too expensive

The government imposed a surcharge of 4%-6% on imports of tinplate from Australia, Japan. South Korea and Taiwan. The surcharge drew protest from consumers mainly fish canning companies.

The price of canned fish using tinplate has increased since 1999 following the rise in the price of tinplate. The price of tinplate rose after the imposition of the anti dumping import duty from the four countries.

The country still depends on import for 2/3 of its tinplate requirement. The surcharges imposed on the tinplate imports range from 4% to 68%. The surcharges are 16.7% on tinplate from Australia, 68% on tinplate from Japan and 41% from Taiwan and 4%-6.5% on tin plate from South Korea.

Consumers protested the imposition of the surcharges as they used to import tinplates in cheaper prices.

Hurdles in world market

The European Commission imposed a tight regulation on quality since 1994 Exports of marine products to that region are examined by the Export Inspection Agency (EIA). The European Union also imposed non tariff barriers in the form of 8 regulations.

The regulations include on packaging, quality, sanitation standards and labels, etc. Exporters are required to send report about hormone and antibiotic residue

In the United States the hurdles include the requirement to adopt HCCP (Hazard Analysis Critical Control Point) on all fish products and marine products. The regulation was first imposed in December 1997. The United States also adopts Automatic Detention that required testing on fishery products from developing countries.

The European Union imposes the highest import duties on fishery products followed by Japan and the United States. There is also discriminative tariff by the European Union such as import duty exemption on imports from former colonized countries in Africa, Caribbean countries and certain Pacific countries while imposing high import duty on the same commodities from other countries including Indonesia.

In the United States the issue over the use of tuna purse seine that kill dolphins and environmental damage are raised to restrict tuna import from Indonesia. There is also demand in FAO among its industrialized country members to adopt ecolabeling.

Other non tariff barriers include quota systems. Around 18% of imports by Japan are on quota. Japan uses quota on a number fish products such as cod, hake, yellow tail, mackerel, sardine, horse mackerel and scallop. France also adopts global quota on canned tuna and sardine.

Thailand has emerged as the largest exporter of canned fish in the world although its fish potential is only one fifth of Indonesia's. Thai products dominate the market in Japan, the United States, Europe, Australia, Canada, Singapore and Malaysia.

Fishery resource abundant

The country has 5.6 million m2 of sea territory potential to be source of sea fishes with a total coastal line of 81,000 km. The sea territory lies at the confluence of two big oceans, the Indian Ocean and the Pacific. The Indonesian sea waters have a sustained yield of 6.1 million tons a year including 219,000 tons of tuna, 374,000 tons of skipjack and 127,000 tons of mackerel. The sustained yield includes 2.3 million tons in the exclusive economic zone.

Based on the Jakarta Fishery Research Center, the waters off eastern coast of Sumatra, off northern coast of Java and the Bali straits are almost entirely overexploited but most other waters are not yet fully tapped. The country has used only 59% of the sustained yield of 6.1 million tons a year. In addition to the open sea fish potential, the country has fish ponds totaling 840,000 hectares.

In 1999-2001, the country's fishery production was estimated to rise 4.25% from 4.89 million tons to 5.2 million tons with fish catching totaling 4.24 million tons.

Consumption of canned fish still low

In 1998, consumption of canned fish in the country shrank in 1998. Consumption is assumed to be equivalent to production plus import minus exports.

The decline followed the weakening purchasing power of the people and soaring price of canned fish mainly because of the expensive packaging.

Later the consumption surged by 20.2% a year to reach 39,481 tons in 2001 exceeding consumption of 32,835 tons in 1997. However, per capital consumption remained law averaging 0.2 kg a year as against 20 kg for fresh fish per capita consumption.

The consumer prefer fresh fish which is relatively easily available in the country and the price of fresh fish is much cheaper.

Increase in capacity utilization and basic material

In the 1996-2000 period capacity utilization of fish canning factories averaged only 30% or far from the installed capacity of 138,188 tons in 2000.

Assuming that the capacity utilization grew by 5% annually capacity utilization in 2004 will be 40% and production is 85,847 tons.

The law capacity utilization is partly caused by difficulty to have regular supply of raw material in fish and inefficiency of old machines.

In 2000, with production totaling 70,30 tons, the industry needed 100,572 tons of fresh fish as 1 ton of canned fish net will need 1.4 tons of fresh fish. Based on the estimated growth of 5% a year, the requirement will reach 122,124 tons in 2004 for predicted production of 85,487 tons of canned fish.

The raw material is available in abundant in the country but fishermen frequently chose to sell their fish to exporters. The domestic production is sufficient for domestic consumption especially as consumption is small because most Indonesian prefer fresh fish which is easily available.

The basic material for cans, however, is dependent partly on import as the country has PT Latinusa producing tinplate needed for the can. Imports, therefore, are needed. Consumption of tinplate for fish canning industry rose from 17,608 tons in 1996 to 20,105 tons in 2000. In 2004, the consumption is estimated to reach 22,404 tons.

Conclusion and prospects

In 1996-2000, capacity utilization of fish canning factories in the country averaged 30%. In 2000, the country's canned fish production was 138,188 tons. The country has 63 fish canning companies but only 30 of them are active in operation. The companies are located in various areas mainly North Sumatra, North Sulawesi, Bali and East Java. Some potential areas such as Kalimantan are not yet exploited by investors.

The country's fish canning industry relies more on exports as the domestic market is too small. The export market, however, is still wide open. Unfortunately the industry has suffered a setback in the wake of the crisis with the soaring price of tinplates needed for the cans.

Fish processing industry is categorized as natural resource based industry but the cost component is high for the s packaging. Despite the abundant availability of fish raw material, regular supply could not be guaranteed for the raw material as fishermen often chose to sell their fish to exporters.

The opportunity to export is still wide open such as to the United States which imports US$ 145 million worth of canned tuna a year. Meanwhile domestic requirement is expected to increase with economic revival. In 2001, domestic consumption was recorded at 35,965 tons and the figure is expected rise in the following years.
Table--1

Fish canning companies

 Company Capacity Investment
 (tons) (Rp)

North Sumatra :

PT Medan Tropical Canning & Frozen 11.750 120.000.000
PT Native Prima Co. 3.600 197.000.000

East Java :

PT Rex Canning 5.000 285.000.000
PT Aneka Tuna Indonesia 10.000 26.000.000.000
PT Maya Muncar 4.896 422.125.000
PT Blambangan Raya 18.000 3.168.000.000
PT Karya Manunggal Prima Sukses 4.800 236.000.000
PT Sumber Yala Samodera 4.500 241.800.000
CV Surya Blambangan 2.500 150.000.000
NV Muncar 1.350 105.500.000
PT Harapan Lancar 500 65.000.000
CV Sari Laut Jaya 4.200 230.500.000
PT Hayata Luhur 3.000 190.080.000
CV Pacific Harvest 385 87.865.000
Koki Indocan 200 66.900.080
PT Avilla Prima 1.000 102.900.090

Bali :

PT Bali Maya Permai 12.000 1.103.981.000
PT Indo Bali 4.200 246.675.000
PT Pengambengan Raya 4.500 223.900.065
PT Suma Extraction 1.400 95.000.000
CV Samodem Jaya 3.000 162.578.000
PT Indohamafish 3.600 7.000.000.000

Central Java :

PT Maya Food Industries 5.500 298.600.050

North Sulawesi :

PT Sinar Pure Food Int. 12.000 27.500.000.000
PT Deho Canning 2.160 78.088.080
PT Estadha Pesca 12.000 31.900.075.000

Jakarta :

PT Tri Sejati Tam Food 3.000 1.500.000.000

Irian Jaya :

PT Citaraja Empat Canning 2.000 107.800.676
PT Muff Tranfish Indonesia 3.450 76.964.000.000

 Company Manpower

North Sumatra :

PT Medan Tropical Canning & Frozen 162
PT Native Prima Co. 100

East Java :

PT Rex Canning 102
PT Aneka Tuna Indonesia 710
PT Maya Muncar 201
PT Blambangan Raya 695
PT Karya Manunggal Prima Sukses 115
PT Sumber Yala Samodera 135
CV Surya Blambangan 125
NV Muncar 98
PT Harapan Lancar 100
CV Sari Laut Jaya 124
PT Hayata Luhur 125
CV Pacific Harvest 105
Koki Indocan 113
PT Avilla Prima 98

Bali :

PT Bali Maya Permai 305
PT Indo Bali 263
PT Pengambengan Raya 200
PT Suma Extraction 45
CV Samodem Jaya 35
PT Indohamafish 285

Central Java :

PT Maya Food Industries 110

North Sulawesi :

PT Sinar Pure Food Int. 687
PT Deho Canning 162
PT Estadha Pesca 705

Jakarta :

PT Tri Sejati Tam Food 256

Irian Jaya :

PT Citaraja Empat Canning 158
PT Muff Tranfish Indonesia 274

Source: Department of Industry and Trade/Data Consult
Table--2

Production of canned fish, 1997 - 2001

 Year Production Growth
 (000' tons) (%)

 1997 58,016 -
 1998 53,662 -8.1
 1999 65,000 17.4
 2000 70,330 7.6
 2001 *) 73,847 5.0

Average growth (%) 5.5

Note: data corrected; *) Tentative figures

Source: Department of Industry and Trade/Data Consult
Table--3

Exports of canned fish by types, 1997 - 2001

Tons
(US$'000)

 Detail 1997 1998 1999

- Salmon in airtight 16 178 823
 container 49 481 2,256

- Salmon in other 17 240 31
 container 70 220 36

- Sardines, Sadinella 54 83 357
 and brisling or sparts 75 71 333
 in airtight container

- Sardines in other 0 42 23
 containers 0 46 47

- Tuna, skipjack and 23,860 38,886 35,768
 bonito in airtight container 70,006 101,575 81,641

- Crab in airtight 1,126 2,188 2,223
 container 6,559 11,251 9,361

- Crab in other container - 39 50
 399 203
- Other aquatic invertebrates 700 573 933
 in airtight container 1,456 1,615 1,780

- Other aquatic invertebrates 138 46 641
 in other container 228 305 469

Total 25,911 42,275 40,849
 78,443 115,967 96,126

 Detail 2000 2001

- Salmon in airtight 58 16
 container 109 38

- Salmon in other 89 704
 container 222 518

- Sardines, Sadinella 154 1,514
 and brisling or sparts 115 1,337
 in airtight container

- Sardines in other 9,155 98
 containers 11,824 45

- Tuna, skipjack and 41,921 32,598
 bonito in airtight container 79,622 75,913

- Crab in airtight 2,322 1,921
 container 11,272 10,018

- Crab in other container 403 12
 300 44
- Other aquatic invertebrates 1,477 1,744
 in airtight container 2,937 4,060

- Other aquatic invertebrates 447 587
 in other container 850 638

Total 46,880 39,194
 95,440 92,611

Source: CBS/Data Consult
Table--4

Exports of canned fish by countries of destination

(Tons)
(US$'000)

Country of 1997 1998 1999 2000
destination

Japan 7,855 10,609 11,220 8,373
 27,672 33,773 30,991 20,558

Saudi Arabia 1,044 798 1,170 2,852
 4,423 3,157 3,824 3,607

Jordan 632 1,066 1,607 2,014
 1,729 2,834 3,540 3,698

Egypt 1,181 3,865 1,935 4,845
 2,625 7,857 3,185 7,306

Australia 63 417 540 181
 152 1,399 1,231 241

United States 7,327 14,372 14,503 15,956
 23,123 41,933 35,921 40,784

Canada 324 513 75 181
 769 1,302 137 251

United Kingdom 4,962 4,883 3,325 5,725
 11,771 10,520 5,561 7,099

Netherlands 282 1,795 1,500 1,737
 822 4,259 3,100 2,368

Germany 918 1,461 2,030 1,823
 1,651 2,938 3,230 2,468

Others 1,323 2,496 2,944 3,193
 3,706 5,955 5,403 2,829

Total 25,911 42,275 40,849 46,880
 78,443 115,967 96,126 95,440

Source: CBS/Data Consult
Table--5

Average price of canned fish exported to a number of countries

Contry of 1997 1998 1999 2000
destination

USA 3,155.86 2,917.69 2,476.80 2,556.02
Japan 3,522.85 3,183.43 2,726.12 2,455.27
England 2,372.23 2,154.41 1,672.48 1,240.00
Netherlands 2,914.89 2,372.70 2,066.67 1,363.27
Arab Saudi 4,236.59 3,956.14 3,268.38 1,264.73

Source: Data Consult
Table--6

Imports of canned fish by types,
1997 - 2001

Tons
(US$'000)

 Detail 1997 1998 1999 2000 2001

- Salmon in airtight 21 2 2 6
 container 50 3 4 8

- Salmon in other 0 5 2 1
 container 1 4 3 2

- Sardines, Sadinella 133 84 128 609
 and brisling or sparts 181 78 170 296
 in airtight container

- Sardines in other 13 1 3 16
 containers 16 1 8 23

- Tuna, skipjack and 445 961 224 299
 bonito in airtight 1.255 2.493 455 555
 container

- Crab in airtight 36 26 69 66
 container 184 246 213 267

- Crab in other container 45 30 8 10
 69 32 14 18

- Other aquatic inverte 12 25 18 50
brates
 in airtight container 23 9 10 149

- Other aquatic inverte- 25 2 8 142
 brates in other container 48 1 4 38

Total 730 1,136 462 1,199 1,312
 1,827 2,867 879 1,357 1,704

Source: CBS/Data Consult
Table--7

Retail prices of canned fish on domestic market
July 2002

 Company Brand Size Type Price
 (Gram) (Rp/unit)

PT Karya Gaga 155 Chili tomato 1,880
Manunggal

 Prima 425 Tomato sauce 4,050
 125 Mackarel 2,975
 425 Mackarel 6,125
PT CIP CIP 155 Tomato sauce 2,650
 425 Tomato sauce 6,460

PT Maya Muncar Botan 425 Tomato sauce 5,876
 155 Mackarel 2,990
 425 Mackarel 6,700

 Maya 155 Tomato sauce 2,650
 425 Tomato sauce 6,460

PT Blambangan ABC 155 Tomato sauce 2,875
Raya
 425 Tomato sauce 6,500

Source: BN/Data Consult
Table--8

Indonesia's fishery potentials by types

(Ton/year)

Fish species/ Territorial EEZ Total
types waters waters

Demersal 1,033,800 653,432 1,687,232
Pelagic 2,580,000 1,462,000 4,042,000
Skipjack 184,750 110,225 294,975
Tuna 91,245 87,123 178,368
Squid 167,980 n.a 167,980
Shrimp 93,828 11,000 104,828
Coral fish 66,036 n.a 66,036
Cuttlefish 25,200 n.a 25,200
Seaweed 148,750 n.a 148,750
Tota1 4,391,589 2,323,780 6,715,369

Source: Department of Agriculture/Data Consult
Table--9

Fish production, 1999 - 2001

(000)

Year Production Total
 Catching Breeding

1999 4,010.07 882.31 4,893.06
2000 4,157.94 980.31 5,138.25
2001 4,237.90 1,080.00 5,317.90
Average growth (%) 2.8 10.60 4.25

Source: Department of Fishery
Table--10

Estimated consumption of canned fish in Indonesia
1997 - 2001

(Tons)

 Year Production Export Import Consumption Growth
 (%)

 1997 58,016 25,911 730 32,835 -
 1998 53,662 42,275 1,136 12,523 -61.7
 1999 65,000 40,849 462 24,613 96.5
 2000 70,330 46,880 1,199 24,649 0.1
 2001 73,847 39,194 1,312 35,965 45.9

Average growth(%) 20.2

Source: Data Consult
Table--11

Estimated consumption of tinplate
2002 - 2004

 Year Can needed of tin plate
 (tons)
 2002 21,255
 2003 21,829
 2004 22,404

Source: Department of Industry and Trade
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Comment:Fish canning industry recovering though slowly. (Industry Profile).
Publication:Indonesian Commercial Newsletter
Article Type:Industry Overview
Geographic Code:9INDO
Date:Aug 27, 2002
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