This article was originally published in Vol. 2, Issue 2 (December 2020) of the Maldives Economic Review. The journal is available for download at mer.mv
The Maldives is an island nation of fisherfolk, all of whom grow up by the sea. The bounty of the seas feed our people and have been the main source of foreign currency earnings from our very early beginnings. The proximity and therefore the affinity to the sea, marine landings being our main source of protein, and fishery being the main primary industry of the country, will not change in our geography. Therefore, it is not surprising or unbecoming. that the state have been, continue to be, and will be involved in the development of the fishery industry.
A journey into the past
Geography has ensured that Maldives will always be a nation of fisherfolk, Small islands together with the nature of the coastline allowing for deep seas close to shore, have meant that Maldivians from time past, grew up with a tinge of salt mixed in their blood. The lagoons and the near shore fishery fed and nourished locals and even today the single most important source of nutrition for Maldivians is derived from fishery.
From the days of sailing boats travelling with thatched palm sails, to today’s 150 ft twin engine fishing boats, Maldivians have fed their family and earned their livelihood from the bounty of the sea. It is recorded that Maldive fish found favor in the royal households of China and Japan in the 13th century.
While historic records dating to 1500 BC show that Maldives had been famous for the export of cowrie shells (cypraea moneta) to be used as money in the Far-east, Middle-east and in Africa, by the beginning of the 20th century the main export of the country was the sale of Maldive dry fish to the Sri Lankan market. The report issued by UNDP in 1967 at the behest of the of the newly independent country of Maldives is perhaps the first professional report of its kind on the economy and the people of the Maldives. This report stated that by that time 90% of export earnings were derived from the sale of Maldive Fish ‘umbalhakada’ to Sri. Lanka. Maldive Fish exports were mainly channeled through the Maldivian National Trading Corporation Ltd. incorporated in Sri Lanka and sold mainly to the Sri Lankan state company Corporate Wholesale Establishment (CWE). The proceeds from the sale were then used to purchase basic necessities including staples, medicine and other items from the Sri Lanka.
During the 1970’s under the premiership of the first female prime minister of the world, Sri Lankan Prime Minister Mrs Bandaranaike implemented a national development policy of ‘import substitution’; curtailing imports and fostering local production- a policy that was globally much in flavor in the 60’s and 70s. As part of the larger policy and because of foreign currency pressures, the Sri Lankan government informed the Maldivian government that Sri Lanka would start reducing import of Maldives fish from 1972 to be totally eliminated in 7 years during which period they would create and foster their own local dry fish production and would no longer have to buy ‘umbalhakada’ from Maldives.
Export of Maldive fish being the single foreign currency earner in 1971- tourism was still a year in the future, the government rightly hustled to find alternatives. As a result of frantic effort, in 1972 vessels from Japanese Hoko and Marubeni corporation started to buy fish directly from fisherfolk and Nippon Corporation built a small 8 MT cannery in Felivaru in 1977.
In 1982, the world market for tuna crashed prompting the foreign companies to inform the state that they could no longer afford to buy the harvest of the fisherfolk at the prices the government required. With no successful conclusion, they decided to cease their purchasing and processing operation and leave the country. The decision of the government in 1982 was to
purchase the assets of the foreign companies and continue purchasing and processing fish from the fisherfolk.
During the same year, in 1982, several government-initiated projects came alive to help develop the fishery industry. These include the Maldives Fish Wealth Exploitation Project (MFWEP) to build 65 dhonis to be given under long term lease to fisherfolk, 3 freezer vessels to transport fish, 3 ice plants and 3 fuel tanks. Another project to upgrade Felivaru cannery from 8 to MT to 50 MT which included amongst its components an alongside jetty and expanded the cold storage capacity was also begun. The Maandhoo Fisheries Complex in L. Maandhoo and the Koodoo Fisheries Complex at G.A Koodoo were opened during the period 1992 – 1994. The opening of the Koodoo complex marked the end of the many fisheries projects implemented by the Government to develop the capacity of the fishery sector.
The fish purchase, processing and fishery development activities of the state were undertaken by different state actors at different times. These include the Maldives Fisheries Corporation formed in June 1979, the Dhekunuge Mas Ganna Project (DMP) under STO, the Export Department of STO, and the Fisheries Projects Implementation Department of STO. The Maldives Industrial Fisheries Company (MIFCO), since 1st November 1993 is the latest guise under which fishery development effort were undertaken. All these different guises, under different names at different times are but the single manifestation of the state’s decision to invest to develop the fishery industry and to create means to continue to buy and process the harvest of the fisherfolk.
Impact of the many development projects
The fishery development projects propelled the fishery industry onwards and helped to grow the harvesting capacity to almost 3 times from an average of 50,000 tons in the 80’s to an average of 148,000 tons in the first decade of the new millennium. Record harvests were received in 2006 at 184,000 tons after which fishing had plateaued around 120,000 thousand tons annually.
The confidence of fisherfolk were boosted by the many state initiated developmental efforts leading to private investment to enhance fishing capacity. These private efforts resulted in an increase from the average length of the fishing vessels- dhonis, from 50 ft to 100 plus and some being equipped with twin engines. In fact, just one fishing vessel overwhelmed the increased capacity of 50 mts of the newly designed larger collector vessel that were designed for the newest fishery complex at Koodoo in its first year of operation.
As the new millennium dawned and because of steadily improving harvests, realization dawned that the infrastructure in place were inadequate to cater to the increased landing capacity of the fisherfolk.
An initiative to allow for private investments for skipjack processing started in 2002/3 as a result of which, the country was divided into 4 geogrpahic zones with 2 zones given for private parties to invest in. The Maandhoo Fisheries Complex in Laamu Atoll was removed from the books of Mifco and was assigned to Horizon Fisheries in 2003 as part of this effort. While some od the private investors had made considerable investments in the industry, it is only fair to say, that their effort too, have not been able to bridge the gap.
Development of Yellow Fin fishery
As the fishery sector developed around investments into skipjack processing, it was always understood that the country also had a respectable yellow fin potential. Even from before, Yellow fin caught in the process of skipjack fishery were frozen and fetched a marginally higher price from canneries. It was known that if caught, kept and exported fresh, Yellow fin would fetch a premium price in the far east and western markets.
Yellow Fin fishery as a specific and targeted activity was initiated in 1990 by Mifco at the Kandu-oiy-giri processing plant set up to receive, hold, process and export fresh yellow fin. Soon fisherfolk were attracted by the higher price on offer and slowly brought changes to the fishery industry. The export and earnings of Yellow Fin as a separate line item was first reported in official statistics at 2.5m Mrf of earnings and listed as Fresh or Chilled Tuna in 1995.
As Maldivian fisherfolk and local entrepreneurs started to explore the premium chilled market for yellow-fin, with its higher prices, yellow-fin became an attractive fishery. Landing statistics show that the catch of yellow-fin as a % of the larger effort was at an average of 11.73% of the total landings between 1971 to 1995, with percentages varying from 2.74% in 1974 to peaks of 16.1% in 1983. From such modest beginnings yellow fin landings have steadily increased with an average of 19% of harvest during post 1990 with a high of 40 and 41% of landings in 2015 and 2016 respectively.
While fishery was mainly a day fishery until then, with the advent of multi-day yellow fin fishery, the nature of the fishery effort too, have changed with fisherfolk often leaving on multi-day trips prepared to harvest yellow fin or skipjack depending on the nature of the bait available and the type of fish school encountered.
In 1995 when ‘Fresh or Chilled Tuna’ was added as a separate item in the Export Statistics, the entry came in at just 16.8 mts at a value of 2.5m Mrf, of export earnings; a modest 0.43% of total merchandise export earnings for that year. From such modest beginnings, earning from Yellow-Fin have grown to 56.21% of total export earnings in 2015 beating earning from skipjack exports by a 472m Mrf for the year. During the 5-year period 2013-2017, earnings of yellow-fin exports accounted to an average of 51.9% of total export earnings.
Today’s reality
Mifco had opened a fishery complex in Addu with a 1,500 mt storage and a 50mt freezing capacity in 2018 and other modest investments in ice plants and similar projects have taken place. However, it is appropriate to say that after the conclusion of the investment that started in 1982 with MFWEP and ended with the official opening of Koodoo in 2004, there had not been planned sustained investment to further diversify and develop the fishery industry.
Meanwhile, the degree of politics allowed into the decision-making process of the state fishery company; Mifco have left the company’s assets in bad repair, incapable to keep pace with private investments and unable to meet the expectations of the fisherfolk resulting in much discontent evident in the fishery industry.
The importance of the primary sector in all economies
Countries tend to protect their primary industries for a variety of reasons. The favorite and perennially touted reasons around food security have always been a common theme. Covid 19 have laid bare the importance of our primary industries while presently accounting for less than 5% in GDP share. As lockdowns gripped the country and borders were closed around the world, much of the population were dependent on landings from fisherfolk and modest harvest of local farmers for nutritional needs. Countries with richer primary industries were able to offer greater comfort to their people and were able to endure stricter lockdowns. Therefore, the importance of nurturing and growing the primary sector, which of course in the local context is largely the fishery industry, has become of additional national significance
Additionally, throughout the world, farmers and fisherfolk, are often able to punch above their economic weight when it comes to political power. While the fishery industry in UK account for only 0.1% of GDP, much of the argument about Brexit and much of the unhappiness in post Brexit UK arises from the terms agreed regarding the access to UK’s seas. Farm subsidies are the largest line item in the EU budget even while agriculture account for only a 1.1% share of GDP. The rice farmers in Japan receive ever increasing state budgetary support even while their numbers continue to decline all the while losing GDP share. Similarly, in Australia and the US too, the primary industry is able to exert influence and attract subsidy that may not be explained by their economic significance.
And the best way to explain this strength of the primary industry is to examine their voting power. The strength of their collective vote in deciding who gets elected to decision making bodies including the national parliament, especially from rural, farming and coastal areas. As long as this power remain, the interests of primary industries will be the most important issues for members representing such districts and consequently onto the larger state agenda.
Therefore, apart from well-meant, and often quickly forgotten statements around food security, it is almost inevitable that the fishery industry of this island nation will continue to play a significant role in the national agenda.
Whither Mifco?
As stated above, Mifco is only the present reincarnation of state involvement to develop the fishery sector and ensure that the landings of the fisherfolk are purchased and processed for export. It had been evident from the dawn of the new millennium that investments by fisherfolk had overtaken the infrastructure that had been developed by the state.
Because fishery is the main primary industry of the country and the importance of the fishery sector as the essential source of food security has been recently highlighted, it is evident that the state will continue to be involved in the development of the fishery sector. As also discussed above because all Maldivians grow up by the sea and are essentially fisherfolk, their clout and importance will not diminish in the political sphere. All governments, regardless of their political leanings, attempt to keep fisherfolk in their favor.
Maldives have been blessed with close to a million cubic kilometers of EEZ with a variety of marine wealth. We are all aware of a variety of other marine species that can be profitably and sustainably harvested including mahi-mahi, deep sea crabs and lobsters. Cuttlefish too, are regular visitors to our harbors and sea trials of Diamondback squid has been successful. Mariculture, targeting snappers and groupers, which have been in commercial production in many countries for more than a decade, are only now being trialed here in the Maldives. The wealth of the larger Indian Ocean is also presently not being explored by us.
There’s no doubting that our fishery industry needs to be diversified and that there’s much scope and potential yet to be explored. Yet, understandably private companies shy away from experimental effort and can only invest in activities that would assure net returns to their shareholders. When they are confident of the returns, they will invest and do it better that their state-run counterparts.
This is evident with what has happened to the yellowfin fishery. It was started much as an experiment effort by Mifco in 1990. Today Mifco exports of fresh yellow fin has plummeted to negligible volumes and private sector dominates the fishery resulting in private earnings being well above stated earning for domestic exports for the past 5 years.
Conclusion
The importance of the fishery industry for reasons of food security, the essential primary industry, and because of their political influence will never cease. The state will always play an influential role in determining the dynamics of the fishery industry. Presently much of this effort is managed through Mifco.
Mifco is only the present corporate identity of the states’ effort to assist fisherfolk and develop of the industry. The state, might decide to convert and manage that effort through some other agency and the name Mifco might be stricken off the corporate register of the country. Yet, there is no doubting that the state will always engage in the effort to sustain and develop fishery of this country, this island nation of Maldives.