SL’s canned fish producers say undercutting by importers has badly hit the industry

Calls for a level playing field

BY SURESH PERERA

Asserting that importers enjoy a competitive edge in Sri Lanka’s canned fish industry, beleaguered local producers called for a level playing field, saying they are “being pushed to the wall due to undercutting”.

The local manufacturers threw a lifeline to the troubled fisheries industry by procuring 700 metric tons of ‘Linna’ (Mackerel fish) in the backdrop of the drastic drop in fish consumption following the eruption of the Peliyagoda Covid-19 cluster, but questions are now being raised whether the move was viable as importers are one step ahead in terms of competitive pricing.

“How can Sri Lanka’s canned fish industry be developed when importers pay a duty of a negligible twenty five cents per kilo on the consignments they inject into the local market?”, asked Kamal Addaraarachchi, a member of the Canned Fish Producers’ Association of Sri Lanka.

This is ridiculous, he protested, adding that importers are given priority to the detriment of the local industry, which remains largely side-lined and fettered in its ambitious drive to boost the country’s economy.

With island-wide consumption at 250,000 cans per day, Sri Lanka imports canned fish worth Rs. 14.43 billion (US$ 78 million) annually. The products come largely from China, while Chile is also a source for procurement.

Though there are seven registered canned fish producing companies in Sri Lanka, only five are in active business, he said.

The local demand for canned fish has shot up as most people now avoid consumption of fish following the Peliyagoda corona outbreak. Canned fish is sold between Rs. 260-300 per 425g and small cans at Rs. 130-150.

However, with no effective price control mechanism coupled with the disruption in distribution, some traders have cashed in on the existing shortages to make a fast buck, consumers complained.

Unlike local producers, importers have no worries as they pay low duties and maintain a substantial margin so much so they can reduce as much as Rs. 25-50 per 425g can at any time and still make a profit, Addaraarachchi claimed.

The government should impose a cess on imported products to encourage local production, he emphasized.

He said that when procuring fish locally, there’s invariably 35% depreciation in terms of quality and another 15% is rejected due to poor handling. The fish that’s turned down is later sold as dry fish by suppliers, which is an unhealthy practice, he noted.

The high rate of rejection is due to non availability of facilities for fishermen to preserve their catch, which is an area that needs priority attention of the authorities to make maximum use of the country’s marine resources, he further said.

“At times, we import frozen fish from Japan, China and Chile to meet production demands”, he continued.

Asked whether the local industry has the capacity to meet the country’s annual demand for canned fish, Addaraarachchi outlined that imports should be gradually phased out until producers geared themselves to enhance production capacity.

Initially, if a stock of 150,000 cans is imported on a daily basis, this can be trimmed to 100,000 in a process that allows local production to systematically meet the shortfall. At the end of the day, the country will be saving a substantial volume of foreign exchange, he explained.

“We don’t want government subsidies. What we are asking for are adequate bank facilities to build up the industry. Within three months, we will be self-sufficient in canned fish and within a year even have excess stocks for export”, he added.

Addaraarachchi said the Association discussed their grievances with Trade Minister Bandula Gunawardena, who assured that the issues pertaining to duties (on imports) will be taken up with the Prime Minister and the Finance Ministry.