Private fisheries companies are sounding the alarm over the potential for widespread bankruptcies and economic instability following President Dr. Mohamed Muizzu's announcement that the state-owned Maldives Industrial Fisheries Company (MIFCO) plans to increase its tuna purchase price to MVR 20 per kilogram.
The Maldives Seafood Processors and Exporters Association (MSPEA) issued a statement on Thursday, expressing grave concerns to the government. The association argues that the proposed MVR 20 per kg price for tuna is unsustainable for maintaining export competitiveness in international markets. This significant shift, they believe, poses a serious challenge to the long-term viability of the nation's vital fishing industry.
"Should the price of Maldivian fish become uncompetitively high in foreign markets, private companies within this industry are highly likely to face bankruptcy and cease operations," the MSPEA statement warned.
The association highlighted what it views as a recurring problem: government intervention in fish purchase prices for short-term political gains.
They pointed to the unrecovered losses sustained by both private companies and MIFCO following similar price adjustments linked to the 2023 presidential election. Furthermore, the MSPEA noted that private canneries, established with substantial investments, remain inoperative due to the volatile climate surrounding the industry and governmental policy shifts.
Volume of fish sold in January saw significant increase, confirms MIFCO. (Photo: MIFCO)
The MSPEA also cautioned that the proposed price increase would force MIFCO to acquire fish at a significant loss, a burden that would ultimately be compensated from the state budget. MIFCO has already been operating at a deficit even with the purchase price at MVR 16 per kg; a 25 percent increase to MVR 20 would, according to the association, lead to an "enormous" escalation in these losses.
Moreover, the association emphasized the crucial role private companies play in purchasing fish in regions not serviced by MIFCO. This impending price change, they argue, signals a lack of governmental commitment to fostering equitable opportunities for all industry participants.
While private tuna exports have been on an upward trend, the MSPEA outlined several negative consequences of the increased fish purchase prices that threaten export competitiveness, including:
A decline in tuna exports.
Reduced foreign exchange (US dollar) receipts.
Erosion of investor confidence in the fisheries sector.
Banks' reluctance to finance companies due to policy and market uncertainty.
A shrinking market share for Maldivian fish exports, benefiting other nations.
Loss of opportunities for value addition within the industry.
In light of these concerns, the MSPEA stressed the urgent need for a comprehensive subsidy model that benefits all fishermen – including skipjack and yellowfin tuna fishermen – as well as both government and private companies equitably. They advocate for a state budget subsidy to be implemented under a policy specifically designed to directly support fishermen and the broader fishing industry.
Finally, the association urged the government to move beyond short-term political considerations and instead craft policies that ensure the medium and long-term prosperity of local fishermen and future generations.