Monday, June 13, 2011

Fisheries And The Diesel Subsidy: Both Sides Are Missing The Point

Malaysia’s deep sea fishermen are on strike because the diesel subsidy has been reduced (excerpt, emphasis added):

Fishermen can’t afford to go to sea with steep hike in diesel price

More than 100 trawlers were docked at the Malaysia Fisheries Development Authority complex as fishermen said they could not afford to go to sea.

Kuantan Fishery Association chairman Chia Hee Juak said this was due to the sudden increase in diesel price to RM1.80 early this month.

“Even at the previous price of RM1.25, we were only earning a profit of RM2,000 per trip.

“With this steep increase, we can't even afford to fuel up,” he said.

He added that local fishermen had to contend with Vietnamese fishermen who had licences leased to them from unscrupulous “Ali Baba” operators.

“There are not enough fishes for us in these seas anymore and those foreign fishermen are allowed to operate in our country.

“We hope the Government will take note of our frustrations.”

Kuantan Trawler Fishermen Association vice-chairman Hing Hua Kow said 70 owners had decided to sell their boats for up to RM1mil each.

“We hope the Government can buy our boats as there is no point continuing to fish because we lose about RM5,000 to RM6,000 each time,” he said.

In Kuala Terengganu, Agriculture and Agro-based Industries Minister Datuk Seri Noh Omar said the ministry needed the cooperation of all parties to curb the activities of “Ali Baba” trawler operators who leased their licences to foreigners who fished in Malaysian waters.

I find the situation described here sad, but both the fishermen and the Agro Minister are completely missing the point – overfishing has depleted fishing stocks. The fact that the reduction in the diesel subsidy has made it clearly unprofitable to fish basically underscores the market signal here, that fisheries in Malaysia is a dying industry. We’ve already mostly lost fish stocks in coastal waters from overfishing, and the problem has now extended into deeper waters.

Setting up Vietnamese competition as the crux of the problem (and Siamese competition before that) is a straw man argument, and detracts from the unfortunate reality on the ground, and what policies should be implemented. And no, it’s not a resumption of the diesel subsidy.

Rather its enforcing environmentally sustainable fishing quotas across the ASEAN region, rigorously policed locally by the RMN and the Fisheries department (and that may well include enforcement of licensing requirements); as well as ensuring that Malaysian fishermen are actually competitive, which means investment into infrastructure, equipment and training to size up and take advantage of economies of scale.

Either that or give up the game and admit that our agro policy has been wrong all along, and let the industry die a natural death – which is now the likeliest outcome. The focus on subsidies to sustain small scale fisheries over the past several decades rather than a holistic (and corporatised) development of a deep sea fishing industry in Malaysia, has resulted in a fishing industry that is dominated by small vessels and a high cost structure relative to fish landings.

We’ve basically conceded deep sea fishing to our more enterprising neighbours, who have long made the investment into supporting a deep sea fishing industry, and we’re now seeing the results.

And this problem is not confined to fisheries, though the problem there is more acute than with other agro industries. I’m still against the idea of supporting development of smallholders in agriculture (e.g. Felda) as this just perpetuates our problems with food security. The government has a choice to make here – continue along present lines and risk an uncompetitive agricultural industry, or completely rethink our approach to developing agriculture and risk losing lots of votes (especially in marginal states). That’s a political and economic dilemma I don’t envy.

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