Indirectly Subsidized by the Government, Industrial Fishing Companies in Peru Continue to Reap Profits

The main fishing companies in the sector contributed 228 million soles (70 million 265 dollars) for fishing rights from 2013 to 2020. / OCEANA (Andre Baertschi)
Convoca.pe
,
Peru

Indirectly Subsidized by the Government, Industrial Fishing Companies in Peru Continue to Reap Profits

Just the year before, in 2019, Peru’s Ministry of Production, which regulates the fishing sector, had increased what’s described as the fishing right fee: the payment due to the government by large fishers for each metric ton of fish taken from the sea.  

That percentage, which was raised from 0.25% to 0.43%, paid to the state based on the market value of 1 ton of catch, had remained stagnant for a full decade.  

Back in 2007, a group of companies from the National Fisheries Society had hired Apoyo Consultoría, a business consulting company, to prepare a technical proposal that served as the basis for legislative decree 1084. As a result of this law, a quota in favor of fishing companies and fishing rights was fixed for a period of ten years during the term of the then-Minister of Production, Rafael Rey.  

After the bill was passed, Gianfranco Castagnola from Apoyo Consultoría gave details to an IDL-Reporteros news report published in July 2011 on how the consulting company advised Rey, whom they even accompanied to uphold the decree in front of a commission of the Congress of the Republic.   

The law froze the percentage of fishing right payment that each company had to make to the State for each metric ton of fish taken from the sea, which remained in force until it was changed in 2019. In 2019, a fisher who caught 10 tons of anchovy, would pay 0.43% of $1400 for each ton (which was the sale price in 2019). In total, $60.2 for each ton fished would be collected by the state.  

Some specialists like Juan Carlos Sueiro, director of Oceana, the largest international advocacy organization focused on ocean conservation, have pointed out that the amount is still very low compared to what is required for investment and management of fishery resources. 

Sueiro says that fishing rights are a kind of "indirect subsidy", because the money collected is very low compared to the benefits obtained by companies such as Hayduk, Exalmar and Austral that exploit the resources of the Peruvian sea, a world power in the fishing industry. 

The president of the National Fisheries Society, Cayetana Aljovín, often repeats that the fishing sector in Peru needs “neither subsidies, nor gifts; just stability and trust.” Aljovín—who has been in charge of three Ministries during the government of Pedro Pablo Kuczynski and Martín Vizcarra—forgets that for the past ten years, the most powerful companies in the union she leads have very clearly enjoyed subsidies. 

The collection of fishing rights allows the Peruvian State to increase funds for further scientific research in view of the high variation in the conditions of the Peruvian sea. Researching when and which species can be extracted from the sea without affecting their stocks allows for sustainable fishing on an industrial and artisanal scale. Without the capacity to monitor and manage these resources, there is a risk of continued overexploitation, which would lead to a weakening of the industry itself and jeopardize the country's food security. 

"If you look at the general fishing law, it is established that a significant part of fisheries research has to be paid with the money allocated for fishing rights," explains Sueiro.   

After many requests for information to the Ministry of Production via the Transparency Law, Convoca.pe gained access to the amount of money collected from fishing rights since 2013.  

It was expected that with the revised percentage of fishing quota, the amount collected would reach 90 million soles (26.9 million dollars) in 2019, according to the Ministry of Production. But the collection reached was approximately 60 million soles (18 million dollars), or 30 million soles (9 million dollars) less than estimated. The National Fisheries Society’s records state that this was because less fish was landed that year. Put another way, even though the rate increase went into effect in 2019, the amount collected by the government decreased. 

As a consequence of the decline of fishing rights in 2019, the fishing canon—which is the economic compensation that the Peruvian government allocates to local and regional governments—was affected too. (The fishing canon is made up of 50% of the resources that come from fishing rights and 50% of the income tax fishing companies pay to the Peruvian State.) 

In 2019, the budget assigned to the canon increased only by 2 million soles ($600,000); yet an increase of 15 million (4.5 million dollars) was expected, according to the Ministry of Production.  

In 2020 there was a 32% increase in the amount of fishing rights collected by the State, a slight increase compared to years prior to the percentage increase in fishing rights. (For instance, in 2014, the amount collected rose to 181%, and in 2017 to 45%.) Despite the hike to 0.43%, in 2020, the amount received as fishing rights by local and regional governments was one of the lowest of the decade: 23 million soles ($6.6 million). 

Comparing neighbors  

If Peru’s charges for fishing rights are compared with what happens in Chile, another country where industrial fishing plays an important role, major differences are evident. In 2019, the year in which the new percentage for the collection of fishing rights was set, the Peruvian State collected approximately 18 million dollars, while in Chile more than 44 million dollars (only taking into account taxes paid by vessels for fishing licenses) were collected, despite Chile catching fewer metric tons of fish than Peru. The contribution of the Chilean fishing industry came from a quota of 3799000 tons of fish during 2019 versus the Peruvian quota of 4860000 in that same year.  

Now, if we compare what happens in Peru and Chile regarding the taxes contributed by the large fishing industry, we only need to look at the following figures: the contribution to the Peruvian State is $ 43,612 according to the National Fisheries Society’s 2019 annual report; in the same year, as per data from the Chilean Undersecretariat of Fisheries and Aquaculture and Sernapesca, Chile’s industrial fishing sector paid more than $73 million in taxes. 

Millionaire earnings  

In response to Convoca.pe, the fishing union sent a document pointing out that in their view, the payment for the right to fish is not the only contribution of the industry.  

The National Fisheries Society, which is the union that brings together the most powerful companies in the sector, indicates that other contributions are made including payments for satellite monitoring and the Control and Surveillance program. Other contributions include Aporte al Foncopes (Compensation Fund for fisheries regulations) for labor reintegration, extraordinary contribution to the Fishermen's Retirement Fund, and a supplementary contribution to the individual pensions of fishermen. In addition, the president of the National Fisheries Society, Cayetana Aljovín, has stated that the fishing sector needs to be certain that cost overruns, which affects competition in the industry, will be eliminated. 

Oceana's Sueiro maintains that the National Fisheries Society should consider fishing rights and operating costs separately. "They are two different things. The fact that I have a control system, such as supervision or the contribution to Foncopes, a fund which no longer exists, are labor issues. It is not [a payment] to the State, so that it can regulate and investigate the fishery, which is one of the main reasons for the payment of fishing rights,” explains Sueiro. Indeed, the Compensation Fund for Fisheries Management (Foncodes) is a private entity that is in charge of managing the resources allocated to social programs for the benefit of workers in the anchovy fishing fleet. 

Despite the aforementioned cost overruns argued by the fishing industry union, the companies have not done badly. According to their reports furnished to the Superintendency of the Securities Market (SMV per its initials in Spanish), Exalmar and Austral, two of the largest companies in the sector, have made millions in profits.  

After having losses in 2016, Exalmar began to increase its profits: 15.6 million soles (4.75 million dollars) in 2017, 96.5 million soles (29.18 million dollars) in 2018, and, despite having lower profits in 2019 and 2020, the company reported 62 million soles (17.77 million dollars) in profits for the first quarter of 2021. 

On the other hand, Austral reported earnings of 104.4 million soles (31.73 million dollars) in 2018 although its earnings fell in the following years: 21.7 million soles (6.5 million dollars) in 2019 and 144000 soles ($ 41000) in 2020. 

Artisanal fishers’ unions feel helpless 

And as benefits to the large fishing industry continue to accrue, artisanal fishermen's unions feel as helpless as ever. 

“They cannot say that there is equity in the treatment of industrial and artisanal fishing. The industrial one is practically a whole country’s effort to subsidize a product that in a large percentage goes abroad. Unlike artisanal fishing, which should be supported, because it provides food," says José Luis Bernuy, from the National Association of Artisanal Fishing Companies of Peru (ANEPAP). For example: in 2019, more than 1 million tons of fishmeal were exported while only 18 thousand tons (1.8% of what was exported) were sold within Peru. 

For the secretary of ANEPAP, the crisis faced by artisanal fishers is grave, as it has an impact on the food security of Peru.  

There remains a wide gap in the large profits made by companies, and the meager amount they turn over to the state. In addition, there is limited transparency and little public information on what large industrial fishing contributes to the country compared to the millions in profits it obtains from extracting natural resources from one of the richest seas in the world. 

This story was produced with support from Internews' Earth Journalism Network. It was originally published in Convoca.pe in Spanish on 23 December 2021. This summary has been lightly edited for length and clarity. 

Banner image: The main fishing companies in the sector contributed 228 million soles (70 million 265 dollars) for fishing rights from 2013 to 2020 / Credit: OCEANA (Andre Baertschi)

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