Maldives Industrial Fisheries Company (MIFCO) has announced the decision to drop fixed fish purchase rates, in a bid to ensure long-term financial sustainability of the company’s operations.
According to MIFCO, it will revise the price at which it would buy fish from local fishers, based on the rates of fish sold in the global market and the expenditures incurred for fish processing and exportation.
The move aims to reduce the financial constraints of the state-run fish company, and ensure its support to the government’s cost-cutting measures.
MIFCO said it has been facing continued financial deficits owing to less revenue generated against expenses incurred, which it detailed was due to higher purchase of fish from local fishers, compared to the rate at which it is sold in foreign markets.
Due to this, MIFCO has acquired loans or sought state’s support to inject funds to manage its cashflow for the past years, further hiking its fiscal imbalances.
In the statement, MIFCO also said that it is financially plighted having paid MVR 353 million to local fishers, inclusive of the disbursement scheduled for July 01 from the pending total.
This is excluding the MVR 389 million MIFCO has paid so far in 2024 to local fishers for the fish it purchased. And inclusive of the fuel and ice credit, the company has spent MVR 831 million on fishers alone so far this year. Which has further increased the company’s expenses.
The company explained that tuna prices fluctuate on a regular basis in the global market, stating that a kilo of skipjack tuna is currently priced at USD 1.3 (MVR 20.04) while MIFCO purchases it at a rate of MVR 20 per kilo from local fishers.
MIFCO said there are times when tuna price is significantly lower in the global market, compared to what it pays to local fishers; which acts against the company’s revenues whenever they try selling the fish globally at above-market price.
This would cause a loss of MVR 8 per kilo of fish, if the state was not extending subsidy to the company – which is projected to reach MVR 600 million by the end of 2024.
To avoid such losses in long-term, MIFCO said it decided to drop the fixed purchase rate, which would allow the company to better manage its finances while ensuring sustainability of its cashflow.
Government’s planned investments to establish new fish processing factories and cold-storage harbors, will support to MIFCO’s sustainability on the long-run, the company added.
The investments are poised to increase MIFCO’s cold-storage capacity to 15,000 tons, and increase fish-processing capacity to 100 tons per day.
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