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Published on August 21, 2007

Thai Union Frozen Products (TUF) is expanding its business into tuna fishing by spending Bt440 million to set up five companies through its Thai Union Manufacturing subsidiary.

The investment seeks to take advantage of lower import tariffs resulting from recent preferential trade pacts between Thailand and other countries and strengthen the group's supply chain by increasing control over its supply of fish raw materials, said TUF president Thiraphong Chansiri.

The five newly established firms are Songkhla Fishing, Samui Fishing, Siam Fishing, Phuket Fishing and Phang Nga Fishing. Thai Union Manufacturing is Thailand's leading processor and exporter of canned tuna and pet food.

"This investment will enhance our group's competitiveness," Thiraphong said. "Through these new subsidiaries, we plan to buy deep-sea vessels for catching tuna in the Indian Ocean. The investment will include four purse-seiners and a fish-searching vessel. Onboard cold-storage capacity ranges from 700-1,100 tonnes per purse-seiner. These vessels will be able to supply us with about 25,000 tonnes of tuna raw materials per year. This should be as much as 8 per cent of the total annual tuna raw-material requirement of our group. The vessels will be ready for operations by the end of this month."

Frozen loins and canned packages of tuna are the company's key products, he said. These have produced steady growth over the years, and the company wants to secure fish supplies to meet continuing market growth.

"Having our own tuna vessels will help achieve this objective," Thiraphong said. "The current requirement for tuna raw materials in our group amounts to 300,000 tonnes a year, and our daily production capacity stands at 1,200 tonnes a day. Aside from the benefits of increased control over our raw materials, this move will help us expand export sales from our Thai-based operations, because we are able to comply with the rules-of-origin requirements in various preferential trade agreements, namely the recently signed Japan-Thailand Economic Partnership Agreement and the European Union's Generalised System of Preferences (GSP) privileges on Thai canned-tuna imports."

Despite the huge potential market for canned tuna in Europe, TUF has been unable to carve out a meaningful share, because of a 24-per-cent import duty. With the GSP privileges granted last year, this duty has fallen to 20.5 per cent as long as the fish used by Thai tuna packers are caught by Thai-registered vessels, he said.

"Tuna prices have hit a new record high lately. Dramatic climate change could be the culprit, because the surface temperature of the sea has risen in recent months. This has driven the tuna deeper."

Meanwhile, TUF will pay an interim dividend of 55 satang a share for first half operations. The firm's net profit in the first six months jumped 27 per cent year on year to Bt957.9 million.