Fishing Industry Transformation: Public Hearings

Agriculture, Forestry and Fisheries

13 June 2011
Chairperson: Mr M Johnson (ANC)
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Meeting Summary

The Committee held public hearings around transformation in the fishing industry, at which it heard submissions from both large and small fishing companies and community groups, and individual fishers.
 
The Oceana Group a Level 3-b contributor, said that it had fair and equitable employment policies and was committed to the well-being of all its employees. It had accelerated transformation since the awarding of long-term rights, and the Group was currently 55% black-owned. The management demographics were described, and the breakdown of its skills budget and procurement spend. Its Corporate Social Investment (CSI) strategy had been reworked to place greater emphasis on coastal communities in which it worked, with particular emphasis on food security and education, and it provided housing for certain employees. Under its employment share scheme, the Khula Trust owned 14.2 million shares. It recommended that the Department of Agriculture, Forestry and Fisheries (DAFF) needed to adopt the Black Economic Empowerment codes of practice in all its policies, to recognise broad-based transformation initiatives and to publish the results of performance review process specific to the current level of transformation in the industry.

Feike Natural Resources Management Advisors (Feike) noted that its pilchards fishery was the single largest employer, sustaining 15 133 jobs, with 62.9% black rights holders. The percentage of black rights holders was also outlined for the Hake Trawl Fishery, the South Coast Rock Lobster Fishery, the Squid Fishery and Hake Long Line Fishery. Feike noted that South African commercial fisheries had significantly transformed, with 60% of all fishing quotas allocated to black persons. However, there were challenges in transformation, which included an inadequate draft small-scale commercial fishing policy, and the lack of leadership, policy and vision within the Department, which resulted in a lack of support for small black-owned enterprises. Feike also criticised the lack of a plan for the next round of fishing quota allocations in 2013. Another challenge was the pervasive poaching of high-value inshore fish stocks, such as abalone and West Coast rock lobster.

Benguala Fisheries outlined the serious plight of women who had to fend for themselves after their husbands had died at sea. They were told to stop fishing despite the fact that these quotas were not filled again. Outsiders who claimed to speak for them did not understand the real issues, and the women needed to be consulted on policy that would affect them.

Sea Harvest noted that the deep-sea hake sector was capital and labour intensive and required economies of scale if it were to remain competitive. Since 2003, the industry had not generated sufficient returns. Sea Harvest did insist on high safety standards and offered other benefits, including death benefits, to its workers, and had not followed international trends to mechanise rather than employing more individuals. Sea Harvest was certified as a Level 2 AAA 88% company. A University of Cape Town study of 2008 apparently found that transformation was apparent in the industry. 96% of all employees, and all but one of Sea Harvest’s skippers, were black, and it had a majority of black board members, and two women out of the 11 members, with a black shareholding of 83% of the company. All employees had been offered shares, but not all had taken up the offer. Economic challenges included the increased exchange rate and costs escalating at higher than general inflation.
Sea Harvest said that the transformation challenges included lack of consolidation in the industry to achieve economies of scale. There was a need for clarity as to when a black shareholder could sell. The shortages of skills included engineering and net making skills.

A private boat owner, Mr Malutyana, said that the major industry players were stifling the potential growth of smaller ones, and that fair labour practices and decent wages were often not seen in practice. Casualisation of labour was prevalent, and there was no compensation offered for injuries or deaths. He cited a particular case where a boat owner denied that a person who had died was on his boat, and requested the Department to take up the matter. This call was supported by the Committee. Mr Malutyana also called upon DAFF to investigate the labour and safety practices of all fishing companies, and ensure that fronting was punished.

Coastal Towns Fishing Crisis Committee said that some employees who owned shares did not receive any tangible benefits. There was not enough employment of black skippers, and abuse of black workers was rife. This Committee suggested the need for a Sea Accident Fund, similar to the Road Accident Fund, and a Fishing Charter to ensure better representation, and redistribution of resources.

Tuna Long Line Fisher Group voiced concerns about only 1% of fishing rights being granted to Northern Cape, marginalisation of traditional fishers, discrimination against women in the industry and the need to address bank policies for small businesses, or alternative financing. It called upon government to form an entity to manage the fish factory at Port Nolloth and address a number of concerns that were listed, and called for grants that would allow fishers to finance basic equipment.

Benguela Fisheries complained about the lack of clarity in application process for long-term fishing rights, and the exclusion of some communities from the process. Cooperatives had proven unsuccessful.

St Helena Bay Fishing Community Forum said that the assertion of the large fishing companies to have created employment failed to take into account that their labour practices also resulted in significant poverty in the areas, with existing quotas being too low for individuals to earn a viable living. This complaint was also voiced by First Indigenous Women, Hout Bay, who also noted that women were sidelined in the granting of quotas.

Umoya Fisheries suggested that the Total Allocated Catch should be increased, but allowances reduced, and that strengthening of policies along with this would result in nothing having to be removed from existing quota holders. There was a need to examine the restrictions on species, particularly in some seasons of the year.

Members agreed that the Department should collate and comment on all submissions. Deaths at sea, which should be seen as the collective responsibility and concern of all relevant stakeholders, fronting and marginalisation were particularly important issues that needed to be addressed, along with compliance with safety and what was being done in this regard by both the DAFF and the Department of Labour.

Meeting report

Fishing Industry Transformation: Public hearings
Oceana Group Limited submission
Mr F Kuttel, Chief Executive Officer, Oceana Group Limited, said that the Oceana group was an empowered Level 3-b contributor, had fair and equitable employment policies, and was committed to the well-being of all its employees. He suggested that the measurement of economic interests was better done by using broad-based transformation criteria, as the narrow-based criteria only measured black ownership and not economic benefits. The former also eliminated fronting, by providing for clear definitions. It also encouraged aspects of procurement, enterprise development and Corporate Social Investment (CSI), which, if channelled correctly, could be of significant benefit to the welfare of all communities including the fishing industry.

Oceana had accelerated transformation since the awarding of long-term rights. Currently, Oceana was 55% black-owned, and was therefore defined as a black-owned company. The Khula Trust owned 11.9% of the company and Brimstone owned 9.7%. 13 Non government organisations (NGOs) were also supported by these, adding up to about 8.5 million black beneficiaries.   

Mr Kuttel noted that of Oceana’s management, 27.3% were black females and 26% of its senior management positions were held by black individuals. In relation to skills development, 82% of the budget went towards the training of black employees. In relation to procurement, 70% of its spend went towards Black Economic Empowerment (BEE companies. Oceana had, over a five-year period, spent in the region of R207 million on enterprise development. Its Corporate Social Investment (CSI) spend over the five-year period had been R13.4 million, of which 96% went towards black-owned companies. Subsequently, this CSI strategy had been reworked to place greater emphasis on coastal communities in which it worked, with particular emphasis on food security and education. Khula Trust, under the employment share scheme, owned 14.2 million shares and, at the current share price, this totalled R343 million. Oceana had also made provisions for housing for certain of its employees. 

Mr Kuttel suggested that in future the Department of Agriculture, Forestry and Fisheries (DAFF) should adopt the BEE Codes of Practice in all policies, recognise broad-based transformation initiatives and publish the results of performance review process specific to the current level of transformation in the industry.

Discussion
The Chairperson said that it was unfortunate that such results were never published, and there was certainly a need for this information to be made available to the public.  

Feike Natural Resources Management Advisors (Feike) submission
Mr S Moolla, Director, Feike, said that fisheries had been clustered so as to ensure that the inshore fisheries were protected from any involvement by the offshore companies. Feike’s Pilchard Fishery was the single largest employer, sustaining 15 133 jobs. There were also 114 rights holders, and 137 vessels, with 62.9% rights holders being black. The Hake Trawl Fishery had 60% black rights holders and 43% of its total allocated catch (TAC) was black-controlled. The South Coast Rock Lobster fishery had 71% black rights holders and 72% of its TAC was black-controlled. The Squid Fishery noted only a 49% black rights holder figure. However, the Hake Long Line Fishery had 91.3% black rights holders.

Mr Moolla said that the South African commercial fisheries had significantly transformed, with 60% of all fishing quotas allocated to black persons. Of the 3 019 commercial fishery quotas, more than 2 200 were allocated to small-scale or artisanal fisheries. Threats to transformation gains included the draft small-scale commercial fishing policy, the lack of leadership, policy and vision within the Department which resulted in a lack of support for small black-owned enterprises, and the fact that there was as yet no plan with regard to the next round of fishing quota allocations in 2013. He also cited the pervasive poaching of high-value inshore fish stocks, such as abalone and West Coast rock lobster.

Mr Moolla suggested that the draft small-scale/ subsistence policy premise was fatally flawed, in proposing that quotas be allocated to fishing communities and managed by cooperatives. It had been observed that cooperative-type management led to community-based conflict. There was also a lack of clarity as to who should shoulder the burden of paying for the administrative costs of running such cooperatives.

Benguala Fisheries submission
Ms N Sotomela, Member, Benguala Fisheries, said that the most serious plight of the women who made up this group was having to fend for themselves and their families when their husbands died at sea. Although they were issued with quotas, they were subsequently told to stop fishing even though these quotas had not been filled. They needed to be allowed to continue fishing in order to provide for their families. There were also many concerns with outsiders attempting to speak on their behalf, although they did not have adequate knowledge of the realities the women faced. They would also like to be consulted in policy processes that would possibly affect them.

Discussion
The Chairperson said there were significant concerns around the continued deaths of fishers at sea and the apparent lack of care taken by boat owners. The Committee would need to engage around this as a matter of urgency.

Sea Harvest Presentation
Mr G Bezuidenhout, Managing Director, Sea Harvest, said that the deep-sea hake sector was capital and labour intensive and required economies of scale if it were to remain competitive. Since 2003, the industry had not generated sufficient returns. The company employed exceptionally high safety standards at all times. One of the advantages of working for large companies such as Sea Harvest was that, in addition to these high safety standards, the employees received other benefits such as UIF cover, pension funds, and life cover. Despite the international trend to mechanise operations, Sea Harvest had employed more people. The number of jobs it created had increased to 65 per 1 000 tonnes of catch.

Sea Harvest was a certified Level 2 AAA 88% company on the scorecard used by the Department of Trade and Industry (dti). A study conducted by the University of Cape Town in 2008 had found that transformation was apparent in all spheres of the business and spanned all pillars outlined by the dti code. 96% of its employees were black. All except one of its skippers were black, and all were South African.  Of the 11 members on the Board of Directors, seven were black and two were women. Although all employees were offered shares in the company, most had declined the offer as a result of the industry not generating good returns. 25% of its shares were held by the Kagiso Trust and 60% by Brimstone Investment Corporation. Broad-based black shareholding made up 83% of the company.

Sea Harvest was described as the single largest employer in the Saldanah Bay/ West Coast district, employing between 3 800 and 4 900 people (and having 2 500 direct permanent and contract jobs). In excess of R4 million had been spent on skills development of its employees. The Sea Harvest Foundation built capacity within the local community, contributed significantly to development, and assisted with education costs.

Economic challenges faced by the sector included the increasing exchange rate, and cost escalations being above the Consumer Price Index (CPI) inflation rate.

Mr Bezuidenhout described the transformation challenges, which he said included lack of consolidation within the industry in order to achieve economies of scale. There was a need for clarity on how long a black shareholder needed to invest before he or she could sell, and there was also a need to address the shortage of certain skills and training within the sector, especially net-making and engineering.

Mr Malutyana: oral submission:

Mr Malutyana said that he represented a private boat, and had directed a memorandum to the DAFF, in which he outlined his grievances. These included the fact that the activities of major industry players were stifling the potential growth of smaller ones. Many politicians made promises about fair labour practices and decent wages, but these did not happen in practice in the fishing industry. The casualisation of labour was still the order of the day and the majority of fishers were not registered as workers. There was also no compensation for workers who were injured, or for the families of those who died at sea. After the recent death of one fisherman at sea, Mr J Mokoena, the owner of the boat had even denied all knowledge of this fisherman being employed on his boat, and that owner had subsequently left South Africa for his home country. The family of Mr Mokoena were unaware of the whereabouts of his body.

Mr Malutyana suggested that the DAFF needed to conduct a thorough investigation into all fishing companies, in order to ascertain whether they were ensuring that their workers were working under safe conditions. He also pleaded that DAFF should assist in the locating of Mr Mokoena’s body so that he could be given a proper burial. He urged that DAFF should shut down all non-compliant companies. It also should assist in ensuring that shareholders whose names had been used in cases of ‘fronting’ be compensated.

Discussion
Mr N Du Toit (DA) commented on the statements about Mr Mokoena, stressing the need to look at how employee registers were kept. There seemed currently to be very little way of monitoring exactly who was on a boat at any given time. This was especially important in cases where the owner was not also the skipper.

Mr S Abram (ANC) said that in relation to this death, there was apparently a signed document in which the owner acknowledged the Mr Mokoena was an employee aboard his boat. He was however extremely concerned that no compensation had been given to the family. This was a clear case of abuse, and was reflective of the disarray in which the industry currently found itself. The Committee would pursue finding solutions to the issues raised.

Coastal Towns Fishing Crisis Committee: Submission
Mr T Mosioa and Mr G Cloete, representatives of Coastal Towns Fishing Crisis Committee, said that there were concerns around employees owning shares but never seeing any benefits from such shares. There were also no black skippers being employed. They claimed that black people were also suffering from constant abuse aboard boats. They recommended the need for a Fishing Charter that would see greater representation of black people in the industry. In addition, they suggested that a Sea Accident Fund – similar to the Road Accident Fund – needed to be established, to ensure that workers killed or injured at sea were compensated. The assertions made by the big fishing companies around their community development and employment creation did not seem to be felt on the ground. They further suggested that the Fishing Charter would need to look at redistribution of wealth and resources.

Tuna Long Line Fisher Group: submission
Mr R Strauss, Secretary, Tuna Long Line Fisher Group, said that there were concerns around the unfair distribution of fishing rights to the Northern Cape, which received less than 1% of rights. There were also concerns about marginalised fishing rights to traditional fishers, which created further impoverishment in these communities, discrimination against women within the industry, scarce working opportunities for the youth, and bank policies that put small businesses at a disadvantage, especially when there was a lack of alternative financing options.

The Tuna Long Line Fisher Group suggested that an entity, formed by mutual agreement between government and the industry, should be set up to manage the fish factory in Port Nolloth. This would have to address the inherent structures that were putting women at a disadvantage, to upgrade the Port Nolloth harbour so that it met safety standards, and to review the circumstances and assist those fishers who did not qualify for quotas, which meant that established businesses were being allowed to monopolise the industry. It was also necessary to assist fishers to access grants, which would in turn finance basic equipment such as boats and machines. The Group called for a meeting with the Minister at the earliest available opportunity.

Benguela Fisheries submission
Ms V Ngomezulu, Chairperson, Benguela Fisheries, said that there was great dissatisfaction with the fact that long-term fishing rights had not been given to certain fishing communities. In addition, there was no clarity around the application process for these rights. Community leaders often acted purely out of self-interest. Cooperatives were not a viable solution, as this had proven unsuccessful in Hout Bay, where she was based.  There needed to be greater representation of smaller fishing communities in matters regarding policy decision-making.

Discussion
The Chairperson agreed that the Department would have to look into clarifying and/or simplifying the application processes.

St. Helena Bay Fishing Community Forum submission
Mr C Jordaan, Representative, St. Helena Bay Fishing Community Forum, said that the labour practices of large fishing companies in the area had resulted in significant poverty. The assertion of the large companies that they created employment in the area were therefore not entirely true. The existing quotas given to the communities were insufficient for them to make their own living. Complaints lodged with the Commission for Conciliation, Mediation and Arbitration (CCMA) had also resulted in workers losing their cases. The organisation Coastal Links also made agreements with Government without consulting the communities.

First Indigenous Women – Hout Bay submission
Ms M Yon, Representative, First Indigenous Women – Hout Bay, said that her group had the distinct feeling that they were being neglected by the Government. Although they were given two months to catch lobster, this was then brought to a halt, despite the fact that big companies were allowed to continue to catch lobster. Small-scale fishers were therefore not being afforded equal treatment. Her husband and father had died, without the family being provided with compensation. Women were also sidelined when it came to quotas. The small quotas that were received by women in particular were not sufficient to allow them to earn a decent living.

Umoya Fisheries submission
Ms Poggenpoel, Director, Umoya Fisheries, said that there appeared to be no logical reason why the TAC could not be increased so as to accommodate the scale the Minister of Agriculture, Forestry and Fisheries wished to implement. The allowances in the existing TAC could, however, be reduced. She suggested that the strengthening of policing and the savings as a result of the interim relief would in fact result in nothing needing to be taken away from the existing quota holders. The limitation placed on the types of species that could be caught under certain permits placed unfair limitations on the earning potential of smaller fishers, particularly during seasons when these species were not common. There needed to be a more fair and more consistent implementation of regulations in this regard for all players.

Discussion
Mr Abram noted that a great deal of information had been presented. He suggested that the DAFF should collate these comments and provide the Committee with its comments.

Mr Abram said that the issues of deaths at sea and fronting were particularly serious matters, and needed to be addressed with great urgency. He asked to what extent the DAFF currently was conducting any oversight on these, and what role the Department of Labour’s (DoL) inspectors played in assessing the compliance with safety standards. He also commented that there was an urgent need to look into the marginalisation of women. He believed that the Committee should alert other Departments to the practice of non-compensation to employees within this industry.

The Chairperson said that the blame for deaths at sea could not be laid at the feet of only one company, but should be seen as the collective responsibility and concern of all relevant stakeholders. There needed to be greater cohesion within the industry.

Ms N Paliso (ANC) agreed that the DAFF should provide the Committee with responses to the issues raised, and suggest some possible solutions to the Committee and the fishers.

Ms M Pilusa-Mosoane (ANC) agreed that answers must be provided, particularly since some of the concerns had been raised before.

The meeting was adjourned.  

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