DRY FISH MARKET RESEARCH

Carried out for: Swisscontact Sri Lanka 23/17, Manchanayake Gardens Off Pagoda Road Nugegoda Sri Lanka

By: Kapila R. A. Tissera Fishery Biologist 29/8A, Pangiriwatte Mirihana Nugegoda

Executive Summary Objectives The project for Womens Economic Development, funded by the Swiss Solidarity Organisation aims at restoring the livelihood of Tsunami affected women and their families in the Matara and Trincomalee districts. It aims at empowering them through the creation of sustainable employment. It is also expected to provide them and their families with psychological and legal counseling.

The current study was carried out in order to assist Swisscontact Sri Lanka to survey the possibility of creating sustainable employment to the target group in the Trincomalee area through the production and marketing of salted and dried fish. This sub-project is to be carried out together with the Sinhala Tamil Muslim Rural Womens Network currently operating in the Trincomalee district.

The main tasks of the study were categorised as follows:

1. Assessment of the supply potential of raw material 2. Understanding the channels and linkages prevalent in the dry fish industry 3. Assessment of the domestic and export demand 4. Assessing the viability and sustainability of the proposed project
(Refer to annex 1 for the terms of Reference)

Methodology The estate sector (Mainly Tea Plantations) is identified as the main consumer of salted & dried fish products in Sri Lanka (per.com. Colombo Wholesale Market). Special attention was paid in surveying this segment of the market. The cities of Nuwaraeliya and Kandy, which are the hubs of trade supplying this sector in general, were visited. A cross section of wholesalers, retail grocery shops and supermarkets in this sector have been interviewed in order to ascertain the trade channels, retail prices, volumes of sales and specialties of this segment. The same cross section of the trade was visited in selected

ii

cities which were thought to be typical for the rest of the market. This was done to enable the researcher to compare the data obtained at the aforementioned locations with those of areas typical of the country. (Refer annex 2 for the questionnaires used in this exercise.)

Trincomalee, a prominent city in the production of marine fish products was selected as the target location for supplies. Special attention was paid to identify the products, trade channels, price levels and production characteristics in this area by interviewing a cross section of the people involved in the Fishery Industry.

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Table of Contents
1) AVAILABILITY AND SUPPLY OF RAW MATERIAL....................................................... 1 1.1) TRINCOMALEE ................................................................................................................... 1 1.2) FISHING METHODS AND LANDING LOCATIONS ................................................................ 3 1.2.1 Off Shore Fishery.................................................................................................... 3 1.2.2) Coastal Fishery ....................................................................................................... 4 1.3) POTENTIAL ......................................................................................................................... 6 1.4) AVAILABILITY OF FRESH FISH FOR DRY FISH PRODUCTION.............................................. 7 1.5) CHARACTERISTICS OF THE CATCH VARIETY COMPOSITION ........................................... 8 1.6 CHARACTERISTICS OF THE CATCH SEASONAL VARIATIONS............................................ 9 1.7) PRICE FLUCTUATIONS ...................................................................................................... 12 1.8) MARKET CHAINS .............................................................................................................. 14 1.9) FORCES IN PLAY AND ETHNIC DYNAMICS ....................................................................... 16 1.10) POST TSUNAMI CHANGES IN THE SUPPLY ....................................................................... 18 2) DOMESTIC DEMAND FOR DRY FISH .............................................................................. 22 2.1) LOCAL PRODUCTION ........................................................................................................ 22 2.2) IMPORTS OF DRY FISH ...................................................................................................... 22 2.3) THE EXPORT MARKET FOR DRY FISH .............................................................................. 24 2.4) CONSUMER PREFERENCES ................................................................................................ 26 2.5) MARKET LINKS IN THE RETAILING OF DRY FISH. ............................................................ 29 2.6) PRODUCT QUALITY .......................................................................................................... 31 3) 4) CURRENT SITUATION..................................................................................................... 32 RECOMMENDATIONS..................................................................................................... 35

5) GUIDELINES FOR THE PROPOSED PROJECT .......................................................... 37

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List of Tables

Table 1 Coastal Fish Production in Trincomalee Table 2: Fishing Villages in Trincomalee District (pre-tsunami situation in project area) Table 3: Fishing Vessels Operating in Trincomalee (2004) Table 4: Characteristics of Fishing Effort in Trincomalee (2002) Table 5: Fresh Fish Availability for Dry Fish Production (2002) Table 6: Species Composition of the annual catch (2002) Table 7: Seasonal Variation in Catch Quantity MDB Vs. ODBs Kg of fish per fishing Trip Table 8: Seasonal Variation of Species Table 9: Minimum Buying Prices at Auctions Table 10: Characteristics of the Domestic Market Table 11: Summary of Target Markets

1 2 3 5 7 8 10 11 12 27 38

List of Figures

Figure 1: Coastal Fish Production in Trincomalee 1993-2002 (MT/Annum) Figure 2: Species Composition of the Annual Catch (2002) Figure 3: Seasonal Variation in Catch (Catch in Kg per Fishing Trip) Figure 4: Colombo Wholesale Market - Price Behaviour (2004) Figure 5: Fresh Fish Market Chain Figure 6: Relationship between the fishermen and the trader Figure 7: Import of Dry Fish and Sprats 2004 Major Suppliers Figure 8: Sprats and Dried Fish Imports 2002 -2004 Figure 9: Exports of Dry Fish from Sri Lanka Figure 10: Sri Lanka's Major markets for Sprats and Dried Fish Figure 11: Links in the Dry Fish Retail Chains

7 9 10 13 15 16 23 23 25 25 30

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List of Annexes

Annex 1: Terms of Reference

Annex 2: Questionnaires

vii

Annex 3: District map of Trincomalee

xvii

Annex 4: Fish Movement to the Wholesale Market

xviii

Annex 5: Basic Technical Process of Preparing Dry Fish

xix

Annex 6: LIST OF SOURCES OF INFORMATION

xx

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1). Availability and Supply of Raw Material 1.1) Trincomalee District of Trincomalee is located in the North-Eastern Province of Sri Lanka, and consists of four District Secretaries Divisions. These have been among the best producers of marine fish both through the Coastal and Off-Shore Fishery. It is interesting to note that 8.1% of Sri Lankas coastal line runs along the district of Trincomalee ( 141 Km of Coastal line in Trincomalee as against the total of 1730 Km) and fish production percentages too remain within the same percentage when compared to the all island coastal catch. (Annex 3 District map of Trincomalee)

The fish produced through the marine fishery of Sri Lanka is transported to the Colombo Central Fish market from all major areas. The movement of fresh fish to the Colombo Wholesale Market from the major landing sites is shown in annex 4.

The importance of Trincomalee in the Islands total coastal fish production is shown in table 1.
Table 1 Coastal Fish Production in Trincomalee Year Coastal Fish Production (in tons) Trincomalee 1998 1999 2000 2001 2002
Dept of Fisheries

Percentage from all Island

All Island 166,700 171,950 183,280 167,530 176,250 7.7% 8.5% 7.9% 8.8% 10.7

12,870 14,770 14,540 14,790 18,980

It can be seen that Trincomalee has, on a consistent basis, contributed about 8-9% of the islands total coastal fish production.

The district of Trincomalee is divided in to 11 administrative divisions known as Divisional Secretarys Divisions. Of these three divisions were visited during the survey,

which had the best potential in organising the proposed project. The Sinhala Tamil Muslim Rural Womens Network (the network) had a strong membership in these locations as well as the locations were well supplied with fresh by incoming day boats as their beaches were wide enough to accommodate the boats.

1. Town and Gravets 2. Kuchchaveli 3. Kinniya

A description of these villages is given in table 2. The division of Town and Gravets seem to be producing the largest quantity of fish among the divisions. There are 2 fishery harbours in this location where the multi-day boats bring in their production. This has had an affect on the fish production data in this locality.

Table 2: Fishing Villages in Trincomalee District (pre-tsunami situation in project area) DS Division Village Fishing Families Town and Gravets Sandy Bay Pattanaththneru1 Sally Jamaliya Weeranagar1 Thirukkadoloor Pallaththoddam Srimapura Sinnakkadai Cod Bay (Not a Village) Kenniyai
1 1 1

Production 2002 (MT) 13,050

Percentage Catch 69.0%

588 450 300 350 250 155 860 175 683 400 150 148 90 105 482 81

Neerothumunai Sinnapillaichchenai Kuchchaveli Salappaiaru Kuchchaveli Pudavaikkaddu

2,970

16.0%

Kuchchaveli .. continued

Kalarawa Pulmoddai Arsimalai Pulmoddai Jinnapura Irakkandi Nilaveli

48 558 1,758 375 175 173 447 179 163 257 1,255 6.0%

Kinniya

Kandaladiyotu Thona Sinnakinniya Periyathumunai Nadutheevu

Courtesy: Business Development Centre - Trincomalee 1. Villages selected for the survey

Table 3: Fishing Vessels Operating in Trincomalee (2004) Type of Fishing Craft Number Operating Multi-Day Boats 3 ton Day Boats 6-7 m FRP Boats Traditional Motorised Boats Traditional - Non Motorised Boats Total
Dept of Fisheries

48 131 1,509 12 1,210 2,910

1.2) Fishing Methods and Landing Locations The Fishing Effort in Sri Lanka consists of two major sectors. Namely; 1. Off Shore Fishery 2. Coastal Fishery 1.2.1) Off Shore Fishery The off shore fishery is carried out by multi day boats (MDB) that remain in the sea for 28-36 days per one fishing trip. They may travel around the island as well as navigate as far as Somalia in their pursuit of fish. The main catch in these boats are the large Tuna. The day boats, as the name implies carry out fishing operations lasting for no more than 24 hours per fishing trip. 3 ton boats and fiber reinforced plastic boats also known as 6 meter (18 to 22 feet) boats operate in this category.

The multi-day boats and 3 ton day boats are received at the harbours or anchorages specially meant for them. Kokilai, Cod Bay and Muthur are such areas where these boats arrive with their catch. Fish Auction halls have been in operation in Kinniya and Sally. As there is no auction facility at Cod Bay, the fish is directly transported to the Trincomalee Main Fish Market. It should be noted that since the tsunami disaster the auction halls in Kinniya and Sally have not been in operation.

1.2.2) Coastal Fishery The boats which do not spend more than 24 hours in sea per fishing trip are engaged in coastal fishery activities. Mainly gill nets of various sizes (table 4) pole and line and beach seine nets are used in this category of fishery. Off shore fishery contributes to about 80% of the marine catch in Sri Lanka. It should be noted that all production data for marine fish are given for the coastal fishery.

Seine netting is carried out from the beaches. A very long net (2000-3000 feet) is laid in a semi circle in the sea by boats. The two ends are brought to the beach at a distance of about 50-100 feet from each other. Many fishermen will gather at these ends and start pulling the net to the beach along with the fish caught in it. The depth at which the net will be submerged is carefully calculated and balanced with floaters and sinkers placed on the net.

The Beach Seine netting is an important supply point in the production of dry fish. This is due to the fact that a larger part of the fish caught in the seine nets are damaged and are not transported to Colombo as fresh fish. They are sold locally for the production of dry fish. Beach seining can be carried out only under a permit obtained from the government after registration of the owner or the fisheries cooperative society, which will be operative in the area. These areas are known as PADUs. The Trincomalee district has the following number of padus in the DS divisions under survey:

Trincomalee North Kuchchuveli Kinniya

10 37 11

Table 4: Characteristics of Fishing Effort in Trincomalee (2002) Type of Craft Fishing Methods Maximum Potential per unit per time Multi-day Boats up to 40 Gill nets 56 2000 Kg / 28 days 4500 Kg / 36 days Tuna Long Line 200 Hooks Yellow Fin1, Big Eye1 3 , (t) Day-Boats Gill Nets 5-6 (40 Nets) Pole and Line Fiber Reinforced Plastic Boats Gill Net 5-5 50-60 Kg / Boat Tuna1, Shark2, Marlin2 Gill Net 1 -2 50-60 Kg / Boat Sardines2, Mackerel2, Mural2, Scads2. Bottom Gill Nets 15-17 Bottom Gill Nets 7 Bottom Long Line 50 Kg / Boat 50 Kg / Boat 50 Kg / Boat Scats2 Queen Fish2 Rock Fish2 Travelly1 Hand Line 30-35 kg / Boat Travelly1, Rock Fish2 Troll Fishing 50-60 kg/Boat Tuna1, Seer1 Oru (Manual Boats) Other (Non Boat) Beach Seine Netting 300-400 Kg per attempt Crustaceans2 Anchovy2 Sardines2 Mackerel2 Flying Fish2
FAO Fisheries Sector Study of the NEP, High demand and price as fresh fish. 1). Economically not viable for processing as dry fish. 2). Good demand as fresh fish. Also available for processing as dry fish.

Types of Fish Caught Tuna , Sharks2

1

Upto 150Kg

Tuna1, Sharks2 Skip Jack2 Yellow Fin1

Tuna Long Line

50-60 Kg / Boat

1.3) Potential The latest official historical data available for the survey on the fish production of Trincomalee date back to the year 2002. This has been taken as an indication of post war, pre tsunami estimate of the fisheries activities in Trincomalee. Both in year 2001 and 2002 close to 80% of the marine fish production has come from the coastal sector and the balance 20% from deep sea and off shore fisheries2. The catches of the deep sea and off shore sectors are predominantly large pelagic fish such as Tuna, Seer, and Sharks as suggested by the type of fishing gear used by them (Refer to table 4). Smaller fish as well as larger demersal fish are caught by types of fishing gear other than those used by multiday and off-shore boats, contributing to the coastal fisheries.

A total of 23,472 fishermen have been active in Trincomalee in 2002 and of this, 1,320 are part time fishermen. The following types of fishing crafts have been operating in Trincomalee in the same year.

A study of a ten year period from 1992 to 2002 shows that Trincomalee has a potential of producing about 14,000 tons of fish per annum through the operation of the coastal fishery sector, which is the important supply base for the production of dry fish.

Figure 1: Coastal Fish Production in Trincomalee 1993-2002 (MT/Annum)

Coastal Fish Production In Trincomalee 1993-2002 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Year

It is seen from figure 1 that starting from 1998 there has been an average annual growth rate of about 9% in the coastal fisheries sector before the tsunami disaster.

1.4) Availability of Fresh Fish for Dry Fish Production Data pertaining to the production of dry fish in Trincomalee were available only up to 1993. The ratio of the raw material weight to the finished dried product is 1:3. As the dry fish production figures are available for four years since 1990, it can be safely assumed that about 17-18% of the coastal fish production has been available for the production of dry fish during that period.

Table 5: Fresh Fish Availability for Dry Fish Production (2002) Production Dry Fish Fresh Fish Equivalent Fresh Coastal Fish Production Percentage from Coastal Catch
Calculations based on Dept of Fisheries Statistics

Tons

1990 619 1,857 8,223 22.5%

1991 652 1,956 11,412 17%

1992 726 2,178 13,048 16%

1993 782 2,346 14,250 16%

1.5) Characteristics of the Catch Variety Composition The species abundance in the marine harvest of the Trincomalee district comprises large pelagic fish such as skip jack and yellow-fin tuna as well as small tuna consisting of frigate tuna and kawakawa. These are mainly caught by the multi-day boats with large gill nets and long line fishing methods. In 2002, these varieties comprised almost 50% of the total marine catch in Trincomalee.

Smaller shore seine varieties, such as anchovy, sardines, mackerel, scad and flying fish comprise about 15% of the coastal fishery in Trincomalee. Table 6 illustrates the species composition of the annual catch in year 2002.

Table 6: Species Composition of the annual catch (2002)

Species Trevally Spanish Mackerel Rock Fish Skip Jack Tuna Yellow-fin Tuna Small Tuna Shark Crustaceans Shore Seine Varieties Others
FAO Sector Study Repot

Percentage 6.5 3.2 9.0 19.6 16.8 12.8 4.1 2.5 14.7 10.8

Annual Quantity (t) 1,233 600 1,700 3,700 3,100 2,500 775 475 2,800 2,000

Figure 2: Species Composition of the Annual Catch (2002)

Catch Composition
Trevally
Other Ma ckerel

Rock Fish

Shore Seine Varietes

Crustaceans

Tuna Shark

FAO Sector Study Repot

1.6 ) Characteristics of the Catch Seasonal Variations Sri Lanka experiences two monsoon seasons when the sea wind starts blowing from the South-West and from the North-East. During the monsoon periods the sea becomes rough with high waves and strong winds. Traditionally fisherman kept out of sea during this time causing a major drop in the production of fish from these areas. However, now with the use of mechanised and more powerful fishing vessels, the effect of the monsoon seasons on the volume of catch is being smoothened out. It is now possible to engage in offshore fishing activities throughout the year thus making it possible to obtain raw fish from the mechanised boats throughout the year. The rough seas during the monsoon winds however, deter the activities of beach seining fishermen to some extent.

On the other hand, the rough seas and the wind have a positive effect on the catch effort in the seas. The churning of the shallow waters brings up the sediments containing algae and nutrients from the sea bottom which results in increased food for the fish. The murkiness created by the up welling is also said to make it difficult for the fish to see the gill nets as well as its prey leading to an increase in the catch by gill nets and causing an increase in the abundance of smaller fish shrimps, prawns and squid during this period.

During a study of the North Eastern Province (NEP) carried out by the FAO (2002), the mean values for the monthly catches of a day boat and a multi day boat have been recorded and the data is shown below. It can be seen that the stronger boats in the coastal area can still engage in fishing during the off season and main a consistency of the quantities so caught.

Table 7: Seasonal Variation in Catch Quantity MDB Vs. ODBs Kg of fish per fishing Trip Month MDB 3 t Day Boat Jan Feb Mar Apr May June 739 874 801 554 324 394 106 81 107 81 73 94 Jul Aug Sep Oct Nov Dec 920 1026 749 862 454 906 Month MDB 3t 1 Day Boat 142 113 98 103 61 137

Figure 3: Seasonal Variation in Catch (Catch in Kg per Fishing Trip)

Monthly Mean Catch (2002)

1200 Ma C t hp rB a e n ac e o t 1000 800 600 400 200 0 Jan Mar May Jul Sep Nov Month
FAO Sector Study

MDB DB

The mean catch figures of historical data shown in the FAO Fishery Report also confirmed by the interviews we have had with fishermen as well as officials of the Ministry of Fisheries, shows the existence of a more or less continuous supply of fish right throughout the year in the Trincomalee district through the catches of mechanised day boats that go to see during the off season. 10

However, a seasonal variation of commercial quantities in the different varieties abundant in the catches is seen in different times of the year. A rainy season and a season of rough seas are also prevalent in the district which will hamper the operation of beach seine nets and traditional boats. Table 8 summarises this data.

Table 8: Seasonal Variation of Species

Seasonal Changes in the Commercial Availability of Different Fish Varieties - Trincomalee
Jan Rainy Season Rough Seas Scarcity Period Yellow Fin Tuna Cuttle Fish (Small) Cuttle Fish (Large) Sardines Keeri Mackerel (Gld Strp) Black kip Jack Seer Fish Paraw Skip Jack Striped Tuna Anchovy Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Courtesy: Business Development Centre Trincomalee

Although the stronger boats produced fish during the off and rough seas seasons, it should be noted that from November to March the project would have to organise different suppliers or commercial activities to maintain the income levels of the group.

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1.7)

Price Fluctuations

The Ceylon Fisheries Corporation acts as a government arm to more or less stabilize the prices of fish at the point of the sea beach and at the level of the consumer by bulk buying during low price periods and releasing of frozen stocks to the retail market during periods of escalating fish prices. Though this is not fully active now due to the governments policy of free market economy, the minimum price levels during the year 2004 have been obtained by the courtesy of the Corporation. Table 9 shows the minimum prices of fish recorded at the buying places in Trincomalee.

Table 9: Minimum Buying Prices at Auctions 2004

Type of Fish Minimum Buying Price Rs./Kg Seer (Pole and Line) Ttrevally (Large) Trevally (Small) Skip Jack Yellow Fin Sail Fin Marlene Shark Rock Fish Flying Fish Golden Striped Mackerel Sardines Herrings
Ceylon Fisheries Corporation

150 80 80 40 60 130 130 70 60 40 40 40 40

It should be noted here, that this buffering activity may have a negative effect on reaching low prices of the fish in the markets, which would otherwise be an ideal condition for the purchase of fish for the project at low prices.

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Although the fish reaches the central fish markets in the regions of production prior to reaching Colombo, the fish prices are decided on the quantity of fish arriving at the Central Fish Market in Colombo as a totality from all the regions of production (annex 4). Therefore, a scarcity of fish in Trincomalee will essentially not cause an increase in the floor prices in Trincomalee, if the Colombo Central fish market is receiving fish from other areas of production in abundance. It can be seen from this that the prices prevailing in the Colombo Wholesale Market is the determining factor of regional fish prices.

Price Fluctuations of Major Commercial Varieties at the Colombo Wholesale Fish Market are illustrated in figure 4.

Figure 4: Colombo Wholesale Market - Price Behaviour (2004)

Seasonal Price Fluctuations
500

450

400

350

300 Price Rs

250

200

150

100

50

0 Jan Feb Mar Apr May Jun Month Seer (Pole & Line) Skip Jack Yellow Fin Sail Fin Marlene Jul Aug Sep Oct Nov Dec

Ceylon Fisheries Corporation

It is the price and supply of the large fish shown in the chart that have a major influence in the prices of other smaller types. Abundance in the larger varieties of the fish shown in the chart will automatically cause a drop in the prices of the smaller varies.

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1.8)

Market Chains

The multi-day and the larger day boats arrive at the fishery harbours or to anchorages. The fish are either auctioned at site or if auctioning facilities are not available at site would be transported in lorries to the Trincomalee main fish market. The traditional boats will arrive at any point in the shoreline where it is wide enough to accommodate the boats. Usually this will be in the location of the home of the fisherman. Beach seining is done at the locations assigned and registered to them by the government known as the Madel Padus (Landing locations for the beach seine nets). Lorries and vans arrive in these places for purchase of fish from these locations. Figure 5 illustrates these relationships. The fish are normally given to the oligopoly of traders in the Trincomalee central fish market as the fishermen as a rule would have obtained a cash advance or other types of assistance from the traders before embarking on the fishing trip. See figure 6 for summary of these relationships.

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Figure 5: Fresh Fish Market Chain

Market Links - Marine Fish Movement in Trincomalee

Multi-Day Boats 3 1/2 (t) Day Boats Traditional Motorised & Non Motorised Boats Beach Seining

Fishery Harbour OR Anchorages

Madel Padu or Wadiyas

ce

Ac

Icons not representative of actuality SCSL 2005

E arly C atch in B rine

To Regional Fresh Fish Markets

E xess or D am aged Fish

Central Fish Market

Best Qua li

ty

Ex

po

rt

lity

Export Company Agent

Go

hQ

ua

Grade II, Spoilt or Damaged

od

es

Qu

Fr

al

b le

i ty

p ta

Fi sh

To Colombo Central Fish Market Exess or Damaged Fish Dry Fish Producer

Spoilt or in Brine

15

Figure 6: Relationship between the fishermen and the trader

Fish

Financial Assistance for Boat Repairs

Assistance for Boat Maintenance

Fisherman

Wholesale Trader
Repair / Replacement of Fishing Gear

Asistance in supply of Fuel, Ice, Salt

Fish
SCSL 2005

1.9)

Forces in Play and Ethnic Dynamics

It was easy to note that the traders in the central fish market in Trincomalee were predominantly if not only, from the Sinhala community. Fishermen were represented in all three communities although the predominant ethnic group in the towns and gravets DS division was Tamil fishing families.

16

There is a multitude of ethnicity-based power plays, market chains, perceptions (whether wrong or right) and conflicts. Some sources say that there is an exploitative relationship between the Sinhala traders and boat owners and the Tamil fishermen due to the dependency of the fishermen on the trader. However, other sources say this relationship is a friendly one and though there is dependency, the trader looks after the fishermen and acts like a social security provider in case of need and emergency (i.e. pays medical bills of the family).

The purchase of the dry fish produced in Trincomalee and its distribution is currently handled mainly by three Sinhalese traders in the Fish Market. During our discussions with two of them, it was felt that the idea of assisting the women in re-establishing their home based production facilities was welcome and that it is possible for them to assist in the marketing of the products not depending on any ethnic complexities.

Another perceived conflict evolves around the access of the fishermen to ice. Some sources say that the Singhalese who own the ice plants are unwilling to sell ice to the Tamil fishermen in order to force them to sell the fish immediately to the (Sinhala) trader instead of being able to store it and negotiate a better price. Other people deny this and say that there is a general lack of ice because the production capacity is not high enough and therefore everyone faces a problem in accessing ice and there is no ethnic bias involved in the sale of ice.

According to information collected, it was further noticed that the Muslim fishermen seem to be unhappy, as they are the most effected by the Security Measures taken by the security forces as well as restrictions placed by the LTTE on sea faring in their areas. However, if one asks X number of different people whether there are any restrictions or not, one is sure to get as many different answers. According to what we could find out, there is really such a problem in the Kinniya area. Fishermen there confronted with a Navy high security zone as well as LTTE controlled areas on the other side of the bay. This limits their capacity to follow their fishing activities.

17

Based on the above-listed perceived or real discriminations and market dominations, we learnt that the Tamil fishermen are now forming their own Fisheries Cooperative Societies and attempting to organize their own avenues and channels of marketing, bypassing the predominantly Sinhala traders. This development seems to be supported or even initiated by the LTTE. Whatever the political implications theoretically this may open up new points of purchase for raw material for the proposed dry fish project at the landing points it self as it would break the oligopoly dominating the purchase and sale of fish.

In conclusion it has to be noted that Trincomalee is extremely ethicised and politicised. The power play between the multitudes of different actors is tremendously complex and impossible for an outsider to fully understand. Getting involved with- or posing a threat to the wrong people can have a serious negative influence on business. In many cases it has had lethal consequences for the individuals concerned.

1.10) Post Tsunami Changes in the Supply Trincomalee district has been very badly affected by the tsunami on 26.12.04. The effect on the fishing industry has been devastating. The industry now requires assistance in all its aspects to be rehabilitated.

Almost 75% out of the 10,431 registered fishing families have been displaced due to the tsunami in the Trincomalee district. The reported number of deaths among fisherman in Trincomalee is at 800.

Damage to the off-shore fishery sector is comparatively less. Only one MDB has been reported as totally wrecked with 20% of the registered 50 boats needing only minor repairs. Of the 180 3 t. boats, only 3 have been reported as totally damaged.

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Reported Damage to the Fishing Boats caused by the Tsunami

Extent of Damage MDB 3 ton 1 day Boats Registered number before Tsunami Reported totally Damaged Partially damaged Needing minor repairs Fishing Gear Damaged Total Destruction
Courtesy: Business Development Centre Trincomalee

6 m(18-22 ft) Boats

Traditional Boats

Large net Boats

50 1 1 10 2 pairs

180 3 10 22 NA

925 50 500 NA 900

1200 700

120 80

The initial numbers of boats are taken from the Dept. of Fisheries as registered boats. However, it is seen that the destruction is more than the number of boats initially in the area. This is due to the fact that a large number of boats unregistered with the ministry of fisheries is operative in the coastal areas, specially so in the NEP.A total destruction of fishing camps or Wadiyas is reported along with the fishing gear.

The destruction caused by tsunami in the Trincomalee district has affected negatively on the coastal fish production

Under normal conditions the best quality fish would be sold as fresh fish to be sent to Colombo and the balance was made available to the dry fish producers as badly handled and spoilt fish. Most of the smaller varieties caught in the beach seine netting also was available to the dry fish producer when in excess. Due to the drop in the fish production, both these grades are also bought from traders as fresh fish to be sent to Colombo. As a result, the effect of tsunami on the dry fish market takes two forms:

The local fish production is currently not enough to supply the dry fish producer through the natural supply-demand excess to continue at pre tsunami levels.

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The destruction of dry fish production locations and systems has also resulted in the absence of a buyer (in this case the dry fish producer) for fish unsuitable as fresh fish even when it is available. Therefore, currently this category of fish too is being transported from Trincomalee to the Colombo Central Fresh Fish Market to be routed to dry fish producers in Negambo, which is a fishing village close to Colombo on the West Coast.

Our discussions with the officials of the Ministry of Fisheries and members of some of the Fisheries Cooperative Societies have helped us to come to the following conclusions:

1. Our visit to Trincomalee was done right on the onset of the production season. The speculation at that time in Trincomalee as to the post tsunami supply potential was uncertain. This included the governments delay in permitting the fishing boats and gear to be handed over to the fishermen and also speculation about a possible oceanographic and/or biotope destruction or alteration in the shallow and productive areas of the sea as an effect of the tsunami. However, the following factors too have to be considered:

The fishing season was yet to start in Trincomalee during our visit. The South West Fishery was still active at that time. This has to gradually diminish for the North East productive season to start.

The vessels and fishing gear lost or partially damaged in the tsunami have yet to be replaced. This is a very slow process. The fishing effort has to be reinstated to pre-tsunami levels for excess fish to be available. It is then, that traders reject spoilt and badly handled fish. This is the category of fish bought by the dry fish producers. Currently these fish are accepted as acceptable to be sold as fresh fish due to the scarcity of fish.

The natural cycle of cash-in-hand has been disrupted due to the tsunami. Now it is difficult to the boat owners to find the operational costs of

20

sending a boat out to the sea for fishing operations. The traders who normally would have offered this help to the fisherman have lost too much cash as physical loss during tsunami as uncollectible advances of money given to fishermen before the tsunami. This is a few millions of rupees per trader as explained to us and the borrowers are no longer living or they have been badly affected by the tsunami.

2. Certain locations such as Muttur, Kalarawa, Kokkilai and Pulmoddai have been reported as areas with excess fish production. The situation is also improving in the areas where the destroyed fishing effort is being restored. Boats from these areas now come to sell their fish in the Trincomalee Town and Gravets area. If there is an organised and consistent buying of smaller, beach seine varieties of fish by the producers of dry fish, the arrival of these boats to the purchasing area will become stabilised.

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2) Domestic Demand for Dry Fish

2.1)

Local Production

It is reported that in the year 2002, 7,753 tons of dried fish has been produced in the North and Eastern Provinces. Trincomalee has produced only 8% of this total for the NEP, which is 619 tons.

Judging by the discussions we had with the traders at the Colombo Wholesale Dry Fish Market, the current domestic production of dry fish is estimated at around 40,000 tons per year. Due to the high variability of the fresh fish catch and volatile market and prices for fresh fish, it is the closest estimate that can be given as correct official figures were not available.

2.2)

Imports of Dry Fish

Annually close upon 35,000 tons of dried fish including sprats (Salted and dried Anchovy a small variety of marine fish) are being imported to the country. In 2004, Pakistan has supplied us with 43% of the imported dried fish and Thailand has supplied 78% of the dried sprats to Sri Lanka. The import situation of dry fish and sprats taken together is shown in figures 7 & 8.

22

Figure 7: Import of Dry Fish and Sprats 2004 Major Suppliers

Imports of Dry Fish (2004)

United Arab Emirates 9% Indonesia 18%

Maldives 7%

50% Pakistan

16% India

Sri Lanka Customs Statistics

Figure 8: Sprats and Dried Fish Imports 2002 -2004

Imports of Dried Fish and Sprats Metric Tons 2004
35,000

30,000

25,000

Metric Tons

20,000 Dried Fish Sprats 15,000

10,000

5,000

2002 2003 Year 2004

Sri Lanka Customs Statistics

23

2.3)

The Export Market for Dry Fish

Exports of dry fish from Sri Lanka are negligible when compared to its imports and consumption in the country.

However, Sri Lankas exports to Singapore, Malaysia and Hong Kong show a high unit value indicating that these exports should be shark fins and other high valued products, which are not included in the present survey. Therefore, these values have been taken away from the statistics for analysis. The export situation during the past 3 years is illustrated in figures 10 & 11.

The main markets to which Sri Lanka has exported are Australia, Canada and Kuwait. It is interesting to note that these are countries with a large Sri Lankan expatriate community. Therefore it is possible that the dry fish from Sri Lanka is targeted at this segment of the market in these countries. 75% of the exports have been done to just 5 countries and they could be regarded as the main markets for Sri Lankan dry fish. 80% of the sprats exported are to 5 countries which are to be considered as our main markets for sprats.

24

Figure 9: Exports of Dry Fish from Sri Lanka

Export of Dried Fish Products
120000

100000

80000 Volume in Kg

60000

Dry Fish Sprats

40000

20000

0 2002 2003 Year 2004

Sri Lanka Customs

Figure 10: Sri Lanka's Major markets for Sprats and Dried Fish

Dry Fish - Major Markets 2004

Sprats- Major Markets 2004

Australia Other 27% 19%

Other 4% 10%
Canada 19%

Canada 6% 40%

2% 4%

6% United States 12% Japan 9% United Arab EMirates 8% Kuwait

8% Australia 26%

Kuwait

At discussions with major exporters, it was revealed that sprats comprise a major part of the dry fish exports from Sri Lanka. Queen Fish, Seer and Sword Fish are the major dry fish varieties other than sprats that constitute exports of dry fish from Sri Lanka.

25

With the exports of dry fish at negligible levels, it can be said that Sri Lanka is a high consumer of dried fish and the volume consumed can be safely estimated at around 70,000 75,000 metric tons per annum.

The Formula: Domestic Production + Imports = Domestic Consumption + Exports 40,000 + 37,000 = Domestic Consumption + 107 (In Tons) Therefore, Domestic Consumption = 76,893 Say 77,000 tons per annum 210 tons per Day!

The Dry Fish Industry in Sri Lanka

Inflow of Dry Fish to the Market
Metric Tons per Annum Domestic Production

Outflow of Dry Fish from the Market

Metric Tons per Annum 107 tons per annum 0.13%

Exports Dom Con Exports 76,893 tons per annum 99.86%

37,000 , 48%

40,000 , 52%

Imports

Domestic Consumption

2.4)

Consumer Preferences

The characteristics of consumer preferences have been studied in 5 different locations. These were selected to illustrate different eating habits of the population. The findings are summarised n Table 10. The mean price level as at July (2005) is given in the table for the most common types of dried fish sold in the visited locations.

26

Table 10: Characteristics of the Domestic Market

Location Characteristics Preferred Types Of Dry Fish Ragala (Typical Town with surrounding Tea Estates) A very small town in the hill country 4000 ft above MSL. Predominantly populated by tea estate labour of Indian Tamil origin. Low purchasing power due to low levels of income. Being habitual beetle (a herb) and tobacco chewers, a habit which affect the taste buds, they require a high level of salt and chilies in their diet. Lower quality grades of the cheaper varieties of dry fish were the fastest moving types of dry fish in this area. It was estimated that this small town moves about 750 Kg. of dry fish per month. Nuwaraeliya A city in the hill country above 5000 ft above MSL. Consumers include mainly estate labour but also effluent businessmen, Seeer Queen Fish Sailfin/Marlin Keeramin Bombay-Duck Shark Sardines Skipjack 26.00 24.00 24.00 24.00 23.00 19.00 43.00 39.00 34.00 32.00 Shark Sardines Sprat Skipjack 26.00 15.00 19.00 22.00 Mean price in Rs/100gr

Price Sensitive Market

government officials and executive staff of tea estates. Varied tastes. Includes wholesale shops that supply the estate kiosks. It is estimated that the town sells around 3,500 Kg of dried fish per month.

Quality Sensitive Market

Catfish Ray Fish

Kandy

City in the hill country at 2000 ft above MSL. The consumer of profile estate shows labour that equal are

Queen Fish Seer Sword Fish Sardines Keeramin Shark Catfish Bombay

50.00 50.00 45.00 40.00 37.50 35.00 35.00 30.00

proportions

predominantly of Indian Tamil origin. An almost equal proportion of urban Sinhalese population visits this town for their shopping. Also populated by a considerable number of Muslims. According to Sources in the Colombo Wholesale Market for dry fish, this

27

city has the best sales in dry fish and is estimated around 10 Tons per month.

Duck Trevally Anchovy Ray Fish Skipjack Queen Fish Perch Sword Fish Keeramin Shark Skipjack Sardines Anchovy 30.00 28.00 26.00 25.00 46.00 45.00 44.00 38.00 32.00 30.00 25.00 25.00

Both Segments Prevail

This is regarded as the Capital City of the hill country where consumers come from various economic levels.

Kiribathgoda

Situated in the outskirts of Colombo and is populated predominantly by middle class Sinhalese families. Dry fish did not seem to

Both Segments Prevail

be an important regular item in their diet presumably due to availability of fresh fish and other meats in shops. It was estimated that the monthly movement of dry fish would not be more than a 1000 Kg. per month. This figure was arrived at with the impressions received during discussions of the more helpful traders in the city.

Wellawatta

This city in the outskirts of Colombo is densely populated with families originating from the City of Jaffna from the North. Many permanent residents as well as a large number of temporary residents who come to Colombo to attend to matters relating to official or migratory work live here. Traditionally this population is known to value the varieties considered as of high quality. It was estimated that this city would be selling about 3,000 Kg per month according to discussions has with the traders.

Seer Queen Fish Sail Fin Keeramin Shark Skipjack Anchovy

52.00 43.00 44.00 36.00 30.00 30.00 24.00

Quality Sensitive Market

Queen Fish Keeramin Shark Skipjack Anchovy Sardines 60.00 42.00 32.00 40.00 25.00 30.00

Super Markets Type I (Colombo, Kandy, Nuearaeliya)

Central Purchase System controlled from Colombo Head office. Purchases are done through registered suppliers who are notified by the management of current requirements. Strict packaging requirements some even requesting for bar coded packs. Packed by the supplier in presentable chunks weighing between 100 to 250 grams per pack. The fins, tails and other unpalatable parts are removed

Quality Sensitive Market

28

from the chunks leading to a price higher than in normal retail grocery shops. Supermarkets Type II (Colombo, Kandy, Nuearaeliya) Purchase decisions are taken by the manager of the outlet. Many wholesale goods are regularly purchased in Colombo which includes rice, sugar, and dhal. During these visits to Colombo dry fish is purchased at the Colombo Wholesale Market. The bulk is bought, sorted and cleaned at the local outlet and packeted by them (100-250 gr packs) Seer Queen Fish 62.00 60.00

Quality Sensitive Market

Please note that the quantities mentioned in the table are only for the locations where the dry fish shops were concentrated. Quantities sold by the day fairs and other mobile sellers have not been included in this. As such, the real quantities consumed by these markets are considerably more than the figures shown in the table.

The supermarkets were also selling some bottled and canned products made out of dry fish. At all locations it was understood that these value added products did not have a demand worthy of attention.

2.5)

Market Links in the Retailing of Dry Fish.

The supply segment of the marketing chain includes the Colombo Wholesale Market, a day-a-week fairs organised in an open area of central towns and vans or smaller lorries purchasing dry fish from these outlets and supplying the smaller retailers. Regional wholesalers as a rule and the retailers in the outskirts of the Colombo city purchased their dry fish from the Colombo Wholesale Market often preferring to buy from the same wholesale shop in Colombo. Figure 9 illustrates these relationships.

29

Figure 11: Links in the Dry Fish Retail Chains

Colombo Wholesale Market Good Quality Product Day-a-week fairs

2nd Grade Product

Regional Retailers

2nd Grade Product

2nd Grade Product

Regional Wholesaler/Retailer

2nd Grade Product

Small Estate Shops and kioks
Icons not representative of actuality SCSL 2005

The dry fish produced in Trincomalee mainly arrive at the Colombo Central Market for dry fish. A smaller part of a lower quality may be transported directly to regional markets closer to Trincomalee by passing Colombo. These dry fish mainly end up at the day fairs held in many popular locations in the open air, called day fairs. From this location they are transported to the smaller kiosks in the hill country where this quality can be sold to estate labourers.

30

The higher quality of dry fish is normally handled via the Colombo central market and bought directly from them by the regional wholesalers as well as larger grocers.

2.6)

Product Quality

The characteristics identified as factors contributing to the quality of the product are listed below: Humidity below 30% No signs of salt crystallisation on the fish flesh Absence of a red/pink colour Absence of sand Less un-edible parts in a piece (Fins, gills etc) Flesh sturdy to the touch Absence of putrefying smell Absence of dry fish dust or small broken pieces when in pack. When soaked in water, the flesh should look and feel as close as possible to the original condition of the fresh flesh.

31

3)

Current Situation

The devastation caused by the tsunami has caused severe damage to the dry fish industry prevailing in Trincomalee before the disaster. However, The Network (STMRWN) is reorganising the women who were engaged in making dry fish as a commercial practice before the disaster. These women, when spoken to, expressed their utmost confidence in being able to obtain raw material and reorganize their previous activities if assistance in certain areas could be given to them.

The main area requiring such assistance was the replacement of their cash which was available for the purchase of raw fish and salt. Also the plastic utensils like basins and barrels have been lost during the disaster.

Assistance in the purchase of raw material could take two forms. Assistance could be given to women (through the net work) to purchase dry fish. More efficient would it be if a mechanism could be devised for assistance to be given to dry fish makers who also own day boats. These day boats do not go to sea on a regular basis due to the absence of a regular cash flow and/or post tsunami damages to fishing gear. If these boats are assisted to start fishing on the condition that a certain percentage (reflecting the magnitude of the assistance given to them) of their catch can be given to the network for processing as dry fish.

It should be strongly kept in mind during any possible assistance, that the tsunami affected families have a multitude of basic needs. Their houses, if survived the attack by tsunami, are in a dire condition. Most houses we visited had only a few cheap plastic chairs. They had even to borrow chairs from neighbours to accommodate us. Jewellery, especially to the Tamil woman, is a most treasured item not only reflecting the monetary value of it but also reflecting many aspects of personal, cultural and social values. In most cases these have been pawned to obtain money for basic survival. They should be made to understand the objective of the project to prevent them from channeling the provided assistance to solve their more basic problems.

32

A few of the women we visited were making dry fish on a small scale. The quality of the dry fish made by these women was very high in comparison with what we see in the retail shops in Colombo and other cities. It is very important that the project takes measures to make it possible to retail this quality at the point of sales. Sea salts contain hygroscopic compounds that absorb water from the atmosphere. When the dry fish is brought to the wet zone to sell, these salts will absorb water and make a perfectly dried specimen of dry fish become wet and sloppy, deteriorating an excellent edible quality. This is a regular occurrence in most places. A solution to prevent this from occurring such as a proper packing method should be proposed.

The dry fish production process has its own relationships within the key players.

1) The trader would advance money to the dry fish producer to buy the raw fish and guarantee the buy back of the finished product.

2) The fisherman would hand over the excess fish to the dry fish producer free of charge, pay for the drying process and obtain the finished product for selling to the trader.

3) The dry fish producer would assist the fisherman to launch the boat with operational expenditure so that the raw material is guaranteed on the fishermans return from the sea.

4) The fishermans wife would dry the excess fish brought in by the husband.

5) The beach seine operators would team up to produce their own dry fish from the excess and damaged fish and sell them to the traders.

6) Multi day boats will make dry fish on the boat it self from the fish in the catch of the early days as they tend to spoil by the end of the fishing journey. If they are not properly dried they are given to dry fish producers for further drying.

33

7) The traders of dry fish also handle fresh fish. If prices or the quality does not warrant selling the total stock to Colombo as fresh fish, they dry it around the central market premises by themselves.

It is seen that every possible avenue between the fisherman, dry fish producer and the trader is being used to produce dry fish.

34

4) Recommendations Three major factors have been kept in mind in proposing the following recommendations:

1. The damage and destruction that have taken place in the fishing vessels and fishing gear have to be replaced to a considerable extent to expect a reasonable increase in the fish catch from coastal resources. Most agencies are still awaiting government approval to distribute such assistance.

2. The dry fish producers have to be rehabilitated with assistance to purchase raw material in the form of a revolving credit.

3. The onset of the fishing season should bring in pre-tsunami levels of production from coastal fisheries. This is to be watched for at least till mid October.

A considerable potential exists for the setting up of a dry fish processing unit in Trincomalee. Of the locations visited, it is possible to recommend the following adjoining villages for setting this up.

1. Pattanaththeru 2. Weeranagar 3. Kenniyani 4. Thirukkadoloor 5. Pallaththodom

35

4.1)

Product Types

A study of the market demand has shown us that there exist three categories of dry fish.

a. Low volume, high priced dry fish products for the upper niches of the market. b. High volume moderately priced dry fish types for the general consumer. c. Moderate volume of low quality low priced dry fish and off cuts.

4.1. a) This category requires seer, queen fish and sail fin fish to prepare the dry fish. With the current prices and low availability of raw material for this product, it is not advisable to concentrate on this segment of the market.

4.1. b) The moderately priced dry fish require frigate tuna, small sizes of skipjack, and many other varieties as shown in table 11.

4.1.c) Invariably some of the fresh fish obtained from the catch of beach seines will be damaged and may not retain the full shape of the fish after drying. This product could be sold as a lower quality component of the dry fish produced. The hill country shops that buy from visiting vans mostly buy this quality for their consumers. This should be the target market for the third category of dried fish

36

5)

Guidelines for the Proposed Project The project should start on an experimental basis as a home based dry fish production program. Members of the STMRWN who would be beneficiaries of the project should be organised to form a group under the net work. Villages of Patttanaththneru and Weeranagar are suitable for this. Financial assistance to purchase raw material from multi day boats and day boats (frigate tuna) and shore seine varieties from beach landings (Wadiyas) should be given to the members of this group. In case of raw material deficiency in the coastal catch, purchase of Tilapia from large reservoirs in the district and transporting them to drying areas should be considered. Financial assistance to increase the salting capacity and for the purchase of crushed salt should be offered to the members. Suitable storage facility should be made available for collecting commercial quantities of dried fish from the members. Suitable packing and packaging of the final product can be done to preserve the high quality of drying that exists in the product in Trincomalee. Equipment and training to this end should be given to selected project beneficiaries. It is strongly felt that the group should possess their own transport to take weekly stocks to the Colombo Wholesale Market. This can also transport provisions such as dhal, rice, sugar and what ever is required by the group for their consumption, from the Colombo wholesale establishments for these products. The group should be assisted to develop a brand name for the dry fish produced by them. They should be trained to achieve consistent high quality in the finished and packaged product. A wholesale trader in Colombo should be identified to sell their product on a commission basis at the lowest possible rate. It is also possible to sell these directly to the targeted markets as shown in table 12. 37

On successful completion of the initial stage of the project, establishing a more hygienic, drying unit and technology that would upgrade the quality and acceptance of the product should be planned and implemented.

Explore the possibilities of selling the product in countries where there are large groups of Sri Lankan expatriates in proximity.

Table 11: Summary of Target Markets

Variety Preferred Target Market Price Rs./100gr (Retail) Seer Queen Fish Sword Fish Marlene Shark Tuna Keeramin (Young Herrings) Bombay Duck Trevally Kandy Colombo suburbs Rs.35.00 Rs.30.00 Rs.32.00 Rs.30.00 Rs.30.00 Supermarkets in all locations Rs.38.00-42.00

Sardines Mackerels Herrings Mural Scads Flying Fish SCSL 2005

Nuwaraeliya Ragala Kandy

Rs.24.00 Rs.38.00 Rs.35.00

38

Annex 1: Terms of Reference

Terms of References for Consultant: DRY FISH MARKET RESEARCH Womens Economic Development Project - Swisscontact Sri Lanka June 2005

Who When
Duty Station Report to Support by

June, July and August 2005

Colombo with extensive field visits to Trincomalee and other places in Sri Lanka as required Ruth Zueblin, Project Advisor (WED) Ruth Zueblin, Project Advisor Maria Vitores, Project Manager Trevor Papalie, Agriculture Technical Advisor (Market Access) Chandrani Adikaram, Program Officer (Womens Programme)

Objective of the Consultancy:

1. To supply Swisscontact Sri Lanka (SCSL) with a market research on the dry fish 1 sector in Sri Lanka and abroad (Export market). 2. To assist SCSL in the development of a business plan for the establishment and running of a dry fish production unit. The above activity supports SCSL and its Partner Organisation in the setting up of a dry fish production unit in Trincomalee to provide employment opportunities for women affected by the tsunami, domestic violence and conflict.

Background
Swisscontact, the Swiss Foundation for Technical Co-operation is active in Sri Lanka since 1981 in the field of Small and Medium Enterprise (SME) promotion, Vocational Training and Education (VET) and Financial Services (FS). The main office is at Nugegoda and a Project Field Office (PFO) is maintained in Ampara. Currently three expatriates and 14 local professionals and support staff are employed. Two projects are currently being implemented by Swisscontact Sri Lanka (SCSL): The Local Economic Development (LED) project with the goal to contribute to the local economic development benefiting the local population in and around the North Central Province and the Eastern Districts in an equitable and sustainable way. The Development and Peace Sri Lanka (DPSL) project with the goal to contribute to the process of promoting peace and mutual understanding between the different ethnicities in Sri Lanka while contributing to the economic development of the Ampara and Batticaloa districts. Additional new projects such as the Women Economic Development (WED) project and others will be implemented according to the current needs in Sri Lanka and based on additional funding made available from the Swiss Government and the Swiss public and other donors. Components of the Consultants assignment:

1) MARKET RESEARCH

Assessments:

This includes value added products based on dry fish.

ii

1. Assessment of raw fish supply & purchasing systems and distribution chains (including power-relations) in the Trincomalee coastal area. a. Varieties of fish, seasonality, quantity, price, quality, etc. b. Market chains (fishermen-boat-owner-mudalali-end market relations and profiles). c. Important market forces and players (incl. politico-ethnic dynamics) Q: Can the production unit purchase fish in the Trincomalee coastal area on a regular basis? At what price and quantity? Where and from whom?

2. Assessment of the domestic market for dry fish and value added products based on dry fish. This includes an assessment of: a. Domestic demand: Existing products and their characteristics. b. Market chains (producer-buyer-client relations and profiles). Including imports. c. Important market forces and players d. Post-tsunami changes in the market and its future development (also taking into account aid flows to the sector). e. Domestic policies regarding the sector including tax regime, support measures, possible post-tsunami changes. Q: What are the characteristics of the domestic market and what is the demand?

3. Assessment of the export market for dry fish and value added products. This includes an assessment of: a. Relevant markets overseas: International trade flows (producer-trader-client relations and profiles). Sri Lankas competitiveness on the international market. b. Conditions to penetrate those markets: tax conditions, quality standards, import restrictions etc. c. Important market forces and players d. Domestic policies regarding the fish export sector, support measures, possible post-tsunami changes. e. International policies and future trends. Q: What are the characteristics of the export market and what is the demand?

4. Assessment of the potential for home-based dry fish production in the Trincomalee coastal area.

iii

a. The current production b. Future potential (products, producers, markets) c. Potential for collective selling and marketing system d. Potential markets for the product Q: Is there a potential for supporting home-based dry fish production in Trincomalee area? If yes, what product and for what potential market?

Recommendations:

1. Recommendations on the assessed locations, taking into account all the factors assessed previously: 2 a. For Trincomalee: Positive and negative aspects of supply, distribution chains, varieties available vs. market demand, availability of premises, local context and security, logistics, etc. 2. Recommendations on potential products and markets. 3 a. Detailed description of the fish varieties available in the different locations, including, quality and quantity, seasonality, prices and price fluctuations, distribution chains, etc. b. Detailed description of the products (including quality, unit quantity, unit price, price of production, production facilities and technology required, hygiene standards, packaging, appearance, etc.). Positive and negative factors for each product. c. Detailed description of markets (domestic and export) for the products and their characteristics and distribution channels (buyers, market chains, competition, niche opportunities, etc.) Positive and negative factors for each market. Q: Which product has potential in which market and what are the requirements?
2 3

This chapter could be done in matrix form, completed by text. Dito.

iv

3. Recommendations on infrastructure a. Potential premises and renovations needed b. Installations and equipment (what, where to buy, prices)

4. Risks and uncertainties a. Business risks b. Context risks (political, security, power-relations in markets, post-tsunami developments)

5. General recommendations, impressions and observations

6. Networking a. List of all buyers considered for the study including contact person and date visited. b. List of relevant government institutions and contact persons (national and local level) c. List of relevant fishing societies and associations (national and local level) d. List of NGO/Donors active in the sector or having an influence on it e. List of training providers and contacts 4 f. List of equipment suppliers and contacts 5

g. Information on fares, trade promotion events, sector-specific programmes by chamber of commerce etc.

The above assignment requires visits to:

STMRWN (Kanthale, Trincomalee), Selected fishing societies (Kinniya, Nilaveli, Trincomalee town, as indicated by STMRWN)

4 5

Kachcheri and provincial council, possibly NGOs and INGOs

If known to the consultant. Dito.

Fish markets and places of trading (sea-shore) Potential premises for production (as indicated by STMRWN) Supermarkets, Exporters, Factories, Hotels and Restaurants NARA

2) BUSINESS PLAN The Consultant shall discuss the findings of the market research with SCSL. Based on those discussions, the best strategic option will be chosen jointly by SCSL and the Consultant. The consultant shall then prepare a draft business plan including: Description of the business environment Legal nature of the business (private company, NGO) Financial projections, at least until end 2006 (Turnover, costs, profits, cash flow, depreciation etc.) Marketing plan (including pricing and distribution, branding and labelling) Investment plan Competitor information Infrastructure needs & costs Raw material needs & costs HR and training needs & costs (production staff, administrative staff, management) Technology, equipment and training needs & costs Transport needs & costs Assessment of business risks Long term vision and sustainability of the business Two alternative contingency plans for a similar venture in the same geographical area.

SCSL will work closely with the Consultant in the preparation of a draft business plan. The preparation of the final business plan shall be the responsibility of SCSL.

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Annex 2: Questionnaires Market Survey on Dry Fish Swisscontact Sri Lanka Location: District: Date: Questionnaire A1
Total Supply of Raw Fish (Primary Producer ----> Buyer)

Name: Owner / Operator

Variety

Availability

Qty / Month (Kg)

Price Max (SLR/Kg)

Price - Min (SLR/Kg)

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Fish Quality

Suitable for DF?

Buyers

Strengths

Weaknesses

Multi-Day Boats

(1) (2) (3)

vii

Day Boats

(1) (2) (3)

Seine Nets

(1) (2) (3)

Relationships: From Buyers Loans Advance Payments Provision of Equipment Traditional Tie-ups Political / Ethnic Obligations To Buyers: Guarantee of Supplies Credit (Months 1 3 More) Loyalty

Off-season assistance:

Market Survey on Dry Fish Swisscontact Sri Lanka

Super Market City: Date:

Questionnaire B1
Demand Characteristics in Supermarkets / Retail Sellers

Name: Position:

Products: (Primary Dried Fish) Name Package Price / Kg Sales Volume Kg/M

viii

Products: (Value Added) Name Package Price / Unit Sales Volume Units/M

Quality Assessment (Primary Product): Humidity Content: Other: Pack: Organoleptic:

Seasonal Variations: Price: Availability: Demand:

Purchasing Behaviour: Supplies are purchased from: Producer Processor & Packer: WH Market:

ix

Door-step delivery by:

Effect of the Tsunami: Pricing: Supply Consistency: Supply Levels: Product Quality:

Contacts of suppliers to the Super Market to whom the Network could sell their products:

Do the Suppliers offer credit to the super market?

If Yes, the credit period:

Regulations applicable to the marketing of dry fish in Supermarkets

Labeling requirements:

Preferred packaging attributes:

Market Survey on Dry Fish Swisscontact Sri Lanka

Location: District: Date:

Questionnaire A2
Locations for a production unit

Discussed with:

Closest supply location: Distance:

Number of Network members in the locality:

Electricity:

Drinking water:

xi

Access:

Extent of land available:

xii

Market Survey on Dry Fish Swisscontact Sri Lanka

Institution:

Name: Questionnaire B2
Export competitiveness of the product

Position: Date:

Dry Fish Types and Varieties that have an Export market: Product Type Major Markets

Acceptance of the Sri Lankan product:

1. Available varieties: 2. Processed quality: 3. Exportable Quantities: 4. Supply consistency: 5. Packing and Packaging: 6. Price

Possible Non-tariff barriers

xiii

International rules and regulations governing the import of Food Stuffs (applicable for dry fish):

Assistance available from the EDB: 1: General to the food industry 2: Tsunami effected areas

List of Exporters to whom the Network could sell their products:

xiv

xv

Questionnaire for Retailers of Dry Fish

Name of Trading Establishment: Address

Contact Person:

Type of Product Types of Dry Fish Sold and Price/100Gr Mainly Local Dry Fish Mainly Imported Dry Fish Both local & imported Where do they buy the dry fish? Colombo Wholesale Market Local Wholesaler By visiting Dry Fish Pola From visiting Sellers (Vans Lorries) Other - Please Specify

Any possible Conflicts on new entry? What are the best moving varieties of Dry Fish? Yes No

What is important to him? Quality Price

xvi

Annex 3: District map of Trincomalee

xvii

Annex 4: Fish Movement to the Wholesale Market

xviii

Annex 5: Basic Technical Process of Preparing Dry Fish

The fish are collected and washed well in sea water to remove sand and other particles. The brine solution in which the fish are soaked is made by adding crushed salt to sea water in plastic barrels to obtain a super saturated brine solution. The washed and cleaned fish are soaked in the super saturated brine using large basins. The time of soaking is about 3 hours and if the correct concentration of salt has been used, the eyes of the fish should be completely dehydrated and destroyed by the end of 3 hours. The fish are then taken out from the basins and arranged in single layers on the beach for drying. The drying takes about three days when the moisture content of the fish drops to below 30%. This is approximately a loss of about 2/3 of the original weight of the fish. The drying fish are taken inside to protect from moisture during the nights and spread out in the sun the next day. The process of drying is completed by the 3rd day when the required weight loss of 2/3 has been achieved.

xix

Annex 6: LIST OF SOURCES OF INFORMATION Government officials

Name Dr. Elmo Weerakoon, NAQDA 2675318 demweerakoon@yahoo.com Short summary Potential candidate for consultant mkt research, but too busy. But helpful and interested. Visited 28.6.05 Phoned

TP, RZ
Sent e-mail and phoned to ask for secondary data, but never got reply. 10.06.05 RZ

DR. REDKHA MALDENIYA, NARA

Mr. Fahreed, DoF, Trinco 026 2222133 Mr. Prem Lal DoF, Trinco 026 2222133, 0777510238 Mr. Kanagasabapati, Assistant Commissioner of Cooperative development, Trinco Distr. 026 2221029 Mr. Illankovan Commissioner of Cooperative development, NEPC Mr. Athukorala Fisheries Inspector Mr. Fareed Fisheries Inspector Dept of Fisheries

Phoned, referred us to Mr. Athugorala

06.7.05 RZ

NEPC & PS = responsible for registration, monitoring and auditing of fish soc, Central Gvt = responsible for training and extension officers Sent one of his MDOs with TP to Kuchchaveli stretch up to Pulmoddai Responsible for the entire NEPC.

19/20.7.05 RZ/TP

Fishing methods in Trincomalee, types of boats, ethnic complexities, fisheries cooperatives; their organization and fisherman Behaviour, trade links and chains, interrelationships among fishermen, traders and middlemen.

18-Jul-05 KT

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Trincomalee Mr. Bandu Ekanayake Priincipal Fisheries Training Centre Cod Bay Training requirements and current status, catch situation in coastal and off shore fishery, types of boats and fishing methods, visiting the Cod Bay Harbour, inspecting a multi-day boat. Post tsunami activities of the government. 20-Jul-05 RZ, TP, KT

Capt. Sarath Jayasinghe Director Training Ministry of Fisheries Colombo

Types of fish used for dry fish and their national, English and Latin nomenclature, Outlook on post tsunami development of the fishing sector, damage caused by the tsunami, a deeper understanding on fishing vessels and gear, International poaching of Sri Lankan commercial waters, Security situation in Trincomalee. Monsoon and fishing seasons, Behaviour of wind and water currents during seasons.

22-Jul-05 KT

Mr. Sahabandu General Manager Ceylon Fisheries Corporation Colombo 15 Mr. Sufian (Deputy Director) Mr. Prasanna Jayasinghe (AD) Ms Srimatee (AD) Ms. Chandra Kiriella (AD) Sri Lanka Export Development Board Colombo

Demand Characteristics, daily buying and wholesale prices, current fishing situation. Seasonal variations.

25-Jul-05 KT

Import and Export Statistics, Export Market Requirements, Rules and regulations, Dry fish exporters from Sri Lanka.

14-Jul-05 KT

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Fisheries societies
Name Jeewa Colombo Fish Wolesale Traders Union C.. Ananda Peireis Chairman Fisheries Society Sumedhagama Trincomalee Short summary Imports and current prices, current raw material availability, new trends in the buying and selling chains, trader fisherman relationships, Situation of ice availability.. Fishing habits and methods, Powerplay, Ethnic complexities, Current Conflict and its effect on ethnic issues in the fishery industry (an outlook) Fishing seasons, raw material availability. Visited 25-Jul-05 KT, TP 19-Jul-05 Phoned

Private sector (shops, market places, supermarkets)

Name Mr; K.Joachim, Mr. Rodigo (BKB Company) Mr. Rajaratnamthnam (Vaeni)Colombo wholesale Market Short summary Import, export, local production situations, power-play, Relationships, Monthly quantities, quality of imported and locally produced dry fish, importers and exporters, Supply situation, wholesale pricing. Visited 09-Jul-05 KT/TP Phoned

Nihal Senerath Manager Purchases Keells Supermarket Chain

Product quality, Best Movers, Volumes of trade in Keells supermarkets. Packaging requirements, Suppliers to Keells

10-Jul-05 KT

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Nuwaraeliya Central Market A.M.M. Saleem Faris Stores M. Mohammed Lucky Dry Fish Centre Karuppaiya Paveesana Dry Fish Traders Other Groceries: M. Annakutti New Kalpana Stores S.M.A. Azees Azees Enterprise Cargills Supermarket Ragala A.I.M. Mohammed Hussein Kairoon Stores T.R.B. Rathnayake Rathnayake Stores A.T. Chandana Piyasena Stores K. Periyasami Priya Stores S. Ganesh Ganesh Stores N.M. Ebrahim Ragala Traders Kandy Central Market Nahinda Rohuwage Nalini Stores Rajakulendran Kurukulasooriya Bros. Other Groceries Mangalika Stores

Types in demand, retail prices, Buying chains, Customer requirements, power play and trader relationships, Customer characteristics, Sales volumes, trade practices.

12-Jul-05 KT

Types in demand, retail prices, Buying chains, Customer requirements, power play and trader relationships, Customer characteristics, Sales volumes, trade practices.

12-Jul-05 KT

Types in demand, retail prices, Buying chains, Customer requirements, power play and trader relationships, Customer characteristics, Sales volumes, trade practices.

13-Jul-05 KT

T.K.Seneviratne Madanwela & Sons

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- Janasiri Stores H.A. Seneviratne Ravi Stores Wellawatte Manager-Cargills Food City Manager Cooperative Shop283,GalleRd S. Methsiri - Shop 1, New Market V. Ganeshan Gamini Stores 09, Manning place M. R. Raja Bismi Stores Kirullupone Market T. Suresh Kirullapone Central Market S. Anganamuttu Shop 2 New Market Kavico Traders 255, Galle Road Types in demand, retail prices, Buying chains, Customer requirements, power play and trader relationships, Customer characteristics, Sales volumes, trade practices. 15-Jul-05 KT

Kiribathgoda Cargills Food City Day Fair H.D.Dharmasena Day Fair N. K. Dayananda Day Fair H. L. Sajith Saman Wijesinghe Bopath Traders, 38, Makkola Road Ravi Grocery 73, Kanda Road

Types in demand, retail prices, Buying chains, Customer requirements, power play and trader relationships, Customer characteristics, Sales volumes, trade practices.

16-Jul-05 KT

N. Wijesundara - Food Centre 171 Eeriyawetiya Rd, A. K. Kumara Ramyasiri Stores, 05, Kandy Road

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B.A. Kumara Geeshani Stores, 83, Kandy Road,

Trinco Nimal Shantha Fresh Fish Trader Fish Market

Introduction to dry Fish traders. Fixing appointments. Discussion on the coastal and off shore fisheries.

18-Jul-05 KT

Mr. Athukorala Fisheries Inspector Mr. Fareed Fisheries Inspector Fishing methods in Trincomalee, types of boats, ethnic complexities, fisheries cooperatives; their organization and fisherman Behaviour, trade links and chains, interrelationships among fishermen, traders and middlemen. Trinco Continued H.Sarath Dry Fish Trader Fish Market P. Nimal Dry Fish Trader Fish Market Current fresh fish and dry fish prices, Affect of imports, fisherman-trader relationships, Volumes, buying and Colombo prices, Market chains, Types of dry fish and raw material used, Ethnic and trading relationships. Dry fish producing members of the Network 1) Town and Gravets 2) Kinniya Current status, experience on production, examining samples, possibilities of reviving and developing the production and trade activities and practices, social complexities, ethnic balance and mutual assistance, availability of raw material, problems currently faced. Effect of tsunami on their families and new problems. 19-Jul-05 KT TP 19-Jul-05 KT TP

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NGOs/INGOs
Name Serge Tissot, FAO 0773187359 2689363/4 serge.tissot@fao.org Ms. Lalitha, FAO 2689363/4 Mr. Bindu, FAO 2689363/4 Gave general info on FAO tsunami emergency activities. Equipment and training (food processing, agro gardening) To date (27. July) FAO has still not given out any gear (nets etc.) in Trinco and neither has ICRC, says Bindu. Waiting for Gvt. Clearance. No info on other organisations and what they already distributed. Harim Sivasubramaniam, FAO 0773081245, 2559331 hari_fao@yahoo.com Ms. Malika, Librarian FAO 2580798 ext. 13 Imanari Ayako (parc_jaf@sltnet.lk) PARC (Pacific Asia Resource Center) 28 Temple Road, Jaffna, Sri Lanka phone: +94 21 222 7897 mobile: +94 776 571995 Gave 2003 FAO report on fisheries sector, very helpful 5.7.05 RZ Potential consultant but already 100% job. July05 RZ 5.7.05 RZ 27.7.05 RZ Short summary FAO and Norway = lead agencies in tsunami-related fisheries sector reconstruction. Does not yet have statistics on fisheries sector reconstruction, i.e. on replacement of gear as yet, will have more info mid-August. Visited 5.7.05 RZ Phoned 27.7.05 RZ

ARE DOING POST-TSUNAMI ANALYSIS OF SL FISHERIES. BUT REPORT NOT COMPLETED YET.

10.06.05 RZ

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MR. CHANDRASOMA, ADB

Sent e-mail to ask for secondary data, but never got reply.

10.06.05 RZ

VIDYA PERERA, NORAD

2469611/up to 4

No contact person in Trinco, persons in charge on holiday.

July 05 RZ

MICKEY, ICRC, TRINCO

Gave overview of Trinco district and politico-ethnic situation. See notes. People in LTTE ctrl areas are far worse off than in cleared areas. People in Kuchchaveli are better off.

18.7.05 RZ 19.7.05 RZ 19.7.05 RZ

WALTER KELLER, GTZ

Gave macro overview political and administrative situation, what GTZ and other agencies are doing, advise on who to meet, passed pro doc on to Chief Secretary of NEPC. Very supportive.

MR. CROOS, GTZ

Gave many helpful contacts and infos. See notes. Very supportive.

MR. JASON, GTZ

Gave many helpful contacts and infos and put RZ onto Trinco coordination e-mail list. Very supportive.

19.7.05 RZ

DIRK STEINWALD, GTZ MF IN CLB

0777881727

FS person within GTZ - synergies for training need of financial officers?

DR. VOLKER STEIGERWALT

Rural Banking Initiative project synergies for training need of financial officers?

MR. RAJANATHAN, SEWA LANKA

026 2227058 0777266804

Informed about SL activities and fisheries sector. SLF has MF and SBC training. Otherwise not much info for our purpose.

19.7.05 RZ

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MR. NALLARAJAH, NECCDEP

026 2225336/7 0776700982

Explained what they are doing and referred me to Mr. Rizvi. Info on Fish sector. Very helpful.

19.7.05 RZ

MR. CROOS, NECCDEP

Was in CLB at the time of our visit in Trinco. But supportive.

19.7.05 RZ

MR. RIZVI, BDC, (SEEDS, ADB)

026 2225391, bdctrinco@sltnet.lk Levan Tchatchua, OXFAM 026 2222700, 2227727, 0773187260

Have demand from Cargills/Food City for Maldive fish, Cargills will send truck. Will do the marketing. Link to ITI for tech. Womens umbrella organisation through fisheries soc. Has a lot of ideas, contacts and knowledge of the fish sector. Partner to look into. Very helpful. Explained 50/50% loan scheme that is now standard for fish soc aid. Fish prices very high. Dutch NGO flooded mkt with canoes, price dropped from R. 40000 to 15000. Lots of illegal nets used. Kinniya less need for assistance. Muthur and Echilampathai need more.

19.7.05 RZ

Susanne and Tom, SDC, Trinco Susanne mob 077 318 53 86 Tom Mob 077 317 08 24 026 222 5956 8 Consortium of NGOs, 57, Post office rd. Mr. Thawasilingham, Chairman and dept chief sec infrastr. NEPC Mr. R.M.J. Jhongarajah Ms. S. Thambipillai 026 222 74 88

Explained what SDC is doing implementing GK housing/cash grant project on behalf of SRC. Cleared and uncleared areas. No coordination between SDC and SRC. Says 77% of affected are M, 19% T, 4% S.

Stressed the importance for local NGOs to register with Consortium.

20.7.05 RZ

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Mr. Kalaichelvan District officer 026 222 32 71 0777 204957

Explained role of Consortium of NGOs (local NGOs) and CHA (INGOs)

20.7.05 RZ

Mr. Chopadithya ITDG Sri Lanka Mr. T. Rizvi Business Development Centre Trincomalee

Technology and methods of preparation of lasted and dried fish. Requirements and successful projects Projects currently under taken, possibilities of assisting the project, Socio-statistical data on fishermen. Effects of the tsunami. Working in Trincomalee Specific Indications. 20-Jul-05 KT

28-Jul-05 KT

Other individual sources of information Name Steeve Creech, Sewa Lanka Foundation 2861013 oddfish@slt.lk Nireka Weeratunge, Consultant 0773154479 nireka@eureka.lk Mr. Leslie Joseph, Consultant Potential consultant, but busy.
June RZ

Short summary Says there is good potential to sell dry fish. Advises to start project buy action research and assess feasibility of production plant whilst working with the selfemployed people. Gave contacts of resource people. (see e-mail).

Visited 08.6.05 RZ

Phoned

11.7.05 RZ

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Partner organisation and beneficiaries Name STMRWN Short summary Visited Phoned

Visited to clarify questions regarding the organisational set-up the credit scheme 18.7.05 and the project implementation. TP

KT = Kapila Tissera (Consultant), TP = Trevor Papalie (SCSL) RZ = Ruth Zueblin (SCSL)

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