Maldives Industrial Fisheries (MIFCO), on Tuesday, has attributed its financial difficulties to low prices of frozen fish in the global market.
The Managing Director of MIFCO, Adhly Ismail spoke to local media outlet Mihaaru and revealed that two-thirds of the company's exports consist of frozen fish which consistently sold for low prices over the last five years.
According to Adhly, it is not possible to purchase frozen fish from local fishermen at reasonable rates and export it at a market price of USD 1,500 per tonne without making a loss.
Adhly noted that the price of frozen fish has plummeted below USD 900 in the past five years whilst the highest price recorded in the period, USD1,800, only lasted for a short period of time.
Adhly proposed that the only way to solve the financial problems of the fisheries company was to ensure that a maximum proportion of exports were value-added goods.
While one-third of exports consist of value added products, Adhly stated that MIFCO will have the capacity to produce 50 tonnes of such products per day in a period of eight months. This burden is to be shared among fish canning factories in Koodoo and Addu.
The Managing Director also stated that cash flow disruption was the main difficulty in increasing the production and export of value added products.
Adhly further explained that payments for these goods are only received after they are shipped, although the order may be placed three months in advance. The company therefore, struggles to fund the production of value added goods. In contrast, shipments of frozen fish may even be paid for in advance.
MIFCO's statements have been made in the wake of the Finance Ministry's decision to allocate MVR25 million to the company as financial aid. This sum is a part of a larger loan which amounts to MVR50 million.
The government has spent MVR140 million as financial aid to the debt laden fisheries company since 2013.