Pioneer Food Cannery on Ghana Protein and Matters Arising

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STATEMENT ISSUED AND READ BY PIONEER FOOD CANNERY (PFC) LIMITED TO THE PRESS ON THURSDAY, 21ST JUNE, 2012 AT THE INTERNATIONAL PRESS CENTRE, ACCRA AT 10.00 AM IN RESPONSE TO THE GHANA PROTEIN COMPANY LIMITED MEDIA CAMPAIGN AND MATTERS ARISING BY NANA YAW AMAKA-OTCHERE, AG. HEAD OF HUMAN RESOURCES, PFC

 

INTRODUCTION

 

Good morning, distinguished guests, ladies and gentlemen of the media.

 

We have invited you all this morning to address some issues that have been affecting our company, Pioneer Food Cannery (PFC) Limited, Ghana?s largest tuna processor and exporter over the last two years.

 

We will tell you about the issues between PFC and Ghana Protein in the media as well as by some selected Non-Governmental Organizations (NGOs), namely Ghana Environmental Watch and Advocacy (GEWA) Organization and Corporate Social Responsibility Movement (CSRM).

 

HISTORY AND BACKGROUND

 

Pioneer Food Cannery (PFC) Limited, producers of StarKist Tuna, John West, Petit Navire and other quality Tuna Products is the Ghanaian affiliate of MWBrands (Marine World Brands) are currently under the Thai Union Frozen Products (TUF) PCL.

 

MWBrands, formerly owned by Lehman Brothers Merchant Banking, took over the ownership of Heinz European Seafood Business, a core division of the H.J. Heinz Company.

 

The Thai Union Frozen (TUF) acquired 100% of MWBrands holding company that is controlling the plants, the tuna fishing company in Ghana and the commercial business units across Europe. This transaction has allowed TUF and MWBrands to become the largest seafood producer in the world (outside Japan) with a global tuna processing yearly capacity in excess of 500,000 tons of whole round fish; as well as a truly global and vertically integrated seafood player with sales, production, and leading brands across Asia, the US, and Europe.

 

Furthermore, this acquisition triggered a new era of success stories against the day-to-day challenges of enhanced competitiveness, new territories developments, process technology improvement and accelerated product innovation.

 

The other seafood producing facilities of Marine World Brands (MWBrands) are located in the Mahe Island, Seychelles, with approximately 2,400 employees, and Peniche in Portugal, with 500 workers.

 

The company also has facilities in Douanenez, France with 325 employees; Liverpool with 57; Paris, 70; and Milan, 7. Together, they provide administrative support and make up the about 5,000 strong employees of the entire MWBrands seafood business sites.

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ABOUT PIONEER FOOD CANNERY (PFC) LIMITED

 

Pioneer Food Cannery (PFC), formerly owned by Mankoadze Fisheries and its partners, StarKist, became a wholly-owned H.J. Heinz Company in 1994 to primarily engage in tuna processing and canning for export.

 

Following the expansion and subsequent foreign direct investment (FDI) of over 10 million US dollars in expansion, training and modernization of the production plant, the capacity rose from 50 metric tons per day with 500 employees in 1994 to 160 per day in 1996 and currently capable to process 240 tons per day. Our new target is to grow PFC to 300 tons by 2014.

 

PFC is considered to be the largest and most efficient agro-processor in the fisheries sub-sector, and by adding value to 95% of landed tuna in Ghana, offers direct employment to more than 1,800 Ghanaians with a 5-fold economic multiplier effect.

 

PFC ranks as one of the biggest single contributors to Ghana?s non-traditional exports, and is a leading supplier of top quality branded canned tuna as John West, Tesco, LIDL, REWE, Petit Navire, Mareblu, Royal Pacific to the EU and Star-Kist to the ECOWAS markets.

 

PFC has undertaken renovation and refurbishment of its processing floor at a cost of US$3 million to offer better and more employee-friendly working conditions at the factory.

 

The company has also completed installing a new fish meal plant (the bane of our current woes) representing a further US$3.2 million foreign direct investment (FDI) from our principals to produce for local markets; with an additional US$3.5 million for a state-of-the-art Water Treatment Plant, currently under construction on our premises to further enhance our full compliance with Environmental Protection Agency (EPA) requirements.

 

PFC has again introduced two new products, the Omega Oil which contains the daily requirement in a can and the NO DRAIN, which has no oil or brine and could be eaten anywhere.

 

We are currently collaborating with Ocean Products Ghana (OPG) Limited, through co-location to process the Tuna Heads to obtain Fish Oil at the beginning of PFC operations, cutting the head of the tuna fish off prior to pre-cooking.

 

It cannot be over-emphasized the main commercial use of fish oil is as a human dietary supplement, Omega-rich oils (Omega-3, Omega-5, etc.), Vitamins, etc. and employed in treating a wide range health related conditions.

 

This undertaking, as intended by PFC, is a value-addition project like the Fish Meal Plant project. This will create new jobs and give young Ghanaians an opportunity.

 

PFC faces great competition from other countries in Asia (Thailand, Philippines, Papua New Guinea to name a few) and South America (Ecuador, Peru, Venezuela to name a few), and the rising cost of raw materials and operating input, which cannot be easily matched consistently with an increase in the price of the final product. Remaining competitive requires such prudent measures as the fish oil project and fish meal project for economic maximization of the raw materials.

 

For the knowledge of the press, today?s tuna fish price is approximately four (4) times what it used to be in Ghana eight (8) years ago.

 

This would allow PFC and its partners to fully maximize its valorization of by-products, achieving its acclaimed vertical integration of the factory, under the ?One Company, One Chain? concept.

 

It is important therefore, ladies and gentlemen, to indicate that once fish oil is extracted from the tuna heads, the remainder of the heads is sent to the Fish Meal Plant to be processed into animal feed, thus this project would not affect in any way, the maximum production of animal feed for Ghana.

 

Again, the quality of PFC?s finished product is supported by accreditations / certifications and the high-level sustainability of the commitment of the company to the protection of the marine and environmental resources. Thus, we are ISO 14001 (Environmental), ISO 9000 (Quality) and ISO 22000 (Food Safety & HACCP) Certified; and also BRC (UK) and IFS (rest of Europe) Certified, facilitating all of our exports to European Union markets.

 

Ladies and gentlemen of the media, we have been investing and will continue to invest an average of US$7-8 million per year on our expansion and compliance strategy, and are proud to combine our Ghanaian heritage with global competitiveness.

 

Voted Best Tuna Processing Plant for 2010 & 2011, PFC only last week recruited 200 young, able workers to add to the already 1,600-strong workforce to meet our strategic growth. The 200 were chosen from an enthusiastic crowd of over 500 unemployed youth, who responded to the invitation.

This recruitment drive follows PFC?s on-going growth strategy and plans to meet ever-growing demands for the high quality products made by PFC under its strong brands in the UK, France and the Netherlands.

PFC currently produces approximately 50,000 tons of raw tuna fish per year with the strong expectation of increasing it to 55,000 tons by 2014, thereby creating another 400-500 jobs in Tema. This is a true commitment made to the Government of Ghana and also the Ghana Free Zone Board. We are here to stay and are proud in saying this!

IMPORTANT

 

Now, distinguished ladies and gentlemen of the media, to bring this subject closer to your own areas of operations before we discuss the other matter of this Press Conference: what would have happened to the expansion programme of Daily Graphic, if the previous recipients of the off-cuts from its newspaper production had decided to undertake the same kind of scurrilous campaign the PFC has been subjected to for the only reason that Daily Graphic had taken the decision to add value to its chain supply (by operating its own packaging business) thereby ceasing the supply of the off-cuts to the market?. Could the off-cuts recipients seriously have called on the National Media Commission (NMC) to halt the purely commercial (and prudent) steps of Daily Graphic? It is a similar absurd situation we are dealing with.

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A similar example in the electronic media would be attempts by established companies in event conceptualization and management to secure the help of the Ministry of Information or the NMC to prevent radio and television companies from encroaching on their ?holy ground? (by doing their own events management). Would the media companies not answer any such campaign with ?it is a free market and our economic right??

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And by the way, which company would build its structure SOLELY on the capacity of another to supply it with all or part of its raw materials without any signed agreements to secure its operations but choose to treat it as negotiating for armistice after a war so can take eternity to conclude negotiations before executing the agreement? That this agreement would not even have been concluded before the very start of its operations at the registration of the company stage to ensure the supply of same? And that it did not even include this supplier in the evolution of the business plan stage, not know the future plans of this supplier and believe time for everybody else should stand still till it was ready before concluding and signing an agreement? Wanting somebody else to pay for its bad business sense and management? Is this what the whole matter that we are faced with all about? Indeed, is it about paying for somebody else?s mismanagement and lack of prudent, forward-thinking and planning business sense?

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Sincerely, we need to take business seriously in this country because it is not like playing ampe or draughts or hide-and-seek. This is the new world and ?old school? thinking has to be discouraged?this is the new Ghana!

 

THE MATTER OF GHANA PROTEIN COMPANY

 

Distinguished ladies and gentlemen of the media, over the past two years or more, PFC has been subjected to all kinds of persecutions for daring to think outside the box; and desiring to fully maximize its valorization of its by-products, in order to achieve its acclaimed vertical integration of the factory, under the ?One Company, One Chain? concept like any other company in Ghana: and there are so many examples to wit.

 

Let it be known that PFC by a letter dated 1st June, 2004 served notice on the Ghana Free Zones Board of its intent to establish its own Fish Meal Plant (long before Ghana Protein commenced production in 2008 according to one of its letters to the MOFA), knowing that at its most efficient and effective point of operation it could operate an almost zero-waste fish processing company with all the various and different add-ons.

 

As its sister company in Seychelles, has successfully done, PFC aims to grow into various areas of the same business as part of its ?One Company, One Chain? concept. What could be so wrong about that in a modern, democratic and free-market economy to attract such intense, extensive ill-motivated and behind-the-times harassment by a company which would rather have no competition at all in its chosen area of commerce?

 

We have been quiet to-date, not because we had done anything wrong but because we needed to stay focused on our core businesses and to pursue our clear corporate objectives; not to be distracted by any distractive acts of a company seeking a modern-day monopoly. We have to work hard to keep our doors open as we have many family lives we are taking care of.

 

  1. For the records, when Ghana Protein Limited?s decision to invest in Ghana, register a company, acquire its land and later build its fish meal plant ?was made without any prior consultations with (or the acquiescence of) PFC.
  2. What is also certain and confirmable is that Ghana Protein?s feasibility study and business plan were undertaken before its project construction started without ever involving our company, PFC as a (sole) supplier of fish offals as raw materials for their production processes.
  3. It was some years after commencing business that Ghana Protein approached our company, PFC and made an offer to buy supplies of some fish offals for their plant; this is after failing to run their plant for a long period of time as they were having problems securing any raw materials from the open market.

 

In one of its own letters to the Minister of Food and Agriculture (MOFA) last year, Ghana Protein stated inter alia that: ?…the plant is currently processing only at 43 tons per day instead of the 360 tons installed capacity. This is because since completion of the plant, we have been unable to secure the necessary raw materials from ALL the sources we were assured of EXCEPT Pioneer Food Cannery Ltd (PFC) which is supplying us with part (average 40%) of their waste.?

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They also state in the same letter that ?…again the plant at Ghana Protein took into account the TOTAL FISH WASTE generated in Ghana currently and possible future expansion…..?, so where and when did it suddenly become the case that PFC is engineering the demise of another company by its strategic decision to build for itself its own Fish Meal Plant as a genuine part of its vertical integration growth strategy? They indicate in another letter to MOFA that apart from PFC, the ?remaining canneries are not co-operating with us?, and admit that the ?issue is not about the lack of raw materials in the country?. Can we ask WHY? WHY? Why they have not been able to work with Myroc Foods, another tuna processor, for example? WHY?

 

Again, just for the purposes of greater appreciation of what we are dealing with, permit us to quote once again from this same letter: ?…if the authorities supervise the collapse of Ghana Protein?s 360 ton fish meal plant in favour of a 120 ton fish meal plant the country will lose all the synergies it may have derived through this technology transfer.??

 

Just for the sake of argument, even if PFC decides to give up its dream of the Fish Meal and give Ghana Protein all its ?fish wastes?, it is only a third of its capacity and what happens to the two-thirds shortfall and how many companies can still survive on 30% capacity operation other than create greater redundancy through under-capacity in the long run, with resulting high unit costs to compensate for the unused, under-utilised 70% capacity?

 

If 70% under-utilisation cannot lead to the demise of the company, how on earth can only the 30% lead to the irrational fear of an economic earthquake that has brought us all here today? If you ask me, if PFC was directly targeting Ghana Protein, we would have gone after the 70% business instead, and consider the 30% secondary or collateral.

 

Ladies and gentlemen of the media, whilst Ghana Protein is entreating all of us that as ?the only fish meal plant operating in the country at the moment (they) must not be allowed to collapse when raw materials are in ABUNDANCE? in another letter to MOFA, they prefer to subject another company pursuing legitimate business to intimidation and guerrilla-style media harassment to what end? They need to do what PFC does best ?source your raw material irrespective of competition in your face; strive harder to stay in business. Competition will continue to exist and we must accept that only fair competition that will drive good performances for the benefit of our customers.

 

  1. Back to the facts: Ghana Protein?s offer to purchase fish offals was not accepted immediately as PFC at that time had other Ghanaian customers, including indigenous clients operating as a cooperative trading with PFC.

 

  1. After much debate over prices, price adjustments, logistical details and ways of working, PFC commenced supplies to Ghana Protein in September 2007 with a proportion of its total offals, whilst continuing with its other customers.

 

  1. It must be said that there has been no official commercial contract signed between PFC and Ghana Protein to date except for a Letter of Intent used to facilitate this transaction from the very beginning ( and which was never intended to be binding).

 

As a parallel to this situation, have the readers of your esteemed newspapers ever decided for you the cover prices of your newspapers? When did advertisers determine for all media houses the costs / fees for advert spaces or spots for jingles or TV commercials? When did consumers fix the prices for the products and services they purchase? That absurd position is exactly what Ghana Protein sought to be in, by using the excuse of PFC?s pricing not to enter into a legal contract with PFC?

 

And just like all media houses contemplating a price review of cover prices or advert space, we have used legitimate and reasonable notices to deal with Ghana Protein in all business dealings. In the many instances PFC has gone a further yard. So once again, where did PFC go wrong to justify this fixation and persecutions?

 

  1. PFC has under many repeated notifications, informed Ghana Protein that once there is no obligation on volume agreement in the absence of an official contract, our company continued to exercise its independence of any limitations from their operations.

 

  1. Thus, PFC currently still services another indigenous Ghanaian company with a substantial proportion of its factory offals under fair trading competition practices.

 

  1. It must be emphasized also that PFC has, for many years now, been informing its partners and stakeholders, including Ghana Protein, the Ghana Free Zone Board, Fisheries Commission and the Ministries of Food and Agriculture (MOFA) and Trade and Industries (MOTI), of its intention of either buying an already existing fish meal production facility and / or building its own milling facility as part of its integrated expansion plans.

 

  1. The business decision by PFC to still continue with its plans of securing its own milling plant was again reiterated in a meeting held at MOFA under the auspices of the Honourable Deputy Minister for Fisheries for the two parties, namely PFC and Ghana Protein and in the presence of the Chairman of Fisheries Commission.

 

In fact, this is only but one of the arbitration attempts by various well-meaning stakeholders, including the Environmental Protection Agency (EPA) to address issues of purely business-to-business relationship between two independent investors and business entities.

 

  1. For a better appreciation of these issues by Ghanaians, it must be stated in unequivocal terms that, the decision by PFC to build its own milling plant was partly a question of regulatory compliance aimed at not only having the full control of its offal movements around the country, but also fulfilling its corporate responsibility on the environmental commitments made to the Environmental Protection Agency (EPA) and the Tema Metropolitan Assembly (TMA).

 

Please note that many adverse documentaries have been aired on the very same topic for the past years, without the mention of any third PFC competing parties. These were indirect acts being used to perpetuate PFC to surrender its fish offals totally to the very same company. We have been strong and never succumb to such miseries?persecutions?harassments?our case was purely professional and business-driven.

 

What we have thus sought to do with our newspaper cuttings displayed outside this hall is to showcase the concerted and calculated campaign of persecution and reputation-damage adopted by Ghana Protein as a business strategy.

 

  1. It is also a matter of public record that PFC was taken to court by an NGO ? Corporate Social Responsibility Movement (CSRM), which explicitly declared its offices as a ?mitigating platform? on behalf of the MOFA for the matter of impressing upon PFC to abandon its Fish Meal Plant in favour of supplying all its ?waste? to Ghana Protein, and further unsuccessfully filed to place an injunction on the PFC fish meal plant project. This was to compel PFC not to continue with its normal business of building for itself a milling plant.

 

Instead of its set environmental advocacy, the Corporate Social Responsibility Movement (CSRM) in its widely circulated letter of 12th October, 2011 to the Environmental Protection Agency (EPA) stated inter alia that: ?The proposed development of the (PFC) fish meal will therefore deny these investors (i.e. Magydom Enterprise and Ghana Protein) of their basic raw materials and force them to fold out. Since the two companies employ far more than the 36 additional hands PFC intends employing for the fish meal plant, the situation will add to the already employment challenge Ghana faces?, guess that is their advocacy.

 

The CSRM goes further to insult everybody?s intelligence as to their environmental advocacy that: ?CSRM being an organisation that champions responsible corporate citizenship propose as follows: (1) EPA immediately take steps to halt all activities in relation to the proposed fish Offal Recycling plant on-going at PFC; and (2) An inter-sectoral meeting to address the concerns of PFC in relation with their trade ties with the existing partners is convened as a matter of urgency under the auspices of the Ministries of Food and Agriculture and Trade and Industries; CSRM will be willing to facilitate such a meeting when PROVIDED WITH THE REQUISITE SUPPORT (money? ? emphasis ours).?

 

Was this what all the persecutions, harassment and intimidation that PFC has been subjected to for the past two years or more was all about?

 

Funny still, look at their conclusion: ?In conclusion, CSRM commends the efforts of PFC at diversifying and expanding their investment in Ghana (our inalienable right as any other investor in the country like Ghana Protein ? emphasis ours), but we strongly believe the intended project is detrimental to the country?s drive at attracting investors since when allowed, their activity will deny other investors the required raw materials (which they say is in abundance in Ghana ? emphasis ours) and create more serious worker health, safety and environmental challenges.?

 

  1. PFC has made it all clear during these past years that it is not the only tuna or fish production facility in operation in Ghana and, therefore, the declaration by Ghana Protein that PFC is their sole supplier is a merely ?comfort statement? and obviously ?not exhaustive?.

 

  1. PFC, as a law abiding company, has secured all the necessary pre-requisites in terms of permits to operate its milling facility and look forward to a very successful commissioning / production soon per its integrated expansion plan.

 

Distinguished ladies and gentlemen of the media, we have in consonance with our fair-trading principles served reasonable notice of half a year to Ghana Protein that we will cease supplies because of the new development of mainstreaming our own fish meal plant. We have invited them, if they so wish to avail themselves of the unique opportunity, to consider local distributorship of the PFC Fish Meal finished products. The notice served is more than fair as it is for a six (6) months period.

 

We have both agreed that it is fish waste that our non-contractual transactions have been about and there should be no confusion about that. The attempt to monopolize our supplies has not worked?I repeat NOT WORKED!

 

Prior to our formal notice of cessation of supply, we have verbally notified Ghana Protein on several occasions of our intentions to establish our own Fish Meal Plant.

 

At no point in time have we made a promise of perpetual continuous and uninterrupted supply of fish waste from PFC to Ghana Protein. Even companies in a contractual relationship would (and could) not make such a promise which would make the supplier nothing but a slave of the purchaser.

 

In constructing our Fish Meal plant, we have utilized technology that is freely and easily available on the global market, for which there is no special, unique or exclusive access to any one party.

 

We have presented the candid facts of this matter to you at this Press Conference. We have put this matter in its real character as a private-business-to-business relationship. We have outlined all the fair and reasonable steps taken (including prior notice given to Ghana Protein).

 

Last but not least and essentially important going forward – if Ghana Protein continues to make unfounded allegations in the media which are neither justifiable in commerce nor law, we take this opportunity to remind them again that any libel or negative communication which has an adverse effect on our company shall be taken very seriously and treated with its utmost legal attention.

 

Thank you for your attention and God bless our homeland Ghana and make our nation great and strong.

 

PFC GENERAL MANAGER

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