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Vol. XXVIII No. 10, September 1-15, 2018

Need to make deep sea fishing acceptable

by A Special Correspondent

It has taken over forty years to take concrete steps towards resolving the fishing rights dispute between Tamil Nadu fisherfolk and the predominantly Tamil fisherfolk of the Northern Province of Sri Lanka. Though through an exchange of letters in 1976, India and Sri Lanka agreed to stop fishing in each other’s waters, Tamil fishermen, knowing no international borders in eking out a living, have been transgressing international borders, exposing themselves to jail by Sri Lankan authorities. Over the years, hundreds of our fishermen have had to undergo jail sentences causing loss of livelihood and hardship to their families. Even as we write this, 27 fishermen have been arrested by the Sri Lankan authorities.

The deep-sea fishing project, launched by the Central government in 2017 at the repeated appeals of the State Government, has certainly offered new hope to this vexing issue. It is a bold step involving major capital subsidy to potentially 2,000 fishermen. It seeks to convert a problem into an opportunity by persuading our fisherfolk to take to more sustainable deep-sea fishing. Monies have been released in record time and much energy is in evidence in implementation.

The project is to be implemented jointly by the Central and State governments with 60 per cent capital subsidy (40 from the former and 20 from the latter) towards cost of deep-sea fishing vessels each priced at 80 lakhs. The beneficiary is required to provide 10 percent – 8 lakhs and the balance – 24 lakhs – is to be loaned by banks. The value of the project is 1,600 crores.

Conceptually, monetarily and for speed of response, the scheme cannot be faulted; but there is more to taking the horse to the water. The project has passed from the policy phase to the stage of fine engineering of its features to match ground realities. In terms of value, 1,200 crores may be a small fraction of the state budget but for removing an irritant in our relations with an important neighbour and securing the livelihood and prosperity of our fisherfolk it is of high importance. Failure cannot be afforded.

Fisherfolk till now used to trawling in shallower waters should be prepared to take on what is now a business venture – managing a 80 lakh venture, managing production, pre-processing, storage, pricing, marketing, loan servicing, worker supervision and money management. That is a big jump. While it is gratifying that technical training sessions are held at different locations, training on business aspects appears neglected and should be corrected.

The new business model is alien to the fisherfolk. They must not only get to know how to manage it but, before committing to it, know its financial implications. The beneficiary is risking 32 lakhs – 8 lakhs as his equity and 24 lakhs as borrowing to repay which he is liable. He should know what he is likely to get out of it and whether it compensates his additional effort and risk adequately. As fishing in deep waters is susceptible to monsoon on the eastern coast of peninsular India, productive voyages may be limited to a few months of the year. Allowing for this, the yield during the remaining fishing periods must be high enough to justify the investment. This should be demonstrated to the target audience. The suggestion here is that the potential beneficiary must be given a financial “one page” easy-to-understand profile – showing operating expenses per voyage, likely catch per voyage, likely money realisation for the catch, likely number of voyages in a year, the monthly EMI to be met, the sum he must set apart for repair and replacements and the surplus that would be his. He should not be allowed to leap into the unknown.

Some fear that they cannot furnish collateral security to get the bank loan. If as our enquiries show that banks will not seek any collateral other than perhaps the vessel itself, this preferential treatment should be made widely known.

It is too much to expect the fishermen to handle the sophisticated operation of monetising an existing asset, not any longer needed by him, and paying up their share of the capital cost for the deep-sea deal. When hundreds of boatmen are in the market to sell their boats, the price offered would be forced down by ruthless middlemen. Simultaneously, the pressure to conclude the new deal paying 8 lakhs would also mount. To save them from these pressures, government must undertake the responsibility, through its agencies or by privatising it, to buy-back the boats and auction them – treating the boats taken over as payment towards the beneficiary’s equity. A standard price per boat can be fixed for the buy-back allowing the fishermen the option to take any better deal outside. This procedure would make disposal easier and speed up enrolment. Waiting for hundreds of individual negotiations to fructify may delay the scheme by years.

Unlike the earlier operation, for deep-sea fishing, running a heavy vessel with cold storage etc. for several days on the seas, there are operating expenses to be incurred before getting the fruits thereof. Where is this recoverable money to come from? Such advance outgo is required voyage after voyage. A continuous rotating capital for operating expenses is as important as the capital support for the vessel. Without operating support, the high-value asset will lie idle or would be sublet to an intermediary, reducing the intended beneficiary to the status of a worker in his own vessel. Working capital is best given by the same bank that gives him the term loan for a better hold on the borrower and to offer him a single window facility. The working capital must cover the waiting period for a good price and should not cease immediately upon catch. No separate security should be demanded other than the stored catch. At present, there seems to be no arrangement for working capital. This short-coming could become a major impediment and must be rectified immediately.

(To be concluded next fortnight)

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