VALUE-ADDED PRODUCTS EXPORTS

IN THE PHILIPPINES
BY

MURIEL B. CAMU
Senior Fishing Regulations Officer
Department of Agriculture
Bureau of Fisheries and Aquatic Resources

BACKGROUND:

Tuna is a high value food material that are exported as fresh/frozen, canned, dried and smoked
and value-added products. In the Philippines, this is the only food product export that has
been considered as industrial products in terms of tariff by the GATT-WTO; although fish is
classified as an agricultural product.

Tuna has been the major export products of the Philippines. It ranks as the first export product
for the past five (5) years. It is considered to be a budget food and only in certain niche markets
are customers willing to pay more for tuna that is presented as a premium product.

INFOFISH Industry Notes reported that a recent survey conducted by New York company
Harris Interactive; nearly half of seafood consumers in US are eating more seafood than they
consumed five years ago. The result showed that about two-thirds of the respondents eat
seafood because it is a better alternative and more healthier than beef and chicken and canned
tuna ranks the second choice. According to researches, the omega-3 fatty acids in tuna can
protect against cardio-vascular problem.

This report examines the stimulating interest of the tuna processors and exporters to diversified
and produce a broader range of value added products from tuna not only for export but also for
domestic distribution.

PHILIPPINE TUNA SITUATIONER:

The changing lifestyle and increasing consciousness and demand for nutritional and quality
canned tuna has brought the need to introduce new and improved canned tuna products; that are
“ready to eat”. In the late sixties, three out of the six big canneries in the Philippines have
invested in diversifying canned tuna products to broaden market appeal for domestic
distribution. Most of their canned tuna products have been developed from recipes with
influenced of Spanish and Chinese cuisine; which are traditionally cooked from animal meat.
According to the Department of Trade report, tuna value added products is now emerging as an
export earner, generating US$11.5M in 2004. Tuna value added ventures are developing into
another industry in General Santos City, the tuna capital of the country. At least twenty three
(23) SME’s are engage in the processing of tuna value-added product in different forms such as
chorizo, longaniza, patties, spring rolls, kikiam, sausage, embotido, siomai, nuggets, spring rolls,
and barbecue in stick. The list will go on increasing as new products will be introduced to
growing health conscious consumers. Eight of these SME’s have been exporting too Hongkong,
Korea, Japan and USA.

PRODUCTION:

Tuna production are derived from marine municipal and commercial catch derived from
Philippine flagged purse seine vessels and tuna long liners, which consist of major species such
as Yellow fin tuna (Thunnus albacares), Big-eye tuna (Thunnus obesus) Albacore (Thunnus
alaluga) and Skipjack (Katsouwonus pelamis). . The catch of tuna have been sporadic from year
to year. Table 1 shows the species harvested/caught by commercial fishing vessel from 2000 to
2004 based on the data gathered by the Bureau of Agricultural Statistics (BAS).

Local catch are utilized commercially by tuna canners, exporters of fresh/chilled for “sashimi”
market and processors of fresh frozen value-added products for export as well as domestic
distribution. Fresh tuna as main raw materials for canning are available locally, if supply is
insufficient importation of frozen tuna (canning grade) can be made to augment the production
for the eight (8) existing big tuna canneries. Frigate tuna can also be utilized as raw materials
for canning. Table 2 shows the volume of tuna import; which are mostly frozen in round
skipjack and yellow fin tuna.

Table 1. Tuna Production by species

Year Yellow-fin Albacore Skipjack tuna Frigate tuna Total Volume
& Big-eye tuna (MT)
2000 67,342.00 85,359.00 108,494.00 261,195.00
2001 96,450.00 112,238.00 115,905.00 324,593.00
2002 99,794.00 83,385.00 163,132.00 346,311.00
2003 127,240.00 114,077.00 179,086.00 420,403.00
2004 130,075.09 115,738.69 208,107.79 453,921.57
From: Philippine Fisheries Profile, 2000 to 2004

Table 2. Tuna Import in terms of Volume & Value

Year Volume (MT) Value (US$ 000)

2000 34,481 17,342
2001 19,126 8,552
2002 31,650 17,462
2003 51,940 31,055
2004 21,263 11,204
From: Philippine Fisheries Profile, 2000 to 2004
PERFORMANCE:

Table 3 shows that tuna export are classified into fresh/chilled/frozen, canned, and smoked
dried. Based on the data, the volume of fresh/chilled/frozen has been declining from 2001 to
2004 as compared to canned tuna, which have been increasing since 2002 to 2004.

Eight large multi-national corporations located in General Santos and Zamboanga City
comprises the canned tuna industry in the Philippines. About 38% of the Philippines canned
tuna are exported to US; the largest single market for canned tuna; followed by the European
Union with a market share of 15%. The recent slow down of global demand for tuna products
has resulted to currently cutting to 50% their production capacity of 13 M cases.

Tuna in pouches accounts for 6% of the US market recently. A growth on this market is
expected as the market moves towards tuna in pouches, especially for institutional and food
service. Three out the seven big canneries are now inching slowly for a share of the market
using “Private Brand” label to US and Europe.

Chinese market showed that tuna export has recorded a highest growth in 2004. Canned and
fresh/frozen tuna accounted for US$2.64M as compared to US$ 1.97M in 2003. Canned tuna
was up by 16% amounting to US$2.2M, while fresh/frozen was six times higher in 2004
amounting to US$443,127 as compared to US$67,500 in 2003.

Cooked frozen tuna loins are exported to Spain, Japan, Genoa, Libya and Israel for further
processing into premium canned tuna product.

Sashimi grade fresh and frozen tuna are usually exported for Japan and US market, while others
are further processed into a variety of frozen tuna products marketed throughout the world. The
products include fresh/chilled or frozen loins, fillets, blocks, slices, cubes and ground meat.

Smoked/dried tuna loins known as “katsuobushi” is a popular Japan tuna product made from
skipjack. There are five processors of this product exporting to Japan and Taiwan.

Table 3. Tuna Export in terms of Volume & Value

Year Fresh/Chilled Canned Smoked/Dried Total Total Value

Frozen Volume (000 US$)
Volume Value Volume Value Volume Value MT)
(MT) (000 $) (MT) (000 $) (MT) (000 $)
2000 43,060 61,896 36,458 64,492 590 1,921 80,108 128,309
2001 22,072 47,476 33,909 68,803 771 2,278 56,752 118,557
2002 23,621 50,648 47,970 93,173 705 1,335 72,296 145,156
2003 27,949 44,702 56,854 111,752 228 484 85,031 156,938
2004 24,319 40,941 53,873 114,056 137 337 78,329 155,334
From: Philippine Fisheries Profile, 2000 to 2004
In the Philippines, domestic market is the biggest consumer of canned tuna products. The market
has been saturated with different brand of “ready to eat “canned tuna variance, which are now
acceptable to the delight of consumers.

INNOVATIONS IN CANNED PRODUCTS:

Recently, three of the large canning factories began to diversify their product lines by selling
canned tuna products aimed at value conscious consumers. These are presented in different
“ready to eat” variance to name a few “Tuna Afritada, “Tuna Menudo”, Tuna Caldereta”, “Tuna
Adobo”, “Hot & Spicy”.

Canned tuna sausage and tuna loaf have been developed and manufactured by Asia Pacific Tuna
Canning Corporation. These products are certified “Halal” now exported in Hongkong, Canada,
and US intended for Filipino community. Since the company have been certified “Halal” the
company has been successful in targeting the market in the United Arab Emirates.

Cooked frozen whole loins maybe processed from larger size frozen yellow fin and skipjack
tuna as raw materials for canning. They are vacuum packed in ten

Tuna in pouches accounts for 6% of the US market recently and will be expected to grow in the
future because of cost efficiency and environmental standards. The product is practically the
same as canned tuna referred to “tuna in airtight container except it is packed differently.

Pet food products that are tuna based are popular in most major markets made from dark
muscles or blood meat which, account for about 12% by-products from canning processes. The
dark tuna muscle is the main ingredient that give flavour to tuna based pet food. One big
canning plant is producing pet foods in different formula for Canada and US market.

TUNA SPECIALTY MARKETS:

The sashimi and sushi markets make up the bulk of the market for prime quality fresh/chilled
yellow-fin and big-eye tuna locally landed by long liners Freshness and quality handling are
critical to obtain the highest price. Swift killing and proper bleeding after taken on board is
important followed by rapid chilling.

Value-adding are made by presented the tuna product in a variety of forms through the processes
of loining, trimming, slicing and other by-products from yellow-fin and big-eye tuna; chilled of
frozen and vacuum-packed.

Loins are derived from the four quarters of the body of yellow-fin and big-eye tuna, trimmed of
bones and blood meat; others are cut into blocks of 300-400 mm in length.

“Saku” are meat blocks made from yellow fin and big-eye tuna.

Slices are thin slice of meat are cut across the grain of the muscle to produce sashimi for
consumers pack
Poke tuna are sliced tuna meat cut crosswise ready for mix with seasonings; which includes
vegetables, green onions, salt and other spices or maybe cooked into other recipes.

Cubes meat cubes slices of tuna meat “ready to cooked” in different recipes using tuna instead of
animal meat intended for consumers.

Ground meat is also another tuna product that can cater consumers as “ready to cooked”
products.

Tuna gonads are by-products during gutting of yellow-fin and big-eye tuna. Japanese market
requires big volumes of this product. However, the supply is not enough since this tuna by-
product is very popular in restaurant catering broiled tuna products such as tuna belly, collar
bone, liver and tail bone.

DEVELOPED TUNA PRODUCT :

A variety of meat analog products promote tuna’s resemblance to meat. Reconstituted tuna
products are comparable to meat analog products in both appearance and taste and more
nutritious than meat. Many of the value-added tuna products have been developed from tuna
trimmings are now widely distributed locally. Export market is limited to countries with
Filipino communities such as Hongkong, Singapore, United Arab Emirates, USA and Australia.

Tuna Minced Products are variety of meat analogs using tuna meat instead of animal meat,
developed in different “ready to cooked” tuna products. These are the more popular products
sold in supermarkets:

1. Tuna Sausages are made from tuna meat trimmings mixed with cornstarch or soy protein,
soya oil, egg white, fresh garlic and onions, sugar, salt, phosphate, curing salt and other spices.
There are at least two SME’s which have been successful in manufacturing this tuna products in
frozen form and one big tuna canners has been successful in targeting the Muslim communities
in the Philippines

2. Tuna Loafs/Embotido are made from tuna minced meat mixed with vegetable oil, raisins,
eggs, cheese, fresh onions, green bell pepper and carrots, salt, sugar and black pepper. Packed
with casing and plastic cling with complete nutritional facts and suggested cooking instructions.

3. Tuna Longganisa/ Chorizo are made from tuna meat vegetable oil, soy sauce, water, salt,
black pepper, sugar and phosphate; packed singly in casing. The product is vacuum packed with
net weight of 400 g. consisting of pieces with complete nutritional facts and suggested cooking
instructions.

4. Tuna Burger Patties are made from trimmings during loining and steaking process grounded
with mixed with binding ingredients such as starch, onion, salt, sugar, spices and seasoning.

5. Tuna Tocino are made from thin slices of tuna meat marinated with soy sauce, pineapple
juice with salt, garlic, black pepper and phosphate.
6. Tuna Dumpling or popularly known as “siomai”, a Chinese product made from minced tuna
meat mixed with vegetables, spices binding ingredients and other seasoning, wrapped in
specialized dumpling casing.

CHALLENGES FOR TUNA VALUE ADDED:

Value is added by careful selection and handling of raw materials, assurance of reliable supply,
packing and presentation, careful transportation and prompt delivery. There are many
opportunities for future product development. However, there are some significant issues and
constraints that must be addressed before new product/market diversification can be further
explored.

 High tariff - The approved final version of the US Trade Bill “Andean Trade Preference
Expansion Act “ (ATPEA) allows a duty-free entry of tuna in pouches from Andean
countries. Although RP official welcome the revised version, the Philippine tuna
industry believe that 0% tariffs for tuna in pouches will place the industry at a
disadvantage for an equivalent product packed differently. The bill also changed the
basis for calculating the Philippine quota from 20% of US domestic production to 4.8%
of US domestic.

 Implementation of HACCP, traceability and SPS Agreement - Major importing countries

have adopted new legislation for fishery products with new requirements for domestic as
well as foreign markets. The responsibility for the safety of fish products is now placed
on the producer/processors of the products. Producers should have a HACCP plan in
place to enable them to export to the major importing countries. The requirements
becomes a competitive parameter for the trade of value-added tuna products.

 Quality criteria and requirements should be identified for these value added products at
the national level.

 Development of domestic market through information to consumer thru advertisement

and promotion. To encourage the promotion of these products credit should be extended
particularly to small-scale entrepreneurs.

 There is a need for additional financing for working capital and new investment in
human resources and equipment. Credit and investment requirements should be
identified for small/medium-scale production.

RECOMMENDATION FOR FUTURE ACTIONS:

 The government and industry to promote new products development, to introduce new
products and encourage increased consumer’s awareness and demand.
 Government should provide appropriate infrastructure such as fish landing, handling and
marketing facilities with good road connections, reliable supply of electricity and safe
water.

 Credit programs should be economically and financially viable for small and medium
entrepreneurs.

 The government should establish a national quality criteria and standard for each of the
value-added products, and

 Training of the industry on food safety for value added products focus on Good
Manufacturing Practices (GMP), Standard Sanitation and Operating procedures (SSOP)
and the principles of Hazard Analysis Critical Control Point (HACCP) and traceability
and the SPS Agreement of the WTO.