Small, Very Small and Very Very Small Crabs Very Large, Large, Medium, Small and Very Small Crabs

27 Figure 6 Schematic representation of supply chains for small, very small and very very small SLBSCs

a. Small, Very Small and Very Very Small Crabs

13 Producers Traders Local Distributors Crab Catch SLBSC Fishermen Local Trader Regional Trader Local Vendors Regional Trader Local Vendors Local Vendors Bycatch Stake Net SL Trawler Fishermen a Local Trader Regional Trader Local Vendors Local Vendors Regional Trader Local Vendors Local Vendors Local Vendors b Local Vendors

b. Very Large, Large, Medium, Small and Very Small Crabs

14 Producers Traders Seafood Company Importer SLBSC Fishermen Company A Importer X SLBSC Fishermen Company B Importer Y SLBSC Fishermen Company C Importer Z Indirect Supply I SLBSC Fishermen a Local Trader Company A Importer X Company B Importer Y Company C Importer Z Company D Importer U b Mini Trader Local Trader Company A Importer X Mini Trader Company B Importer Y Mini Trader Company C Importer Z Indirect Supply II SLBSC Fishermen a Local Trader Company D Importer U b Mini Trader Local Trader Company E Importer V Mini Trader Mini Trader Indirect Supply III SLBSC Fishermen FCS Company F Importer W 13 See Table 7 for definitions of small, very small and very very small SLBSC. 14 See Table 7 for definitions of very large, large, medium, small and very small SLBSC 28 126 A typical bond would is likely to be in the region of LKR 100,000.00 to LKR 150,000.00. Due to the bond, the fisherman or boat owner undertakes to sell the catch to the trader. The bond between fisherman boat owner and a local trader is life-long and may be generational. Fishermen who had been displaced due to the conflict and then returned to recommence fishing were still o ded to thei lo al t ade , despite ha i g lost all their assets during displacement. 127 No interest accrues on the bond paid by traders to fishermen boat owners. In order for a fisherman boat owner to sell his catch to another trader, the original bond must first be repaid. It was estimated that as many as 80 to 90 of fishermen are bonded to local traders in Jaffna District. 128 The personal bond between fisherman or boat owner and trader is different from seasonal loans taken by fishermen or boat owners from fish traders. Seasonal loans taken at the start of the fishing season to buy fishing gear or during the fishing season to purchase new nets or replace fishing gear damaged, lost or stolen vary from LKR 100,000.00 to up to LKR 1,000,000.00. 129 Seasonal loans are repaid by the fishermen boat owners by means of deductions made by the local t ade he pu hasi g the da s at h. LKR 20.00 to LKR 30.00 per kilo may be deducted daily from the da s at h, depending on the amount of seasonal debt outstanding. Interest is paid by fishermen and boat owners on seasonal loans taken from local traders to purchase fishing gear and other inputs. 130 The daily price per kilo for SLBSC see Grading System below is determined by the seafood companies purchasing SLBSC from the local traders. Local traders deduct between LK 10.00 to LKR 20.00 per kilo from the price set by the seafood companies as their commission, when setting the wholesale purchasing price for SLBSC from fishermen and boat owners. The commission taken by local traders is between 3 and 7 per kilo, depending on the size of the crab and the amount deducted. 131 No data or information was available describing the basis of the relationship between fishermen and boat owners who sell their catch directly to collecting centres operated by seafood companies how these companies are able to guarantee their supply of SLBSC, from the fishermen and boat owners who sell to them? Possible options include the payment of a bond between the fisherman or boat owner and the seafood company concerned and or the provision of seasonal loans. A further financial incentive may be the higher prices paid to fishermen and boat owners who sell their catch directly to seafood company collecting centres, as no deductions are made by local traders. The advantage for seafood companies of dealing directly with fishermen and boat owners is that the companies are better able to ensure the quality of the SLBSC purchased by fishermen and boat owners 132 The Supply Chain - Seafood Companies: Aplex Marine, Ceylon Foods, North Western, P N Fernando, Prawn Ceylon and Taprobane Seafood are the five principal seafood companies engaged in purchasing SLBSC, either directly from fishermen and boat owners or indirectly through local traders See Table 5 15 . Another four or five smaller companies, together with perhaps 10 to 20 individual small scale exporters, also purchase SLBSC for export, from the four districts covered by the assessment. 15 Phillips Foods Lanka was briefly part of the SLBSC supply chain, but the company ceased operations and withdrew from Sri Lanka prior to commencement of the Assessment 29 Table 5 Key Seafood Companies Purchasing, Processing and Exporting SLBSC District Supply Chain Crab Product KAL MAN KIL JAF Seafood Company Alpex Marine X X X X Local Traders Fresh Frozen Ceylon Foods X X X Local Traders Fresh Frozen North Western X X X Local Traders Fresh Frozen P N Fernando X X Direct Fresh Frozen Prawn Ceylon X X X X Direct Fresh Frozen Tabrobane Seafood X X X X Local Traders Fresh, Frozen Canned Lotex Marine Resources X Direct? Fresh Frozen? Nikasa X X X Local Traders? Fresh Frozen? CAK Lanka X Local Traders? Fresh Frozen? Kalpak X Local Traders? Fresh Frozen? Pearl Island X Local Traders? Fresh Frozen? 133 Out of the five leading SLBSC exporting seafood companies, only one has established processing centres in the Northern Province. Taprobane Seafood operates two processing centres, one in Mannar District and on in Jaffna District. Taprobane Seafood is also currently the private sector partner of crab processing centre owned by Irainamadanagar FCS in Kilinochchi District. All four of the other leading SLBSC exporting seafood companies transport SLBSC from the north to processing centre in Puttalam North Western Province or Gampaha District Western Province. 134 Crab Products: SLBSC are exported by seafood companies as fresh, frozen and canned products. Fresh crab is either exported as head o o ut a p odu ts. Cut crabs are processed by removing the top shell, guts and gills. The cut crab is then brushed clean and cut into two sections. The majority of fresh crabs exported are male, because only the male SLBSC is blue. Fresh crabs are exported on ice at temperatures ranging from 0°C to 5°C. Fresh crab has a shelf life of a few days. All exported frozen crab is cut crab. Frozen crabs are frozen to – 40°C and packed in 1 lb boxes and 12 lb cartons 16 . 135 Canned crab is a pasteurised product that involves picking the meat from boiled crabs. In contrast to both fresh and frozen crab products, only live SLBSC – both male and female - are purchased the single seafood company exporting canned crab products. Live crabs are the boiled in village level ooki g statio s see right and allow to cool, before being transported to processing factories. Crab meat is graded according to type and size. Grades include colossal, jumbo, B jumbo, flower, lump, special, claw, B claw and finger. Canned crab p odu ts i lude fa , spe ial , ju o lu p , a k fi lu p hite a d la . 136 Wholesale Price: The purchasing price paid to fishermen and boat owners by seafood companies, either directly through seafood company owned collecting centres or indirectly through local traders, varies throughout the season and from company to company. The wholesale purchasing price offered to fishermen and boat owners on any given day, is the result of a series calculations and assumptions, available only to the directors and senior managers of the respective seafood companies. 16 For the USA only? 30 137 The wholesale buying price set by each seafood company undergoes a series of mini adjustments as it passes through one or more local trader, before it becomes the wholesale price offered to the fisherman or boat owner. The final wholesale prices paid to the fishermen or boat owner dependent on the bond and seasonal loans owed by the fishermen or boat owner to the local fish trader. 138 As a general rule, seafood companies exporting fresh crab products offer a higher price for SLBSC than do seafood companies purchasing crabs for frozen crab products. Although seafood companies exporting canned crab products are unable to compete with fresh and frozen crab exporters on price, particularly during the offseason, canned crab product exports have an advantage in terms of handling large volumes of crab 17 . Canned crab exporters are thus able to offer to purchase large volumes of crab at higher prices during the peak season, when demand for fresh and or frozen crab is less than the supply of raw material. 139 T o o e ge e al ules for setting the wholesale price of SLBSC are as follows: the price paid for large crabs is higher than that for small crabs and that the purchasing price for large males is higher than that for large females 18 . To complicate matters further, each of the leading SLBSC exporting seafood companies has its own wholesale pricing index and grading system. A summary of the wholesale price indices and grading systems used by different seafood companies and local traders to purchase SLBSC from fishermen, boat owners and local traders is given in Table 6. Table 6 Grading systems, weight and prices paid for SLBSC in during the field survey Weight Range g Price Range LKR kg Price Range US kg Minimum Maximum Minimum Maximum Minimum Maximum Grade Very Large 250 g 700.00 700.00 5.38 5.38 Large Male 200g 249g 500.00 690.00 3.85 5.31 Medium 150 g 199g 300.00 420.00 2.31 3.23 Small 100 g 149g 150.00 200.00 1.15 1.54 Very Small 80g 99g 100.00 100.00 0.77 0.77 Very Very Small 50g 79g 50.00 80.00 0.38 0.62 140 Demand: Demand from seafood companies is driven by the international demand for SLBSC products. As was noted above, the SLBSC is a new fishery in Sri Lanka. Until very recently fishermen in the north did not fish directly for SLBSC, which were considered a nuisance or a menace if they became entangled i fishe e s ets. The g o th of the SLBSC fishery is a consequence of the end of the civil conflict in Sri Lanka - and with it the lifting of fishing restrictions and increased access for seafood companies to northern seafood resources - coupled with the strong international demand for SLBSC product see export destinations in the next section. 141 Different SLBSC products demand different grades of SLBSC. In general only very large, large and medium crabs are exported by seafood companies as head o a d ut f esh a products. Large, medium and small sized crabs are purchased by seafood companies exporting both frozen cut crabs and canned crab products. The de a d fo s all sized ut f oze a s is u h less tha fo la ge a d medium ut f oze a s. 142 Seafood companies exporting canned crab will purchase all sizes crab, including small and very small crabs. However, as crab size decreases, the operating efficiency of workers picking crab meat for canned crab products declines. So, while the lack of competition to purchase small and very small crabs may be a bonus for seafood companies exporting canned products, additional labour costs are incurred in processing compared to the same weight of medium, large or very large crabs. 17 because of the shelf life of their product 18 due to the presence of eggs and ovaries 31 143 Export Destinations: As noted elsewhere in this assessment report, the data collected by the Department of Customs for Sri Lankan crab exports does not discriminate between the three main export species i.e., P. pelagicus, S. Serrata and P. sanguinolentus. According to representatives of seafood companies exporting crab products, the main species exported is the SLBSC. Between January 2011 and March 2012 seafood companies exported 2,842. 21 t of crab, with a value of LKR 2,220 million US 17.35 million to 31 countries see Table 07. 144 According to the Department of Customs the average export price of a kilo of crab was LKR 865.58 US6.65 for fresh crabs; LKR 751.61 US5.78 for frozen crab and LKR 568.08 US4.36 for crab neither fresh nor frozen. The overall average exported export price for a kilo of crab was LKR 781.42 US 6.10, between January 2011 and March 2012. Table 7 Export destinations for SLBSC products January 2011 to March 2012 Export Destination Sri Lankan Crab Products kg Frozen Live or Chilled Not Live, Chilled or Frozen Grand Total 1 Singapore 482,914.40 560,712.71 16,500.50 1,060,127.61 37.30 2 United States 789,454.19 1,100.00 790,554.19 27.81 3 Canada 224,362.09 1,233.60 488.00 226,083.69 7.95 4 United Kingdom 110,055.70 15,796.00 28,972.00 154,823.70 5.45 5 Korea 115,011.00 115,011.00 4.05 6 Taiwan 81,763.35 28,569.00 110,332.35 3.88 7 Switzerland 28,741.30 42,765.80 5,597.00 77,104.10 2.71 8 Netherlands 72,987.00 72,987.00 2.57 9 Hong Kong 3,848.50 56,553.50 60,402.00 2.13 10 Japan 52,473.86 155.31 52,629.17 1.85 11 China 43,788.00 3,198.50 46,986.50 1.65 12 Maldives 21,638.54 5,507.38 72.00 27,217.92 0.96 13 India 17,348.00 50.00 17,398.00 0.61 14 Thailand 4,480.00 1,363.00 5,843.00 0.21 15 Philippines 5,460.00 5,460.00 0.19 16 United Arab Emirates 1,950.00 2,691.40 120.00 4,761.40 0.17 17 Viet Nam 3,090.00 3,090.00 0.11 18 Kuwait 2,758.00 2,758.00 0.10 19 Cyprus 2,700.00 2,700.00 0.09 20 Qatar 937.00 1,124.00 2,061.00 0.07 21 Germany 506.70 904.00 90.00 1,500.70 0.05 22 Antigua Barbuda 255.00 428.30 683.30 0.03 23 Syrian Arab Republic 450.00 450.00 0.02 24 Jordan 360.00 360.00 0.01 25 France 175.00 180.00 355.00 0.01 26 Saudi Arabia 210.00 210.00 0.01 27 Denmark 132.00 132.00 0.00 28 Malaysia 106.00 106.00 0.00 29 Zaire 41.00 41.00 0.00 30 Norway 35.00 5.00 0.00 31 Belgium 4.30 4.30 0.00 Totals 2,064,788.93 725,529.50 51,889.50 2,842,207.93 32 145 The leading market for Sri Lankan crabs was Singapore 37.20, which imported roughly equal amounts of frozen 452.81 t and live or chilled crabs 519.05 t. The USA was the second largest export destination for Sri Lankan crab products, importing 730.33 t, equivalent to 27.58 of the total crab exported during the period. Ten other countries accounted for a further 28.67 of Sri Lankan crab exports: Canada 8.34, United Kingdom 5.31, Taiwan 3.79, Korea 3.83, Netherlands 2.76, Switzerland 2.70, Hong Kong 2.20, Japan 1.77 and China 1.77. According to data complied by the Customs Department, frozen crab is the main Sri Lankan export crab product, accounting for over two thirds of the export volume by weight and value see Figure 7. Figure 7 Relative contributions of crab products to total exports by weight kg and value LKR 146 Figure 8 shows the monthly export data for crab products between January 2011 and March 2012. The data suggests that the peak season for crab exports during this period, for both frozen crab and live and chilled crab products, was November 2011. Exports of frozen crabs were relatively higher in May, June and July of the same year. Figure 8 Relative Contributions of Crab Export Products, by Weight kg and Value LKR Crab Products by Weight kg Crab Products by Value LKR 33

e. The Ecology of the SLBSC Fishery