# **7.3. Industrial fish processing facilities**

The impact of the loss of EU markets on individual fish processing facilities will have reflected a number of factors. Firstly, the degree of dependency on exports to the EU and, more specifically, fresh fish fillets. Plants that did not have the installed capacity to manufacture frozen fillets will have experienced an almost total loss of their markets with little option to divert to alternative export destinations. Secondly, the degrees to which reductions in export prices were offset by lower prices for raw Nile perch at landing beaches. SMEC (2002) suggest that fish processors typically operate on relatively low operating margins and their returns are highly sensitive to changes in the landed price of fish. Thirdly, the ability of processors to identify and exploit alternative export markets; exporters with experience in other markets (even at some time in the past) and/or well-established connections were more likely to have been able to offset the loss of EU markets through sales to other countries.

Thus, the loss of sales during the three periods of restrictions on exports to the EU varies widely (Table 10). In some cases exporters reported experiencing no loss; these were generally minor exporters to the EU, had a broad export base and/or did not manufacture fresh Nile perch fillets. In others, very significant losses, often exceeding 50 percent of sales, were reported. Further, some plants had experienced a total, or near total, loss of sales. Most of these subsequently ceased operations.

Care must be taken, however, in interpreting these data, which are self-reported losses based on face-to-face interviews and, perhaps, provide an over-estimate of the real impact on any particular exporter<sup>45</sup> . Indeed, there appears to be a considerable inconsistency between the trends in total exports by value over the period 1996 to 2001 and the losses reported by the fish processors. For example, it seems that these estimates ignore any trade diversion effects whereby losses of EU markets were offset by increased exports to other countries.

# **8. COMPLIANCE STRATEGIES AND COSTS**

# **8.1. Legislation and public sector controls**

Previous to the ban on exports to the EU, the Kenyan fish sector as a whole had made little progress in restructuring hygiene and other food safety controls. For example, landing beaches had received virtually no attention and in many cases lacked even the most basic of infrastructure. Inspection and other government controls were ineffective and constrained by lack of resources. Many industrial food processing facilities had not implemented HACCP and otherwise did not comply with generally accepted good manufacturing practice. Further, there was very little co-ordination or cooperation between government and the private sector, different levels of the supply chain, and between the individual industrial fish processors. However, the need to address the concerns of the EU as a means to regain market access brought about wholesale and fundamental change to the sector in a relatively short period of time. More still needs to be done, particularly at the major landing beaches. _However, arguably, the Nile perch fishery and export supply chain is better able to meet the needs of the global market place today than it has ever been._

> 45 Compared, for example to data on annual total export values.

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