CHAPTER TWO DEMOGRAPHIC AND ECONOMIC TRENDS

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1 CHAPTER TWO DEMOGRAPHIC AND ECONOMIC TRENDS 2.1 GENERAL An evaluation of relevant demographic and economic trends represents an important element of the port master plan. Ever changing trends associated with the resident population and the economy that helps sustain the people and lifestyle of the Republic of the Marshall Islands (RMI) exert considerable influence upon the Port of Majuro. The growth in resident population increases consumer demands for imported foods, supplies, vehicles, and equipment. Increased consumer demands generate international vessel calls that bring containerized and general cargo to Delap Dock. Interisland vessels owned by the RMI carry residents and cargo to the Outer Islands of the Republic. Small business activity generates demands for materials, supplies, equipment and food needed to support local construction, retail establishments, visitor accommodations, eating and drinking establishments, and other business activity. Raw copra produced on the Outer Islands is shipped and unloaded at the Tobolar coconut processing facility at Delap Dock. Coconut oil, copra meal, and other by-products processed by Tobolar are exported to international markets via oil tankers and container vessels. The international fishing fleet regularly enters Majuro Atoll and transships skipjack, yellowfin and bigeye tuna to carrier vessels that transport fish harvests to Asia and Far East markets. A smaller portion of the catch harvested by the international fishing fleet is delivered to local fish processing facilities operated by Marshall Island Fishing Venture and Pan Pacific Foods, Inc. The operation of government requires the delivery of imported materials, supplies and equipment necessary to support the delivery of its services to the general public. 2.2 RESIDENT POPULATION Population Estimate The RMI Economic Policy Planning and Statistics Office (EPPSO) completed a population and housing survey in Available data from this survey indicates that the resident population of the RMI included roughly 53,158 persons in 2011 (RMI, Economic Policy, Planning, and Statistics Office, 2013) Population Distribution About 74 percent of the resident population in 2011 resided on the more urbanized atolls of Majuro (27,797 persons) and Kwajalein (11,408 persons). The remaining 26 percent of the population (13,953 residents) lived on 24 of the more remote and rural atolls/islands of the Republic (Table 2-1). Port of Majuro Pre-Final Master Plan February

2 TABLE 2-1 REPUBLIC OF THE MARSHALL ISLANDS POPULATION AND GROWTH RATE BY ATOLL/ISLAND CENSUS YEARS 1980, 1988, 1999, AND 2011 Population Average Annual Growth Rate (%) Atoll/Island Marshall Islands 30,873 43,380 50,840 53, Ailinglaplap 1,385 1,715 1,959 1, Ailuk Arno 1,487 1,656 2,069 1, Aur Bikini Ebon Enewetak Jabat Jaluit 1,450 1,709 1,669 1, Kili Kwajalein 6,624 9,311 10,902 11, Lae Lib Likiep Majuro 11,791 19,664 23,676 27, Maloelap Mejit Mili , Namdrik Namu Rongelap Ujae Ujelang Utirik Wotho Wotje Note: Rows in blue indicate atolls/islands with declining populations Source: RMI Economic Policy, Planning, and Statistics Office, 2012; Pedersen Planning Consultants, Table 2-1 Population and Growth Rates by Atoll The distribution of the Marshallese population in 2011 indicates the population on 29 atolls of the Republic declined between 1999 and At the same time, the residential populations of Majuro, Kwajalein, and Jaluit Atolls expanded. This trend reflects a growing out-migration from the Outer Islands that stems from a growing dependence upon the cash economy and the lack of job opportunities. The extent to which the out-migration relocated to Majuro, Kwajalein or Jaluit Atolls is unknown Age Characteristics About 40 percent of the 2011 resident population comprised children and youth were under 15 years of age. This characteristic reflects higher birth and fertility rates among the Marshallese population. However, the proportion of youth in 2011 was less than 51 percent reported in 1988 and 43 percent in 1999 which may suggest that much of the recent out-migration has taken place Port of Majuro Pre-Final Master Plan February

3 on a family basis rather than by specific age cohorts, e.g., 15 to 19 years of age (RMI, Economic Policy, Planning, and Statistics Office, 2012). The primary working age population of the Marshall Islands includes residents ranging from 15 to 64 years of age. This age group represented roughly 56 percent of the population in 2011 (Republic of the Marshall Islands, Economic Policy Planning and Statistics Office, 2012). Despite the lack of job opportunities and the loss of fisheries-related employment in the past decade, the proportion of the age group surprisingly rose somewhat compared to 1988 and The remaining four percent were 60 or more years old. The proportion of this age group has generally remained stable since 1988 (RMI, Economic Policy, Planning, and Statistics Office, 2012) Population Growth Trends General The RMI has experienced sustained population growth since, at least, While the population of the Marshall Islands continues to rise, the rate of annual population growth has slowed considerably during the past 23 years. This is evidenced through a review of population data derived from population censuses that were conducted in 1980, 1988, 1999 and, most recently, in Figure 2-1 RMI Population Growth The annual rate of population growth averaged almost 5.1 percent between 1980 and 1988, but fell to only 1.5 percent per year between 1988 and 1999 (Figure 2-1). Between 2004 and 2011, the annual rate of population growth continued to decline at a rate of just under 0.4 percent per year (RMI Economic Policy, Planning, and Statistics Office, 2012) Figure 2-1 Population Growth, Republic of the Marshall Islands The sharp decline in the annual population growth rate between 1988 and 1999 appears to have been a consequence of greater out-migration by the resident population. This out-migration was primarily generated by the lack of job opportunities and a growing reliance upon the cash economy. By 1999, only two percent of the Marshallese population relied completely upon a subsistence lifestyle. The rate of unemployment in the cash economy was approximately 25 percent (RMI Economic Policy, Planning, and Statistics Office, 2008). In response to military force reductions mandated by the US Congress around 2000, the US Department of Defense made significant reductions in the number of personnel working at the US Army Kwajalein Atoll (USAKA) between 2000 and A significant out-migration of residents from both Kwajalein and Majuro Atolls occurred during this period. This outmigration did not generate an overall decline in the resident population of the Marshall Islands, but significantly reduced the rate of annual population growth. Population Port of Majuro Pre-Final Master Plan February

4 Between 2004 and 2011, natural growth (births minus deaths) regularly added between 1,396 and 1,630 persons to the resident population each year (Table 2-2). However, these gains were offset by a steady out-migration of residents which consistently exceeded the number of incoming or returning new residents (in-migration) to the Marshall Islands. Year Live Births Deaths Natural Growth In Out Net , ,397 13,111 13, , ,083 33,999-1, , ,068 17,097-2, , ,011 17, , ,818 17, , ,397 17, , ,370 18,407-1, , ,594 16, , ,187 16, , ,742 16,209-1, , ,349 15, , ,643 14,683-1, , ,553 14, N/A N/A N/A 7,492 7, N/A: Not Available le 2-2 Sources: RMI Economic Policy Planning and Statistics Office, 2001 and 2008; RMI Ministry of Health, Natural Growth and Migration Trends Natural Growth Natural growth generally surpassed net migration (in-migration less out-migration) between 2000 and Exceptions occurred in 2000, 2001 and 2008 when net migration was greater than natural growth. Since 1988, natural growth (births minus deaths) of the resident population has been influenced by a continuing decline in the number of live births for every 1,000 persons of the resident population (crude birth rate) and the number of deaths for every 1,000 persons of the resident population TABLE 2-2 NATURAL GROWTH AND MIGRATION TRENDS REPUBLIC OF THE MARSHALL ISLANDS Available Birth and Death Data Migration Figure 2-2 Crude Birth Rates Per One Thousand Population 1988, Republic of the Marshall Islands (crude death rate). The crude birth 60 rate gradually slowed from births per 1,000 residents in 1988 to births per 1,000 residents in and 23.0 births per 1, persons in 2011 (Figure 2-2). 0 Substantive reductions in the crude birth rate may reflect a growing Year Year dependence of households upon the cash economy and an increased participation of women in the local workforce. Number of Births Per Thousand The outmigration of women in their child-bearing years may also be influencing the declining crude birth rate. Figure 2-2 Crude Birth Rates Port of Majuro Pre-Final Master Plan February

5 In contrast, the crude death rate similarly fell from 8.9 deaths per 1,000 residents in 1988 to 4.9 deaths per 1,000 persons in 1999 (Figure 2-3). But, in 2000, the crude death rate escalated to 5.8 deaths per 1,000 persons and gradually slid downward to 4.6 persons per 1,000 residents in Since 2008, the crude death rate has gradually declined to 4.3 deaths per 1,000 persons in This trend likely points to significant improvements in local health care. Number of Deaths Per Thousand Figure 2-3 Crude Death Rates Per One Thousand Population 1988, Republic of the Marshall Islands Year Year Migration Figure 2-3 Crude Death Rates Net migration represents the number of persons migrating into a country such as the Marshall Islands (in-migration) less the number of persons who are leaving the country and relocating to another location outside of the Republic (out-migration). In and out-migration from the Republic of the Marshall Islands can be estimated through the use of available data from RMI Customs and Immigration Office. This information is obtained from air passengers arriving and departing from Amata Kabua International Airport on the Island of Majuro and the US Army at Kwajalein Atoll Airport on the Island of Kwajalein. Between 2000 and 2011, out-migration regularly exceeded in-migration. As stated earlier, this was particularly true in 2000, 2001, and 2008 in response to job reductions at the US Army at Kwajalein Atoll complex between 2000 and 2003, as well as the subsequent closure of the Majuro-based PMO tuna loin processing facility in Although, the extent of annual net migration, which ranged from as many as -2,029 persons in 2001 to as low as -553 persons in 2004, varied considerably. The sustained trend of greater out-migration is likely tied to a general lack of job opportunities and occasional job reductions in both the public and private sectors. This reality, combined with lower incomes and a rising cost-of-living, have, in the past 11 years, encouraged many Marshallese residents to leave the Republic and seek potential job and educational opportunities in Hawaii, the US mainland, Guam and other locations. Port of Majuro Pre-Final Master Plan February

6 2.3 WORKFORCE General Employment in the Marshall Islands must be viewed in the context of dual cash and subsistence economies. The predominant cash economy includes jobs in the public and private sectors of the economy where workers receive a monetary compensation for their work. The subsistence economy includes persons who complete tasks necessary to sustain the lifestyles of themselves and their families, but receive no monetary compensation. In many Marshallese households, particularly on the atolls outside of Majuro and Ebeye, residents participate in both economies Potential Labor Force The potential labor force of the Marshall Islands is defined by the RMI Economic Policy, Planning, and Statistics Office as persons who are 15 years of age and older. Preliminary results from the 2011 Census, conducted by the RMI Economic Policy, Planning, and Statistics Office, reported that the potential workforce of the RMI included 31,307 persons Employed Labor Force Residents who were actually employed or pursuing employment in 2011 included 12,924 persons, or roughly 41 percent of the total workforce population. The employed labor force was comprised predominantly by 8,417 males who represented about 65 percent of the employed labor force. The remaining 4,507 females accounted for approximately 35 percent of the employed labor force. It is important to note that the number of employed persons reported from the 2011 Census included, in part, persons involved in the home production of goods, e.g., farming, fishing and handicrafts, for sale or personal consumption. Participation in these economic activities was considered as employment in the cash economy (RMI Office of Economic Policy Planning and Statistics, 2012). When compared with comparable data from the 1999 Census, it is readily apparent that the employed labor force in 2011 represents a smaller proportion of the potential workforce population. In 1999, the employed labor force comprised about 51 percent of the 15-years-andolder population versus 41 percent of the same age group in This change may signal that a substantive part of out-migration during the past decade included persons who were previously part of the employed labor force of the Marshall Islands Unemployment Responses to questions posed during the 2011 Census further revealed that 612 persons of the employed labor force were unemployed at the time of the Census. This represented an unemployment rate of 4.7 percent (RMI Office of Economic Policy Planning and Statistics, 2012). Almost 40 percent of those unemployed were workers ranging from 25 to 39 years of age. Thirty-one percent of the unemployed persons were 40 years and older. Younger workers, between 15 and 24 years of age, comprised the remaining 29 percent of unemployed persons (RMI Office of Economic Policy Planning and Statistics, 2012). Port of Majuro Pre-Final Master Plan February

7 Differing definitions regarding economic activities used for the 2011 Census do not enable a reliable comparison of longer term unemployment trends between 1999 and Sources of Employment Preliminary data from the 2011 Census indicates that almost 75 percent of the employed persons received wages or salary from jobs in the private and public sectors of the economy. Another 21 percent were involved in producing goods mainly for sale. The remaining four percent of employed persons were self-employed, employed in a family-owned and -operated farm or business (either paid or unpaid), or involved in volunteer work (RMI Office of Economic Policy Planning and Statistics, 2012). While volunteer work is a valuable contribution to any community, volunteer work would typically not be considered as employment for statistical purposes. Consequently, the rate of unemployment in 2011 may be slightly higher than originally estimated by the RMI Office of Economic Policy Planning and Statistics. Jobs in the public sector comprised almost 33 percent of all employment in the Marshall Islands economy in FY Historical employment information from FY 1998 through FY 2011 indicates that the number of public sector jobs grew more than any other industry in the private sector between FY 1998 and FY 2011 (Table 2-3). During that period, for example, the number of public administration jobs rose 23 percent. Much of that job growth was associated with the national government jobs which grew 73 percent. The expansion of public administration employment can be attributed largely to: the establishment of a new republic in 1986; the related expansion of local and national governmental activities; supporting financial aid from the United States, other countries, and various multinational organizations; and, higher wages and salary rates in the public sector. TABLE 2-3 FULL AND PART-TIME EMPLOYMENT BY INDUSTRY REPUBLIC OF THE MARSHALL ISLANDS FY FY 2011 Industry FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Agriculture, Hunting & Forestry Fisheries ( , ,136 1,261 Mining and Quarrying N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Manufacturing Electricity, Gas & Water Supply Construction Wholesale & Retail Trade 1,369 1,391 1,552 1,747 1,720 1,636 1,744 1,805 1,819 1,810 1,826 1,715 1,738 1,754 Hotels & Restaurants Transport, Storage & Communications Financial Intermediation Real Estate, Renting & Business Activities Public Administration 2,830 2,708 2,673 2,769 2,919 2,986 3,150 3,326 3,640 3,574 3,548 3,436 3,413 3,487 Education ( Health & Social Work Community, Social, Personal Svc Activities Private Households w/employed Persons Extra-Territorial Organizations & Bodies 1,120 1,169 1,254 1,296 1,240 1,467 1,243 1,222 1,254 1,210 1,113 1,044 1, Totals 8,012 7,978 8,602 9,211 9,589 9,961 10,149 9,755 10,137 10,380 10,340 10,218 10,506 10,709 Note: N/A: Not Available. Annual employment totals may not add up due to rounding. Source: McKinlay, Sturton, and Graham, Table Employment by Industry Port of Majuro Pre-Final Master Plan February

8 Employment associated with extra-territorial organizations and bodies, e.g., RMI Port Authority, accounted for roughly nine percent of all jobs in the RMI economy in FY However, the number of jobs in this sector has gradually declined between FY 1997 and FY Private sector jobs represented roughly 67 percent of all employment in the Marshall Islands economy in FY Private sector employment rose roughly 63 percent between 1998 and The gradual expansion of fisheries related employment provided the greatest boost to private sector employment during this period. Although part-time jobs associated with fish processing and vessel support services represented a significant portion of this employment Participation in Subsistence Economy Historical census and labor force data suggests that the number of residents who relied completely upon a subsistence lifestyle ranged from roughly 2,281 residents in 1973 to 3,367 persons in Somewhat less participation in the subsistence economy was reported in 1980 (3,002 persons), 1988 (2,073 persons), and 1999 (2,920 residents) (RMI Office of Economic Policy, Planning and Statistics, 2001). The RMI Office of Economic Policy, Planning Statistics organized a community survey of 1,205 households on Majuro, Ebeye, Eniburr, Wotje, Jaluit, Arno and Ailuk in Data gathered from this survey revealed, in part, that only 123 persons were working in the subsistence economy. Over half of these people resided on Majuro. While the survey sample represented only about 17 percent of the Republic s total population, available data suggests that the total number of Marshall Island residents, who were working on a subsistence basis, was probably less than 1,000 residents. While the work skills necessary to sustain a subsistence lifestyle remains for many Marshallese residents, the level of participation in this lifestyle is clearly on the decline. And, as residents continue to seek and purchase more imported goods and services, the demand for more job opportunities in the cash economy will only increase. 2.4 INCOME Average annual wage and salary rates in the private sector of the Marshall Island economy were roughly $9,586 in FY Higher income levels averaging $16,338 per year were received by those residents working in financial intermediation, or a financial institution such as a bank. In contrast, residents working in fish processing and vessel support services annually earned an average wage of about $2,874; hotel and restaurant employees earned roughly $5,501 (Table 2-4). Public sector jobs, or those employed in public administration, earned an average wage or salary of $11,869. This income level surpassed average wage and salary rates for most private sector jobs except for those persons working in extra-territorial organizations ($16,623), banking ($16,338), electric, gas and water utilities ($14,661) and education ($13,220). Port of Majuro Pre-Final Master Plan February

9 TABLE AVERAGE ANNUAL WAGE AND SALARY RATES PRIVATE AND PUBLIC SECTOR JOBS BY INDUSTRY REPUBLIC OF THE MARSHALL ISLANDS Industry FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 Agriculture, Hunting & Forestry N/A N/A N/A N/A N/A 2,614 2,830 3,315 2,713 2,741 2,966 3,132 3,163 3,504 Fisheries (1 4,966 8,865 3,088 3,093 2,747 2,443 2,542 5,456 5,382 5,929 4,727 3,885 2,991 2,874 Mining and Quarrying N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Manufacturing 4,486 4,317 4,726 5,193 5,554 5,563 6,185 5,357 5,249 5,521 5,128 5,639 6,499 6,447 Electricity, Gas & Water Supply 11,522 11,025 11,983 11,211 11,350 12,631 12,245 13,090 13,172 12,219 13,278 13,131 13,873 14,661 Construction 5,904 6,239 6,111 6,141 5,297 5,361 5,281 5,132 5,547 5,523 5,911 6,412 6,660 6,817 Wholesale & Retail Trade 5,334 5,465 5,494 5,422 5,246 4,742 4,563 4,525 4,317 4,516 4,644 5,062 5,133 5,255 Hotels & Restaurants 5,314 5,406 5,216 4,800 5,214 4,658 4,463 4,947 5,086 4,976 4,709 5,217 5,208 5,501 Transport, Storage & Communications 10,067 9,912 9,782 9,869 9,396 9,677 9,245 8,373 8,164 7,743 8,997 8,802 9,834 9,872 Financial Intermediation 13,560 12,788 12,252 11,381 13,418 14,366 14,437 16,418 16,483 16,510 16,079 16,836 16,594 16,338 Real Estate, Renting & Business Activities 6,386 7,117 6,679 6,659 7,346 7,340 5,662 5,504 6,450 6,293 6,451 6,786 7,723 8,634 Public Administration 8,771 9,157 9,716 9,928 10,294 10,256 11,205 11,188 11,080 11,232 11,395 11,569 11,576 11,869 Education (2 6,846 8,099 8,965 8,560 9,337 10,559 10,749 10,755 12,122 11,522 12,277 12,779 12,822 13,220 Health & Social Work 4,650 4,680 4,820 4,945 5,139 5,768 5,849 6,048 7,271 7,385 7,064 7,075 8,589 8,275 Community, Social, Personal Svc Activities 4,798 4,967 4,694 5,132 5,974 5,649 5,811 5,317 5,488 6,046 6,179 6,658 6,320 6,772 Private Households w/employed Persons N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 5,754 3,428 3,216 4,025 Extra-Territorial Organizations & Bodies 12,002 12,617 13,575 13,708 13,477 12,162 14,532 15,217 16,201 16,077 15,525 16,754 16,460 16,823 Average Annual Wage/salary 8,138 8,517 8,556 8,487 8,468 8,340 8,734 9,355 9,471 9,398 9,396 9,622 9,458 9,586 Notes: N/A = Not Available. Information provided is based upon Marshall Islands Social Security Administration data and unreported estimates by the RMI Economic Policy, Planning and Statistics Office. Sources: McKinlay, Glenn; Mark Sturton, and Ben Graham, Table 2-4 Annual Wage and Salary Rates These income trends point to a reality that will influence future expansion of the private sector and related small business development. The employed labor force (those holding or pursuing jobs) is more likely to pursue jobs associated with government or quasi-public agencies which typically pay higher wages and salaries than jobs in the private sector. At the same time, lower wages in industries such as fisheries could be viewed as a competitive advantage to investors contemplating investments related to fish processing and the export of potential fish products. 2.5 COST OF LIVING The RMI Economic Policy, Planning and Statistics Office established a consumer price index for Majuro and Ebeye in The index tracks the cost of some 61 consumer items on Majuro, Ebeye, Jaluit and Likiep on a quarterly basis. The costs for the 61 items are aggregated into 10 major groups of consumer items. The most recent base period established the consumer price index was the first quarter of 2003 which enables a comparison of more recent costs with those documented by EPPSO in The most recently published cost-of-living information was published by EPPSO in September Available information for the third quarter of 2010 indicates the cost-of-living in Majuro rose roughly 37 percent over consumer prices for the same consumer items in In contrast, the cost-of-living on the Island of Ebeye in 2010 was only about 27 percent higher than prices experienced in While available information does not reflect more recent changes in consumer prices, the consumer price index information clearly demonstrates an overall trend of rising consumer prices from 2003 through During the same seven year period, average wage and salary rates for the entire employed workforce in the Marshall Islands increased just over 13 percent. Consequently, local wages and salaries are not keeping pace with the cost-of-living for many workers in the Marshall Islands economy. Port of Majuro Pre-Final Master Plan February

10 2.6 PRIMARY INDUSTRY TRENDS In the Marshall Islands economy, there are four industries in the private sector that provide significant employment opportunities to local residents, as well as generate revenues to the Republic of the Marshall Islands and various quasi-public enterprises. These industries include: fisheries, copra, wholesale and retail services, and the visitor industry Commercial Fisheries The predominant commercial fisheries of the Marshall Islands involve longline, purse seine, and pole-and-line fishing activity by an international fishing fleet and a national fishing fleet that operate within the RMI Exclusive Economic Zone (EEZ) as well as other areas of the Western and Central Pacific Ocean. The RMI EEZ and territorial waters (Figure 2-4) encompass around two million square kilometers of oceanic waters within and adjacent to the RMI (Western and Central Pacific Fishing Commission, 2011). The international fishing fleet is comprised primarily by vessels from several countries outside of the Marshall Islands. The national fishing fleet represents a smaller number of RMI-flagged purse seine and longline vessels that is based in the Port of Majuro (Marshall Islands Marine Resources Authority, 2011). Since 1990, the combined annual catch of skipjack, yellowfin, and bigeye tuna in the RMI EEZ by longline, purse seine and pole-and-line has varied between 4,464 and 91,345 metric tons (mt). Since 2004, however, total annual catches have more consistently ranged between 20,811 and 24,516 metric tons. The majority of this harvest has been made by the purse seine fishery (Secretariat of the Pacific Community, Oceanic Fisheries Program, 2011) Purse Seine Fishery In 2010, approximately 117 international purse seiners were licensed to fish in the RMI Exclusive Economic Zone (RMI EEZ). These included purse seiners from the United States, Japan, Papua New Guinea, Taiwan, the Federated States of Micronesia, Vanuatu, the Republic of China, and the Solomon Islands (Marshall Islands Marine Resources Authority, 2011). The number of licensed purse seiners declined considerably from 149 vessels in 2008 and 142 vessels in 2009 (Table 2-5). The decline in the number of licensed purse seiners may have been influenced by global economic conditions and the related lack of investment motivation by international fish buyers. Table 2-5 Number of Foreign Purse Seine Vessels TABLE 2-5 NUMBER OF FOREIGN PURSE SEINE VESSELS LICENSED TO FISH IN THE MARSHALL ISLANDS EEZ BY YEAR AND FLAG, Year Flag (Country) Peoples Republic of China Federated States of Micronesia (FSM) Japan Kiribati Korea New Zealand Papua/New Guinea (HomeParty) Republic of China (Taipei) Vanuatu Solomon United States of America Total Source: Marshall Islands Marine Resources Authority, Oceanic and Industrial Affairs Division, Port of Majuro Pre-Final Master Plan February

11 Figure 2-4 Republic of the Marshall Islands Exclusive Economic Zones Figure 2-4 RMI Exclusive Economic Zone Port of Majuro Pre-Final Master Plan February

12 Between 2006 and 2010, purse seine vessels operating in the RMI EEZ made combined annual catches of skipjack, yellowfin and bigeye tuna that ranged from 11,666 metric tons in 2007 to 24,043 metric tons in 2008 (Table 2-6). Purse seiner American Victory TABLE 2-6 ANNUAL CATCHES BY PURSE SEINE FLEETS IN THE MARSHALL ISLANDS EXCLUSIVE ECONOMIC ZONE BY FLAG AND SPECIES, Catch (Metric Tonnes) Fleet (Flag/Country) Year Big Eye Tuna Skip Jack Tuna Yellow Fin Tuna TOTAL China Federated States of Micronesia (FSM) Table 2-6 Annual Catch by Purse Seine Fleets , , , , ,177 1,824 9, , , , ,046 Japan , , Kiribati , , Taiwan , , , , ,587 1,606 5, , , , ,888 United States of America ,586 2,071 5, , , , ,071 Vanuatu , , , , TOTAL EEZ (Exclusive Economic Zone) Note: The totals may not add up due to rounding , , ,807 1,594 15, ,378 1,024 11, ,296 6,227 24, , , , ,524 Source: Marshall Islands Marine Resources Authority, Oceanic and Industrial Affairs Division, Port of Majuro Pre-Final Master Plan February

13 Longline Fishery Table 2-7 Number of Foreign Longline Vessels In 2010, the international longline fishery fleet licensed to fish in the Marshall Islands comprised 49 vessels. This fleet included vessels from the People's Republic of China, Japan, the Federated States of Micronesia, and the Republic of China (Taiwan). Since 2006, the number of longline vessels has generally declined. Only a slight increase in the number of vessels occurred between 2009 and 2010 (Table 2-7). Between 2006 and 2010, the combined catch of this fleet in the RMI EEZ ranged between 3,918 metric tons in 2008 and 4,894 metric tons in 2006 (Table 2-8). Bigeye and yellowfin tuna represent the primary species TABLE 2-7 NUMBER OF FOREIGN LONGLINE VESSELS LICENSED TO FISH IN THE MARSHALL ISLANDS EEZ BY YEAR AND FLAG, Year Flag Peoples Republic of China Federated States of Micronesia Japan Korea Republic of China (Taipei) Belize TotalS Source: Marshall Islands Marine Resources Authority, Oceanic and Industrial Affairs Division, caught by the longline fishery fleet (Marshall Islands Marine Resources Authority, 2011). However, a significant portion of the longline catch, roughly 1,000 metric tons per year, includes various by catch species such as blue marlin, sharks, wahoo, dolphinfish, swordfish and albacore tuna (Secretariat of the Pacific Community, Oceanic Fisheries Program, 2011). Table 2-8 Annual TABLE 2-8 ANNUAL CATCHES BY FOREIGN LONGLINE FLEETS IN THE MARSHALL ISLANDS EXCLUSIVE ECONOMIC ZONE BY FLAG AND SPECIES, Catch (Metric Tonnes) Fleet (Flag) Year Albacore Big Eye Tuna Yellow Fin Tuna Other TOTAL Peoples Republic of China ,908 1, , , , , , , , , ,171 Federated States of Micronesia (FSM) , ,199 Japan Republic of China (Taipei) TOTAL EEZ (Exclusive Economic Zone) Note: Totals may not add up due to rounding ,525 1, , , , , , ,014 1, , ,823 1, ,763 Source: Marshall Islands Marine Resources Authority, Oceanic and Industrial Affairs Division, Port of Majuro Pre-Final Master Plan February

14 Pole-and-Line Fishery Twenty-six pole-and-line vessels were licensed to fish in the Marshall Islands in All of these vessels were from Japan. With the exception of 2009 when only 12 vessels were licensed, the number of pole-and-line vessels has typically included 22 or more vessels between 2006 and 2010 (Marshall Islands Marine Resources Authority, 2011). Annual catches by the international pole-and-line fleet, which were licensed to operate in the Marshall Islands between 2006 and 2010, ranged between 476 and 4,988 metric tons (Marshall Islands Marine Resources Authority, 2011). Pole-and-line vessel National Fishing Fleet The national commercial fishing fleet represents RMI-flagged purse seine and longline vessels that are based in the Port of Majuro. The national fishing fleet includes 10 purse seiners, four longline vessels, nine fish carriers, and four fuel bunker vessels (Western and Central Pacific Fisheries Commission, 2013). The national fishing fleet operates throughout the Western and Central Pacific Ocean, but longline vessels of the fleet fish primarily in the RMI EEZ (Marshall Islands Marine Resources Authority, 2011). In 2010, purse seine vessels of the national fishing fleet caught roughly 56,835 tons of skipjack, yellowfin and bigeye tuna. The rising volume of catch in 2010 reflects, in part, the addition of four purse seine vessels during the second half of 2010 (Marshall Islands Marine Resources Authority, 2011). Nevertheless, recent catch volumes in 2008 through 2010 demonstrate an upswing in tuna catch volumes by RMI-flag purse seine vessels. In contrast, longline vessels of the national fleet landed roughly 257 metric tons of bigeye and 117 tons of yellowfin tuna, as well as considerably smaller volumes of blue marlin, albacore, and swordfish in 2010 (Marshall Islands Marine Resources Authority, 2011). This catch volume was considerably less than previous annual catches in 2008 (552 metric tons) and 2009 (567 metric tons). Port of Majuro Pre-Final Master Plan February

15 Transshipment to International Markets The international fishing fleet currently transships virtually all of its catch to markets in the Far East and southeast Asia. The transshipment process involves the combined effort of fish buyers, fishing boat owners, fish boat crews, and shipping agents who all work together to transship fish from the RMI Exclusive Economic Zone to market channels in the Far East and Southeast Asia (Ma, 2013). Three major fish buyers dominate and influence the purchase of fish in the Pacific Ocean. These companies include Tri Marine, FCF Fishery Company, and Itochu (Campling et al, 2007; Muller, 2013). Commercial fishing vessels that operate within or near the RMI EEZ transload their catch to larger carrier vessels that accompany the fishing trips of purse seine and longline vessels. One fish carrier vessel typically travels with two purse seiners. The transshipment of fish takes place in the calmer and protected waters of Majuro Lagoon. When in the Majuro Lagoon, purse seiners will, for example, transfer a catch of roughly 1,000 to 1,200 metric tons to a carrier vessel. Purse seiners may remain a few days in port, but then these vessels will return to the RMI EEZ to continue fishing and subsequently return to the carrier vessel, or return to their home port in the Far East. If the fishing boats elect to fish more in the RMI EEZ, the carrier vessel will likely remain moored offshore in the Port of Majuro until its holding capacity is saturated (Ma, 2013). Fish buyers charter fish carrier vessels which are primarily owned by larger companies based in Korea, China, and Taiwan. Carrier vessels have an average holding capacity of 3,000-4,000 metric tons of fish; although, some larger carrier vessels have capacities of 4,000-5,000 metric tons (Ma, 2013). Unloading tuna from purse seine vessel Transferring tuna to carrier vessel Carrier vessel deliveries of lower-priced skipjack tuna are generally destined for lightmeat canned tuna market channels in Thailand where larger fish cannery operations are based (Forum Fisheries Agency, 2011; Ma, 2013). Higher-priced tuna species such as yellowfin and bigeye are delivered to sashimi market channels in Japan (Muller, 2013) Pan Pacific Foods Pan Pacific Foods (PPF) operates a tuna loining plant on Majuro. Skipjack personnel cut and package loins into three or four kilo bags which are subsequently loaded into refrigerated containers. Each container can accommodate about 25 metric tons of skipjack tuna. Pan Pacific Foods processes about 8,000 metric tons per year (Xu, 2013). Port of Majuro Pre-Final Master Plan February

16 Fish processing at Pan Pacific Foods PPF transships its skipjack tuna to the cannery markets in Thailand, as well as canneries such as Bumble Bee, StarKist, and Chicken of the Sea along the US west coast (Xu, 2013). Pan Pacific Foods is operated and managed by about 10 full-time personnel. An additional 200 part-time workers are employed by PPF when vessels arrive with loads of fish for processing (Xu, 2013) Marshall Islands Fishing Venture Marshall Islands Fishing Venture (MIFV) is a joint venture between the RMI Marshall Island Marine Resources Authority and Luen Thai Fishing Venture, Ltd. MIFV operates a long line fish base with international long line vessels based in the Port of Majuro, as well as long line vessels from the national fleet (Marshall Islands Marine Resources Authority, 2011). Marshall Islands Fishing Venture operates 42 long line vessels in the RMI Exclusive Economic Zone. MIFV primarily catches yellowfin, bigeye, blue marlin, and some bi-catch. These vessels harvest roughly 300 metric tons per month, or about 3,600 metric tons of fish from the RMI EEZ per year (Liang, 2013). Thirty to forty percent of the catch, which represents their best class of fish, is air shipped to the US mainland. Another 20 percent of the catch is cut into fish loins and packaged into 3-kilo size bags. The remaining 20 percent are packaged into small plastic bags containing one fish steak that are sold to wholesalers in Seattle, Washington and Los Angeles, California (Liang, 2013). Frozen bycatch is shipped to China via refrigerated containers or sold locally (Marshall Islands Marine Resources Authority, 2011) Marshall Islands Fishing Company Marshall Island Fishing Company (MIFC) is a joint venture between the RMI Marshall Island Marine Resources Authority and Koo's Fishing Company in Majuro. MIFC began operations in March Koo s Fishing Company operates seven purse seiners and three carrier vessels in the RMI Exclusive Economic Zone. Each of its seven purse seiners makes about 10 fishing trips to RMI EEZ in a given year. Each fishing trip extends for three to five weeks. Each purse seiner has a fish holding capacity of 900 metric tons (Muller, 2013). Port of Majuro Pre-Final Master Plan February

17 Koos Fishing Company primarily sells its catch of skipjack tuna to fish canneries in Thailand. Yellowfin and bigeye tuna are transported to Japan (Muller, 2013) Copra Production and Processing Tobolar Coconut Processing Authority is a quasi-public agency that produces several coconut products that are distributed to various international markets. Some of these products are also sold to local consumers. Tobolar is financially supported by funds made available by the Government of the Republic of the Marshall Islands, Asian Development Bank, as well as price subsidies from the US Government (Banzuela, 2013). The Tobolar complex is situated on the northeast side of Delap Dock where it receives copra from farmers located throughout the Marshall Islands. Local farmers harvest coconuts from their respective coconut plantations, de-husk the coconuts, and export the remaining copra to Majuro via RMI interisland cargo and passenger vessels. Tobolar receives about 500 metric tons of copra per Tobolar coconut processing complex month from the Outer Islands. About 80 percent of the copra is transshipped from the Outer Islands to Tobolar via RMI interisland vessels. The remaining 20 percent is received from farmers in Majuro and Outer Island via privately owned small boats (Banzuela, 2013). Tobolar processes the copra into several products. The primary product is coconut oil; approximately 300 metric tons of coconut oil are produced each month. About 15 TEU of coconut oil is loaded into one large plastic bladder that, when filled, contains about 20 metric tons. Much of that oil is shipped to market channels in Malaysia (Banzuela, 2013). When some of the produced coconut oil (approximately 300 metric tons) remains unsold during a given month, Tobolar will make arrangements to load the excess oil to incoming oil tankers that have about a 1,500 metric ton capacity. The oil is transported to bulk buyers of oil in Europe and the United States, e.g., Proctor and Gamble (Banzuela, 2013). Pure coconut oil must be stored below 32 degrees Centigrade; otherwise, the oil solidifies. Tobolar sells the solidified oil for roughly $650 per metric ton and produces roughly 300 tons per month of the solidified oil product (Banzuela, 2013). Another product derived from coconut processing is copra meal. Approximately 150 metric tons of copra meal are processed each month. The copra meal is packaged into smaller zip lock bags. About 450 of these bags can be loaded into one TEU container. The copra meal is sold to market channels in Taiwan, Federated States of Micronesia, Australia and New Zealand for use in secondary products such as fish food, fertilizer and other products (Banzuela, 2013). Virgin oil is also sold for local consumption on Majuro. Local residents use the virgin oil for cooking. Port of Majuro Pre-Final Master Plan February

18 2.6.3 Visitor Industry The visitor industry in the Marshall Islands primarily represents accommodations, as well as eating and drinking establishments on Majuro, Ebeye, and some Outer Islands. In addition, some private fishing and scuba diving tours are occasionally provided by private companies or individuals. While stunning views and recreational opportunities abound throughout the Marshall Islands, most visitor travel to the Marshall Islands is made for business purposes. Business travelers accounted for approximately 51 percent of all visitors to the Marshall Islands in The average length of stay for these visitors was just over five days in Travelers coming to the Marshall Islands for a holiday or vacation, which represented about 21 percent of all visitors in 2010, remained in the Republic for about four days in Almost 13 percent of the visitors to the Marshall Island were friends and relatives coming to spend time with family. Their average length of stay was roughly five days in The remaining visitors did not respond to visitor surveys. Since 2001, the annual number of visitors coming to the Marshall Islands has ranged between 4,391 visitors in 2010 and 7,583 visitors in 2005 (Table 2-9). More recent declines in 2008 through 2010 are believed to be reflect the impact of the nationwide recession in the United States and troubling financial trends in the Far East and Asia upon both business and holiday travel. The upcoming 44th Pacific Forum conference in September 2013 is anticipated to generate increased business travel volumes to the Marshall Islands in TABLE 2-9 VISITORS TO MAJURO (1 BY YEAR AND PURPOSE OF VISIT 1996, 1996, Purpose ( ( ( Business Holiday/ Vacation Visiting Friends/ Relatives Other/ Not Stated Totals 4,239 4,669 4,768 5,005 5,207 7,228 7,583 4,815 5,544 4,697 4,599 4,391 Notes: 1) Prior to 2004, only visitors travelling by air were included; 2) In 2002 and 2003, visitors who arrived at Kwajalein Airport were not included; 3) In 2006, some visitors arriving by sea were not included. Source: Marshall Islands Visitors Authority (MIVA), EPPSO, Table 2-9 Visitors to Majuro Opportunities to Strengthen the RMI Economy Expanded Fish Processing and Fish Product Transshipment The Marshall Islands is blessed with an abundance of fish in the RMI Exclusive Economic Zone and other nearby economic zones in the Western and Central Pacific Fisheries Commission Convention Area. It is also fortunate that the Marshall Island Marine Resources Authority Port of Majuro Pre-Final Master Plan February

19 maintains a watchful eye over the condition of tuna fish stocks in the RMI Exclusive Economic Zone and the related operations of the international fishing fleet. The previous overview of the demographic and economic trends clearly reveals a need for expanded investments into the private sector of the Marshall Islands economy. These investments are needed to retain and attract an expanded employed workforce that can provide new job and income opportunities for local residents. It is recommended that the Marshall Island Marine Resources Authority continues to encourage the private sector to expand the transshipment of processed fish products to international markets. The expansion of fish processing operations in the Marshall Islands can facilitate the creation of new jobs and income opportunities in the fishing industry. The Compact of Free Association with the United States offers attractive opportunities for the export of tuna products to the freely associated states of the Republic of the Marshall Islands, the Federated States of Micronesia, and Republic of Palau. The Compact allows for duty-free exports to the United States from any of the freely associated states if: the product is directly imported from the freely associated state and does not pass through any other country or territory before entering the customs territory of the United States; and, processing and production of tuna products within the freely associated state must add, at least, 35 percent of economic value to the product (Campling, Havice, and Ram-Bidesi, 2007). Discussions with representatives of both Pan Pacific Foods and Marshall Islands Fishing Venture indicate that existing fish processing operations desire to expand their operations. But the potential opportunity to expand local fishing operations is hampered by: limited land area that is necessary to support any facility expansion; insufficient dock area needed for the unloading of incoming fish catches and the servicing of fishing vessels; and, the lack of vessel repair services. There is also a growing demand for the use of refrigerated containers for the transshipment of processed fish from Majuro. This trend is occurring because fish can be shipped faster to wholesale customers compared to the time required by carrier vessels. With a shorter product transportation time, fishing companies can be paid earlier by their wholesale customers. The traditional transport of frozen whole fish via carrier vessels is made for about $100 per ton (Muller, 2013). In order for the Marshall Islands to take advantage of this transportation trend, the Port of Majuro will need to have more electric reefer plugs available at Delap Dock and/or at any other future docks in the Majuro Lagoon that may support the transshipment of processed fish from Majuro. In addition to this improvement, it is important to remember that international fish buyers and fishing vessel owners have a choice among various Pacific Island ports regarding where to transship their tuna catches. Their port selection will be based primarily on the proximity of a Port of Majuro Pre-Final Master Plan February