Industry Overboard

Businessmen call it "the Peruvian miracle," and by all odds it is one of Latin America's brightest success stories. In 1950, imaginative Peruvian entrepreneurs started netting the immense schools of anchovy in coastal waters and processing the small silvery fish into fish meal, a high-protein poultry and livestock food. So rich was the harvest and so great the demand that plants went up all along the coast. Today, fish meal is the country's biggest industry, and Peru has risen from nowhere to No. 2 rank (behind Japan) among fishing nations.

The problem now is to keep the industry from going overboard trying to make too much of a good thing. Last year, Peru processed 1,159,000 tons of fish meal from a record 6,650,000-ton catch and earned an impressive $116 million from exports. But this year there are fears of a smaller haul, with a sharp fall-off in dollars.

Peruvians insist that smaller catches are due merely to a temporary shift in ocean currents, not overfished waters. But everyone agrees that too many people are out fishing. "Two or three years ago," says one Lima skipper, "you seldom saw more than 100 seiners fishing at the same time. Nowadays you see as many as 300 go to work on a school."

The grumbles are even louder ashore. With gold-rush enthusiasm, businessmen overborrowed--took short-term loans at interest as high as 28%--to overbuild. "They are operating in a sea of lOUs," says Victor Riveros, editor of Peru's fishing-industry journal Pesca. The industry now has a capacity of 2,000,000 tons of fish meal a year, or nearly double what it expects to sell. As a result, most of the country's 156 plants are operating at half speed; 30 are closed altogether. Last week workers marched in and seized one plant on account of three weeks' unpaid salaries. Said a union leader: "We know it is in financial trouble, but we must have some money to feed our families."

This week a Peruvian congressional commission is expected to propose a series of emergency relief measures, including a moratorium on federal taxes. Even if the government exempted fish-meal processors from all taxes, their average $9-a-ton profit (v. an average ,$20 in 1963) would still not cover interest on the industry's $74 million debt.

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