Russian government confirms stable outlook for nation's fishery industry

The Russian fishery industry will not be shaken or reshuffled. Its mission is the same: to provide Russian people with high quality Russian-made fish products, and the sector's investment appeal is improving, according to the 1st Vice-PM Victor Zubkov interviewed by Fishnews Agency. 

It was said that total catch for January-October was 3.41 million MT, 196 thous MT (6%) more than in the same period of 2010.  Total production was more 2.8 million MT (107.6% of 2010).  Import volume decreased 13.6% (560.5 thous MT against 648.6), and export rose (1.06 million MT against 992.7 thous MT in 2010).  Profitability and revenue of the industry was at the same level.  Average monthly wage was RR 25.1 thousand ($810) - 111% to average level for Russia.

In the first half 2011 gross value added in fishery and aquaculture reached RR49.4 billion, 6.6 billion more than in the same period of 2010.  (At the same time Deputy Representative of Russia President in Far-East District says that value added production of fishery products decreased in most fishing territories).

There are unpleasant numbers as well.  From the year beginning fish and seafood price in Russia went up 7.7%, while official inflation was 4.7%.  This is more or less normal for spring and summer and is related to fishery seasonality.  However, we expect that large catch of salmon (506 thousand MT) will help stabilize or even decrease prices.  We have all the reasons to expect good results for the year, said Zubkov.

The government worked a lot to develop favorable conditions for the industry.  A number of important legal documents have been developed including amendments to Fishery Law, 32 billon rubles have been invested by the Government.  Bank interest was subsidized when loans had been taken for ship building and modernization, processing and storage facilities, fish markets construction.  The sum totaled RR 600 million.

Government fishery management was improved greatly.  Procedures were simplified and accelerated, IUU prevention measures were put in place.

A lot of other important things have been done.

Next year the Government is to start a program of Fishery development - 2020.  Its preparation has been almost over.  Strategic priority of the Government program is the supply of the country population with high quality Russian-made fish products.  To do this it is necessary to increase the industry efficiency by implementing innovative technologies and main funds modernization.

The new program will include and develop the existing one.  The program sets targets for 2020: total catch 6 million tons, production 5.3 million ton, seafood consumption 28 kg per capita.  Domestic seafood will take 85% of the market.  For comparison: in 2010 the figures were 4.3, 4.1, 17, 77.5%.

Mr. Zubkov thinks such a document is absolutely necessary for businessmen as it sets priorities and gives directions for short and long term.  Draft program will be delivered to the Government by the end of this year.

It is very important to build efficient logistic system.  Now price of fish delivered to retail shops is multiple to price EXW.  For example this winter capelin price at Murmansk warehouse was RR20 for kg, but retail price in Moscow was up to 80 with transportation cost at around RR 3-4.  To improve fish products distribution networks Mr. Zubkov has ordered to develop a complex of measures including:

• Development of direct supply from producers and processors to retail shops and chains;
• Enlargement of wholesale networks. Development of logistics and cost cuts;
• Establishing of a chain of fish markets in Russian cities and towns;
• Support of establishing and functioning of self-regulated organisations in fishery

New control and check measures have been put in place.  It includes labelling, storage, quality checks.  A special attention is paid to radioactivity monitoring in Pacific Russia.

However, it's clear that quality and safety is not a problem of the government institutions, but producers' business.  Producers associations participate in Government commissions on fishery and agriculture development, and working group on State control over trade.

Mr Zubkov calmed down fishermen concerns regarding proposed allocation of quotas to encourage newbuilding at Russian yards.  Recently there has been a lot of talk that quota distribution system could change as of 2018.  However, the high level official confirmed that no amendments are being planned to the Law on Fishery as to modification of the current system of quota share distribution. The honest quota users have nothing to be afraid of as the government will only look at the quotas held by rentier companies (who actually do not fish but live by leasing fishing rights).

All the fishing fleet is private owned and there is no way to make ship-owners to renew the fleet.  Some of them receiving quota shares for 10 years continue working on outdated vessels, crying a lot about absence of shipyards and competent staff, ship design projects, etc.  Those who are ready to innovations look for ways out and make proposals.  We study all of them: subsidizing interest rates on loans taken for building and modernization of fishing vessels, prolonging the loans; permission of quota turnover, removal of duties on ship equipment, tax discounts for shipyards.

There are other recommendations including hard measures directed on old fleet removal and competition increase.  However, it is necessary to discuss the ideas with fishermen and shipbuilders before accepting or declining them.  It's necessary to take into account international experience, but study possibility to apply it to Russian conditions.

The measures will be included into Fish shipbuilding strategy till 2020 developing by Rosrybolovstvo together with fishing associations.  It is to be concentrated on economic stimulation methods.  A draft has been discussed at Government commission on fishery development, serious amendments are to be made and the Strategy is to be approved.

Sterkoders

There is a smaller but very acute problem.  There are some trawlers built abroad in 1990-s under state guarantee.  They stayed idle for years at Sakhalin and Kamchatka because the government lost a lot of money in this controversial arrangement and just recently the boats were transferred from offshore to Russian Flag and allowed to start fishing in Russian waters.   At the same time loan payment conditions were quite tough.  

It's impossible to describe the problem in a few words, but to settle it down it was necessary to amend some Federal Laws and issue many Government decrees.  The vessels were registered in Russia, and four Sakhalin fishing companies accepted the new rules, signed new agreements with the bank, and the ships worked throughout a year, earned money for loan payment.  The fifth company developed a business plan to justify prolonged loan payment.  The Bank and the Government Commission studied the document and decided to change loan conditions to all the Sakhalin companies.  Legal work is under way now, we need to amend Federal Law on budget 2011 and for planned period 2012-2013. 

As for the Kamchatka-based company, legal relations between it and the other stakeholders are the same.  However, shipowner pays no money and declines from dialog with Vnesheconombank.  The company management made promises, and used the ships for profit taking.  Actually, right after the interview Kamchatka-Vostok Co. was purchased as part of Akros by Karat holding.  Maybe, new owners will change their approach.