Latvia challenging increased import duties for canned fish in Ukraine

Latvia has asked the European Commission to review the decision of the Ukraine to increase 2.3-3.6 fold the import duties for a number of goods, seafood including. Should the EC confirm invalidity of the Ukraine's decision, the country would be facing punitive measures, reports www.fishnet-russia.com (www.fishnet.ru) with reference to Telegraph.

Latvia's Ministry of Agriculture says that increased import duties in the Ukraine will first of all hit Latvian fish processors and, not least of all, Latvian producers of canned sprat. (The Ukraine has grounded its decision by the wish to reduce import flows and encourage a boost of consumption of domestic seafood products.)

Latvia thinks that higher import duties will lead to lower competitiveness of products labeled as "Made in Latvia". Besides, Latvian officials say that the Ukrainian decision does not comply with the nation's obligations in the World Trade Organization.

In the meantime, the Ukrainian sources say that imported canned sprats have become uncompetitive on the Ukrainian market also due to stable rise of hard currency exchange rates in the recent months. The share of imported sprats on the domestic market amounts to no more than 22% now, Ukrainian producers won their position on the market several years ago. According to general director of Interrybflot, owner of Akvamarin label, Vladimir Lesnoy, now in the Ukraine only such more expensive brands as Rizhskoye Zoloto have stayed on the market, and the target audience of these brands does not depend on the product value.

According to the market operators, the 22% share of the imported sprats on the Ukrainian market is divided between Latvia with 17% and Estonia with 5%. The domestic producers control 78% of the market, of which 30% belong to Interrybflot and Yuzhnaya Manufaktura Proliv, another 18% are held by Akvarium and Ekvator, and the remaining 30% belong to small market players.

The current situation on the canned sprat market leaves much to be desired. While last year traditional turn-of-the-year sales jumped 2-4 fold, in the holiday season 2008-2009 the sales of canned sprats were in keeping with the results of the previous months. As one of the reasons, canned sprats have ceased being a very popular dish on the holiday table.

Latvian analysts confirm that the import duty increase will affect canned sprats, but not frozen and live fish. The decision can cost the Ukraine fines, the total value of which can hardly be forecasted because the Ukraine has become the first nation to make such a decision. The Latvian side will evidently insist that the Ukrainian novelty has resulted from lobbyism of the domestic producers and its cancellation under pressure from the EC is highly probable. According to the market players, the volume of the Ukrainian canned sprat market amounts to 47 million nominal cans (approximately equal to 325g). The retail price per one can in the Ukraine reaches 20 hryvnias (ca.2.50 USD).

Latvian export of fish products and canned fish to the Ukraine correspondingly amounts to 13% and 7% of the total volume of the nation's export of fish products. In the recent four years the volume of shipments has more than doubled.