Russia's seafood market gearing up to make another big leap: IMPORTS

The volumes of imported fish production in Russia during the last few years were growing rapidly. This mainly has to do with the growing incomes and purchasing capacity of the population. The customers with high income level purchase not only expensive kinds of fish (salmon, trout, halibut etc.) and sea products other than fishfish (mussels, shrimps, squid) canned or unprocessed but also preparations (preserved, smoked etc.). The main species imported in 2004-2006 were herring, salmon, trout, mackerel, sprats, capelin, blue whiting and cod.

The main supplier of trout is Norway supplying on the average 82% of the imported trout. Norway also is the main supplier of salmons (95% of the imported total) and frozen herring (92%).

In the whole import of pilchard and sprats Mauritania (42%), Lithuania (22%) and Latvia (15%) occupied 79% and from the total import of frozen mackerel Great Britain (50%), Norway (17%), and Lithuania (11%) in 2004 occupied 78%.

From the nine countries-suppliers of frozen liver, roe and milt 4 of them supplied 83% of this production: Norway (46%), USA (23%), Iceland and Canada (7% each). From the 24 countries 87% of fish fillets were supplied by 6 of them: Norway (39%), Spain (18%), Argentina (11%), Poland and Kazakhstan (7% each) and Iceland (5%).

The main supplier of shrimps is Denmark (82%). China, Thailand, Peru and Chile delivered 88% of squid to the Russian market in 2004-2005.

During the period 2000-2005 the import value increased nearly sevenfold from $139,2 million to about one billion USD.

The main growth was observed in import of:

• Fresh frozen fish - from $114.6 million to $563 million or 4.9 times
• Fresh and chilled fish from $6.5 million to $131.9 million - 20.3 times
• Fish fillets from $10.9 million to $122.1 million - 11.2 times.

According to the Federal Customs Service (FCS), in 2005 the following developments were observed:

Fresh and chilled fish production excluding meat and fillets was imported by 104 companies. The volume of import of 49152 tons with a value of $129.1 million relative to 2004 increased by 41% or 14309 tons / $57.2 million though the number of importers increased only by 4 members. In 2005 TOP-10 companies occupied 70% of the whole imported volume - 34780 tons amounting to $42 million. In this respect conclusion could be made that the market of chilled fish production in 2005 became consolidated and structured. In 2004 TOP-10 companies occupied 71% - 24974 tons amounting $58.1 million.

Fresh frozen fish production excluding meat and fillets was imported by 612 companies. The volume of import was 659735 tons amounting $539.1 million. As compared to 2004 the number of importers decreased by 84 companies, while the volume of import increased by 9% or 59.3 thousand tonnes amounting to $106.8 million. In 2005 TOP-10 companies occupied 48% of the whole import or 291788 tons amounting to $261.1 million. It should be mentioned that the reduction of the number of importers and at the same time market stabilization let the TOP -10 leaders to hold the market under control. By comparison, in 2004 the TOP-10 importing companies occupied 46% of the volume or 24 974 tons and USD 58.1 million - in value.

Chilled production:

Among the "countries of origin" TOP -3 - Norway, Poland and Finland - hold 96.5% of chilled and fresh fish market that is 47423 tons. The other 15 "countries of origin" hold only 3.5% of market or 1730 tonnes.

As for Norway, the absolute leader in the shipments - 85.6% in the whole imported volume of fish, the main items are salmon with 27848 tons and trout with 12675 tons. On the domestic market Russia holds 1% with 487 tons. On the whole, in 2005 the import from Norway increased by 61% up to $820 million. The share of fish and fish products in the whole Russian import from Norway was 70.3% or $500 million. In comparison with 2004 the members of TOP-3 changed: Cyprus from the 2nd place moved to the 5th, France - from the 3rd moved to 7th, though the imported volumes increased: the import from Cyprus jumped by 40% or by 157.6 thousand tonnes.

Fresh frozen production:

The main quota in import belongs to Norway with 40% or 261.6 thousand tonnes, against the year 2004 the growth was 4% or 1.5 thousand tonnes.

Mauritania from the 3rd place in 2004 moved to the 2nd place when it increased the exported volumes from 56.3 thousand tonnes to 63.5 thousand tonnes in 2005.

The Great Britain moved to the 3rd place: the volumes decreased to the range of 33.9 thousand tonnes in 2005 against 56.3 thousand tons in 2004.

If compared to 2000 in 2005 the imported production increased 2.1 times or by 511 thousand tonnes. The average annual growth of fresh frozen fish import amounted to 30%. Taking in consideration that the catch in the near future will not provide for the food security of Russia concerning fish production and taking into account the actual growth of imports, the volume of imported fish production in 2010 may reach 3.7-4 million tons.

According to the statistics of the FCS of the Russian Federation, in 2006 the value of imported fish production amounted to $1278 million against 1007 million USD in the year 2005, while the volume decreased by 21% or by 179000 tonnes. The main drop in volumes of import was observed in the following groups: fresh frozen fish - by 61000 tonnes, canned fish (including caviar) by 29000 tonnes and chilled fish by 19000 tonnes.

The analytical- investment group of the "Norge-Fish" Ltd while analyzing import dynamics in 2005-2006 points out that in this period the volume of the fresh, chilled, frozen fish and fillets import decreased by 13% or by 100 000 tonnes. At the same time the growth of fish prices, growth of overheads and the customs expenses in 2006 (as compared to 2005) resulted into the growth of the total value of imported fish production by 22% or $178 million. The average price rise of 1 tonne of imported fish production was by 40%- from $1040 to $1450. During the years 2005-2006 the share of imported fish products in the whole Russian food imports and agricultural raw material decreased from 5.02% to 4.89%

* Fish and fillets fresh or frozen, excluding shellfish, mollusks and preparations (dried, dry-cured, marinated, etc.), canned fish.

The import dynamics for the whole spectrum of fish production show growth  from 2000 till 2006.:

The main growth of the imported volume was generated by such fish products as dried fish and salted fish, on the one hand, as well as fresh and chilled salmon, on the other hand, the annual rise averaging 23000 tonnes or 0.3% and 15 tonnes or 1.2% respectively. The growth of the fish fillets sales and the sales of prepared and canned fish are stable.

The average annual growth within 2000-2006 of the frozen imported fish has amounted to 7% or 71000 tonnes. The freshfrozen category has doubled since 2000 with an overall increase by 258000 tonnes of freshfrozen fish products. The frozen fish accounts for 68% in the total fish imports.

The main positions in the import items are held by:

Chilled fish production in 2006 consisted of salmon with 57% (18000 tons), trout 21% (6400 tons) while in 2005 all  the salmonids excluding trout occupied 56.7%, trout 26.5%, sprats  6.8%, herring 4.2% and saithe 3% .

The fresh frozen fish production: herring 37% (219000 tonnes), mackerel 27% (60000 tonnes), sprats - 21% (47000 tons). In 2005 TOP -10 freshfrozen items accounted for 93.1% from the total Russian import of the category.

Within the structure of the imported freshfrozen fish production the volume rating is as follows:

• Herring - 36.3% or 239000 tons decreasing against 2004 by 5%, 13000 tons;
• Capelin 11% or 73000 tons;
• Sprats 9.3% or 61500 tons rising by 47% against the year 2004 or 19000 tonnes
• Mackerel - 7.8% or 51600 tonnes decreasing by 42% from 51600 tons in 2004 to 34600 tones in 2005.
• Pilchards species (Sardinops and Sardinella) - 7.7% or 51000 tonnes displaying growth by 9200 tons or 22% against the year 2004.
• Fillets and other meat displayed growth of 18% for surimi (17000 tons) and 15% or 15000 tons for Alaska pollock.

The TOP-10 "countries of origin" hold 79% in the whole volume and 81% in the value of the import market. The main "country of origin" is Norway with 40%  of the goods imported.

Among the main TOP-10 Russian  companies that operate in the market of import are: "RUSSKAYA RYBNAYA COMPANIYA"(Russian Fish Company), DEFA" ,"GOLFSTREAM", "SKY-F", ","FRESH AND FROZEN FOODS".

The main species that Russia imports are:

• Salmons, including salmon and trout
• Pelagic species: herring, mackerel, capelin
• Shellfish and mollusks called in Russia sea products

Among the main Russian importers are:

Salmons, including salmon and trout

"RUSSKAYA RYBNAYA COMPANIYA" (Russian Fish Company), "SEVERNAYA COMPANIYA", "SKY-F",

 "FRESH AND FROZEN FOODS", "ROK-1", "DOSTOYNOYE PARTNYORSTVO"," "GLOBUS"," "DEFA, "NORGE-FISH","ATLANT-PACIFIC", "GOLFSTREAM".

Pelagic species: herring, mackerel, capelin

"RUSSKAYA RYBNAYA COMPANIYA", "ATLANT-PACIFIC"GOLFSTREAM", "DEFA," TALEX".

Shellfish/mollusks

• "ALBATROS","VICINJAYRUS", "LEDOVO","EMBORG", "AGAMA-TRADE", "OSA-TRADING".

In the recent time the market consolidation of fish importers is obvious. So, the number of importers in 2006 was reduced by 94 members - from the total number of 650 in the year 2005 to 556 members in the year 2006.

More detailed information on importers and their shares in volumes and values of the goods imported may be found in a separate market report prepared by "Norge-Fish").

The main channels for seafood distribution to the Russian regions in 2006

The main share of imported volumes - 86% and values -91% are conducted through:

Moscow and the surrounding region -36% of volume and 47% in value,

Saint Petersburg and the surrounding region-35% of volume and 31% in value,

Kaliningrad region -15% in volume and 13% in value.

According to Federal Customs Service, in the January of 2007 the fish production import jumped 1.7 times against the January 2006. This happened partly due to the lifted ban on chilled salmon and trout imports from Norway enforced in January 2006 and partly due to stricter control over contract prices during clearance to bring them in line with the market situation. According to Russia's Ministry of Economic Development in January 2006 the fish imports actually plummeted 1.5 times.

Аs for imports on the whole, the Ministry of Economical Development and Trade is forecasting reduction of the rate of year-on-year import growth from some 28% to the level of  16-17% in 2009/2010. Meanwhile, according to projections of Norge-Fish analysts, in the near future due to objective and subjective reasons the expected growth of domestic processing and competitiveness of domestic goods will not be able to match the rising demand. Moreover, if Russia will access the WTO the limits and barriers for the import of foodstuffs will be to a great extent lifted. Thus after receiving the WTO membership the average customs duties on agricultural products will be reduced by about 3%. That means that the market will become more open to imports. At the same time the tariff quotas that are in force now for import of beef, pork and poultry will be preserved until 2009, afterwards they may be prolonged.

By 2009-2010 the population's income is expected to grow 1.5-2 times on 2005 while the domestic production is projected to increase by 10-12%. This will occur versus a geometrical growth of consumption and the consumer basket especially concerning the imported foodstuffs and other consumer goods. In particular, imports of fish from Norway is likely to increase further with its current share of Russian imports standing at over 40% in volume and 52% in value.