Russia planning nationwide network of seafood markets

By April 2008 Russia's State Fisheries Committee is planning to complete analyzing foreign experience of running seafood auctions/exchanges, develop a Russian model and give a final assessment of the project cost which is now estimated at more than 50 million Euro, according to Oleg Polyakov, General Director of FGUP National Fish Resources (the enterprise is subordinate to the State Fisheries Committee).

Towards that end, in the middle of February 2008 the Committee visited seafood auctions in Reykjavik and Copenhagen and concluded that the model could be adopted in Russia as well. The costs to establish one exchange in Europe are estimated at 5-6 million Euro with 40% subsidized by the European Commission. In the coming weeks the Russian side will also study the experience of Asian countries (Korean and Japanese auctions) and examine operations of the Norwegian Seafood Exchange. Earlier in December 2007 head of the State Fisheries Committee Andrey Krainy said that due to its large territory Russia could not adopt the model of the Tokio Exchange trading in live fish with the contractors present on-site.

The State Fisheries Committee has defined the deadline according to which the first trial auction located in Moscow should start working by 1 July 2008 and as of 1 January 2009 the auction should work in normal mode. As per late-February the Committee planned to trade in seafood at the European-Asian Seafood Exchange which had already hosted auctions of seafood capture quotas until 2004. At the same time, there will be 5 affiliates of the Exchange in five large cities of Russia, namely in Vladivostok, Yuzhno-Sakhalinsk, Petropavlovsk-Kamchatsky, Murmansk and Kaliningrad, though the country needs about 10 operations of this kind. Polyakov has also noted that seafood auctions can be financed both by private owners and the government cooperating in the form of partnerships and/or purely by private capital.

According to the project, the seafood auctions will be co-founded by large companies of the industry. The auctions will earn 0.1% of the deal with the money to be spent as the exchanges' maintenance costs.

The auctions will have two main targets. First, the auctions will sell the so called second-hand quota shares withdrawn from poachers or from companies which have been underexploiting their quotas as well as new quotas. The idea is to get rid of rentiers in the seafood industry because as of 2009 the company quota shares will be allocated for 10 years, twice longer than the previous quota shares valid for 2004-2008.

Second, the seafood auctions will provide the mandatory channel for sale of aquatic biological resources meant for export. The compulsory condition of sale of exported products via seafood auctions will be stipulated by the special order of the government. Such form of seafood export from Russia is expected to lead to legalization of shipments, control and monetization of payments (so far the payments will sometimes be made in the form of barter deals).

Unlike export sales, when supplying fish to the domestic market the Russian fishermen will be able to choose whether to sell their catches via auctions or ship them directly to the buyer. According to the State Fisheries Committee, seafood trade via auctions under the above mentioned conditions is supposed to deprive the Russian market of a large number of brokers thus hopefully pushing down the retail fish prices in Russia by 20-40%.

Moscow wholesale seafood market

According to head of the Committee's centre of public communications Alexander Saveliev, investments into Russia's first wholesale seafood market in Moscow region are estimated at ca.50 million USD. Saveliev says that the project will be realized by FGUP National Fish Resources together with a number of commercial companies. As per late February, the organizers were searching for a construction site in Moscow region so that it would be close to an airport and a railway station.

Saveliev says that the project is based on the model of the wholesale seafood market near Madrid. The Spanish market occupies nearly 100,000 square meters of sheltered area with the booths of various producers and foodservice zones.

Thanks to such markets Russia's major fishery industry body is going to reduce the number of intermediaries between the fishermen and the consumers thus pushing the seafood prices down.

The wholesale seafood market in Moscow region is to be launched in 2009.