Russian traders looking into repercussions of looming complications for import of Norwegian seafood
More than one week passed since the day when the Russian veterinary inspectors sent a letter to the Norwegian Embassy in Moscow warning that seafood imports from Norway will be banned as of 1 October current unless the exporters submit EU import permits with transit cargoes and the processing plants are audited and approved for export to Russia. In the meantime, there are yet no indications that the problem will be settled amicably, purchasing manager of Saint Petersburg based JSC ZAO Orghimecology Ms. Tatiana Kuzmina told RFR on 21 September 2006. (Some positive news however arrived that six more Norwegian plants have been approved by the Russians for export of fresh salmon to this important market.)
The Norwegian exporters also say that they cannot get any official information. They are only aware that the veterinary service of Norway as well as the nation’s Minister of Foreign Affairs are trying to find a solution of the problem via “various channels”.
Official grounds mentioned in the letter of the Russian vets to Norway (the original text of which was actually not shown either to importers and exporters) are multiple cases of forgery of Norwegian veterinary certificates discovered by the Russian side when checking the cargo at the border. The trend has allegedly made the Russian authorities require introduction of a new form of veterinary certificates for seafood export to Russia with the new documents impossible to be forged. However, as the current certificate form has also been approved by the EU, there is no possibility to develop a new form and get its EU vet approval within the deadline of 1 October 2006.
Besides, the Russian veterinary authorities insist on auditing and certifying all the fish plants producing and processing seafood for export to Russia, which is also physically impossible to do until 1 October because now in Norway there are more than 100 fish plants freezing whitefish and pelagic species, let alone salmon and trout farms.
Although the Norwegian exporters do not doubt that there indeed were cases of export certificate forgery, they are more than sure that it was done with knowledge and consent of the Russian importers, most probably in the Baltic States engaged in transit of the largest share of salmon/trout to Russia.
It is quite possible that seafood products from Norwegian processing plants banned for export to Russia were imported into the adjacent countries where they were relabeled and then imported to Russia under forged export certificates. Though the Norwegian exporters claim that they have had no idea of the above practice, obviously they have still been in the know, because the final customer is normally known to the supplier, Kuzmina claimed.
Besides, the Russian veterinary authorities have been fed up by the practice of importing officially banned chilled salmon disguised as frozen fish on paper. Since 1 January current when the ban for imports of chilled Norwegian salmon/trout to Russia was introduced, only two Norwegian exporters have succeeded in getting Russia’s approval for export of their products to the country. However, taking into account that the volumes of chilled fish exported by those two factories to Russia exceed their production capacities, it is quite sensible to assume that either the documents have been doctored or the products have been relabeled. All the above statements can be regarded only as suppositions, Kuzmina underlines.
However, those are only some of possible reasons discussed by exporters and importers. In the third week of September the Norwegian and Russian officials are planning to meet to discuss possible ways of settling the problem. Though it is not clear if the meeting will take place despite all the efforts of the Norwegian side.
Most of the exporters think that the threatening ban is part of a political game started in January current with a ban for import of chilled Norwegian salmon/trout to Russia due to the high content of heavy metal salts. Russia and Norway still have a number of non-settled issues touching catches, quotas, the border between the fishing zones, etc. Most likely, those issues underlie the current actions of the Russian veterinary authorities. In this case, the problem’s solution will take much more time than until 1 October and will most probably call for some serious concessions from the Norwegian government in the above mentioned issues.
Expected consequences
At present the Norwegian fleets have suspended their operations on the mackerel grounds and as per mid-September the species has not been harvested nearly for a fortnight, because the Norwegian processors have not yet reached an agreement on minimum prices to be charged by the fishermen. Russia has traditionally been the second largest market for the Norwegian mackerel after Japan, while since last year Russia has even managed to surpass Japan because the Japanese importers have turned down the Norwegian mackerel due to extremely high prices to their mind and switched over to other countries such as Canada. This year the situation has been even more favorable for Japan as the local fishermen have been reporting fairly generous catches of mackerel Scombres Japonicus with the average weight of 500 grams which is a good substitute for the Norwegian mackerel 600+.
Thus, due to the expected closure of the Russian market, Norway will have to decrease minimum prices for mackerel by at least 1/3 as compared to last year prices. As per mid-September the Norwegian fleets still had to exhaust the remaining 96,000 metric tons of mackerel out of their total annual quota. The fishery could have been gathering momentum, but the exporters and processors stopped purchases of the fishermen’s catches due to zero demand on the market. Some exporters have also got coldstore inventories of both winter and new mackerel which have been exported to Russia while still allowed.
Along with Russia and Japan, mackerel has been purchased by the Ukraine, though despite a considerable growth of seafood import from Norway in 2005 the Ukraine will not be able to substitute Russia even partially on the pelagic fish market. Besides, the Norwegian mackerel has been enjoying a demand from Korea, Thailand, Turkey and some Balkan countries, but they are interested mainly in cheaper small sizes, thus the potential market for large sizes from Norway remains vague.
Talks on minimum prices for mackerel have been conducted practically on a daily basis, but the sides have not yet reached concordance. The end of September – the start of October is the best period for mackerel fishery when the fish is still very large and fat with the red feed content staying at the zero point. However, until the sides agree on minimum prices, the fishery will not be resumed. The fishermen have been bearing losses due to the current situation in the industry.
Herring
This year the herring fishery season has had a later start as compared to 2005. The fishing vessels have been out to sea nearly every day, but they have not yet found fishable concentrations. Probably, it is too early, Kuzmina surmises.
Minimum herring prices for the season 2005-2006 have not been announced, but the Norwegian organization FHL is planning to set minimum prices at the level enabling the producers to reduce all the herring into fish feeds if needed.
Russia is the most important market for the Norwegian herring and it cannot be substituted by any other country. Should the situation develop in the worst possible way, large size herring would go to the Ukraine, while small herring would be reduced into fishmeal and fish feeds and only small volumes of herring would be delivered to the EU canneries.
Decrease of minimum herring prices would considerably cripple the economy of the Norwegian fishery industry. The Norwegian exporters fear that the fishing vessels may start landing catches in Scotland, Ireland and Iceland for further completely legal export to Russia under the documents of other countries. Should this happen, losses would be borne not by the fishermen, but by the Norwegian processors and exporters. The Russian market would therefore feel no difference without any shortage of fish to appear, though later on the Norwegian exporters would have to fight hard to win back their lost shares on the Russian market. At present the exporters are trying to do their best in order to limit supplies of herring to Russia via other channels.