November 3, 2003
Russia's Fisheries Production Expected To Decrease By 5% in 2003
Executive Summary
Total fisheries production is estimated to decrease by five percent in 2003 due to the depleted fish stocks in Russia's Exclusive Economic Zone (EEZ) and the poor condition of the fishing fleet. An estimated 70 percent of Russian fishing vessels are considered below standard and this is taking a toll on industry efficiency. However, fishery production is forecast to increase in 2004 due to positive moves to restructure the industry and increased activity in non-Russian fishing zones. The salmon catch exceeded expectations in 2003 due to unusual weather conditions but groundfish production was lower than forecast due to reduced cod landings.
Production
Wild Catch
According to the Russian Statistics Committee, the Russian catch in sea fisheries (wild catch) amounted to 3.3 million metric tons in 2002, down ten percent from 2001. Sources at the State Fisheries Committee (Goskomrybolovstvo) also announced that wild catch during Jan-Jun 2003 reached 1.5 million metric tons, down six percent versus the same period of 2002. Official sources state that the main reason for the drop in wild catch was a reduction in quota for 2003 of more than 400,000 metric tons. Goskomrybolovstvo has not yet released the official allowable catch levels for 2004, but many experts believe that they will not deviate significantly from 2003.
Other reasons cited for the decrease in 2003 were the reduction of basic fish stocks in the Russian Exclusive Economic Zone (EEZ), combined with a drop in catches per unit, and the poor conditions of the Russian fishing fleet. According to trade sources, 70 percent of the fishing fleet, approximately 3,800 vessels, is below standard due to lack of maintenance. In addition, most of these vessels are specialized and not appropriate for catching far-eastern species such as herring, flounder, and other species from the Pacific Ocean. Foreign vessels play a major role in harvesting resources in the Russian Exclusive Economic Zone and are often blamed for contributing to reduced fish stocks. In the first half of 2003, licenses were granted to 864 foreign vessels, including those from Japan, China, Korea, Norway, Lithuania and Ukraine.
According to the scientific chief at the State Fisheries Committee, Russia is only catching 72 percent of the fish it is entitled to and could increase its fish catch by 25 percent (by 1 million tons) if the country's existing stocks were used more effectively. Such an increase could come from exploiting species currently not fully utilized and reducing the illegal catch.
Aquaculture
In the absence of reliable government data for aquaculture production in the Russian Federation, industry sources estimate total fish farm production in 2003 to be approximately 90,000 metric tons, up two percent from 2002. It is also estimated that nearly 80 percent of fish farming comprises common and silver carp species. Production of other species is insignificant. However, there are some new initiatives with varieties of salmon in northwest Russia and in the Russian Far East, where 100 natural basins are suitable for fish farming, but most of the projects lack financing. Moreover, there are 20 farms in the Far East that cultivate high-value seafood products, like scallops, sea urchins and shellfish for export to Japan and China. Experts forecast a continued increase in production of around three percent per annum in the short term, reflecting optimistic prospects for economic growth.
The diversity of fishing reservoirs in the Russian Federation offers a strong opportunity for developing different production methods. Current development of aquaculture is concentrated in three main areas: ponds, industrial (artificial bodies of water), and ocean farming in pens. Government and private enterprises are developing new technologies to assist producers to improve production yields and reduce the cost of production. Some of these projects are joint ventures with foreign companies. However, output growth has been tempered by the following factors: a) demise of former agricultural support policies; b) difficulties of the farm-restructuring and enterprise-privatization, which creates an uncertain legal status of farm ownership; c) environmental degradation of inland waterways through industrial, urban, agrochemical pollution; d) occasional shortages of imported feedstuffs; e) shortage of investment capital for restructuring, maintenance, and for investment; and f) lack of new distribution and marketing channels, for both lower and higher priced aquaculture products.
Groundfish
The groundfish catch is forecast to increase by six percent in 2004, reflecting a likely increase in the fishing quota, new investments in the fishing-fleet, and expected higher catches outside the Russian Exclusive Economic Zone due to the implementation of fisheries agreements. The groundfish category in Russia consists basically of the following species: cod, haddock, pollock, and ocean perch. Cod has traditionally held by far the largest share within this category with catches in both the Atlantic and Pacific regions.
The decline in groundfish catch in 2003 is mostly attributed to a sharp decline in cod and pollack catch due to problems with issuance of quotas, depletion of stocks, and other restrictions derived from international agreements on catch quotas, such as in the Baltic sea.
Salmon
Post forecasts salmon catch to increase by nearly seven percent in 2004 because of the expected higher catch of salmon from the Russian Far East (RFE), which is responsible for the largest share of total salmon landings.
Salmon catch in 2003 is estimated to increase over 13 percent due to an unusually hot summer in Russia's Far East, which prolonged the salmon season. In addition, there was a significant increase in the harvest of pink (humpback) salmon, mostly in the Sakhalin region. According to trade sources, the Sakhalin region received an industrial quota for 90,375 metric tons of salmon species this year, of which 85,531 metric tons was of the pink species (Oncorhynchus gorbuscha).
The salmon fishing industry in Russia's Far East has recorded stable growth over the past three years, but faces a major problem with poaching. According to trade sources, unreported fishing in the region remains significant and linked to organized criminal groups.
According to trade sources, in the first half of 2003 salmon breeders released into RFE waters about 500 million Pacific and Atlantic Salmon fingerlings and ten million silver salmon fingerlings, twice as many as expected. The breeding programs are already showing results and are expected to help to increase the fish stocks in the coming years.
Crab and Crabmeat
Government Resolution #1270-P of September 2002 increased the fishing quotas for rare types of crab by allowing an additional catch of 220 MT of blue crab, opilio crab, shellfish and trumpeter fish in the North of Okhotsk sub-area of the Far Eastern basin. This additional allocation was aimed for scientific research. However, most crab was harvested not by scientists, but by commercial companies and sold for about $10 million dollars. The Resolution also raised by 40 percent (9,000 MT) the 2003 Total Allowable Catch (TAC) for crab.
In the North Okhotsk Sea, 100 percent of the TAC for crab was harvested in 2002 and 92 percent of the TAC was harvested in the West Kamchatka. However, only 76 percent of the total Russian TAC for crab was caught because of the poor conditions of fishing fleet, catch inefficiency, and unfavorable fishing conditions. Post forecasts crab catches to increase only by one percent in 2004, mostly driven by firm export demand.
Consumption
Overall consumption of fishery products in the Russian Federation is estimated to decline in 2003 as a result of higher market prices owing to reduced fish supplies, competition from other animal proteins (mostly from attractively priced poultry products), and higher prices for imported seafood products due to higher import costs. Local consumption trends are forecast to remain largely unchanged in 2004, unless an improvement in fish prices versus meat products increases the competitiveness of seafood products.
Market research indicates the majority of the population are consuming high fat food, although a growing number of Russian consumers are turning to fish for a health-conscious alternative. However, any major increase in consumption will largely depend on the strengthening of the Russian economy and increased consumer income.
Also, there is a growing niche for sales of further processed products, such as gourmet fish products, mostly in the HRI and catering sectors. This is largely due to economic growth, lower volatility of the exchange rate, higher consumer income, a booming tourism sector, and new marketing channels.
Trade
The Russian Federation became a net exporter of fish products after the devaluation of the ruble in 1998. The Russian State Customs Committee reported total Russian seafood exports passing through Russian customs was $383.5 million in 2002, 1.5 percent less than in 2001. During Jan-Jun 2003, Russia exports of seafood products were valued at $156 million, nearly eight percent above the same period last year. The main reason for the increase is attributed to higher exports of black caviar and other high value seafood products. Japan, China, Korea, and the United States continue to be the top markets for Russia seafood exports, while Norway and Finland are the major suppliers of fish products to Russia.
Unreported exports continue to be a difficult issue for the government and are estimated at almost thirty percent of the fish total exports. According to trade sources, underreporting is motivated by attempts to evade state and federal taxes, customs duties, and accounting for quota usage. A significant share of the unreported fish catch is in the Far East, where fishermen harvest in Russian territorial waters but ship the product directly to other countries (mainly to Japan, Korea and China) without registering the catch with Russian Customs.
Reduced domestic fish supplies have increased the share of imported seafood products in Russia. The Russian State Customs Committee reported total Russian seafood imports at $311.7 million in 2002, 48 percent above 2001. It is estimated that during Jan-Jun 2003, imports of seafood products reached $138 million, 70 percent more than the same period last year.
The United States is a major destination for a variety of edible fish and seafood from Russia. In 2002, the United States imported $271 million of fish and seafood products from Russia, up 26 percent from 2001, while Russia imported $11 million of fish and seafood products from the United States, up 31 percent from 2001, the highest value for the past 30 years.
Russia imports of fish and seafood products from the United States represent only two percent of the total value of agricultural, fish, and forest products imported from the United States. However, Russian exports of fish and seafood products to the United States account for 62 percent of all Russian exports of agricultural, fish, and forest products to the United States.
Opportunities for U.S. Exporters
The Russian market for seafood products is evolving quickly and there is plenty of room for U.S. exporters despite the fact that Russia is a net exporter. The Russian HRI sector is now key for demand in many Russian cities, especially Moscow and St. Petersburg. Opportunities mainly exist in the marketing of very high-quality and high-value U.S. seafood products. This also reflects the main trends for U.S. products in supermarkets that target high-income consumers. U.S. suppliers have the best opportunity in these sectors with processed salmon products and fresh/frozen fish of species not native to Russia.
Policy
Russian officials are currently developing a long-term development plan for the fishing industry. The plan calls for increasing wild catch up to 5.5 million metric tons by 2020. Although an ambitious target, this volume represents only half of the Russian seafood production of 10-12 years ago. The plan calls for higher investments in revitalizing the over-fished Russian Exclusive Economic Zone (EEZ) and making new investments in the shipbuilding industry in Russia to gain access to the open ocean and the economic maritime zones of other countries.
This is expected to materialize by increasing maritime cooperation agreements with other nations. According to Leonid Kholod, the Fisheries Committee Deputy Chairman, the committee encourages Russian trawlers to return to the waters of other countries, and to the open seas, particularly the central Pacific, where a Russian research vessel recently claimed to have discovered huge fish stocks. Currently, Russia has fisheries cooperation agreements with Morocco, Mauritania, Angola, Guinea-Bissau, Sierra-Leone, Mozambique, Madagascar, Korea, Japan, and Norway. Talks are underway for new agreements with the European Union, Vietnam, Chile, and Peru.
Source: USDA
