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USDA GAIN: Fish Production


24 June 2013

USDA GAIN: Russia Fish and Seafood Production and Trade UpdateUSDA GAIN: Russia Fish and Seafood Production and Trade Update

Total wild seafood catch in Russia has remained stable during the past few years largely unchanged in 2012 and is only up slightly so far in 2013. Russia’s fish processing industry continues to be underdeveloped, although more investment is flowing into that sector. In order to further develop the fishery industry, on March 7, 2013, the Russian Government passed Decree # 315-P “Federal Program on the Development of the Russian Fishery Industrial Sector from 2013 till 2020”. The main objective of the Program is shifting the fishing industry in Russia from its focus on production and exporting of raw materials (low-value added products) to a focus on adding value to fish products, sustainable harvesting, and the introduction of new technologies to ensure Russian fish competes globally

USDA GAIN: Fish Production

General Information:

Production

Total wild catch in Russia was largely unchanged in 2012, reaching 4.25 million metric tons (MMT) in CY 2012, thus a small decline from CY 2011. The fish and seafood catch in Russia has stabilized over the recent years, after the sharp decline at the beginning of the century. So far in 2013, wild catch has been increasing, and total catch for January-May 2013 reached 1.8 MMT, a growth of almost 2 percent versus the same period in 2012. During this period there was an increase in catch for cod, far eastern cod, herring, greenling, and rockfish, while catch levels decreased for flounder, crab, grenadier, and pollock. Despite lower catch, pollock still accounted for 60 percent of Russia’s total fish and seafood catch between January and May 2013, followed by cod, herring, and flounder.

Wild Catch in Russia, in MMT

Source: Federal Fishery Agency (Rosrybolovstvo)

Catch by Major Species, TMT, 2012

Of the five harvesting basins in Russia, the Far Eastern basin accounted for 68.5 percent of total annual catch in 2012, followed by the North Atlantic basin. In general, stocks have been improving steadily in the Far East and in the North Atlantic basins over the course of the last six to eight years. In Murmansk region, for example, harvest levels bottomed out in 1998 due to massive overfishing and poor regulations. However, stocks have now begun to recover, specifically cod and king crab.

Catch by Basins in 2012, %

Source: Federal Fishery Agency (Rosrybolovstvo)

Catch of Pacific Salmon

Russia is a major producer of Pacific salmon. The most important producing areas for Pacific salmon are in the Far East. The Total Allowable Catch (TAC) for Pacific salmon is set only for the exclusive economic zone and has been stable over three years at 22,500 MT. However, the main catch comes from the coastal areas and rivers and every year scientific research institutions on the local and federal levels come out with the recommended catch for each zone in the Far East based on fish stock levels. In 2008-2012, the average annual catch for salmon fluctuated from 325,000 MT to 538,000 MT. These production figures are higher than those achieved during the Soviet era. The increased catch of salmon is attributed to government initiatives to improved regulation and management of salmon stocks as well as better research.

Kamchatka and Sakhalin are the two major regions for the Pacific salmon catch. In CY 2012, Kamchatka fishermen harvested 254,700 MT of salmon, followed by Sakhalin with 129,800 MT and Khabarovsk with 50,800 MT. Scientists forecast a 10 percent increase for total salmon catch in 2013 (as every other year there is typically a better spawning season for salmon). Salmon is one of the most popular traditional species in Russia. Analysts believe that demand for salmon will to be strong as a result of growing population with healthier eating habits and increasing Russian production.

Russia: Catch of Pacific Salmon, 2009-2012, TMT

Source: Federal Fishery Agency

Total Allowable Catch (TAC)

The Russian government sets the total allowable catch (TAC) levels for fish and seafood annually. The Ministry of Agriculture of the Russian Federation approved TAC levels for 2013 by Order #571 issued on October 31, 2012. In general, the TAC for most species has been relatively stable from year to year, although some species have seen significant fluctuations. For example, the TAC for Pacific herring in the Bering Sea had more than 7-fold increases between 2011 and 2013. The TAC for squid for 2013 was up 10 percent from previous years. The increase has also been noted for cod and snow crab opilio from the Okhotsk Sea, and king crab from the Barents sea. The rise of these TAC levels is attributed to recovering fish stocks, as well as more detailed scientific research and collaboration, and better fish population forecasts. For example, in October 2012, the Russian-Norwegian commission decided to increase the total TAC for cod for 2013 in the Barents sea (for both Russia and Norway) by 30 percent or up to 1 million metric tons, including a TAC for Russia which increased by 50 percent to 430,000 MT (versus 2012 levels).

Some TAC levels, however, have declined. The TAC for pollock from the Okhotsk Sea was reduced from 959,000 MT in 2012 to 920,000 MT in 2013; for Pacific herring from 293,000 MT in 2012 to 259,000 in 2013. The TACs for different types of crab have stabilized with slight increases, except for snow crab opilio from the Bering sea and tanner crab from the Sea of Japan. In addition, there is a significant drop in TACs for Pacific squid between 2011 and 2013, from 200,000 MT to less than 1,000 MT. These changes are said to be a result of overfishing during the 1990s and early 2000s, and the Russian government’s effort to create sustainable fisheries and to restock the population of dwindling species.

Processing

Russia’s fish processing sector continues to be underdeveloped, and this has been partially responsible for the rise of Russia’s imports of fishery products. As a result of poor processing facilities, Russia continues to be at a competitive disadvantage relative to other global producers. In fact, a significant amount of fish imported to Russia from China was actually caught in Russia and shipped to China for processing. The government has tried to curb this phenomenon of overseas processing for the Russian market by introducing legislation that requires all fish and seafood caught within Russia’s territory to be cleared by Russian customs at Russian ports (rather than being shipped directly from the vessels at sea). This requirement has meant that more of the catch has returned to Russian ports, and thus has benefited processors in port cities such as Vladivostok where they report increased availability of fish at these port cities and reduced prices. Moreover, local governments in the Far East and Murmansk region have also increased funding support for costal processing facilities.

Currently, there are 680 small, medium, and large fishery companies operating in Russia. The country’s most significant fishery processing facility is found in the Far Eastern basin, where 55 percent of Russia’s total processing capacity is located. About 19 percent of the country’s fish processing capacity is located in the Northern basin, while the Eastern and Caspian basins combined account for 12 percent of the sector’s processing potential, and the Southern basin makes up only 2 percent. Processing facilities for canned production utilize 45 percent of Russia’s total processing capacity.

In 2012, Russia’s production of fish and fish products, including canned fish was at 3.6 million metric tons (MMT), down only slightly - 0.4 percent - from 2011. Frozen fish is predominant in overall production and its share is 62.6 percent, (or 2.2 MMT) followed by other fish products at 21 percent, production of canned fish at 4 percent, frozen fish fillet at 2.5 percent, fish and culinary products at 1.9 percent, and preserves at 1.1 percent.

Production of fresh and chilled fish in Russia in 2012 decreased 1.2 percent, to 1.4 MMT in comparison with 2011. The top 3 federal districts, Far Eastern, North-Eastern and Southern, account for 95.2 percent or 1.3 MMT of the total production of live, fresh and chilled fish in Russia.

The strongest growth in processing has been in frozen fish fillets, which have had more than 20 percent growth during the past 2 years, and frozen roes and livers also increased more than 15 percent during this time frame. However, despite this rapid growth, these products still make up a very small share of total production (2.5 percent and 1.5 percent respectively). The increase in frozen fish fillets and roes and livers is attributed to growing demand for these products and changing eating habits to healthier food.

Consumption

According to Federal Fishery Agency, Russian current annual per capita fish and seafood consumption is estimated at 22 kilograms. Fish consumption patterns will continue to depend heavily on household incomes, prices, and preferences within the population. Consumption preferences of the Russian population have been stable over the last years and include herring, pollock, mackerel, salmon and trout. Frozen fish is also traditionally popular in Russia. The projected outlook suggests a higher domestic demand for fish and an increase in per capita consumption, both in lower-priced segments such as herring, hake, pollock, and cod, as well as in more expensive fish and processed products. Higher imports of chilled fish and ready to eat products are due to changes in eating habits, increased consumer demand, and economic recovery.

During 2012 wholesale prices for the main species including Pacific herring, cod, haddock, capelin and salmon were stable (with fluctuations following typical seasonal trends). Consumer prices for fish and seafood in 2012 rose modestly by 0.5 percent.

By January 1, 2013, total annual stocks of fish products and seafood products increased by 14.1 percent, including stocks of fish cans and preserves by 7.3 percent. According to the Federal Fishery Agency, the share of retail trade of fish and seafood in overall retail trade of food products has increased from 7.4 percent in 2011 to 8.2 percent in 2012.

Trade:

Imports

For 2012, Russia’s imports of fish and fish products equaled $2.55 billion, almost the same as in 2011. However, according the Federal Custom Committee, Russian imports of fish and seafood (HTS code 03) so far in 2013 (January-April) have increased by 9 percent from the same period last year. At present, Norway remains the largest supplier of fish products to Russia, with exports totaling over $1 billion in 2012 (41 percent market share), followed by China at $291.8 million (11 percent), Iceland at $158.1 million (6.2 percent) and Chile at $125.6 million (4.9 percent). United States has around 2 percent market share in overall Russia’s imports of fish and seafood.

Russian Import Structure by Major Species in 2011-2012, 1,000 MT

Source: Federal Fishery Agency

In 2012, Russia’s fish and seafood imports from the United States decreased sharply to $39 million, dropping by 35 percent when compared to 2011. The fall in trade was a result of a poor salmon catch in Alaska which negatively affected the share of salmon roe shipped to Russia. Normally, salmon roe (HTS 030390) constitutes about 35-40 percent of total imports from the United States. Currently, 186 U.S. fish fishery facility are on the approved list by the Russia Veterinary Agency for shipping fish products to Russia. However, between January-April of 2013, imports from the United States started to rebound and increased by 27.9 percent versus the same period in 2012. The share of frozen hake (HTS 030366) has accounted for 23 percent in the total U.S. imports during this period followed by frozen fish livers and roe (HTS030390) at 11 percent, and caviar substitutes prepared from fish eggs (HTS 160432) at 9.2 percent. The import of high value seafood, such as lobster and crabs has also significantly increased. And further increases in Russian imports are expected due to strong demand for salmon and salmon roe, frozen fish for processing as well as for other premium categories of fish and seafood, primarily for HRI sector.

Exports

Total Russian exports of fish and seafood in 2012 fell to $2.4 billion, a drop of 10 percent in comparison with 2011. The Federal Customs Committee reported that Russian exports of fish and seafood (HTS code 03) for January through April 2012 decreased 16 percent to $1.05 billion. In 2012, Russia’s primary seafood export markets were concentrated in East Asia, with exports to South Korea totaling $995 million (41 percent), China totaling $831.4 million (35 percent of Russia’s total seafood export), and $241.5 million to Japan (10 percent).

As mentioned previously, some of Russia’s fish exports to China are re-imported back to Russia as processed product. Many fishing companies prefer to supply Asian markets rather than to try to sell their products domestically, as Asia offers more competitive prices, fewer logistical and administrative obstacles, and large and steady consumer demand. Whether fish is supplied domestically or exported also depends on the species, as for example, most pollock, mollusks, and crabs are exported, while most herring and salmon are sold domestically. International trade in crab and illegal fishing of crab continues to be a challenging issuet. While the discrepancy between the Russian export number for crab and import numbers of Russian crab by major imports (in the past importers reported much higher imports from Russian than Russian Customs reported exports to these countries) had been shrinking, in 2012 the gap between these numbers widened.

Government Policy:

In order to support the fishery sector, on March 7, 2013, the government passed Decree # 315-P “Federal Program on the Development of the Russian Fishery Industrial Sector from 2013 till 2020”.

The federal government has appointed the Russian Ministry of Agriculture as the agency in charge for implementation of the Development Program, and the Federal Fishery Agency’s co-partner for implementation of the Development Program. In general, the document sets objectives, tasks and major developments of the fishery sector until 2020, as well as highlights mechanisms for implementation of the activities in the sector and indicators for their efficiency.

The main objective of the Development Program is to ensure the shifting of the fishing industry in Russia from one focused on production and exporting of raw materials (low-value added products) to one focused on innovative development with preservation (adding value), sustainable harvesting, and the introduction of new technologies to ensure fish and seafood products produced in Russia will compete globally.

The Federal Development Program consists of 6 subprograms: “Organizing of Fishing”, “Aquaculture Development”, “Science and Innovation”, “Protection and Control”, “Modernization and Motivation”, and “Providing Conditions to Ensure Implementation of the Federal program”. The Federal Program will be implemented in 2 stages: the first stage in 2013-2017; and the second stage in 2018-2020.

The Development Program presents 2 possible scenarios for the sector’s development, depending on the amount of budget financing which will be made available:

  1. The first scenario sets total financing of the Development Program for both implementation stages (until 2020), at 90.6 billion rubles ($2.9 billion), including 88.9 billion rubles allocated from the federal budget, and 1.7 billion rubles as extra budgetary allocations. The targets set in this scenario are not optimistic, with the total fishery catch forecast to reach 4.5 MMT, only a 5 percent total increase (or less than 1 percent a year) from 2012, and the forecast for aquaculture production at only 150,000 MT, only a 7 percent total increase (about 1 percent a year) from 2012. Fish, processed fish products and canned fish production is set at 3.9 MMT (compared to 3.6 MMT in 2012), and annual average per capita consumption is forecast to reach 22.7 kg, compared to 22 kg in 2012. The share of domestically produced product in the local market is forecast at 68.2 percent; there are no official statistics on this for 2012 but current estimates are 70 percent.
  2. The second scenario (referred to as the optimized scenario) for the Development Program set a budget of more than double the first scenario, at 191.8 billion rubles ($6.393 billion), including 184.2 billion rubles from the federal budget, 5.9 billion rubles using the funds of consolidated budgets of the subjects of the Russian Federation, and 1.7 billion rubles as extra budgetary allocations. Implementation of the Federal Development Program calls for large scale renovation of material and technical resources in the fishery industry, more government influence and involvement in the economic activities in the sector, improved regulatory and legal framework, development of government and private partnerships and implementation of new federal and regional specific programs. Targets for this scenario are much more optimistic, with the fishery catch by 2020 at 6.2 MMT (up 44 percent from 2012), aquaculture production 410,000 MT (nearly triple the 2012 level), production of processed fish products and canned fish 5.3 million MT (up 36 percent from 2012), annual average per capita consumption at 28 kg (up 27 percent from 2012), and the share of domestically produced fish and seafood in the domestic market at 85 percent.

Regional Focus – Murmansk

Murmansk is the largest city in the world north of the Arctic Circle, and the fishery sector maintains a large role in the region’s GDP. This region accounts or 16 percent of the overall fish and seafood harvest in Russia. The majority of fish (62 percent) of the regions catch is actually harvested from zones of foreign countries including the Norwegian economic zone, Greenland zones and the Faroe islands. The regional annual fish catch is 550,000 to 660,000 tons. Murmansk's fish catch dropped significantly (50-65 percent) with the fall of the Soviet Union. However in the last 5 years the sector has stabilized as a result of improved fish stocks in Barents sea, primarily for cod, and increased catch quota for cod.

According to the Fishery Industry Committee of the Murmansk region, the region exports 40 percent of its total catch in volume and 70 percent in value and Murmansk is improving its processing infrastructure as a result of government programs aimed at renovation of coastal fish processing. There are 142 fishing companies in Murmansk that own quotas for catching in the coastal area, and currently the city has roughly 46 processing facilities, of which 80 percent are small or medium-sized. The oblast processes 510-580,000 tons of fish products annually. The regional government provides financial support to local processing companies by covering interest rates on credit from Russian banks aimed at purchasing raw material for further processing as well as for fish breeding, feed for fish, equipment and renovation of aquaculture facilities. The EU, Norway, and the United States are the primary destinations of exports from this region, and cod, white fish, ground fish, and king crab are the primary products exported, with the largest value attributed to white fish. Local Murmansk companies have expressed concerns about falling prices of fish products because of weaker demand in the EU due to the economic situation there, and the increasing catch of some species, such as cod.

There are 214 fishing vessels registered in Murmansk, of which 12 are large, 122 are medium-sized, and 68 are small. However, more than half of the boats are over 25 years old. This is a similar situation throughout the Russian fishing fleet. While in general the investment climate in the sector is favorable, uncertainty surrounding the future of quotas is hampering more long-term investment. The current quota allocation lasts until 2018, and as a result many companies are waiting until that point to make sure their allocation does not change before investing in new vessels or refurbishing old ones. Most companies are lobbying for a new 20-year fishing quota allocation, rather than the current 10-year, as a way of boosting investment.

Catch Distribution by Catching Zone in Murmansk Region, 2012

Source: Fishery Industry Committee of Murmansk Region

Dynamics of Fish and Seafood Harvesting in Murmansk, 1,000 MT

Source: Fishery Industry Committee of Murmansk Region

Aquaculture in the Murmansk region has developed dynamically as a result of financial support provided by the regional authorities to subsidize interest rates on credits for purchasing fish breeding stock and the renovation of infrastructure. Recently, a large group of companies “Russkoye More” signed an investment contract with the local government for investing in number of fish hatcheries in the coastal areas of Barents and White Seas. The local authorities estimate potential in aquaculture production in the region at 25,000-30,000 MT in mid-term. The most popular types of fish for aquaculture production are Atlantic salmon, trout and cod.

Aquaculture Sector Development in Murmansk Region, 1,000 MT

Source: Fishery Industry Committee of Murmansk Region

Structure of Fish Processing Industry in Murmansk Region, 2012

Source: Fishery Industry Committee of Murmansk Region

June 2013

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