Review of the Russian Fish MarketResearch by the Company “I-Marketing”
It would seem that the food embargo and ruble devaluation should have contributed to the development of domestic fishing and fish farming. Alas, the effect turned out to be the opposite – not only did Russian production not grow in 2014–2015, it dropped, thus demonstrating the long-standing problems of the fishing industry.
In 2014, 1.11 million tons of live, fresh and chilled fish were produced in Russia, which is 20% lower than the figure of 2013; in 2015 the volume of production equaled 0.93 million (-16% to 2014). According to estimations by "I-Marketing", it will further decrease by 15-20% in 2016.
In the structure of domestic production of live, fresh or chilled fish, the largest share of 27% falls on Sakhalin region. It is followed by Kamchatka Krai (17%), Primorsky Krai (10%), Magadan region (10%) and Saint Petersburg (7%).
It should be noted that during the first 10 months of 2016 production decreased in Sakhalin region (-54% to the similar period of the previous year), Kamchatka Krai (-14%), Saint Petersburg (-6%), and Khabarovsk Krai (-46%). Production growth was observed in Primorsky Krai (+144%), Magadan region (+74%) and Kaliningrad region (+9%).
The volume of production of processed and preserved fish and fish products increased in 2015 and during the first 10 months of 2016. Growth was due to an output increase in certain segments (due to import substitution), namely: frozen fillets, frozen flesh and minced fish as well as fish preserves and canned fish. Other segments, such as frozen, salted and smoked fish, demonstrated a decline.
In the structure of fish production the largest shares are accounted for by Kamchatka Krai (19%), Primorsky Krai (17%), Sakhalin region (13%), Murmansk region (13%), Kaliningrad region (9%) and Khabarovsk Krai (8%).
Production growth during the first 10 months of 2016 (to the similar period of the previous year) was recorded in Kamchatka Krai (+3%), Primorsky Krai (+10%), Sakhalin region (+3%) and Khabarovsk Krai (+15%). Production decreased in Murmansk region (-11%) and Kaliningrad region (-4%).
In the structure of frozen fish production (excluding herring) the leaders are Kamchatka Krai (23%), Murmansk region (16%), Sakhalin region (15%) and Primorsky Krai (14%).
The volume of fish imports into Russia decreased almost twofold, from 788 thousand tons in 2013 to 424 thousand tons in 2015. Imports of fresh fish, frozen fish and fish fillets in 2015 dropped by 79%, 41% and 42% respectively compared to 2013.
In monetary terms, fish imports in 2013-2015 declined by 51%; in particular, imports of fresh fish decreased by 81%, frozen fish – by 37%, fish fillets – by 39%.
We would like to note that, in the structure of imports, there was an increase in the share of frozen fish – from 65% in 2013 to 72% in the first 10 months of 2016 in physical terms, and from 45% to 58% in monetary terms. This was caused by the withdrawal of fresh and chilled fish suppliers from Norway due to the food embargo.
In imports of fresh and chilled fish in 2015, supplies of all types of fish decreased, which included salmons (-67% and -70% in volume and value terms respectively), trout (-86% and -91%) and sea breams (-34 and -36%).
Regarding imports by supplying countries, imports stopped from European counties, which primarily concerned supplies of Norwegian salmon and trout. Fish deliveries from the Faroe Islands could not compensate for the drop in imports from Norway.
Imports of frozen fish in 2015 declined by 31% in physical terms and by 35% in monetary terms compared to 2014. Supplies of the following types of fish declined the most: flatfish (-95% and -86% in volume and value terms respectively), Alaska Pollock (-80% in both volume and value terms), and tilapia (-47 and -48%).
In the geographical structure of imports, there was an increase in the shares of the Faroe Islands (from 10% in 2013 to 32% in 2015), Chile (from 10% to 21%), China (from 2% to 9%) and Morocco (from 2% to 5%) in volume terms.
The volume of fish exports in 2015 (including ‘shadow’ exports that are taken into account by state agencies) amounted to 1.7 million tons, which is 6% higher than the figure of 2014, valued at $2.9 billion (-4% to 2014). It is worth noting that, according to official data by the Federal Agency for Fishery, the share of the shadow sector (fish transshipment) is about 23%, whereas in reality the figure is significantly higher.
In the structure of exports, the largest share falls on frozen fish (around 94%), in particular, Alaska Pollock, herring and cod. The key recipient countries of Russian exports are China and South Korea.
Why does Russian fish not end up reaching domestic consumers? There are several reasons for this.
The remoteness of major consumers and the deteriorated state of ports and logistics infrastructure play an important role. The bulk of fish catch falls on the Far Eastern Basin (55-65%), whereas the majority of consumers are concentrated in the Central and Volga Federal Districts. There are no normal logistics established for fish from the Far East to the central part of Russia. Transportation of fish is currently carried out in refrigerated vans, most of which are critically worn out, and therefore they cannot provide the appropriate transportation quality. In addition, there is a shortage of rolling stock at times. To be fair, Russian Railways have been actively trying to implement refrigerated containers for fish transportation, but the share of said shipments is insignificant for the time being.
The port infrastructure of the fishery complex was built in the 1950’s and 1960’s and is therefore worn out and partially in emergency condition. This makes it impossible to increase the capacity of berths and the cargo turnover of terminals, to ensure safe berth operation, and to use modern loading and unloading equipment. Another factor is the redundancy of control and supervisory functions at Russian ports (border, customs, veterinary and sanitary, and transport control).
The aforementioned reasons combined with the weak ruble contribute to the reorientation of Russian Far Eastern fishers towards services in foreign ports and prompt them to sell fish to foreign contractors, primarily Chinese, Korean and Japanese. Additionally, there are no limits on transshipment of fish to other vessels, which is what domestic fishers end up doing. The problem is particularly acute in the Far East – goods brought ashore are often what was refused by Chinese and Japanese buyers.