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Review of the Russian Market of Fish and Seafood

Research of the Company Market Analitika
According to the baseline scenario of the Forecast of Socio-Economic Development of the Russian Federation for 2017 and the planning period of 2018 and 2019, prepared by the Ministry of Economic Development of the Russian Federation, in 20172019 it is planned to maintain positive growth rates in the catch of biological resources and fish production at the level of 11.3% per year.
According to the Ministry of Economic Development of the Russian Federation, growth in aquatic biological resource catch in 2019 will amount to 6.6% against 2015, and production of fish and canned and processed fish products will increase by 5.4%. As a result, fish production in Russia is expected to reach its maximum volume of 4,024.8 thousand tons in 2019.
The volume of fish and processed and canned fish product output amounted to 3,936 thousand tons in 2016, which is 3.1% higher than in 2015. The overall dynamics of domestic fish production in Russia are demonstrating an increasing trend: production grew by 15.8% in 20102016. The crisis year 2014 was the only year when a decline in production was recorded throughout the period of 20102016.
Dynamics of imports in both volume and value terms were negative in 20102016. Imports in physical terms dropped from 998 thousand tons in 2010 to 514 thousand tons in 2016 (a 48.4% decline). The volume of imports in monetary terms decreased from $ 2.3 billion in 2010 to $ 1.6 billion in 2016 (a 28.9% decline). Compared with 2015, the physical volume of imports decreased by 8.4%, which suggests that the negative trend will continue in 2017. The monetary volume of imports increased by 2.9%, reflecting exchange rate fluctuations.
Up until 2014, imports of fish and seafood in physical terms were remaining at the level of 1 million tons, whereas in monetary terms they were demonstrating growth, reaching their maximum value of $ 3.2 billion since 2010. After the food embargo was imposed, a trend reversal occurred. Thus, the reasons for the negative dynamics of fish and seafood imports into Russia are both the cheapening of the Russian ruble against other currencies in late 2014 early 2015 (and the consequent increase in retail prices in rubles), and the ban on food and seafood imports from the USA, the EU, Canada, Australia and Norway in August 2014, which decreased the supply of imported goods in the Russian market.
In 2016, frozen fish was dominating in the product structure of imports the category occupied more than half of all supplies in physical terms and 39% in monetary terms. In the structure of imports in physical terms, it was followed by fish fillets and processed/canned fish each of these categories was accounting for around 12%. In the monetary structure, shares of 1012% each were occupied by 4 product categories: fish fillets, processed/canned fish, crustaceans, and fresh/chilled fish.
In 20152016, imports of fish and seafood into Russia decreased by 8.4% in physical terms while having grown by 2.9% in monetary terms. The highest growth in imports in volume terms took place in the categories of crustaceans and prepared/canned crustaceans and molluscs growth rates in import volumes of these product types were exceeding 30% in 20152016. The most significant decrease was observed in the categories of live fish and prepared/canned fish.
The greatest increase in monetary terms was demonstrated by the categories of crustaceans as well as prepared/canned crustaceans and molluscs; the categories of live fish and invertebrates demonstrated the biggest decline.
Frozen fish was the main category of imported fish in 2016, its supplies to Russia amounting to $ 635.3 million, or 270.9 thousand tons. The largest category imported in physical terms was mackerel (28.1%). Salmon and herring were less represented in the structure of imports in physical terms, occupying 17.2 and 13.5% of supplies respectively. The share of other frozen fish varieties is significant and equals 27.2%. The largest share in the structure of imports in monetary terms falls on salmon (second largest category in physical terms), amounting to 42.2%. Mackerel (the largest category in the structure of physical imports) occupies 17.7% of imports. The shares of other types of frozen fish in the structure of imports in monetary terms are less than 10%.
Imports of fresh and chilled fish into Russia reached $ 183.3 million, or 28.8 thousand tons, in 2016. Fresh and chilled salmon was dominating in the structure of imports this type of fish occupied 64.5 and 75.8% of imports in volume and value terms respectively. The share of other fish varieties equalled 5.4 and 3.1% in volume and value terms respectively. The remaining volume of imports was approximately evenly distributed among such fish varieties as trout, sea breams and sea bass.
Whereas imports of fish and seafood have been demonstrating a negative trend, exports increased in 2016, reaching 1,519 thousand tons in physical terms and $ 3.1 billion in monetary terms. In comparison to 2015, the physical volume of exports increased by 9.8%, whereas the monetary volume grew by 8.4%.
All in all, fish and seafood exports from Russia were demonstrating positive dynamics in 20102016. In 2016, exports in volume terms increased by 11.8% to 2010. At the same time, due to outstripping growth in export prices for goods in US dollars, the increase in the monetary volume of exports in 20102016 equalled 33%.
The structure of exports by product groups repeats the structure of imports. However, the share of frozen fish, the main product group in Russian fish and seafood exports, is higher 86.8% in volume terms and 64.2% in value terms. Other large categories include fish fillets ad crustaceans. Crustaceans are the second largest category in monetary terms, following frozen fish and occupying the share of 21.7%.
The main type of fish supplied from the Russian Federation to other countries in 2016 was Alaska pollock, occupying 60.2 and 41.7% of exports in volume and value terms respectively. Categories with shares of more than 5% in the structure of exports in physical terms were cod, salmon and herring with approximately even volumes. Approximately equal shares of more than 10% in the structure of monetary exports were occupied by cod and salmon as well as fish liver, roe and caviar. Herring accounted for as low as 3.7% in monetary terms.
The volume of the fish and seafood market in Russia amounted to 2,932 thousand tons in 2016 (-2.1% to 2015). Up until 2014, market size in physical terms was demonstrating a growing trend, reaching the maximum volume of 3.2 million tons. Due to growing exports, and imports having declined as a result of sanctions, the physical volume of the Russian fish and seafood market decreased by 7.8% against the level of 2014.
In 2016, retail sales of fish and seafood amounted to 601.1 billion rubles, which is 7.3% higher than in 2015. Despite the increase in gross value added in fishing and fish farming, it is mainly expensive and processed goods that were supplied to the Russian market, produced from Russian raw materials at times. Domestic companies, on the contrary, were exporting raw materials with low added value.
One of the main problems of the Russian fishing industry is the lack of a modern processing base, which results in a significant part of Russian biological resources being supplied abroad for processing. Increasing the competitiveness of domestic goods of deep processing in foreign markets is one of the most important measures for the development of the Russian fishing industry.
Despite fish and seafood imports into Russia having declined as a result of counter-sanctions imposed in August 2014, and part of export-oriented goods having been supplied to the domestic market, growth in domestic demand was still limited by the low availability of domestic products to the population. Reasons for said limitations include, in particular, significant distances between fishing locations and the key consumption markets of the country. Therefore the creation of a domestic aquaculture production base is another important development direction for the Russian fishing industry.

Tatyana Evdokimova,
Market Analitika