Russia is now in the midst of a grand restructuring of its seafood sector. From massive investments in infrastructure to overhauling fisheries laws to efforts to boost domestic and overseas markets for its products, Russia’s government is pouring resources into reviving and invigorating all aspects of its fisheries economy. SeafoodSource has undertaken an in-depth, two-part investigation of Russia’s efforts. Part two of this series will be published Tuesday, 24 July.
A bold strategy
In late 2017, the Russian government adopted as official policy the tenets laid out in a document titled “The Strategy for the Development of Fishery Terminals Through 2030.” The document calls for a program to bring fishing vessels belonging to Russian companies back to national terminals, with the dual goals of boosting the national economy and delivering more fish to Russian consumers.
The document set ambitious goals for the industry over its performance in 2015. Specifically, ensuring 80 percent, or 440, of Russia’s large-scale vessels operated through Russian fishing terminals, up from 40 percent, or 270 vessels, in 2015; doubling the throughput of Russian fishing terminals from 1.5 million metric tons (MT) to three million MT; and increasing the capacity of the country’s cold-storage facilities from 235,000 MT to 440,000 MT.
In addition, the document laid out a detailed plan to improve the efficiency and quality of services provided to fishing companies at Russian ports, including significant investments into new storage and repair facilities on behalf of both state and private entities.
The centerpiece of the strategy was the creation of more attractive conditions to entice Russian fishing companies to get their ships served at Russian ports. The document said such a move would lead to an increase of volumes of catch landed at domestic terminals and, consequently, an increase of domestic fish sold in Russian shops and markets.
The document predicted the plan would add RUB 11 billion (USD 176 million, EUR 150.5 million) to the value of the domestic industry annually, RUB 4 billion (USD 64 million, EUR 54.7 million) of which would come from storage services and RUB 7 billion (USD 112 million, EUR 95.8 million) of which would come from technical maintenance and repair services. Russian consumers would also benefit by a reduction of an estimated 10 percent of the end price for fish – an important component of the program, as high prices for seafood have been a constant problem in Russia in recent years.
The plan called for an initial investment of RUB 9 billion (USD 143.8 million, EUR 123.1 million), which would include the construction and refurbishment of fishing terminal and cold storage facilities so that they could offer a full range of services needed by fishing companies, including repair, maintenance, fuel, and storage. Achieving all the goals laid out by the plan will require state and private businesses to invest RUB 26.5 billion (USD 423.7 million, EUR 362.6 million) between 2017 and 2025.
But even such a large investment required targeting of resources in order to maximize impact. Currently, there are 21 fishing terminals within sea commercial ports and 27 isolated fish terminals, including those owned by fishing companies, in Russia, according to Russia’s Federal Agency for Fisheries. The plan called for several ports in each fishery basin to be designated regional service centers, to be equipped with the capability to provide services for the entire basin’s fishing fleet. At some places, new repair workshop would be established at existing ship repair facilities.
Regarding fishery basins, a vast majority – 80 percent of the total amount of landed product in Russia – passes through ports in Russia’s Far East. In second place is the Northern basin (primarily, the Barents Sea) with 11 percent; followed by the Western (the Baltic Sea) and Azov Black Sea (the Azov Sea and the Black Sea) basins with five percent each; and the Volga Caspian basin even less.
The centers were selected to be placed in the ports in Kamchatka, Vladivostok, and Sakhalin in the Far East; in Kerch and Sevastopol in the Azov Black Sea basin (both ports are on the Crimean Peninsula); in Kaliningrad in the Western basin; in Murmansk and Arkhangelsk in the Northern basin; and in Astrakhan in the Volga Caspian basin.
Building cold storage capacity
In recent years, the annual throughput of Russia’s fishing terminals was between 1.3 and 1.6 million MT. Nearly 85 percent of that total was landed at 10 terminals, with the port of Vladivostok alone accounting for almost 50 percent of the turnover. But with Russia breaking records for catch totals – 2017 was the most successful year for Russian fishermen for the last 20 years, yielding 4.9 million MT of total catch – the country’s fishing terminals, especially in the Far East, have been straining to keep up with the increased load.
The first part of the plan calls for an investment of RUB 17.5 billion (USD 280 million, EUR 239.4 million) into the building and modernization of refrigerators and cold-storage facilities. Currently, Russia’s Northern and Western basins have cold storage capacity of 84,000 MT – widely considered to be enough for current and future volumes. The same opinion is held of the Azov Black Sea basin with its 20,000 MT storage facilities. However, in the Far East, even with a total cold storage capacity of 150,000 MT, the amount is considered inadequate given the increase in catch seen over recent years. Making matters worse is that a large part of this amount is composed of refrigerators that were put into operation more than 30 years ago, and an estimated 40 percent of those units fail to meet modern standards.
In 2030, nearly 1.5 million MT of catch is projected to be landed at Russian terminals in the Far East, which will require refrigerators for simultaneous storage of 274,000 MT in local ports, which means additional facilities for 124,000 MT need to be built. The volume of catch for the Northern basin is going to be about one million MT, which can be easily stored at the existing refrigerators. The same situation is in the Azov Black Sea basin, which will see about 250,000 MT of catch in 2030, while the Volga Caspian basin is to increase its catch to 130,00 MT, which translates into the necessity to build additional storage for 10,000 MT.
Much of the investments into refrigerators will be made by private businesses which have already started to build new facilities, primarily in the Far Eastern ports.
The plan also calls for a review of hydro-technical utilities at the terminals. A total of 61 percent of the length of all hydro-technical utilities at the terminals (26.5 of 43 kilometers) are owned by the state and operated by the state-owned National Fish Resources company (NFR), which is itself controlled by the Federal Agency for Fisheries. The remaining utilities are owned by private businesses. A significant part of the infrastructure belonging to NFR is leased to private companies.
What’s next
Thus far, fishing companies and ports have positively reacted to both systemic efforts by authorities to revive the sector and increase the nation’s catch. However, the existing gap between the potential demand for terminal services from fisheries and the current poor supply, becomes a more complicated situation when foreign fishing terminals become a part of the equation.
That issue will be tackled in Part 2 of this series, as well as a check-in on progress on the plan thus far and an examination of the potential barriers which could impede or even derail the plan’s implementation.
Photo courtesy of Vladivostok Sea Fishing Port
