The Russian government has been using changes in its tax code to counter problems with fishing vessel maintenance and incentivize the production of higher-processed products and is also directly financing infrastructure improvements in its Far East Fishery Basin.
Russia’s fishing fleet has faced issues accessing foreign ports it used in the past, particularly Norway’s, where Russian shipowners performed vessel repairs. Norway closed its borders to Russian trucks and ships in May 2022 – except for fishing boats – and expanded its restrictions to cover fishing boats in October 2022. Russian vessel owners are now barred from receiving repairs at Norwegian shipyards, and can only change crew, bunker, unload, get provisions, and undergo controls at three ports – Båtsfjord, Tromsø, and Kirkenes.
In light of the restrictions, Russian shipowners now must secure repairs at Russian shipyards – and the Russian government is using tax breaks to incentivize owners to repair vessels domestically, and also to upgrade vessels.
The new law requires vessel owners to enter into an investment agreement with Russia's Ministry of Industry and Trade and Ministry of Finance that would allocate some of the company’s annual funds to repair and upgrades at Russian shipyards.
Other tax incentives are being used to prioritize deeper processing of pollock products. In November 2022, Russia changed its tax code so that fishing companies would pay higher rates on pollock – upping the fee for the use of “aquatic biological resources” on pollock to RUB 4,300 (USD 47.69, EUR 42.48) per ton at the highest. However, deductions were available for companies producing certain products or using new vessels.
Pollock surimi was one of the products that were incentivized, and Pollock Catchers Association Head Alexey Buglak told Fishnews that, in 2022, 37 percent of the pollock catch went to making value-added products.
“We see significant potential for further increase in production, and a tax incentive for the payment of natural rent can undoubtedly become an incentive for its implementation,” Buglak said.
However, there are certain products that the government left off its list, including fish oil, he said. The PCA proposed that fats and oils, and other products from fish, be added to the tax incentive list as they generate “significant added value” and also require investment in terms of production capability.
Buglak said the way the tax incentives are structured also needs to be updated, as currently, the deduction takes multiple years to apply, and do not adjust for rapily rising inflation.
Separately, Russia has also been supporting fish projects in the Far East with investments in storage, transshipment, and transportation infrastructure, Fishnews reported. Far Eastern Federal District Presidential Envoy Yuri Trutnev said the infrastructure and ports in the region are overwhelmed by the volume of fish caught there - as much as 70 percent of the country's total volume.
A new investment project by Eurasian Fish Center in Vladivostok includes a refrigerated warehouse with a capacity of 25,000 metric tons (MT) of cold storage, a warehouse for refrigerated containers, increased port capacity, and a separate warehouse for general cargo.
Russia Federal Agency for Fisheries Head Ilya Shestakov also said the department plans to create an auction site on the Nazimov Peninsula for the sale of aquatic biological resources.
Separately, the Refservice-Vostok company will create a railway operator for organizing refrigerated cargo using reefers, with a focus on fish products, to minimize the risk of a shortage of carrying capacity for products transshipped through the Far East.
The projects will receive financing from VEB.RF, the Russian state development corporation, Fishnews reported.
Russia has prioritized the manufacture of new refrigerated storage containers due to ongoing logistical issues related to transporting seafood from its Far East to other regions. However, sanctions stemming from the country’s invasion of Ukraine have limited its access to international supplies of reefers, leaving it with a shortage..
Photo courtesy of the Russian Pollock Catchers Association
