A rewned pledge by Russia's government to subsidize the transportation of pollock from the country’s Far East is coming as prices for the species are dropping.
The government has announced it will subsidize shipments of 12,650 metric tons (MT) of pollock in 2021. In a recent draft decree, the government said its subsidies will specifically cover pollock shipped by rail. The government considered subsidies for pollock transportation earlier this year, but has thus far not dedicated any funding to the effort.
Thus far, 2021 has been a difficult one for Russia’s pollock industry. China, Russia’s primary pollock market, ramped up inspections of imported seafood and then later shut out Russian imports entirely, leaving pollock exporters searching for alternative markets for its product.
At the same time, the cost of rail shipments via reefers effectively doubled, business paper Kommersant reported. According to Russian fishery agency data, in early 2021, a shipment of fish from the Far East to the central part of the country cost RUB 9.00 (USD 0.12, EUR 0.10) per kilogram in a refrigerated wagon and RUB 10 (USD 0.14, EUR 0.12) in a reefer. But by August, prices had increased to RUB 16 (USD 0.22, EUR 0.19) and RUB 20 (USD 0.28, EUR 0.24), respectively. Similar trends were seen in truck transportation.
As a result, pollock companies have been forced to reduce shipments, Kommersant reported. Primorye Fisheries Association President Georgiy Martynov said shipping pollock is no longer profitable. With less product being shipped, cold storage warehouses across Russia are storing more fish, reporting an occupancy rate of 60 percent, 90 percent of which is pollock, herring, and capelin.
That lack of profitability may be driving pollock-fishing companies to curtail their efforts. Russia reported 1.4 million MT of pollock caught through 4 October – 160,680 MT less year-over-year.
Despite lower catches, excess supply in the Far East has led to a drop in pollock prices across Russia. The Pollock Catchers Association said that one kilogram of pollock in Vladivostok cost RUB 58 (USD 0.81, EUR 0.70) in August 2021, compared to RUB 101 (USD 1.42, EUR 1.22) in August 2019.
Pollock-fishing firms are now facing lower incomes coupled with higher debt burdens due to their participation in Russia's highly touted investment-quotas program, which required them to upgrade their vessels and processing facilities in exchange for additional fishing quota. Dobroflot CEO Alexander Efremov told Kommersant the situation will likely impact the fishing-infrastructure projects currently underway.
Andrey Grechkin, a member of the council of the Association of Owners of Refrigerated Rolling Stock (AORRS), said current rail-freight rates are enabling railway companies to compensate for low rates outside of the fishing season. Current volatility can be mitigated through long-term contracts steady-rate contracts free from fluctuations, Grechkin said.
Photo courtesy of Matveychuk Anatoliy/Shutterstock
