The All-Russian Association of the Fishing Industry (VARPE) – which represents the interests of fishing companies in Russia – is once again sounding alarms about the financial state of the industry as tax data from 2024 rolls in.
VARPE posted on its Telegram channel that Russian fishing and fish-farming companies paid RUB 67.2 billion (USD 670 million, EUR 644 million) in taxes in the first 10 months of 2024. According to the association, that amount is 8 percent lower than the same period of 2023.
The agency said the reason taxes are dropping is the “crisis in the industry” as profits for fishing and aquaculture companies drop. VARPE said the biggest reduction in tax revenue came from a drop in the profit tax, which fell 62 percent, or RUB 5.4 billion (USD 53.7 million, EUR 51.6 million), as the industry’s profits decline.
VARPE President German Zverev partially placed the blame on programs and taxes that harmed the financial viability of Russia’s fishing industry.
"Armed with the myth of the super-profitability of the fishing industry, the authorities have increased the tax and quasi-tax burden on fishermen in various ways in recent years. They increased rates for the use of water-biological resources, introduced export duties and windfall taxes, and held auctions,” Zverev said. “All this has significantly worsened the financial health of the industry and the profitability of the fishing industry business. As a result, while revenues are growing, the profit tax has been decreasing for the second year in a row."
In early December 2024, VARPE pointed out that the total debt load of the fishing, fish-farming, and processing industry reached RUB 1.04 trillion (USD 10.3 billion, EUR 9.94 billion) in the first eight months of 2024 – a 26 percent increase over the same period of 2023 and three times more debt than the industry was carrying in 2019.
Of that debt, 80 percent belongs to fishermen, who are dealing with the debt as the profitability of the industry declines.
The industry’s debt burden has been growing since 2017, when the country’s investment quota auction program first started, according to VARPE. At the time, Zverev warned companies to avoid “crab fever” and potentially overinflated auction prices for crab quotas – as the strong market at the time could shift depending on market trends, which would be detrimental to the overall seafood industry.
“The situation with the volume of accounts payable is a matter of serious concern – especially against the backdrop of the growth of the key rate, which leads to an increase in the cost of servicing loans,” Zverev said in early December.
Sberbank Executive Director of Corporate Business Development Alexander Panov told Fishnews the industry will likely be forced to stop some of its investment projects and the state-owned bank is planning ways to support the fishermen.
According to a representative of the banking sector, part of the problem stems from Russian fishing companies investing in upgrades and modernization as part of the quota auction program – only to have those investments delayed as shipyards fall behind on commitments.
“Instead of an investment phase of two to three years, we have received long-term construction projects lasting five to seven years, which means the impossibility of using the new fleet for fishing and making a profit,” the representative told Fishnews.
Panov said the issue has been compounded as costs for construction increase and companies are now no longer to access foreign financing at comfortable interest rates.
“Now, there is no such opportunity; it is necessary to attract a loan at a commercial ruble rate since there are no mechanisms for preferential lending for the fishing industry for the purpose of building a fleet,” Panov said.
Panov said most of the problems are not the fault of the fishing industry, but some companies may end up having to cancel projects.
“We see that some of the investment projects will have to be terminated by the fishery industry due to the extremely difficult economy in the new circumstances," Panov said.
