The All-Russian Association of Fishing Industry (VARPE) is sounding an alarm on the Russian fishing industry’s debt load, which it said is rising fast.
The association posted on its Telegram channel that it estimates the total debt load of the fishing, fish farming, and processing industries reached a total debt of RUB 1.04 trillion (USD 9.2 billion, EUR 8.7 billion) in the first eight months of 2024. According to VARPE, that marks a 26 percent increase over the same period in 2023 and is also nearly three times more debt than it had in 2019.
Of that debt, 80 percent of it belongs to fishermen.
“The industry’s accounts payable are already 36 percent higher than its revenue in the same period; it reached RUB 662 billion [USD 5.9 billion, EUR 5.5 billion] in eight months,” VARPE said. “Meanwhile, the industry’s profit barely reached RUB 60 billion [USD 530 million, EUR 502 million], 26 percent less than last year.”
VARPE said the industry’s debt burden has been actively growing since 2017, when the country’s investment quota auction program first started. VARPE President German Zverev warned companies during the auction to not get swept up in “crab fever” that could result in the overinflation of the value of previously sold crab quotas. In 2023, he also warned the attractiveness of the crab market could shift depending on market trends, which would be detrimental to the overall seafood industry.
Now, as seafood companies work to meet the obligations of the investment quota program and spend money on hundreds of fish-processing facilities, vessels, and logistical complexes – many of which are well behind schedule – companies are dealing with the debt burden that came from the loans needed.
“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 on VARPE’s Telegram channel.
Zverev said as the industry deals with its debt, it will also have to attract “at least” RUB 219 billion to RUB 239 billion (USD 1.9 billion to USD 2.1 billion, EUR 1.8 billion to EUR 2 billion) to extend contracts for the rights to use fishing grounds, even as it deals with other cost burdens.
“The growth of wages in the industry, the increase in operating costs, the decrease in export efficiency and the increase in the tax burden – all this has a negative impact on the financial position of the fishing industry, a clear confirmation of which is the indicator for accounts payable," he said.
Zverev, in a video posted to VARPE’s telegram, also said that public statements by the country’s central bank indicate there have been enormous investments in the country’s fishing industry via bank loans, which have resulted in a financial burden “dragging the entire industry to the bottom.”
The warnings from VARPE come as the value of the Russian ruble dropped to a two-year low against the U.S. dollar, the Moscow Times reported. Russia’s Finance Minister Anton Siluanov said the devaluation was favorable for Russian exporters. Meanwhile, the country’s central bank suspended all currency purchases for the year, restricting the supply of the ruble.
