The Russian government is considering a controversial return to auctioning off its crab quotas.
Crab quotas have a complicated history in Russia. In the early 2000s, they were distributed through auctions, but the unpredictability of market prices resulted in heavy losses for many crab-fishing companies, and some went bankrupt. In response, in 2008, a historical catch system was introduced, with quotas allocated in 10-year intervals.
The first 10-year period of historical quota allocation expires this year, and a schism has erupted in Russia’s fishing industry over their opinions as to the best path forward. In November 2017, as SeafoodSource previously reported, a group of investors contacted Russian president Vladimir Putin in an attempt to convince him of the necessity to return to the auctions to bring additional funds to the state federal budget.
The proposal to reintroduce the auctions caused an uproar in the industry, with several representatives of the crab-fishing industry in Russia loudly voicing their hopes that the historical catch approach will be continued.
“We hope that a right decision will be made and the historical principle will stay,” Georgy Martynov, the president of the Association of Primorie region fisheries, said in an interview with Vostok-Media news agency. “If fisheries will have to spend funds for winning auctions, they will have no money to develop other business segments, for example, building processing plants."
However, the government has thus far not abandoned the proposal of returning to quotas, perhaps lured by the potential financial windfall the auctions could bring in. It appears even governmental officials are split on the idea, with the head of Russia’s Federal Ministry for Agriculture, Alexander Tkachev, backing auctions, while Ilya Shestakov, the leader of the Russia’s Federal Agency for Fisheries, has expressed concern that auctioning off quota may once again bring risks for the sector’s profitability.
At a recent meeting of fisheries officials, Shestakov said his agency had done calculations showing that quotas will indeed have a negative financial impact on crab fishing companies, but not one severe enough to endanger their future existence.
One potential path forward under consideration is a hybrid model, returning 50 percent of the quotas to an auction process. It’s too early to say which part of the fishery will be moved to quotas, but the move of even 50 percent of the quotas to an auction process will net as much as RUB 80 billion (USD 1.3 billion, EUR 1.05 billion) for the federal government, Shestakov said.
Shestakov added that another positive of the move might be the consolidation of control over quotas in the hands of fewer, larger companies, which would give the government enhanced control over the industry and help it fight illegal, unreported, and unregulated (IUU) fishing.
At the same time, Shestakov admitted that his concern that foreign companies could tap into the Russian crab sector, as considerable funds are needed to take part in and win auctions.
“We are not sure that the companies work[ing] in the segment now will be able to attract [adequate] funds,” he said.
A final complicating factor is that the government initiated a program distributing bonus quotas to companies that engage in infrastructure investment, such as building new fishing vessels or processing plants in Russia. Changing to a quota system may be unfair to those companies as their capital is now tied up in those various infrastructure investments, Shestakov said.
Alexander Duplaykov, the president of the Association of Crab Fisheries, said the indecisiveness of the federal government was hurting his Russia's fishing sector.
“The crab question is being discussed for too long,” he told Vostok-Media. “This situation creates an unhealthy atmosphere in the industry.”
Duplaykov’s concern is likely to be addressed soon. Shetakov has said a final decision on Russia’s crab quotas is expected at the governmental commission, taking place later in April.
Photo courtesy of Russia’s Federal Agency for Fisheries
