Russian President Vladimir Putin has extended the ban on import food from the European Union, the United States, Canada, Norway, and Australia through the end of 2019, giving the Russian seafood sector yet another year-and-a-half to become more competitive.
Russia’s food embargo on dairy, meat, vegetables, seafood, fish (except canned) and other agriculture products was introduced in August 2014 as a response to sanctions imposed by the E.U. and the U.S. after the annexation of Crimea. Initially, the counter-sanctions were imposed for one year, but they were then repeatedly extended in one-year increments. A few countries, including Iceland – then one of Russia’s biggest importers – were added to the list in subsequent years.
In July 2018, a new round of trade war boxing began when the E.U. extended its sanctions through the end of January 2019, and Russia responded by prolonging the food ban until the end of 2019.
The extension of the ban is expected to further favor investments into Russia’s fishery industry, which benefited from the embargo, although it has faced a significant decrease in consumption volumes of seafood due to higher fish prices.
In 2013, the last full year before the embargo went into effect, Russian companies caught 3.5 million metric tons (MT) of fish. An estimated 1.6 million MT of this volume was exported (primarily pollock), while around 1.9 million MT stayed in Russia. That same year, Russia imported 904,100 MT of seafood, meaning non-Russian seafood represented 32.2 percent of domestic consumption, the Russian Agency for Statistics’ data showed.
The largest foreign exporter to Russia in 2013 was Norway, with a 31.8 percent share of total fish imported into Russia and a 10.2 percent share of national consumption. The E.U.’s share of import volumes was 12.8 percent and 4.2 percent of consumption; the figures for Canada were 4.3 percent of imports and 1.4 percent of total consumption; the U.S. reached 2.2 percent of the import total and 0.7 percent of the Russian market.
Russia’s then-Minister for Agriculture Nikolay Fyodorov claimed that it would be possible for Russian companies to entirely replace imported fish on the market as exports flows were exceeding imports. Industry experts doubted the ministry’s suggestions at the time, pointing out the dependence of Russia on Europe for several kinds of species, including cold salmon and char from Norway.
Four years later, after the sanctions and counter-sanctions have been imposed, it seems that the Russia’s fishery sector has indeed gotten a boost. In 2017, Russian fishermen caught 4.9 million MT of fish, a 25-year-record for volume. At the same time, the import share in consumption fell to 20 percent. In 2018, Russian fisheries’ turnover is estimated to be RUB 325 billion (USD 5.16 billion, EUR 4.43 billion), which is about seven percent higher than in 2017 and significantly more than in 2014.
From 2015 to 2018, the Russian government took systemic measures to attract investment into the sector with the help of special quotas allocated to companies getting their fleet renewed or getting new processing facilities built, and by adopting a strategy for the development of fishing ports and aquaculture. As a result of these programs, some subindustries have experienced a fantastic rise. For example, production of oysters increased by a multiple of 265, to 531 MT, and Russia’s output of mussels went up by 12.5 times, to 1,200 MT.
However, the government’s efforts have still not resulted in higher consumer satisfaction. Prices for food increased by a factor of two during the period between 2014 and the end of 2017, forcing many Russians to reduce their consumption of seafood.
Photo courtesy of The Moscow Times
