Russia rethinks fishery strategy as trading realities set in

Russia has adopted a new Agriculture and Fishery Development Strategy, after its previous strategy was rendered obsolete by the geopolitical upheaval caused by Russia’s invasion of Ukraine in late February.

The new strategy is part of a larger economic plan geared toward achieving higher domestic growth rates following sanctions leived by European Union, United Kingdom, and the U.S levied against Russia. Another key part of the new plan, according to the note, is enhancing the nation’s food security and increasing its food exports.

“Target parameters for the fishery industry have been corrected in accordance with new food security requirements,” Russian Federal Agency for Fisheries Head Ilya Shestakov said in an agency press release.

Russia's new fisheries strategy continues to place emphasis on increasing the production and quality of value-added seafood products, with Shestakov setting the goal of squeezing 50 percent more value out of each metric ton of seafood caught by 2030. That target is identical to the country's goal in its previous fisheries plan, despite the drastically different economic circumstances Russia now faces after losing many of its export markets to trading sanctions.

Russia will also continue programs geared toward fleet and seafood processing modernization, and improving its aquaculture production to reach a goal of 618,000 metric tons of output by 2030. The government announced through its new plan that it will invest RUB 136.5 billion (USD 2.3 billion, EUR 2.4 billion) in the fishery sector through 2030, with most of that going to science and rescue vessels.

Most of the changes implemented in the new strategy document are in response to the recent exodus of Western companies from the country, including companies that make aquafeed, genetics companies, and vessel and equipment designers and manufacturers. Through incentives for businesses and additional investments in fishery science, the strategy aims to increase domestic aquafeed production and improve Russia's capacity for aquaculture-related genetics programs and aquafeed manufacturing. 

Russia’s aquaculture industry had been on a positive trajectory – the country produced 358,000 MT of aquaculture products in 2021, a 180 percent increase from 2016. However, that result required between 200,000 and 230,000 MT of additional aquaculture feed – and Russia only produced 20,000 MT of feed in 2021. An estimated 90 to 95 percent of the country’s aquaculture feed is imported.

As early as April 2022, aquaculture operators were asking the Russian Federal Agency for Fisheries to act quickly as the country’s aquafeed inventory dwindled due to foreign companies boycotting Russia or being banned from trading there due to international sanctions. The government responded a plan to increase domestic production, including a May 2022 announcement of the construction of a new aquafeed plant in the Novgorod region to produce salmon feed. However, Shestakov said new feed plant could take three years to come online.

Russia also faces challenges in achieving the objectives for its wild-catch fisheries outlined in the new strategy document. 

Russian shipyards with too-little capacity to build new vessels and now no ability to purchase certain equipment abroad, a domestic catch that is thousands of miles away from anyone who can eat it, and an aquaculture industry that has dwindling aquafeed resources in a country with little capacity to provide it for at least three years.  

Hindered by an inefficient and aging fishing fleet, Russia launched an investment-quota program in 2016, granting additional resources to companies that constructed new fishing vessels or processing facilities in the country. That program was supposed to produce 105 new ships, including crabbers, by 2024. But currently, fewer than 10 new vessels have been completed, with another 9 or 10 expected to be handed over to companies or floated out in 2023. As early as 2019, Russian shipyards were struggling to meet the delivery times of vessels being built through the program, and by 2020, several companies announced they could not meet the program's deadlines.

Because delays in vessel construction will only get worse as a result of Western companies withdrawing from doing business with Russia and refusing to continue supplying needed materials and equipment, the new seafood strategy includes a postponement of of to two years of deadlines for qualifying for the investment-quota program. 

Still – Russia has reiterated that the task to renew the fishing fleet remains a high priority, and it isn’t the only fleet the country wants to renew. The country introduced pans to undertake the modernization of its scientific fleet, with a goal of obtaining more accurate stock and biomass counts and predictions for catch totals. The country said it wants to build 10 new science vessels by 2030 – and two are already under construction.

However, that renewal effort is also facing problems. Russia’s scientific fleet has been on the docket for renewal for years – the country’s “Strategy for Fishery Science Development 2020,” released over a decade ago, planned for 27 new scientific vessels by 2017. Since that time, no vessels have been launched, though only a few have currently reached the design phase.

Russia also faces problems in increasing domestic seafood consumption - a major target of its new strategic document, as many of its export markets have closed off or limited trading with Russia following its invasion of Ukraine. Theoretically, Russia is entirely self-sufficient in terms of its seafood consumption needs, as the country's yearly catch of around 5 million metric tons (MT) is equivalent to 153.2 percent of the nation's total seafood consumption. But due to both logistical and marketing issues, much of what Russia produces is not consumed domestically. The new plan continues to predict an increase Russia's total catch, reaching 5.07 million MT in 2024 and 5.13 million MT in 2030.

Russia’s estimation of seafood self-sufficiency based on catch still has a few obstacles, however. Nearly 75 percent of Russia's domestic catch originates in the country’s Far East. But the main railway transport corridor between the fishery hub of Vladivostok and Moscow is more than 9,000 kilometers long. Additionally, transport routes have to contend with wild swings in demand due to the seasonality of certain fisheries, high prices caused by long distances traveled, and the need for robust cold-chain logistics.

Russia has been striving to correct problems with its rail transport system to try and bring more seafood from the country's east to its west, but the country's efforts are being hindered by a looming refrigerated container shortage. Logistics companies have estimated that Russian transport operators need around 1,500 new reefer units annually, but those needs likely won’t be met since sanctions have cut off imports and domestic manufacturing is unable to meet demand. While Russia’s Federal Agency for Fisheries announced it would facilitate production of reefers in 2021 – prior to the war and sanctions – Russian companies have estimated the production output will fall far short of what’s needed. Roughly 620 units in an optimum year is the current estimate, based on projections from companies like Omsk-based Omsktransmash, Donskoy Mechanicheskiy, and CHTZ-Uraltrak.

Even with the transport problems solved, however, Russia still faces obstacles in terms of increasing domestic consumption of its own seafood. In 2021, as China tightened its imports from Russia in light of the COVID-19 pandemic, the country was faced with a glut of pollock. Prior to the pandemic, China accounted for 60 percent of Russia’s pollock sales. Domestic pollock consumption is low – normally no more than 130,000 MT – and Fishery Union President Alexander Panin told the news agency Regnum in 2021 that consumption has been falling for years. Despite a government effort to address the issue, the mismatch between the seafood Russia produces and what Russian consumers want, and the additional problem of stubbornly high seafood prices, are major barriers to Russia achieving its strategic aims laid out in its new plan.

Photo courtesy of Russian Pollock Catchers Association