Chinese behind bleak supply outlook for Russian pollock processors

November 10, 2006 11:12

In 2006 some 80% of the Alaska pollock catch in the Russian Far East has been shipped for export as raw material while next year nearly the entire pollock harvest is likely to miss the domestic market.

Such warning has been made by President of Vladivostok–based Association of Fishing Companies of Primorye Dmitri Glotov quoted by EXPERT magazine.

More specifically out of one million tonnes of APO caught in the RFE the industry roughly produces 100,000 tonnes of h/g pollock for the Russian market and some 40,000 tonnes of fillets (mainly for export) while the remainder will be exported as material for further processing overwhelmingly in China.

As a result, with not a tonnes of own pollock harvest, China is getting an added value of up to 100-150%  from exports of APO fillets to Europe and its respective share on the European market has reached about 70%.

Meanwhile Russia, which holds a 35% share of the world’s harvest of cod, 32% of pollock and 20% of wild salmon is not only absent on the world market of highly processed end products but it is also quickly losing positions at home, complained the report.


In the last five years the share of imported seafood has grown from 10% to 40%, according to Russia’s Ministry of Agriculture.

In fact, the year-on-year growth of imports has jumped to a rate of 90% the total reaching an absolute annual figure of 1.1 million metric tons, warned Deputy Minister of Agriculture Vladimir Izmailov quoted by the magazine.

The Chinese processors are conquering the Russian market offering high bids for raw material (1200 USD per tonne of APO) and low prices for end products (1900 USD per tonne of frozen pollock fillets in St. Petersburg Harbour). 

The Chinese can afford the prices with a massive government support including tax benefits, subsidies, quick refund of 18% VAT to exporters and a 30% subsidy for exports.

The resulting lack of price balance is making it unprofitable for the Russian processors to manufacture APO fillets because the h/g products are getting a much more attractive price in margin terms.

It is not difficult to predict the forthcoming turn of events, said Managing Director of a major Russian processing concern SP-HOLOD  Alexander Martynov quoted by the report.

As soon as the Chinese become main buyers and processors of the Russian material, they will buy up at high prices nearly the entire catch volumes of APO, cod and some other species. And eventually as the Chinese processors get firmly established on their feet, they will lose government support and switch the price policy the other way round to cheap bids for material and high prices for end products. The Russian fishermen would be the most vulnerable sector in such a situation because of too few processing factories in Russia being able to put up a competitive bid.

Some analysts believe that the scenario may unroll in quite near future.

According to Deputy Minister of Agriculture Vladimir Izmailov quoted by the report, the Chinese will get themselves established in the Russian market, ruin the Russian plants and start dictate prices to the Russian fishermen as is the law of monopoly. Eventually the Russian fishing companies will go broke and the Russian fish will be caught by anyone except own fishermen, strongly warned the Deputy Minister. 

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