Russia's naval shipbuilders hungry for potential big orders to renew fishing fleets beyond 2018
With ten-year quota share period ending in 2018, the fishery industry players are gearing up to have the fishing rights system modified to better suit their needs as they see it. On the one flank, the Russian fishery head has come forward with a proposal for the government to extend the quota attachment period to 20 years (quotas are now granted to fishing companies). On the other flank, the powerful United Shipbuilding Corp. (USC, Russian acronym "OSK") holding under its umbrella all Russia's major naval yards wants a juicy proportion of the quotas linked to the boats which the concern hopes would be built in Russia at its yards. The fishermen are vigorously protesting but the Corporation is only developing its inroads to the decision-makers in the government.
As part of this campaign, the USC recently prepared a letter to the government named "Analysis of developed countries experience in stimulating national shipbuilding during sea bioresources quota distribution". The letter is even longer than heading. We are not sure it is really interesting "in full" and our contacts in the fishery industry comment here just most important aspects. We tried to put foreign quota allocation models referred to by USC to Russian reality.
Norwegian system looks very attractive. All the experts liked the very idea of fleet rationalization. Many of the fishermen would be happy to receive extra compensation for writing ships down. Russian government recently ran such a program to support car-making industry, but it's hard to believe such a program in shipbuilding could become real.
It would be very dangerous to get Norwegian quota distribution system to Russia. Every four years the government can change the rules, and in Russia it might do it at once. A vessel good and seaworthy might be declared not appropriate at any moment, and as buying a new one takes a lot of time, the company would be pushed out of the business. In today's Russia it would be an efficient tool for reshaping market shares.
The major force in EU Common Fisheries Policy is full-scale subsidizing of fishery. USC claims it targets "optimal fleet age structure". However, it is not a proper target for both fishermen and the government. The industry targets are to be located in terms of products and economics, not in vessels, to say nothing about second tier indicators like "age structure"
US quota system is not really good for Russia at the very least because the industry structure in Russia is totally different to the American one. The most efficient part of American fleet is catchers-processors, just like in Russia, however major quota volume belongs to inshore companies, an obvious social project. Russian fishing grounds are often (e.g. in the Russian Far East) really far from populated areas, and shore processing and the American system is unfeasible because of absence of infrastructure and severe weather.
The US Administration has fixed list of fishing vessels. This was done long ago to push foreign fleets from US EEZ. Today it became the industry problem. The ships have become older, but it is impossible to get a new one even instead of worn out or even burned. Of course, there is no problem to buy a ship, but she will not receive quota. There is no doubt the law will be changed in future. Taking into account current condition of Russian fleet such a restriction looks impossible, and USC hints it would be possible to introduce an American-like demand to use only Russian-build vessels. By the way, there is no large trawler afloat built in Russia.
Canadian system is claimed by USC the best for copying. By the way, why should we COPY anything at all? It's worth saying that according to FAO total Canadian catch is about 3.6 times lower than the Russian one. Is it really reasonable to use Canada as example? It's really obvious that a small "ship" is to be steered not the same way as a large one.
To great surprise, USC gives no real arguments supporting Canadian pattern. The "Olympic system" has been over in Russia long ago. Words that both Russia and Canada can fish in three oceans and there are plenty rivers and lakes look really strange discussing sea fishery.
The most frightening are words that Canadian pattern allow change all quota system parameters extremely quickly. Fast change of a large (means inert) system are extremely dangerous for both the system and everything related. It is a common knowledge, and USC engineers and managers are supposed to realize it. Without any calculation it is proposed to distribute quotas between different kinds of them as 80/10/10. It's interesting if USC designs ships using the same thumb rules, or they know more subtle methods.
USC actually recognized that the American system is not applicable in Russia among the other reasons because "in Russia there is no developed civil society and legal system". Looks correct, but it is true speaking about the other discussed systems as well.
There is a proposal "to impose prohibitive customs duties on import of second hand fishing vessels till 2018" (emphasized in original). It's not too difficult to prohibit. Has USC got something to propose to replace the import? At which quay the new trawlers are waiting for new owners? As far as we know it doesn't exist. Where have they been backfilled? There is no such a dock. Actually, USC proposes to stop Russian fleet modernization for a couple of years (the minimum imaginable time between starting negotiations on design and starting fishing).
At the same time the shipbuilders ask to allow them to participate in quota distribution, clearly mentioning it in the letter. It's really above understanding when they managed to get the expertise how to run fishing industry (quota distribution is one of the strongest tools). Some parts of the letter clearly indicate shortage of understanding in this matter.
We can only admire with shipbuilders' persistent intention to steer a customer industry by setting convenient KPIs. Marketing rules say that a client should be loved and cared, he should be provided with necessary goods or services at right price. At least - should be taught that the service is necessary, and the price is right. USC goes another way, they try to make the buyer to accept new rules. Looks like fishermen would teach housewives to plan their budget. However, neither for Russia, nor for its fishermen fleet renewal at Russian yards is not the main task. Fishermen exist not to "have fleet optimal by age structure", and even not to provide orders to USC.
Another important question is "where". Where are those Russian-built ships to make the fishermen happy? If they don't understand what they need, and USC is sure in its abilities - why can't they build at their (neither buyer's, nor the Government) account some trawlers. A demonstration how efficient the ships are (for the start a leasing scheme could work) would work much better than another attempt to move fishermen to happiness with an iron fist.