The development of investment quotas program was discussed by the participants of the round table

August 18, 2021 12:47

At Far East and the Arctic Development Corporation (KRDV), with the support of the Ministry for the Development of the Russian Far East, a round table "New investment cycle in the fishing industry: business expectations" was held. More than 60 representatives of the largest companies in the fishing industry, authorities of the subjects of the Far Eastern Federal District, the Federal Agency for Fishery, the Ministry of Industry and Trade, the United Shipbuilding Corporation, and industry associations participated in the event, reports.

Key issues of the fishery complex and fish logistics development were discussed, the results of the first investment cycle were summed up.

“The fishing industry in Pacific Russia is the one, where a significant amount of investment is attracted, where a large part of the population is employed. In five years, the industry managed to increase its investment fivefold. Twenty four  new fish processing plants have already been built or are at the final stage of construction, 55 contracts for  fishing vessels construction have been signed. As part of their implementation, we stimulate the development of related industries that were previously in stagnation, for example, shipbuilding," first deputy minister Gajimagomed Guseinov said.

Khasan Likhov, Deputy Head of the Federal Agency for Fisheries, summed up the preliminary results of the first investment cycle (until 2025) in the fishing industry. Within the framework of investment quotas mechanism, about 20% of the TAC has been re-distributed. Rosrybolovstvo has already arranged 9 application campaigns: applications for the implementation of 121 investment projects have been received, 91 applications have been approved. As a result of the selection, 79 contracts were signed with a total investment of 213 billion rubles, of which almost 88% - in the renewal of the fleet (25 vessels for the North-West and 30 vessels for the Pacific). The remaining 12 applications are undergoing a selection procedure. The launch of new vessels will make it possible to renew production capacities in the North-West by 80% and in the Far East by 40%. Construction is underway at 9 shipyards, 5 trawlers have already been transferred to fishermen. In addition, contracts have been signed for the construction of 24 onshore fish processing factories, 20 of which have already been completed: 10 in the Far East and 10 in the North-West. According to the forecasts of the Federal Agency for Fishery representative, the new facilities and vessels commissioning by 2025 will increase processing capacity by 2 million tons per year. In addition to the distribution of 20% of quotas, in the period from 2019 to 2021, Rosrybolovstvo distributed 50% of the TAC for crab through auctions with investment obligations: one lot - one crab vessel. A total of 41 lots have been distributed, respectively, each assumes a crab catcher building, of which 15 vessels will be built in the Far East. The total investment will amount to about 60 billion rubles. As a result of the auction, about 145 billion rubles were transferred to the state budget.

German Zverev, President of the All-Russian Association of Fishery Industries (VARPE), noted in his speech that Russian fishing community positively assesses the first stage of the investment quotas program results. At the same time, the second stage of the program should meet the goals of the National Program for the Development of the Far East, adopted by the government last year: private investment arrival, new jobs creation and an increase of economic ties within Asia-Pacific region. “Let me remind you that from the production point of view, the pivot of the first stage was the construction of a large-capacity fleet. From the economic point of view - state stimulation of the creation of expensive equipment for the production of products of a certain market niche, e.g. pollock fillets. However, economic analysis shows that the emphasis on the construction of large, powerful onshore enterprises will create more jobs and will have the greatest multiplier effect,” summed up Herman Zverev. Alternative tools can also help stimulate the fleet renewal - subsidizing part of the costs of building small and medium-sized vessels, as well as limiting the service life of existing vessels. Onshore facilities development is an addition to small and medium-sized ships building, a greater number of jobs with a more favorable cost of creation, VARPE President emphasized.

Alexey Buglak, President of Pollock Catchers Association (PCA), recalled that in 2020 China imported from the Russian Federation 579 thousand tons of pollock for $657 million, then most of the fish was processed into fillets and re-exported mainly to Europe and the United States. According to PCA estimates, as a result, the value was increased by $ 250 million. Alexey Buglak believes that these funds should remain in the coastal regions of the Far East. “Onshore processing is capable of providing a qualitative change in the output. In the sea, pollock frozen blocks can be produced, but products with high added value, consumer products, can only be produced onshore”.

It must be remembered that the industry is developing progressively only as a complex. “The fleet, even the most modern one, cannot operate without coastal infrastructure.  Fish must be discharged, stored, handled and delivered to customers. It is necessary to switch Russian fish transshipment to the Russian coast, develop refrigeration and berthing infrastructure. This is additional money for the industry, and for the regions - taxes and new jobs. With this approach, investments will work for the benefit of the Far East and its inhabitants, ” Alexey Buglak is sure.

Russian Fishery Company, that previously asked Prime Minister Mikhail Mishustin to reform the industry, including expanding the investment quotas program, does not support VARPE proposal. According to the first deputy general director of the company Saveliy Karpukhin, small and medium-sized vessels building with onshore factories can become an effective measure for certain coastal fisheries only. For pollock fishing, which accounts for more than 36% of the fish caught in the Russian Federation, large trawlers-processors are the most effective solution, Karpukhin is sure.

The representative of Norebo, Sergei Sennikov, noted that projects are already underway to build new catchers-processors that will produce frozen fish products, but, unlike onshore factories, the product range of such vessels is limited. Norebo proposes to allocate quotas to large processing plants in Russia mainland on condition of waste-free production. These territories are closer to the main markets and are better provided with labor resources, reminded Sergei Sennikov. And for large vessels construction, quotas should be allocated for further processing of frozen fish in Russia only, adds Mr. Sennikov. Processing factories will naturally be built with refrigeration facilities, so it is inexpedient to single out refrigerators as a separate investment object in the investment quotas program, Norebo believes.

Fishing Fleet Shipowners Association (FFSA) proposed to remove the requirement that during processing at onshore factories, it is the volumes produced under the quotas granted to the design companies only are counted. The current regulations do not allow to build the raw materials delivery and products production the most efficient way. It is often impossible to comply with the current rules due to the fishing grounds distance from each other and from the factories, FFSA says. The idea of investment quotas program will not suffer as a result of the changes, the association said: in any case, the obligations for value added products production at the factory will have to be honored.

“This year FFSA again suggested to the regulator to take into account in this obligation the fish caught under quotas of any user. This will remove the administration problem, but will not affect processing volume, since the factories' capacities, according to regulations, exceeds the current size of the investment quota by at least two times, and for pollock, in fact, up to four times. The factories are already in operation, and it is important to adjust the regulation in time so that there are no risks of losing the investment quota, ” stressed Alexey Osintsev.

The issue is relevant not only for investment quotas program participants in the Far East. Even when the by-law base was being developed, Karelia Fish Industry Companies Union applied to the Federal Agency for Fishery with a proposal to set off the quotas of companies that belong to the same group of persons with the investor, said the association chairman Ilya Rakovsky.

Almost all onshore enterprises built for investment quotas in the North-West of Russia are part of some group of companies that has a fleet and quotas for fishing in sea waters. If plans are made for the whole group, this will allow more efficient organization of work at the plant under investment quotas, noted Ilya Rakovsky.

The roundtable participants unanimously agreed that investment quotas gave a significant impetus to the development of the fishing industry. However, in order to expand the existing mechanism, it is necessary to focus on the construction of new fish farms.

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