Russian Fishery reform should focus on boosting modern consumption patterns

April 20, 2012 10:09

As Russia is close to joining WTO, authorities at last started to think how to keep tax collection after transition period and cutting import taxes and tariffs.  One of possible ways is to increase the added value, e.g. by development of domestic processing. It's a good reason to discuss what we could do to increase production of value added products (particularly - fish) in Russia, an industry insider shared his views on the subject with

Its common knowledge that almost all Russian catch is being processed in China.  Actually, the major part of total world catch is processed there as well.  The reasons for this are well known: low labour cost in China and absence of adequate by cost and quality machines.  The problem (for the entire world) is that cost is rising, but consumers from developed countries insist that price should be at least stable, or go down.  There are three possible ways out:

1. To increase retail prices.  This is probably inevitable, but neither Europeans, nor Americans are ready to it, to say nothing about consumers from the other countries.

2. To move processing from China to some places with cheaper processing.  First of all this is surely not Russia.  Labour laws in Russia are strict, hour pay is much higher even for non-qualified workers.  On the other hand, the list of places with potentially low processing price is very short.

3. To replace Chinese (Vietnamese, Koreans, or anybody else) with machines.  Alas, there is no cutting machine equal to a man, and efficiency of existing equipment is far from Chinese factories.

What could we do to increase processing in Russia?

First of all - to create demand.  Both retail and wholesale market is filled with low processed fish because most Russians think "poor".  A large proportion of consumers don't want to buy expensive fillet (or, say, surimi product, or some battered fish) thinking if I can buy reasonably cheap WR, gut it myself and save.  Professionals know there is no saving in it, real price and possibly quality of self-made fillet will hardly be lower than factory-made one, and the guts will be surely thrown out though they might be used for fishmeal.  It's strange that semis of meat and poultry are quite popular in Russia, but fish is an exception.

Probably it is a result of long-time propaganda that fish is a cheap meat substitute.  Every now and then we see indignant people who say that, e.g., pollock or herring is too expensive. It's funny, but nobody says that aquaculture salmon is too expensive, though its retail price is about 20 times higher.  Nobody is surprised that aquaculture salmon is much more expensive than the wild one.

I guess, great marketing investments are necessary to change consumer paradigm.  Russian consumers have to learn that fish is NOT cheap stuff. It is necessary because there is no sense to invest in processing until demand exists. Otherwise we'll have to distribute value-added products forcedly.

Of course, it's necessary to develop processing.  Is it necessary to do it aboard at fishing ground, or ashore, or near consumers?  The answer is short: everywhere.  Some fish should be processed aboard to cut waste volume, many others should be produced ashore.  Unfortunately, Russian fishing grounds at both East and North are far from Russian populated areas.  Even so many kinds of raw material should be processed ashore, not at sea.  Some seasonal mobile factories can be set, or new settlements established.  Of course, it supposes large long-term investments.  Many retail products don't survive land transportation, and they'd better be packed at consumers' concentration regions.

We also hope, responsible fishermen and the Government will manage to eradicate the remaining IUU catch.  In fact, it would be good for everybody.

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