Russian Government looking into tariffs to beef up declining herring market

June 19, 2012 22:24

The Russian Federal Fisheries Agency has put forward a proposal to increase export duties for Pacific herring caught by Far East fishermen and to decrease import duties for Atlantic herring. Thus, the authorities intend to saturate the domestic market with herring caught by Russian and foreign fishermen to keep the "popular" fish in the average price segment. The move however has faced vehement opposition, first of all from Russia's pacific fishing companies who are unhappy both with the idea of increased export tariffs and lifted barriers for competition, reports

The Russian Federal Fisheries Agency (FFA) submitted a proposal to the customs and tariff regulation commission which envisages increase of duties for export of "Russian" (caught in the Pacific Ocean) herring and reduce the duties for the imported Atlantic herring. According to the Head of the PR Center of the Russian Federal Fisheries Agency Mr. Saveliev, the duties for import of fish are planned to rise from 5% to 15-17% of the customs value. It is expected that it will help to "reverse" the flow of Pacific herring which now primarily goes to the external markets to the Russian shops and keep it affordable to the mass consumers.

According to the Russian Federal Fisheries Agency, in 2009-2011 the balance of the domestic market for herring was reduced by 23.2 % due to growth of export of Pacific herring to South Eastern Asian countries. It is caused by the fact that export of herring grew up threefold (about 165,000 tons per year), while the share of imported Atlantic herring in the balance of the domestic herring market went down from 48.1% to 44.9%.

"Herring takes the first place in consumption compared to other fish. The average per capita consumption of herring in 2009 was 4.7 kg, while in 2011- up to 3.7 kg. The capacity of the domestic market is about 550,000 - 600,000 metric tons. So, fishermen will have no problems with sales", is confident Mr. Saveliev.

Some of the affected market participants are in natural opposition to the proposal of the Russian Federal Fisheries Agency. "The schedule for catching of Atlantic herring is different from the schedule of catching Pacific herring: the Atlantic one is caught in summer, while the Pacific one is caught before May and after November. So, the wholesalers and retailers will buy imported herring in summer with reduced duties and will not buy Pacific herring in late autumn, while catching of Olyutorsk herring starts in autumn, TAC (total allowable catch) of which may be increased up to 130,000 tons", says the President of the Russian Pollock Association German Zverev. Meanwhile, according to President, the share of RPA is 57% of the catch of the Pacific and Olyutorsk herring put together, the latter being the more expensive and fatter variety of herring from the Russian Far East.

Besides, according to him due to decrease of TAC for Atlantic-Scandinavian herring by 100,000 tonnes the shortage of the raw materials will increase anyway, thus, the price will go up. "Subsequently, reduction of import duties will not make herring more affordable", is sure Mr. Zverev.

According to RPA, the total catch for Pacific herring in 2011 was 294,000 tons: 174,000 were exported and 120,000 were sold in the domestic market. In 2012 the catch of the Pacific herring is forecast to be 427,000. According to the Association's forecast, about 220,000 metric tons will go to the domestic market and 200,000 tonnes will be exported. "It is all about attractiveness of the product for Russian processors: they need fat and large fish with minimum waste, so they import such fish. The Chinese and Japanese processors may process thin and small fish, so they buy such type from Russian pacific fisheries. No duties may correct it", is sure Mr. Zverev.

In this case, "the play" with duties will not bring about the desirable effect as the costs related to transportation and retailer markups comprise a substantial part of the price of fish. The expert believes that in this case the Russian Federal Fisheries Agency should rather focus on the target program "Increase of Efficiency of Use and Development of the Resource Potential of the Fishery Sector" and start joint work with the Russian Railways to develop fishery ports and improve logistics.

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