Russia suffering from lack of seafood despite mandatory customs clearance at home ports

April 22, 2009 16:28

At a recent meeting with Russia's First Vice-Premier Viktor Zubkov who supervises the nation's fishery industry the fishermen have been told that the current strategic target of the Russian government is to feed the population with affordable seafood, reports ( with reference to ZRPRESS.

According to federal officials, the affordable seafood includes capelin, pollock, flounder, and wachna cod, which should cost in retail network ca.RUB20.00-50.00 per kilo. However, the fishermen think it impossible as it is very expensive to land fish at Russian ports. Besides, there are a lot of intermediaries in Russia and the railway charges for transportation services make the domestic fish very expensive for end consumers, the fishermen say.

Actually, seafood shipments from the Russian Far East have been declining considerably on last year. In particular, according to official information, the seafood cargoes transported by railway from the Russian Far East to European Russia amounted to 69,200 tonnes in January-February 2009, 18% down on the same period last year. The total volume of seafood cargoes delivered by railway in 2008 amounted to 423,300 tonnes, 10% down on 2007.

The annual decrease of volumes bound for the domestic market has been reported not only by the Russian Railways. Head of transport company OOO Severo-Zapadnyi Morcentre Mr. Igor Kolganov says that now they practically do not transport seafood from the Russian Far East because the coldstore inventories are zero with nearly all the Russian fish exported to the overseas markets due to higher prices. More specifically, the price per tonne of pollock on the export market fluctuates from 1200 to 1400 USD and the companies bear much smaller cargo and transport expenses there.

In the Russian Far East cargo charges are paid for cargo handling at ports, namely for transhipment from vessel to coldstore or from vessels to railway reefer section (reefer section contains several reefer cars and a diesel generator car with a total capacity of up to about 200 metric tons). Now seafood cargoes are handled by Dalrybport, Diomidovsky Commercial Port, Vladivostok Merchant Port (container terminal), Vanino Port and Nakhodka Fish Port. There are also small terminals in various ports, but, as a rule, they transship only containers and in very small volumes. The largest market player here is Dalrybport which handled 389,000 tonnes of seafood in 2008, 10,000 tonnes up on last year and 22,000 tonnes down on 2006 when the port handled 411,000 tonnes of seafood. However, the volume was still insufficient for the port's three divisions have been loaded barely at 50%. This year the Russian market has been facing a real shortage of fish with only a little more than 3000 tonnes available at coldstores in Vladivostok and the remaining storage facilities of the total capacity of ca.38,000 tonnes staying empty.

Two years ago the cost of cargo handling services amounted to ca.RUB0.60 per kilo of fish. But at present the cost of such operations somewhat increased to a little more than RUB1.00 per kilo for transshipment from vessel to coldstore and from coldstore to railway reefer section (for processing plants Dalrybport offers a 20% discount). The cargo handling charges could have been smaller if the companies would have been loaded evenly during the year, said Dalrybport's general director Ludmila Talabayeva.

Many wholesalers agree that the fish prices could have been lower if the landings distributed evenly throughout the year, and it normally happens that the bulk of seafood cargoes are handled during the salmon season thus creating a rush when all the market participants are trying to earn more money to cover the losses of other months. Nearly all the market players agree that formation of prices for seafood transportation and cargo services is often speculative.

Larger companies such as OAO Refservice (plc) with a rolling stock of ca.400 railway reefer sections deliver a section to Moscow at RUB1 million already and during the salmon season when the company transport ca. 400,000 tonnes of fish the price of the fish travel to the capital will amount to RUB1.5-1.6 million.

As a result, the value per kilo of fish for storage, transportation and handling operations from the Russian Far East to Moscow may reach RUB10.00 per kilo. As for affordable fish priced RUB20.00 per kilo, the fishermen cannot evidently sell pollock at RUB10.00-20.00 per kilo as on the export markets they can get RUB40.00 and more per kilo.

The year 2009 has showed a large increase of prices for a number of products. One of the largest increases has been observed for herring and pollock. The traders attribute the price rise to producers' focus on export. In 2008 the price per kilo of pollock amounted to RUB36.00 and in 2009 producer's price has already reached RUB55.00-59.00 per kilo, according to Vladivostok division of Simbirgroup. The price rise has been due to the fishermen's focus on export and higher prices at export markets. Besides, weakening of the Russian currency on USD and Euro has also added fuel to the fire.

Along with the above, there has been a considerable decrease of the product range and often fluctuations, seasonal as well, of prices spurred by shortage of supplies.

At the same time, heads of fishing companies think that there is enough fish in Russia now and export component is one of the most important conditions of business development in the country. Businessmen complain of absence of Russian buyers willing to purchase such volumes which are now shipped to the international markets. However, at the aforesaid meeting with Viktor Zubkov President of Russia's Pollock Association German Zverev has assured First PM that the seafood shortage problem will be solved in short term with the fishing companies of the Russian Far East allegedly ready to satisfy the domestic demand and ship ca.150,000 tonnes of pollock to the domestic market.

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