Russian fishery head sends policy signals to domestic and foreign players. Part 1.

August 11, 2008 16:25

In early August 2008 head of Russia's Federal Fisheries Agency Andrey Krainy participated in the circuit meeting of the resource committees of the Federation Council, where he has voiced the guidelines for the long term development of the nation's fishery industry, according to Kamchatskie Vesti.

Subsidies

Rising fuel costs is one of the most urgent issues for the fishermen as the Russian fleet is threatened to stay idle with the fishery to grow unprofitable.

The world history of fisheries has been facing the problem for the third time in the recent 40 years, Andrey Krainy said. With a steep rise of fuel prices the world catches would fall by 10 million metric tons in the past.

The Russian Government has already prepared an order on subsidies for the fishermen to get compensations for the rising fuel costs subject to those subsidies will be invested to renew the fleet. Andrey Krainy says that the above condition is also in the interests of the fishermen as the nation's current fleet is out-of-date and economically inefficient. More specifically, now the Russian fishermen spend more than 400 kilos of fuel per tonnes of harvested cod, which is twice as much as normally practiced in Norway. The high fuel expenses and growing fuel prices make the Russian fishermen's prices less competitive as compared to other countries.

Another measure on the Government's agenda is to subsidize two thirds of the rollover rates for the bank loans for the fleet refurbishment and renewal. In this case the fishermen will have to pay only 5% of the interest rates per year. Moreover, some Russian provinces have announced their eagerness to subsidize one third of the rollover rate. Thus, the fishermen will be exempted from paying the annual rates. (The above will not touch Kamchatka which lives on donations).

According to Andrey Krainy, the Federal Fisheries Agency has signed an agreement with Russia's Agricultural Bank Rosselkhozbank on its annual allocation of 50 billion RUB as bank loans for the fishery industry. A similar agreement is to be signed with the Development Bank (former Vnesheconombank).

Resumption of deepsea fisheries

In September 2007 Andrey Krainy spoke about establishing a state fishery corporation to be called Rosrybflot. This state joint stock company will be formed on the basis of Arkhangelsk Trawl Fleet and Murmansk Fish Port which are 100%-owned by the state. The project is now being considered by the Fisheries Commission of the Government.

The new entity will be commissioned to return the Russian fishing fleet to the World Ocean and to recover the nation's historic right for fish resources in the areas where the Russian fleets had been working in 1970-1980s.

Krainy is sure that the food crisis in the world will continue as the cheap food era has come to an end and in the near future only chemical food will remain cheap. By 2030 the Americans apprehend wars for domination over protein resources and sweet water. At the same time, the World Ocean together with aquaculture can yield about 115 million tonnes of seafood. In some 20 years at the utmost all its areas with abundant volumes of aquatic bioresources will be divided between nations and Russia has to restore its position which has been lost after a collapse of the Soviet Union.

According to Russia's fishery industry head, 27 vessels (filleting trawlers of the Sterkoder series and longliners) will be handed over to Rosrybflot. These ships have been constructed under the nation's guarantees and the right for their operational control has been given to Akros, Sakhalinleasingfleet and Sakhrybakkolkhozsoyuz.

After the state has transferred the right for operational control to the above companies, they have been supposed to pay the bank loan interest rates, but the companies have evidently neglected their liabilities. Therefore, the government has made a decision to get the fleet back to the state property after paying the debt to the bank.

Although, Krainy says that Rosrybflot will not send those vessels to the overseas grounds as they are of little use for operations on distant grounds. He has not disclosed for which purpose the vessels will be used, he has only promised that Rosrybflot will not claim capture quotas in the national waters.

Focus on domestic raw

In 2008 the nation's fishery industry has been enlisted as one of the strategically important sectors. As a result, the 200-mile zone has been closed for foreign fleets (except for those operating under the intergovernmental agreements).

Actually, many fishing nations have been also forcing foreigners out of their waters with joined stock ventures with foreign capital admitted to the wild stocks subject to landing catches for processing at home shores. If a foreign company wants to purchase a blocking pack of shares of a Russian fishing company, the government will define where to allow the deal or not.

In 2008 the Federal Fisheries Agency will approve catch quotas for the extended term of 10 years and Andrey Krainy says they are going to scrutinize the applicants for implicit control by foreign businesses. The new regulations are to break the current situation when the bulk (ca.60%) of Russia's harvest of Alaska pollock is controlled by companies beyond the nation's jurisdiction.

Andrey Krainy says he strongly opposes foreign expansion into the nation's fishing sector. Instead foreign investors are welcome to capitalize on the development of the Russian onshore fish processing sector by means of participating in refurbishment and construction of fish factories.

Along with the above measures, the Federal Fisheries Agency has offered the government to raise import duties for farmed fish. The idea is to clear the market for domestically produced fish. While the current capacity of own meat production accounts for 45% of the nation's need in meat, the capacity of own seafood production is estimated at 120%.

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