Russian harvester combined market and deepwater crab stocks into goldmine. Part 1.

August 31, 2007 12:56

Vladivostok-based fishing co-op RK Vostok-1 has discovered a new goldmine by combining the market development and the stocks of deepwater crabs which have remained underexploited both in the Russian waters and in the international waters. In other words, the co-op has reported a success both with the fishery results and with sales of the product on the US market.

In particular, in 2006 the company achieved highest prices of all the crab sizes and in early 2007 it was able to set fixed prices at the highest market level. As a result of fixing the prices, the co-op received orders exceeding its fishing capacity and it even had to put them off till 2008.

Taking into account the above situation, Vostok-1 is now in search of partners for operation in the international waters on the grounds of deepwater crabs as well as a range of valuable and abundant finfish species, according to Chairman of the company's Board of Directors Valery Shegnagaeyv as quoted by Fishnews.

Due to heavy costs the fishery of deepwater crabs has been ceased practically by all the companies of the Russian Far East, therefore now the co-op has remained the single supplier onto the US market with a good deal of freedom to make the marketing policy.

Originally the small-sized crab would make a problem for the company, but its engineers have done a good job to meet the challenge. They have found out that on the deepsea grounds the dominating crab sizes are normally small and such sizes are not strongly demanded on the US market. That is why the co-op has decided to follow the Chinese example and to process crab into meat products just like the case with swimming crab.

There are several groups of crabs divided by weight: frozen sections smaller than 3 ounces, 3/5 ounces, 5/8 ounces, 8/10 ounces and more than 10 ounces (one ounce equals 28 grams). Each group is differently priced. The difference between the prices of the sizes less than 3 ounces and 5/8 ounces is nearly twofold. At the same time, the yield of meat from one kilo of frozen sections is approximately the same at 40%. The thing is that small-sized crabs have thinner shell than large-sized crab. This is the discovery that has been made by Vostok's engineers. They have concluded that processing of frozen crabs into meat products can enable the producer to increase prices of small-sized crab to the level of large-sized crabs. In other words, opposite to previously difficult sales of small sizes at low prices, the new method is expected to help rise the efficiency of crab production nearly by 30-40%.

Good marketing both of crabs and finfish species has enabled the company to look into its potential operations in the international waters. The co-op's engineers have been to China and demonstrated the possibilities of deepwater crabs processing in order to achieve equal prices of meat extracted from large and small crabs.

International waters

Vostok-1 has already developed the concept of its future operations on the international grounds. The concept provides for the vessel's practically unlimited operations on the deepwater crab grounds with the catch rates per day expected at ca.10 tonnes. The expected crab concentrations should make it possible to profitably operate with two or three lines instead of typically 5 lines per day which is to result into large savings of fuel. Thanks to no resource fees on deepwater crabs, the vessel's total expenses can be decreased nearly by 50%. The saved money will be invested into development (shipbuilding) and increase of crewmen's wages.

The co-op's specialists have also worked out the methods of fishing and processing of some valuable and comparably cheap, but abundant species. Valuable species are deepwater halibuts, black cod, ocean perch, dory, purplehead and seabass and the catch rates of those species are expected at 10-15 tonnes per day. Comparably cheap fish such as grenadier can be harvested at the rates of ca.30 tonnes per day.

The fishing areas have remained undisclosed as the preparation work has taken much time and money, but the co-op says it will give the info to its partners free of charge and to other interested firms at prices to be agreed. Product sales will be carried out via the co-op's agent Global Seafood Corporation not to bring down the market. As it is fairly unreasonable to send one single vessel to work on the open grounds, there is a need to send a small group of 5-7 vessels in order to make their operations mutually beneficial. Participation in the expedition would be on a paid basis.

Meanwhile, the co-op says that the project has already received the backing of Deputy Minister Vladimir Izmailov from Russia's Ministry of Agriculture, Chairman of Agrarian Committee of the State Duma Mr. Gennady Kulik and Yuri Kokorev from VARPE Association of Fishermen, Processors and Exporters.

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