Siberian company establishing joint venture to farm sturgeons and produce black caviar

OOO Gamma-Service (ltd) based in Novossibirsk (more than one million-strong city in Siberia) and German company Fischtechnik Fredensloh have agreed to establish a join venture to be engaged in sturgeon farming, black caviar production and fish processing, according to general director of the Russian firm Tatiana Ivanova quoted by Vedomosti.

More specifically, the agreement provides for construction of a sturgeon farm, a caviar production unit and a fish processing plant. The joint venture established for the purpose will be owned at 51% by Gamma-Service and 49% by Fischtechnik Fredensloh.

Participation in the project has been confirmed in the head office of Fischtechnik Fredensloh, though the firm's representatives have declined to give any further details about the project.

Construction of an artificial pond and a fish plant will take off in March-April 2008, Ivanova says. The production output is expected to amount to 175 metric tons of fish (sturgeon and beluga) and 8 tonnes of black caviar. The investments into the project are estimated at RUB428 million. The money will be contributed by the partners in accordance with their shares in the joint venture. According to Tatiana Ivanova, her company will participate in the project mostly with borrowed funds. The project is to pay back within two years.

In the meantime, Mikhail Glubokovsky, ex-deputy director of former Federal Fisheries Agency, has described Gamma's expectations of the project's paying back within a couple of years as too optimistic because the farmer will have to wait for some 6-7 years until sturgeon matures for spawning (beluga matures even later in its 13th year).

The investments will be repaid only in 10-12 year and the first profit will be received in 5-6 years at the earliest, managing director of Rostov-based fish farm Kazachka Nikolai Leonov agreed with the above opinion.

According to deputy head of the sales department of Severnaya Kompania Roman Lavrov, black caviar made from wild sturgeon is sold at ca.RUB30,000 per kilo, while black caviar from farmed sturgeon is more expensive offered at RUB48,000 per kilo. The profitability of the sturgeon farming business amounts to more than 100%. Lavrov thinks that the plant will have to sell its produce first of all on the domestic market, as there are strong competitors in Europe.