Trends and outlook for canned fish production in Kaliningrad in 2006

Production of canned fish and marinated preserves in Kaliningrad region in the current year 2006 is expected to stay on a par with the last year 2005 with the growth rate forecasted at 3-5%, according to Ryba I Moreprodukty.

Background

Through the recent five years six new fish canneries have been opened in Kaliningrad with the largest being OOO Kreon (ltd), OOO Bars (ltd) and the crab stick producer OOO Viciunai-Rus (ltd).

Practically all the fish processing plants located in Kaliningrad province are focused on the Russian market.

Canned fish production in 2005 in Kaliningrad amounted to 279.7 million nominal cans (a statistical unit equal to 325 grams) or 42.4 million nominal cans up on the year 2004.

The most stable and dynamically developing plants were OAO Polessky Rybokonservnyi Zavod (plc) and OAO Mamonovsky Rybokonservnyi Kombinat (plc).

Due to problems with the supplies of raw sprats for canning (in May-September Baltic sprat harvested in the 26th subarea of the Baltic Sea is not fit for industrial processing), absence of own working capital and sales problems OAO Baltiisky Rybokonservnyi Kombinat (plc) suspended production of canned sprats, while Za Rodinu fishing co-op considerably decreased its production volumes.

Fish processing companies based in Kaliningrad have completely suspended production of canned fish in tomato sauce because the production cost is higher than that of canned fish in own juice and with oil. (The recipe of canned fish in tomato sauce provides for preliminary frying of the raw fish). Though canned fish in tomato sauce enjoys a fairly strong demand on the market, under the old-established tradition the product is regarded cheaper and therefore in the nearest outlook it cannot be sold at prices comparable to the production costs. Through the recent two years production of canned fish in tomato sauce has dropped by more than 5 million nominal units.

Constraints

Constraints for sales of canned fish from Kaliningrad on the Russian market beyond the Urals are as follows:

-        overstated terms of cargo delivery by the Russian Railways (for instance, the normative term of delivery of cargoes to Chelyabinsk is 21 days against actual 12 days);

-        a ban for transportation of canned fish in ordinary sheltered railway cars except for four winter months a year. In the remaining part of the year canned fish should be transported in reefer sections. The requirement however does not touch canned meat.

According to the analysis of demand and supply situation, now the Russian canned fish market is close to the stage of saturation with insignificant seasonal fluctuations of demand also possible.