Fishermen's News - The Advocate for the Commercial Fisherman

Russia to Modernize Renew Domestic Fishing Fleet

Eugene Gerden

 

December 1, 2017



The Russian fishing industry is on the verge of big changes, due to the recently approved federal law, titled “On Fisheries and the Conservation of Aquatic Biological Resources,” which established a new mechanism of the distribution of quotas on the production of fish and seafood in the Russian territorial waters among domestic and foreign fishermen.

The new law involves the extension of quotas’ duration from the current 10 to 25 years, as well as the introduction of so-called “investment quotas”, that will be offered to fishermen who build new fishing vessels at a Russian shipyard or invest funds in the development of domestic fish processing infrastructure.

The state hopes the use of this scheme will provide an impetus for the renewal of the Russian fishing fleet, reconstruction of coastal infrastructure and the development of the domestic fish processing industry.

It will also attract up to 200 billion rubles (US $3.2 billion) to the Russian fishing industry by 2022, of which 120-150 billion rubles will be invested in the establishment of fish processing infrastructure in the Russian Far East.

Alexander Galushka, Russia’s Minister for the Development of the Far East, commented: “The new law establishes a new mechanism for the provisioning of quotas. This is a quota with investment commitments for fishermen. Obtaining the catch rights, an investor will undertake to either build fishing trawlers at a domestic shipyard or to establish facilities for fish processing within the country.”

The existing scheme of ten-year fishing quota distribution in Russia was approved as far back as in 2008. The quotas were distributed on a historical basis, taking into account the history of the company’s fishing for the previous period. Starting from next year this scheme will be changed, while the duration of quotas will be extended to 25 years.

In the meantime, in addition to an increase in quota duration, the government plans to intensify opposition to unscrupulous fishing companies operating in the domestic market. Implementation of these plans will be carried out through the elimination of quotas, in the case of their provision to these companies. Elimination will be carried out in the case of non-use of 70 percent of the allocated quotas for the period of two years, as well as the use of less than 70 percent of the provided quota on the owned or chartered vessels of a particular company and enterprise.

This will allow for the withdrawal of intermediaries from the market, and in particular those producers that do not have their own fishing fleet and which resell their quotas to genuine producers.

In addition to these measures, the Russian Federal Agency of Fisheries (Rosrybolovstvo) plans to start more active seizure of quotas from domestic fishing producers affiliated with foreign capital.

As part of these plans, Rosrybolovstvo plans to conduct a massive audit of the domestic fish producers on the subject of their affiliation with foreigners.

That will be similar to actions that occurred several years ago and resulted in the withdrawal of the Hong Kong holding Pacific Andes from the market, as a result of proved accusations of the illegal control of up to 85 percent of Russian pollock producers.

In the meantime, the increase of quota duration has been criticized by Rosrybolovstvo. According to Ilya Shestakov, head of Rosrybolovstvo, the 25-year term gives the government less flexibility and ability to “make prompt interventions, if necessary.” Nevertheless, the decision has already been approved by the Ministry of Agriculture and Russia’s Prime-Minister Dmitry Medvedev.

Shestakov has also confirmed plans by Rosrybolovstvo for a further tightening of state control over the activities of foreigners in the Russian fishing industry, as a significant number of Russian fishing producers are still affiliated with Chinese and South Korean capital.

In the meantime, leading Russian fishing producers generally welcomed the new state initiatives. A spokesman of Russian Fishery Company, one of Russia’s leading fish producers and processors, said that accelerating efforts for domestic fishermen will result in the withdrawal of numerous intermediaries from the market and will provide additional guarantees to producers of the return of their investments.

However, according to analysts in the Russian Fisheries Union, the new initiative may pose a threat of corruption in the industry during the distribution of quotas for such a long period of time.

This opinion is shared by Alexander Fomin, a former President of the All-Russian Association of Fisheries Enterprises, Entrepreneurs and Exporters, according to which the mechanism for selecting applicants for these quotas is not detailed, which creates corruption factors in the implementation of the proposed legislative norms.

“Most of Russian fishing enterprises (somewhere around 800), are companies of small and medium size, which have one or two vessels,” Alexander Fomin says. “It is planned that the majority of them will not be able to receive quotas for fish catch in accordance with the new scheme, as the bulk of quotas will be distributed among Russian leading fish producers.”

In addition, Russian shipyards say they simply do not have enough capacity to build new fishing trawlers, especially given the fact that the construction period after signing the contract, according to the new federal law, should not exceed three years.

Currently the technical level of the majority of Russian shipyards remains poor, while at present only three of them can build fishing trawlers of 80 meters in length. However these shipyards are fully loaded with orders until 2018.

Still, the renewal of the domestic fishing fleet is expected to be one of the priority goals for the Russian government during the next several years. According to recent assessments by the Russian Federal Agency for Fisheries, the Russian fishing industry may be faced with a serious shortage of fishing vessels by 2020. Already the shortage of vessels is estimated at 360 units and continues to grow.

As of January 1, 2017, the Russian fishing fleet was comprised of 2,600 ships, while its average age is estimated at 27 years. These figures are not critical on a global scale. The major problem is associated with the lack of a well-functioning and high-quality market for fleet maintenance, repair and timely modernization of ships, which would allow for a significant increase in the period of their effective operation, and reduce the need for new vessels.

Anatoly Volodin, Deputy Director General of OOO Russian Fishery Company, said that the last ships were built under the Soviet government in the 1980s at the Mykolayiv shipyard in Ukraine. In the case of Russia, the last large-capacity fishing trawler was built almost 25 years ago.

Volodin, however, acknowledges, the importance of the renewal of the domestic fishing fleet, taking into account that large-capacity vessels account for up to 70 percent of total fish catch in Russia.

Volodin has also added that each year 3 or 4 large-tonnage fishing trawlers are decommissioned in Russia because of hull deterioration and metal fatigue.

In the case of fish processing, part of the state plan is the establishment of a “Far Eastern Fish Cluster”, a complex of modern fish processing plants in the Far East region (which accounts for up to 70 percent of the total fish catch in the country), that will specialize in fish processing.

Eugene Gerden is a free-lance writer based in Moscow, Russia who has covered the European maritime industry for 15 years. He can be reached at gerden.eug@gmail.com

 
 

Powered by ROAR Online Publication Software from Lions Light Corporation
© Copyright 2017