Fishermen's News - The Advocate for the Commercial Fisherman

Russia to Compete with US in Global Pollock Market

 

December 1, 2018

At the Eastern Economic Forum in Vladivostok, Russian President Vladimir Putin and Chinese President Xi Jinping made Russian pancakes, stuffed with black and red caviar, washed down with Russian vodka. Photo courtesy of the Russia Fishery Agency.

The disagreements between the United States and Russia, so far mainly observed in the military and political fields, have expanded in recent years to trade in the pollock segment. Lately the United States and Russia have strengthened their positions as the world's leading producers of pollock, which is intensifying their competition in major markets. Recent changes in the production structure of pollock products in Russia and increased production of value-added products have made local producers more competitive in the global market. In addition, in recent years, many of them have renewed their pollock catcher vessels and have modernized their coastal processing infrastructure. These advances by Russian fishermen have already raised concerns among their American rivals, who have been facing a decline in sales of their pollock on the world market and an attendant reduction in export earnings.

The only product whose sales have increased both in volume and value has been surimi. However, due to lower world market prices, sales revenue growth is significantly lower than that of its exports. Many pollock producers in Russia and the United States regard the current situation in the global pollock industry as "depressed." According to them, the main reason is the low price of pollock products on the world market. Pollock prices have stagnated for a while, and a predicament with the conglomerate of Hong Kong's Pacific Andes International Holdings, which has been accused of illegally controlling the main pollock producers and exiles from Russia, further complicated the situation. The price of Russian pollock, which is currently a major product in the Russian seafood industry (mainly exported to China for further processing and production of frozen fillets), reached $1,300 per ton in January of last year. The year prior, pollock had brought $1,500, whereas two years ago the price was $1,700 to $1,800 per ton. Prices for Russian pollock products have traditionally increased at the end of the year, but did not in 2017. Chinese processors are mainly interested in buying large pollock, but US and Russian producers are currently offering medium and small pollock, which keeps the prices low. According to forecasts by the Alaska Seafood Marking Institute and analysts of the Russian Federal Fisheries Agency (Rosrybolovstvo), the ever-increasing volume of unsold stocks, low prices for pollock and competition could cause US producers serious difficulties in the global pollock market this year.

Specialists from Rosrybolovstvo say that this year, pollock production in Russia could exceed 2 million tons, significantly more than 2017, which stood at 1.8 million tons. Rosrybolovstvo is already planning next year that Russian companies will start on-board pollock surimi production, which will create conditions for their active expansion into the global market. In addition, next year, Russian fishermen are also planning to increase the production of pollock fillets in individual blocks. Ilya Shestakov, director of Rosrybolovstvo, said in 2017 that Chinese companies produce 440,000 tons of pollock from Russian harvests, about 45 percent of the world's production of pollock fillets. The total value of this production was $1.3 billion and it is possible that these numbers will increase significantly this year as Russian companies are ready to increase stocks of pollock in China and other countries of the Asia-Pacific region this year. According to forecasts, exports of Russian pollock to South Korea, Japan and China could be significantly less expensive than those of the United States. According to Russian experts Rosrybolovstvo, the United States, for its part, wants to ensure deliveries of large-scale and tariff-free pollock in the Asia-Pacific region, which will however be sold at higher prices than Russian. The situation for American pollock producers is also compounded by the predicted warming of seawater in the US fishing zone over the next 25 years, which will result in the migration of pollock to Russia. Analysts predict that a possible migration may affect about 35 percent of pollock in the US fishing zone. In the meantime, the McDowell Group recommends that US producers take steps to boost demand for their pollock products in key markets. This could be done by expanding the range and number of export destinations. Authorities at the Alaska Seafood Marking Institute say it's important for American pollock producers to accelerate their efforts to promote their products in foreign markets, using the experience gained from implementing a similar wild salmon extension campaign.

The Institute's experts also believe that special attention should be given to launching new products and expanding the existing range. One of these products could be protein powder, based on pollock from Alaska. Experts believe that the start of mass production will allow American pollock producers to expand into the food additive segment and provide additional sources of revenue.

A spokesman for Russian Agriculture Minister Alexander Tkachev expects American pollock producers to try to strengthen their positions in key markets, reducing their Russian competitors and preventing their expansion abroad. As part of these projects, Trident Seafoods, one of the world's leading fishing companies, has stepped up its advertising campaign by positioning its fillets, produced from Alaska Pollock as a natural alternative to frozen Russian fillet, which, according to Trident, are pumped with polyphosphates and water to retain moisture. As Joe Bundrant, General Manager of Trident Seafoods, said, these actions are part of the company's efforts to educate consumers about the quality of pollock caught in the United States.

This campaign will probably be aimed primarily at European consumers, with Trident Seafoods recently acquiring the European Seafood Traders plant, which was part of the collapse of Pickenpack Holding Germany. Given that Russian producers of pollock fillets have recently started to gradually restore their positions in Europe, offering quality products that the Chinese freeze, Trident Seafoods will consider Russian producers as their direct competitors. At the same time, the American Genuine Alaska Pollock Producers (GAPP) recently announced its intention to expand its marketing campaign to promote its products in Germany. This will include the use of various marketing techniques and tools, including direct contact with consumers, participation in International Green Week in Berlin, as well as the expansion of the multichannel public relations program.

In addition to the European market, American pollock producers also plan to accelerate their expansion into Asian markets. For example, Trident Seafoods has repeatedly announced its intention to increase sales of pollock fillets in Japan. Last summer, the company successfully launched a new product: the boneless "Kirimi" fillet (which is a pollock fillet, cut into pieces in a flavored sauce), specifically developed for the Japanese market. The Trident policy in Japan, where the positions of Russian pollock producers are not particularly strong, aims to create a new demand by offering consumers new types of products and stimulating their consumption. This year, Trident plans to sell 2,000 tons of pollock fillets in Japan and plans to increase these numbers to 5,000 tons in the next few years. Meanwhile, the current situation in the pollock segment also seems more favorable for Russian producers, who expect a gradual recovery in prices, which will be triggered by the stagnation of US production. According to Rosrybolovstvo, this year, pollock production in Russia will remain relatively high compared to US production.

 
 

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