Fish Will Not Swim Away
A reform of the law on fishing is aimed at solving the problems of the industry
The Russian Far East has vast marine biological resources. About 20 of all fish in Russia is caught in Kamchatka alone. However, not only does the catch not reach the central regions of the country; it does not make it to the market stalls of coastal regions either. Practically all fish caught is exported. Urgent measures adopted by the authorities should change the current situation.
The Far East provides about 82% of the fish produced in Russia, but many problems have accumulated in the industry lately which require an urgent solution. The problem is that the Far East is mainly just a raw materials base, and mostly for foreign countries at that, whereas the macroregion itself lacks capacities for fish processing. According to official statistics, about 90% of all fish caught is exported, primarily to Asian countries. For example, in the first seven months of 2016, only 352,000 tons of fish out of the 1,863,600 tons caught were sent to the inner regions of the country, which means the rest was exported.
Federal and regional authorities are seriously worried about situation taking shape, and the last year has been distinguished by serious changes in the development of the fishing industry. A lack of investments, deterioration of operative assets, a deficit of capacities for processing and storage, and focus on export to the detriment of the domestic market – these are the problems which the initiatives currently being implemented must help solve.
Amendments to the federal law “On fishing and the preservation of aquatic biological resources”, which were adopted in spring 2016, were of great significance to the industry. They aim to attract investments and eliminate quota “rentiers” from the industry. The principle of long-term assignment of resources was introduced, which means that quota shares will be assigned not for 10 years, as had been done since 2008, but for 15 years. In addition, the threshold for development of aquatic bioresources was raised for two years in a row, from 50% to 70% of the volume of allocated quotas. This measure serves to fight quota “rentiers” – enterprises which do not have their own fleet and do not catch fish, but receive and resell fishing quotas.
If you want to catch something, build something
After long discussions, a legislative regulation was adopted on investment quotas, so called “keel quotas”, which are designed to stimulate the building of ships for the fishing fleet, as well as coastal enterprises for processing of aquatic bioresources. It is anticipated that 20% of quotas will be distributed for investment purposes, which may include the purchase of new fishing ships built at Russian shipyards, as well as the creation of domestic fish processing sites. This initiative is intended to solve the problem of the serious deterioration of the Far Eastern fishing fleet, which is up to 80%, as well as provide a workload to Russian shipyards. At the same time, there is still a risk that the redistribution of quotas will harm small fishing enterprises which cannot invest in ships because of their high cost and could lose their quotas. Furthermore, at this moment the large national shipbuilding enterprises do not have free capacities, as operating shipyards are booked with orders for several years in advance. Nevertheless, there are reasonably good options for the development of shipbuilding directly in the Far East (one of the last initiatives appeared in Sakhalin, in the city of Nevelsk), as well as in other regions of the country (at the facilities of the industry leader, United Shipbuilding Corporation) for the benefit of the Far East.
The law also establishes that fishing territory is one whole and the user makes the choice between industrial and near-shore fishing at his own discretion. However, within the scope of near-shore fishing, only refrigerated fish should be delivered to the shore – delivery of frozen near-shore fish, which usually does not enter the domestic market, but is exported abroad for processing, is prohibited. The opinions of experts concerning this initiative differ. Some state that it will negatively affect near-shore fishing. At the same time, these measures will make it possible to change the status of near-shore fishers, which in reality exported frozen fish abroad. Now they will have to take up industrial fishing, and the Far East regions will have access to a larger volume of refrigerated fish. On the one hand, the consequences of adoption of the law could actually be harmful for some part of players on the fish market, but on the other hand, a qualitative change in the fishing industry is impossible without these steps.
The problem of insufficient investments could be solved through cooperation with foreign companies, primarily Japanese and Korean ones. In particular, in exchange for fishing quotas, Asian partners will be offered the opportunity to build fish processing capacities in the Far East or invest funds in the purchase of Russian ships. The idea is currently being actively discussed by Russian and Japanese parties. Criticism of this approach consists in that it does not solve the problem of providing the domestic market with fish, as the product obtained will most likely be exported. At the same time, it could be effective for attracting investments and will solve the problem of producing fish products with high added value, thus bringing in additional revenues to the industry.
Fish will return to the country
Important steps are also being taken for the purposes of increasing of accessibility of fish products for the population and decreasing its cost. Among the innovations it is worth mentioning the creation of an electronic fish exchange in the Sakhalin Region, which will allow consumers to obtain fish products directly from suppliers by participating in auctions. As a result, fishing companies were able to sell 420 tons of aquatic biological resources for 230 million rubles, which overall is considered a positive result. The exchange is to launch full-scale activities by 2020, after the modernization of the port of Korsakov – a large logistic complex will be created there. It is worth noting that there are hopes of spreading the positive example of Sakhalin to other fishing regions of the country as well.
The above-mentioned near-shore fishing, whose development is one of the priorities of the federal and regional authorities, should also help to provide the population with refrigerated fish at low prices. Sakhalin has become a pilot region, where new rules for regulating fishing in the near-shore zone came into effect this summer. First, a simplified scheme for reporting catches was introduced. According to the changes, fishermen registered in the Sakhalin Region who engage in near-shore fishing only in the six-mile zone of Sakhalin and the Kuril Islands on ships up to 24 meters in length now can fill in the ship’s fishing log already on shore, at unloading centres determined by the regional government. Second, for the purposes of developing multispecies fishing, incidental catch of so called TAC objects (species for which a Total Allowable Catch has been determined) has been increased from 2% to 10% (aside from mammals, crabs of all kinds and prawns) and limits on incidental catch of species for which no Total Allowable Catch has been established have been lifted for small fleets. Furthermore, starting in 2019, fishermen involved in near-shore fishing will be able to claim state support in the form of additional quotas.
Among positive changes, a ban on drift fishing, i.e., fishing with nets in upper waters, introduced as of January 1, 2016, is worth pointing out. Drift fishing in Russian waters was actively used by Japanese and Korean fishing companies, which intercepted a significant part of salmons from Russian near-shore enterprises. In addition, fish was unable to spawn because of this kind of fishing, which threatened the absolute devastation of spawning areas, and thus the end of fishing. The result of the limitations can be seen already. As a result of the ban, migration of humpback salmon has increased in the Sea of Okhotsk, and Magadan fishermen received a catch quota which is 2.3 times larger than the initial one. Eventually, fishing of this species of fish has increased by 145% compared to 2014, to 60,600 tons.
The driver of development of the Far Eastern fishing industry is to be a fishing cluster, the creation of which was initiated by the President of Russia, Vladimir Putin, as early as 2013. Initially the idea of localizing the entire cluster in the bay of Sukhodol in the Primorski Territory was being developed, but this idea had to be discarded. In winter 2016 the Russian Federal Fisheries Agency presented a new concept of the fishing cluster, which will include four divisions consisting of Primorsk Territory, Sakhalin Region (with the Kuril islands as a separate zone), and Kamchatka Territory. The leading role will still belong to Primorski Territory, where the implementation of five large investment projects is planned: The Vladivostok wholesale distribution centre, which will make it possible to solve the critical problem of overloading refrigeration capacities; a flagship plant specializing in producing pollack fillets; an enterprise specializing in frozen semi-finished fish products; a multipurpose fish processing complex for small enterprises within the scope of the “Nadezhdinskaya” Advanced Special Economic zone; and an innovative science park with a business incubator and a venture fund. According to the preliminary calculations of the Russian Federal Fisheries Agency, the project will provide an inflow of private investments in the amount of 17 billion rubles, the annual contribution to GDP will come to 4 billion rubles, and tax revenue will amount to 1.6 billion rubles. In addition, 1300 new jobs will be created.
The Advanced Special Economic zone mechanism will also be used for the development of the fishing industry and attracting investments – the “Kurily” Advanced Special Economic zone, specializing in fishing, may be created in Sakhalin before the end of the year. In addition, the authorities of Khabarovsk Territory sent a request for the creation of a “Nikolaevsk” ASEZ, where residents will be engaged in fish processing, shipbuilding and logistics. It is worth noting that two fish processing enterprises opened in the Nikolaevsk district of Khabarovsk Territory, one of which is the largest in the Far East (investments amounted to 1 billion rubles), which contributed to the emergence of an initiative to create a new Advanced Special Economic zone. Individual projects in the area of fish processing will be implemented within the scope of other ASEZ.
Furthermore, four residents of the recently created free port of Vladivostok will be engaged in “fish” projects for a total investment amount of 3 billion rubles, which will make it possible to create about 866 jobs. For example, the Khoral Company will create hi-tech facilities for fish processing (pilchards and mackerel), the Prim Khunchun Corporation will engage in the creation of a complex for processing and storage of marine products; the Vladivostok Fish Terminal will involve the construction of a specialized refrigeration complex for storage and transshipment of fish products, and SeaLife will build a facility for farming of Far Eastern trepang, scallops and mussels. Thus, new institutions of development created in Far East are mainly oriented towards the development of the fishing industry and create tax and other preferences for enterprises.
Expansion of our own fish processing capacities by building and modernizing facilities instead of exporting raw materials to other countries, as well as providing the domestic market with products at moderate prices, are the main priorities of the development of the commercial fishing industry of the Far East. Over the last year a number of legislative initiatives were adopted which changed regulation of the industry significantly and for the better, and created incentives for attracting private investments in various investment projects. However, a lot more time and effort will still be needed to accomplish fundamental transformations and obtain concrete results.