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Sep 12, 2021
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The fisheries revolution

The vector of the results of the VI Eastern Economic Forum is aimed at continuing the revolution in the fisheries industry in Russia.

The next Eastern Economic Forum (EEF) was held in Vladivostok on September 2-4, 2021. Domestic fishery producers were waiting for the event with special interest. At the forum site, a discussion was organized on the topic of investments in fisheries, the round table was called “Invest Quotas 2.0: the path to intensive development”. Thanks to the organizers of the EEF, the entire fishing industry watched the live broadcast. Moreover, the recording of an important business conversation is currently available for viewing on the website of the Eastern Economic Forum.

“Invest Quotas 1.0: Path to Intensive Development”

The quota reform in Russian marine fisheries has been under preparation since 2014. The initiator was the Russian Fisheries Company, which then made appropriate proposals to the President of Russia. As a result of this initiative, in October 2015, a meeting of the Presidium of the State Council on the development of the fishery complex was held, at which it was decided to partially change the principle of distribution and long-term assignment of rights (quotas) to fishery producers for the extraction (catch) of aquatic biological resources. In parallel with the “historical” quotas, depending on the commercial history of the enterprise, there appeared “investment” quotas allocated for the construction of investment objects in Russia: fishing vessels and coastal fish factories. As stated at that time by representatives of federal ministries and departments, and primarily by the antimonopoly service, “investment” quotas are needed to renew the fleet, increase the level of competition and the arrival of new “players” in the fishing industry. And most importantly, to improve the efficiency of the Russian fishing industry. Efficiency became the officially declared goal and ideological foundation of the declared “revolution”.

Speech by Ilya Shestakov at the panel session at EEF-2021 “Invest Quotas 2.0 The path from extensive development to intensive” / Fish.gov.ru

In 2015, the program “Invest Quotas 1.0: Path to Intensive Development” was actually launched. In order to implement the plans, the legislation on fisheries was significantly changed in the next two years. Manual adjustment of the initial regulatory legal framework to the harsh everyday life of a fishing “investment” life is still going on – to the situation.

“InvestQuotas 2.0: the path to intensive development”

As a matter of fact, the fish discussion at EEF-2021 was devoted to summing up the intermediate results in the literal and figurative sense of the launched process. Depriving the fishermen of hope for a quiet life, from the name of the round table, as if by itself it followed that the continuation of reforms is inevitable, the issue has been resolved, it is only necessary to determine how many and what percentage quotas to use for “investments”. And, of course, come up with “all together” the next investment objects. As one of the speakers of the fish industry put it philosophically: it would be better if there was nothing, but since this is so, then we fully support.

Assessing the implementation of the first stage of the project “investment” quotas, the head of the Federal Agency for Fisheries I. V. Shestakov said that five years of reforms launched systemic changes in the industry, but it is too early to sum up the results.

“We are changing the economy of the fishing industry by revolutionary, one might say, methods – this is, of course, a fact. This is where we were going. In fact, we are changing the economy. We have already increased the volume of products with high added value by 25%, and this is only in the last year. Our export volume due to covid fell by 24% this year, and in value terms increased by 2.5%. The most important thing, of course, for us is the economic return per ton of fish caught. The factories that are already in operation are capable of reorienting our fishery economy, and this is the main goal setting, it seems to me that this is the main result of the first stage of the investment mechanism, ”the head of the fisheries department explained his view on the process of sectoral reforms.

Indeed, in the last two years, many coastal factories have been built, which was previously mentioned in KINGDOM

Here, according to the laws of the genre of solemn events, it would be necessary to immediately move on to the next fateful section of the program. However, I still want to look into the bins of state statistics, to be convinced, so to speak, of the solidity of the information declared at the round table.

Fish processing complex in the Murmansk region / Fish.gov.ru

Fish products with high added value

Unlike words, government statistics data depend on the government accounting system and are responsible for themselves, digitizing economic and commercial reality. Sometimes confirming what was said at forums and congresses, and sometimes refuting. Based on the data of customs statistics (export and import of fish, fish products and seafood by the Russian Federation), the following picture emerges.

EXPORT

Products with high added value: fish fillet / TN VED TS code – 0304

  • 2020 – 112.2 thousand tons;
  • 2019 – 104.9 thousand tons;
  • 2018 – 124.1 thousand tons;
  • 2017 – 117.7 thousand tons;
  • 2016 – 111.9 thousand tons;
  • 2015 – 100.6 thousand tons;
  • 2014 – 107.0 thousand tons.

As far as exports are concerned, it is hardly correct to say that as a result of five years of “revolutionary reforms” in the Russian fishing industry, there has been a steady growth in the production of fish products with high added value. On the contrary, in the last two years there has been a decrease in this indicator. And this is quite understandable – the conjuncture of international markets determines how much and what to produce. If we look at the foreign exchange earnings from the sale of these products, then the result of 2020 (508.6 million US dollars) is in a sense comparable to the result of 2014 (552.2 million US dollars). In the period between these reporting years, the price of fish fillets fell, so the results were worse than in 2020.

The result for five months of 2021 is not surprising either. Fish fillet production amounted to 62.3 thousand tons. In the same period of 2020, 59.7 thousand tons of these products were produced and sold for export. Comparable. In monetary terms, respectively, $ 268.2 and 264.5 million. Let’s wait for the results of the current reporting year.

Salmon fillet / webandi

Mass production. Frozen fish / TN VED TS code – 0303 (production / sales proceeds)

  • 2020 – 1941.1 thousand tons / 2.84 billion US dollars;
  • 2019 – 1,810.5 thousand tons / 3.02 billion USD USA;
  • 2018 – 1956.5 thousand tons / 3.25 billion US dollars;
  • 2017 – 1,875.8 thousand tons / 2.64 billion US dollars;
  • 2016 – 1,677.2 thousand tons / 2.47 billion US dollars;
  • 2015 – 1,595.7 thousand tons / 2.40 billion US dollars;
  • 2014 – 1476.4 thousand tons / 2.38 billion US dollars.

The pattern is obvious – the greater the amount of annual harvest (catch) of aquatic biological resources allowed by the state regulator, the more production and money.

Nevertheless, the volume of total exports (TN VED TS codes 0301-0308, 1604 and 1605) of Russian fish, fish products and seafood in 2020 amounted to 2.24 million tons for a total amount of 5.29 billion US dollars. In 2019, these indicators amounted to 2.10 million tons and 5.36 billion, respectively. US dollars. That is, whatever one may say, a year earlier, in the pre-pandemic 2019, they produced and sold for export of sea and fish products even less than in 2020, and they earned more money – this is how the conjuncture of international markets developed.

Even if you look only at codes 0303 and 0304 of the dominant frozen fish products in the production, the total volume of export sales in 2020 amounted to 2.05 million tons with revenues of 3.35 billion US dollars. In 2019, these indicators were 1.92 million tons and $ 3.50 billion, respectively. The same picture. It is unclear then, where did the head of the Federal Agency for Fishery have reason to assert at the Eastern Economic Forum that as a result of investment reforms in the fisheries “we have increased the volume of products with high added value by 25% over the past year”, and “we have export volumes due to covid fell this year by 24%, and in value terms increased by 2.5%. ” Customs statistics do not support this thesis.

Freezing trawler of the newest generation “Mechanic Sizov” was launched / Fish.gov.ru

What was it and what next?

It’s hard to believe that early government officials don’t know industry statistics. And the point is not even that these very statistics are often ignored for certain reasons at official public events. The point is different, in the sincere fanatical “revolutionism” of the “reforms” being carried out. It was announced at the WEF that there will be a second phase of the redistribution of fish and crab quotas, either in 2023, or in 2025, they called this phenomenon “Invest Quotas 2.0: the path to intensive development.” It is argued that “the mentality and self-awareness in the industry have changed” and, unlike in 2015, the fish producers themselves are no longer against the continuation of reforms, now so, some details remain to be discussed. But the main goal, declared five years ago under the “revolutionary transformations”, has not been achieved even close – to increase the efficiency of the Russian fish industry. This is shown by the official results of the financial and economic activity of the industry. For 2020, the balanced financial result of organizations in the fishing industry (excluding small businesses, banks, insurance organizations and budgetary institutions) in current prices, according to preliminary data from Rosstat, amounted to 112.2 billion rubles, which is 16.4% below the level of 2019. In 2020, the profit of organizations in the fishing industry decreased by 14.4% compared to 2019 and amounted to 116.5 billion rubles.

This is understandable – there is no efficiency from revolutions, even if they occur in one single branch of the market economy. From revolutions, something else happens – what the words of the hero of the famous story Mikhail Bulgakov call systemic devastation.

Valentin Balashov

Cover photo: Fishing / Ivan Shilov © IA REGNUM



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