• Industry Profile Issue 3/2019

    An Interview with H.E. Ilya Shestakov, Deputy Minister of Agriculture of the Russian Federation Head of the Federal Agency for Fishery/Chairman of the Organizing Committee of the 3rd Global Fishery Forum and Seafood Expo

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INFOFISH: Your Excellency, at a meeting with Russian President Vladimir Putin in December 2018, you said that fish production exceeded 5 million tonnes in 2018, an almost 6% increase from the previous year, and that this trend has continued since 2014. The record salmon catch in the Far East – 676,000 tonnes, which is attributed to “regulatory measures”, made a significant contribution to the total catch volume. Could you explain to our readers who are not familiar with Russian fishing what these measures consisted of as well as other factors that could contribute to a record increase in the salmon catch?

H.E. Ilya Shestakov: The salmon fishing season in the Far East was indeed unprecedented in 2018. Such a quantity of red fish has never been caught in Russia or in other countries of the Pacific region in the entire history of observations. We achieved this result thanks to several factors: the biological features of the fish, measures to preserve and reproduce the stock, and fishery organisation measures.

Pink salmon, whose biomass fluctuates depending on the year, accounted for the bulk of the catch. Last year, the rivers were literally overflowing with spawning fish. We had to efficiently cope with the resources, which became a real challenge for us, the regulator, the regional authorities, and for fishermen and processors. All the problems that had manifested themselves in one way or another were exacerbated – a shortage of catch processing plants, warehouse freezers, and transportation difficulties due to the long shipment interval between the fishing area and the regions of consumption. Fishermen and factory workers virtually worked around the clock in multiple shifts. Fishery owners redeployed their fleets to help in particularly busy areas. Fish protection was intensified, the salmon “headquarters” met weekly for rapid response measures and to provide assistance for fisheries, and scientists gave recommendations.

Conservation and artificial reproduction measures, in particular, played a role in such approaches to the pink salmon. Regional strategies developed by scientists for organising fishing in each region were also put into action.

INFOFISH: Experts say there was also an increase in aquaculture production, including sea farming, in 2018. What are the main types raised for the domestic market, and which ones are in demand in the external market? What do you believe is currently preventing the further expansion of aquaculture production and sea farming?

H.E. Ilya Shestakov: Developing aquaculture is one of our priorities. This is a relatively young industry in Russia, and the share of marketable fish in comparison with the volume of the industrial catch is still quite small at less than 4%. Aquaculture production in Russia has tripled since 2005 and grew to 239 000 tonnes in 2018. The production structure is primarily made up of carp (61%), salmon (28%), invertebrates (4%), and brown algae (2%). Sturgeon farming is a priority, but it accounts for a small share of the production structure. Carp, trout, silver carp, salmon, perch, and Black Sea mussels and oysters are all raised by Russian fish farmers and are popular on the domestic market. The sea farming products from the Primorsky Territory are mainly exported – sea cucumber, scallop, other molluscs as well as sturgeon products.

The law on aquaculture adopted in 2014 provided an impetus for the development of fish farming in Russia. Since that time, an impressive package of by-laws has been drafted and adopted. In addition, legislative and regulatory compliance practices constantly reveal blind spots or omissions, so work to improve the regulatory framework never stops.

We see that there is a need to change the production structure, and we are committed to altering the species composition of aquaculture as well as utilising industrial methods in fish farming. According to the strategy that has been developed, the share of salmon, as one of the most valuable species of fish, is projected to increase from the current 28% to 37% by 2030 in physical terms – from 66 600 tonnes to 185 000 tonnes of red fish. We also need to pay attention to the increase in the production of whitefish, sturgeon, and other popular species.

We are actively working on allocating sections for fish farming, and the water area allocated for aquaculture increases each year. The potential of areas in our country that are not utilised but are suitable for aquaculture is still very high. State support for the development of fish farming is now being provided at the federal and regional levels, primarily through subsidising investment and short-term loans as well as offering consultative and technical assistance from our research institutes, which are developing and introducing new technologies for cultivation, adapting species, and producing feed. We are now discussing the introduction of additional support measures. There is still a high dependence on imported stocking material and feed. That is why one of the priorities is to promote the development of breeding centres and feed mills.

We are working on eliminating the overregulated nature of the industry, but we are trying to take a very careful and balanced approach to this issue. The issue of monitoring veterinary safety is very important here, as international experience has demonstrated the role of epizootic risks.

INFOFISH: In light of the ongoing ban on food imports (including fish products) from the European Union, the United States, Norway, Canada, and Australia since 2014, data on international markets shows that many exporters from these countries have switched over to other markets over the past few years. Has there been an increase in supplies from Asian countries to make up for the shortage? At the same time, has this ban strengthened Russia’s determination to increase its own production in order to reduce dependence on imports?

H.E. Ilya Shestakov: The countermeasures that have been introduced against countries that have imposed anti-Russian sanctions have enabled Russian enterprises to offset the main drop in import volumes. Whereas before the sanctions the ratio of domestic and imported fish products on the store shelves was about 50:50, now the share of Russian fish and seafood has increased to 80–85%. There is no need for us to talk about a deficit. The Russian fishing industry is able to fully provide the domestic market with Russian-made fish products. We mainly import aquatic bio-resources that we do not catch or raise ourselves, or we are producing them in insufficient quantities for now - for example, tuna or Atlantic salmon.

As for changes in the structure of importing countries, more than 70% of the total supply in 2018 came from the Faroe Islands (27%), China (19%), Chile (15%), Greenland (5.1%), and Vietnam (4.5%). A significant increase of almost 43% was seen in imports from Chile over the past year, while shipments from other countries decreased compared with 2017.

INFOFISH: Large volumes of fish intended for processing are sent to other countries (for example, to China), and then reimported into Russia. At the same time, the federal government has reportedly continued to have success in reforming the seafood processing sector on land and at sea. Would it be too ambitious to assume that the bulk of raw fish will be processed in Russia and not abroad by 2025?

H.E. Ilya Shestakov: The objective of altering the structure of domestic production and exports by increasing the share of products undergoing advanced processing with high added value is a strategic one. In the past decades, frozen, gutted, and ungutted fish have accounted for roughly 70% of production. A large share of domestic fish processing enterprises are located far from the coastal regions of the Russian Federation and, until 2014, they focused primarily on processing imported raw materials.

In order to fix this situation, the government introduced quotas for investment goals, specifically the construction of high-tech fishing vessels and coastal fish processing plants. This mechanism took effect in late 2017. Following the selection process, contracts have already been signed for the construction of 33 vessels and 21 plants in the Russian Far East and northern Russia. Another agreement will be signed on the construction of a processing plant in the Far East in the near future. Most vessels will also be equipped with modern processing facilities. The projects are in different stages of implementation and are supposed to be completed in the next two to four years. The campaign is still ongoing. We accept new applications from investors.

Whereas now the share of fish products with high added value makes up 30% of the total volume of fish production, according to the strategy for the development of the fisheries industry, this figure is projected to increase to 54% by 2025 and to 65% by 2030.

Regarding the processing of raw pollock in China in particular, the strategy includes the ‘New Cod Industry’ programme in which the objective is to specifically create infrastructure for the production of fish products with high added value primarily from cod fish species, including pollock. We believe that this segment is the most promising. Given China’s changing economic policy and the depreciation of the rouble, we have every chance to take a leading position in the global production of fish fillets and end products from these types of fish.

According to our estimates, the industry’s economic contribution may increase by RUB 40–50 billion per year by 2022 due to the construction of efficient processing trawlers and onshore fillet production plants.

INFOFISH: Regarding international measures to prevent illegal fishing and transhipment at sea (rules and regulations, certificates of origin, electronic surveillance, etc.), how do you see Russia’s role and capabilities in facilitating these efforts?

H.E. Ilya Shestakov: Our country is making great efforts to eliminate illegal fishing both in its own national waters and outside the zone of national jurisdiction. Recall that the first legally binding international document on combating illegal, unreported, and unregulated (IUU) fishing – the Agreement on Port State Measures (PSMA) – was signed at the FAO Conference in 2009 to prevent, deter, and eliminate IUU fishing. The Russian Federation signed it in 2010 and is very close to ratifying it.

In addition, our country is a party to the North East Atlantic Fisheries Convention under which the contracting parties founded and run the North East Atlantic Fisheries Commission (NEAFC). The Convention envisages a procedure for the authorised Russian agency to provide prompt (no more than 72 hours) confirmation of the legality of products that have been unloaded by Russian vessels at the foreign ports of NEAFC member countries based on an analysis of information on the fishing permits that have been issued and the satellite positioning of vessel data. Similar conditions apply to foreign vessels that are planning to unload fish products from fishing areas at Russian ports. Since 1 January 2009, state port control rules have been introduced in the area regulated by the Northwest Atlantic Fisheries Organization (NAFO).

The legality of the fish catch is also monitored within the framework of bilateral agreements. In particular, the supply of fish and fish products to European Union countries must be accompanied by a certificate indicating that the fish were legally caught. All Russian fish products exported to the EU must be certified. Similar agreements on the mandatory certification of crabs caught in the waters of Russia are in force with South Korea, China, and Japan. There is a memorandum on jointly combatting IUU fishing with Canada.

INFOFISH: What are your forecasts for Russian fisheries this year in terms of production volume, trade flow, export revenue, markets, and international cooperation?

H.E. Ilya Shestakov: Our economic calculations have formed the basis of the draft Strategy for the Development of the Fisheries Industry until 2030, which describes target indicators of the industry year by year. This year, we expect the catch to be at the recordbreaking level it was in 2018. The volume of products which had undergone advanced processing will increase by 5% by 2018, including through the commissioning of new processing facilities in the Far East and North-West.

We will continue to work to promote Russian domestic products under the Russian Fish brand. This not only means participating in exhibitions. In November of last year, the Russian Federal Agency for Fisheries, along with the Russian Export Center and Sberbank of Russia, presented mechanisms to promote goods and services to the international market as well as a wide range of financial and non-financial instruments to support non-resource exports.

At present, the Russian Federal Agency for Fisheries is creating a register of exporters to establish a mechanism for interaction through all parts of the product supply chain. In addition to the increase in the catch and the share of products with high added value, expanding the destination for supplies will also increase the volume of fish exports from Russia. In addition to the existing exporting countries, Russia intends to branch out to the markets of Brazil, India, the United Arab Emirates, and EU countries (in terms of commercial aquaculture products). At present, 95% of total fish exports go to South Korea, China, the Netherlands, Japan, and Ukraine.

By 2024, the value of Russian fish exports to foreign markets is projected to increase from the current US$5.2 billion to US$8.4 billion.

As for international cooperation, we plan to continue working on meeting the obligations under the Agreement on the Prevention of Unregulated High Seas Fishing in the Central Part of the Arctic Ocean, which was signed by the Arctic Five and five other parties in October of last year. We agreed not to start fishing in this region until full data on the status of stocks and ecosystems is obtained. In addition, measures need to be developed for their sustainable use and conservation. Russia initiated the first meeting of scientific experts from the countries that are parties to the Agreement. Scientists from Russia, Norway, Canada, the United States, Japan, Denmark (on behalf of the Faroe Islands and Greenland), China, and South Korea all gathered together in April in Arkhangelsk, where they prepared the basis for a future research plan for the Arctic.

One of the most interesting international projects in 2018 was a large-scale expedition to study the wintering conditions of Pacific salmon. The project took place as part of the International Year of Salmon program, which was officially launched at the 2nd Global Fishery Forum in September 2018. A team of scientists from five countries in the Pacific region – Russia, Canada, Japan, the United States, and South Korea – conducted groundbreaking studies on a research vessel of the Russian Federal Agency for Fisheries in the Gulf of Alaska, where about two-thirds of the Asian salmon and American

stocks spend the winter. This period of salmon life is the least studied; however it is critical for fish survival and forecasting how salmon approach the shores of Pacific countries in the future and their catch volumes. Scientists obtained unique data on the food supply, diet, species distribution, salmon migration routes, and the conditions of the fish habitat in general.

Comprehensive studies are also planned in the Arctic and Antarctic this year. During the expedition, we expect to enter the waters of Argentina so that Argentine scientists can participate in the voyage. In December 2018, we signed an intergovernmental agreement on cooperation in matters concerning fisheries and aquaculture in Buenos Aires, which also provides for our countries to engage in scientific and technical cooperation. In addition, Argentina will have a joint industry booth at our 3rd Global Fishery Forum and Seafood Expo this July.

A major international image-building project of 2019–2020 is the circumnavigation of the world by our training sailing vessels Sedov, Krusenstern, and Pallada (Pallas), which is dedicated to the 200th anniversary of the discovery of Antarctica by Russian explorers Thaddeus Bellingshausen and Mikhail Lazarev. The expedition will begin in late 2019, when the vessels leave their ports: Pallada from Vladivostok, Sedov from Kronstadt, and Krusenstern from Kaliningrad. The expedition will involve circumnavigation of the world by the Sedov and Pallada as well as a transatlantic crossing by the Krusenstern. Most of the places and ports at which the sailing vessels will call were discovered by Russian explorers during their round-the-world voyages. A landmark event of the expedition will come when all three sailing vessels meet in the Atlantic near the South Georgia Islands, where the route of the circumnavigation will be at its closest to Antarctica.

Of course, we will continue working on strengthening cooperation within the framework of existing bilateral agreements and at international fishery organisations events, including our annual Global Fishery Forum. This year the Forum is dedicated to the development of fisheries in the oceans, economic and environmental risks as well as solving social problems in the fishing industry.

INFOFISH: And last, but not least, as chairman of the Organising Committee of the 3rd Global Fishery Forum and Seafood Expo which will be held in July in St. Petersburg, you contributed to the editorial of this issue of INFOFISH International, which touched upon the theme of the upcoming forum: ‘Ocean of Opportunities: Nature, Economy, and People’. This Forum is expected to bring together representatives of government, big business as well as small and medium-sized fishing communities from around the world to discuss common measures to protect the ecosystem and the interests of all parties. What would you cite as the key expected results of the Forum?

H.E. Ilya Shestakov: Indeed, we expect a very solid list of participants, both in terms of status and geography. Even though our event is very young – this is only the third time that the Forum and Expo have been held, the discussion platform we are organising has generated significant interest among the global community and received high praise for the level at which it is held and the information content. More than 1 100 delegates took part in the 2018 Forum and over 3 000 exhibitors and visitors attended the Expo. The Forum was attended by participants from 42 foreign countries, including Guinea, Germany, Iceland, Mauritania, Morocco, Norway, South Korea, the United States, and Japan. More than 150 Russian and foreign journalists were accredited for the event. The Expo featured joint regional and national stands.

A number of significant agreements were signed at last year’s Forum, including an intergovernmental agreement on cooperation in matters concerning fisheries and aquaculture between the Government of the Russian Federation and the Government of the Republic of Guinea, and a Memorandum of Understanding between the Russian Federal Agency for Fisheries and the Administration of Water Resources of the Republic of Panama on cooperation in fisheries and aquaculture.

Last year, the main discussion theme was ‘Global Fishing Activities 2050: Resources, Markets, Technologies’. This year we plan to discuss the key risks in the development of fisheries in the oceans. The minimum value of all key assets of the ocean is estimated at US$24 trillion. But this value is decreasing due to over-fishing, climate change, and pollution, including from the impact of human activities on land. The productivity of the ocean is likely to deteriorate, and this may deprive people of the ability to use fish and seafood as a sufficient source of protein in the next 20–30 years. Global fisheries have a huge impact on the social development of territories.

At the Forum, we will try to answer the question of how to find a balance between the ecological state of the ocean, the efficiency of fisheries, and the social needs of both coastal areas and fish consumers throughout the world. There are a lot of questions in the global fishing industry, and our platform will help to find answers to them. I am confident that this year the meeting will be even more interesting, particularly since the Forum guests and participants will be able to appreciate the charm and beauty of our Northern capital in the summertime.