World focus
Government announces big plans for domestic salmon farming
Russia
THE Russian government is investing more than RUB 80 billion ($1.3 billion) over the next decade in the development of salmon farming in the country. It is part of a new state strategy involving the provision of targeted support to various sectors of Russian fish production and aquaculture, including salmon.
As part of the plans, a fishery complex, recently designed by the Ministry of Agriculture, will also be built.
And at least 20 new plants for the growing of chum salmon will be constructed in the Russian Far Eastern fisheries basin by 2030.
The salmon farming industry received a major boost following the introduction of western sanctions in 2014. In 2012, the Russian ‘red fish’ market was 195,600 tonnes, with only 15,000 tonnes supplied by domestic production.
But now salmon and trout farms are springing up, especially around the nuclear submarine and missile bases on the Kola Peninsula, next door to Norway.
According to data from the Russian Federal Agency for Fisheries (Rosrybolovstvo), in 2018 the production of trout and Atlantic salmon in Russia grew by 20 per cent on a year-on-year basis, amounting to 67,000 tonnes. The majority of production was in the North-West Federal District.
Salmonids take second place in Russian aquaculture, after carps (common carp, silver carp, grass carp) and other herbivorous fish species.
However, salmon occupies an insignificant share in both production and consumption in Russia, which is primarily due to the high prices.
The decrease of purchasing power among the local population and the imposition of a ban on fish imports- primarily from Norway- led to the reduction of the market to only 100,000 tonnes in 2016.
But the recovery of the Russian economy from the financial crisis, which has been observed in recent years, has resulted in significant market growth.
Analysts predict the improvement of the economic situation in Russia may result in the growth of overall salmon consumption in Russia up to 200,000 tonnes.
That will contribute to the further growth of the investment attractiveness of the salmon farming sector in Russia, which has already been increased since 2017.
This is reflected in the number of investment projects, recently announced for implementation, in the local market.
For example, a couple of months ago the aquaculture enterprise Fish East announced its plans to invest over RUB 1 billion (US$15 million) in the construction of a trout growing complex in the Russian Tambov region with the capacity of 1,000 tonnes per year.
At the same time, another project will be implemented by another local producer, Agrocapital, involving the building of a fish farm for growing Atlantic salmon.
The new farm will be established in the Lipetsk region (Central Russia), and will require investments totalling RUB 6 billion.
At the end of last year, the Norwegian company Nores Watertech announced plans to build an Atlantic salmon plant in Tatarstan with a capacity of 3,000 tonnes per year.
And sector pioneers Pure Salmon announced
“The salmon farming industry received a major boost following the introduction of western sanctions”
plans more than a year ago to build a land based farm in conjunction with Israeli RAS technology company AquaMaof.
The 2,500 tonne, €25 million project in the Vologda region, financed by local investors, will include a hatchery, nursery, and full grow-out areas.
In the meantime, analysts of the Russian Rosrybolovstvo believe the success of the salmon farming sector will be linked the investors’ ability to create a vertically integrated business, from fish farming itself to the distribution of finished products in the Russian retail market.
Most Russian fish farming enterprises cannot at present afford to develop such schemes.
The only local producer which implements this model is Russian Aquaculture.
The company was expecting to produce up to 20,000 tonnes of salmon by the end of
2019, about 20 per cent of the overall Russian market for salmon.
Russian Aquaculture has 49 sites for salmon and trout farming in the Barents and the White Seas and in Karelia, with annual potential production capacity of around 50,000 tonnes.
In its first half financial results for 2019, published in August, the company reported a record performance and said it could increase production to 30–35,000 tonnes per year by 2025.
Russian farming companies began developing on the Kola Peninsula after the West imposed sanctions in retaliation for the Kremlin’s annexation of Crimea four years ago. Moscow responded by banning Norwegian fish.
As in salmon farming elsewhere, disease issues continue to present a threat – Russian Salmon, which was one of the largest producers of red fish in Russia during the 2010s, lost billions of rubles to disease outbreaks.
Among the other constraining factors are the lack of qualified personnel and, until now, lack of state support.
Moreover, according to producers, there are serious difficulties in obtaining banking loans for the development of aquaculture businesses in Russia.
The situation is further complicated by the fact that most of such loans are provided on unfavourable terms and usually involve the payment of high interest rates.
But those who have invested are confident of a bright future. Russian Aquaculture CEO Ilya Sosnov said his company expects continued growth in demand for its products.
‘The development of the Russian market for chilled red fish is only gaining momentum.’