Estonia uses the crisis to create a more competitive fisheries sector

by Thomas Jensen

Olavi Petron, Deputy Secretary General for Fisheries Policy and Foreign Affairs, Ministry of Agriculture, Estonia

Since last year Olavi Petron has had to deal with a series of critical issues in the fisheries sector with international repercussions. In January 2014 Russian veterinary authorities found that some Estonian fish processing factories did not comply with their standards and rescinded the plants’ export permits. In August sanctions imposed by the west on Russia sparked a ban on imports of certain fisheries products to Russia from the EU, which also affected Estonian processors. The ban is still in place and the Estonian authorities are using different strategies to assist the sector.

How have western sanctions on Russia and the counter sanctions imposed by Russia on EU (and other) countries affected the Estonian seafood sector? What steps are being taken by the administration to mitigate the loss of this important market for the fishing and processing sector?

I should say that the crisis for us probably started in January last year when the Russian authorities inspected our factories and declared several of them unfit to export to the Customs Union. This was followed by the political crisis in the eastern part of the Ukraine, which led to sanctions being imposed on Russia, and Russian counter sanctions on western countries in August. It is perhaps important to put the crisis in perspective. The economic sectors that have been affected are only a part of what is a wider security crisis. In fact in economic terms only 2% of the Estonian trade has been affected, though of course some sectors such as agriculture and specifically dairy and fisheries have been more affected than others. However, so far in the fisheries sector, while companies have been affected none of them has been bankrupted, though profits are down and the uncertainty of the situation makes it difficult to plan and make investments. The situation for fishermen regarding Baltic herring was stable last year because POs (producer organisations) have facilities and storage for freezing and storing fish. Without this storage the situation could be much more complicated.

From the government’s side the companies in the short term can draw on storage aid, and they are also getting support to find new markets and this is where I feel efforts need to be concentrated. This support allows companies to attend trade fairs in countries where they can promote themselves and their products. Russia has been a geographically and culturally close, and in some senses the easiest market for us. However, we do not know whether, even if the political situation were to calm down and the sanctions and counter sanctions were to be lifted, the veterinary authorities in Russia who have stopped exports from several factories to Russia will reverse this decision. If we are to evaluate the chances of this happening then it is better to be conservative and decide that we do not know how long this situation will last. Companies need therefore to plan accordingly and start to establish themselves on other markets. These efforts have already begun and companies are exporting to new markets in Africa, as well as to Japan, and are trying to increase the volumes to existing markets such as Ukraine and Moldova, where despite the currency devaluation Estonian fish is a relatively cheap product and people can still afford it.

The need to penetrate new markets should also trigger the development of new and innovative products and in this context the discussion about a potential new factory to make high value components from fish, such as fish oil for human consumption or fish protein isolates is relevant. Broadening the range of products we can offer should also help widen the customer base.

Greater added-value, getting more from less, is a priority for fisheries administrators as well as the industry. How can the administration contribute to the goal of increased value addition?

We are directing some money from the EU funds into innovation and into building partnerships between the scientists and the producers. Our idea of course is that they start to look into all the possibilities in the production chain. For example, using mussels and algae to offset emissions from aquaculture, or using the waste and offcuts from fish processing, or even extracting the fats and other potentially useful material from waste water in a processing plant. There is an environmental benefit, but also an economic one as you are reducing your cost, and in this sense I think the idea of looking into each part of the production chain is quite interesting. From the government’s side this is what we can do – direct some money and then hope that it is used for this purpose.

The fishermen have understood the value of this and what they are doing is clever. As everything stems from the fish they have been investing in quotas, and in addition they are improving their fishing gear, and concentrating on quality in the whole value chain starting from the vessels, to the production and the distribution.

We are also encouraging them to study the potential of a factory that could make fishmeal and fish oil but more importantly make higher value products that can be used in the nutraceutical, pharmaceutical, and even cosmetic industries. And once they have decided and declared themselves ready to invest in it themselves, then we are prepared to put some money into it depending on the conditions and the amount.

Increasing the contact between the different stakeholders, industry, environmental groups, the administration, and researchers can contribute to a well-functioning and profitable sector. What are the measures that need to be implemented to create this kind of cluster?

The Estonian fishing community is small as are the other stakeholders, such as environmental groups, and therefore it is quite easy to involve them. In addition there is the Fisheries Council, which gives advice to the minister, and which meets at least four times a year. Estonia’s thoughts on the European Maritime and Fisheries Fund were discussed here, and when we were creating the national strategic plans, then we had strategy meeting groups, where environmentalists and scientists were involved. So I think we already have quite a good dialogue. Of course it could be better, particularly as environment and agriculture are organised into two separate ministries, which is a bit of an administrative burden.

I do agree that we need to keep environmental groups on board and encourage their participation because at the moment our main environmental consultants are the scientists rather than the environmental groups. Closer involvement with local environmental groups may also help in instances such as the recent one where an environmental NGO from outside Estonia made some critical and, in our opinion, unfounded remarks about our inland fisheries. Such claims will be easier to rebut if the rebuttal can be corroborated independently.

The CFP seeks to remove or reduce the barriers preventing the growth of the EU aquaculture sector. How will this emphasis on fish farming at the EU level promote its development in Estonia?

With regard to aquaculture we have
already developed a strategy. Our aquaculture producers are mainly supplying the Estonian market and mostly with rainbow trout. We are still waiting for our production to go up because there have been several investments in the last few years, in new facilities and equipment and so far we have not seen the rise in production that we expected. But the facilities are there, the money is being monitored, there are fish farms, and the fish is in them, so it has to come. The strategy showed us quite clearly the marketing possibilities for locally-produced fish. The red fish market is very competitive and if we are to prevail on this market then the first argument is the freshness of the product compared to that of imports. We also have to make people more aware of the local farming industry, which is what Ecofarm, a producer organisation in the farming sector is doing. It is also making vacuum packages out of smoked farmed fish which is an innovative way of marketing the product on the local market as this increases the shelf life and allows the fish to be distributed to inland areas.

We also want the farmers to make investments in technologies that will benefit the environment using the opportunities offered by the EMFF. This is also in keeping with the recommendations on sustainable aquaculture in the Baltic made by HELCOM, of which Estonia is a member. Currently fish farmers are paying for every kilogram of nitrogen and phosphorus they release into the environment and these charges will be reduced if they invest in technology that removes these pollutants from the water.

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