Covid-related hardships successfully overcome
After growing continuously for the 10 years to 2019 the fish processing industry suffered a significant drop in output in 2020 thanks to the impact of the pandemic at different levels. Although it recovered the following year, the effects of the war in Ukraine threaten to set it back again.
The Lithuanian processing sector is important due to its economic size and the employment it generates. It is the 10th largest seafood processing industry in the EU and the 7th largest in terms of employment. The 86 Lithuanian seafood processing companies in 2021 employed more than 5,100 people. The total production of processed fish reached 136,000 tonnes in 2021 (including products not intended for human consumption) and compared to 2020 it increased by 13% and thereby reached the same level as in 2019, before the covid pandemic. In 2021, the total income of the Lithuanian processing industry, comprising turnover from processing and other income, was EUR704 million corresponding to a 13% increase compared to 2020, but only a 3% increase compared to 2019.
Over the years export destinations have changed from east to west
Overall, the output of the processing sector increased for ten years—from 2010 until 2019. But 2020 was affected by the pandemic resulting in a 10% drop in both volume and value. The growth in production in 2021 to a level higher than that in the pre-covid period shows that the industry has successfully overcome the challenges presented by the pandemic. Most of the raw material (95% in 2021) used by the fish processing companies for their production was imported, and half the resulting products were exported. Around 86% of the exported production was sold in EU countries. This shows a remarkable switch in the market for Lithuanian seafood products away from the Commonwealth of Independent States (CIS), Russia, Belarus and others, which were the main export destinations a decade ago.
In terms of volume the largest commodities produced by the Lithuanian fish processing industry were surimi and smoked fish including smoked fillets. Each contributed about half to the total weight of production. However, the value of production was significantly higher for smoked fish and smoked fillets. This category contributed about 56% to the total production value compared to 15% from surimi production. The most important species in the production was Atlantic salmon which amounted to 60% of the total value and 35% of the total weight. Around 11% of the total weight derived from processed Atlantic herring (mostly salted) and 7% from Atlantic cod (mostly frozen fillets).
Lithuania maintains a positive trade balance in fish and fish products, with exports consistently exceeding imports. In 2021, the value of exports was EUR603 million, almost EUR79 million higher than imports, and the volume reached 133 thousand tonnes.
Lithuania boasts some of the largest fish processors in the EU in terms of manpower
According to the Scientific, Technical and Economic Committee for Fisheries, fish processing enterprises are indeed largely different across the EU in terms of labour intensity. If the EU average is around 35 employees per enterprise, Lithuania and Poland have, respectively, 128 and 122 employees per enterprise. Lithuania belongs to that group of Eastern Europe countries, where bigger enterprises dominate the processing sector. Statistics show that the Lithuanian fish processing sector is mostly represented by large scale enterprises: companies employing more than 250 people generate 80 percent of the national turnover and 60 percent of the total persons employed. There are six such companies in Lithuania. Fish processing enterprises, employing 50-249 persons contributed 15% to the total turnover of the sector in 2021, there are 9 companies in the list.
Fish processing enterprises employing 1-49 persons are important because they work with locally sourced fish—the raw material is mostly raised or fished in Lithuania. There are 32 companies in this group. A positive development among some of these companies is that processing of aquaculture products is growing though slowly. Farmed fish is mostly processed by companies whose main activity is not processing; they are mostly aquaculture farms which have fish processing facilities. The increased processing of aquaculture products is related to a significant growth in production while the market for fresh aquaculture products is limited. In 2021, the number of companies with fish processing as a side line increased 18% to 39 from 33 in 2018. In the period 2019-2021, the industry processed around two thousand tonnes of local aquaculture products per year of which carps, rainbow trout, and African catfish comprised 993, 280, and 240 tonnes respectively.
According to 2020 data, most (68%) employees involved in Lithuanian fish processing industry were female. The distribution of employees by gender in different size categories were very similar. For example, in large companies (with >250 and 50-249 employees) female workers accounted for 69% of the workforce, whereas in smaller units (11-49 and <10 employees) 60% were female. Some 56% of all employees in the sector had a secondary education, whereas workers with low and high education accounted for 24% and 20% of the workforce respectively. Around 99% of total employees had Lithuanian nationality.
Pricey energy coupled with high inflation could have unpredictable consequences
The Russian invasion of Ukraine in February has seriously affected all EU members and all economic sectors including the fish processing sector. At the time of going to press, energy prices and inflation were still rising, affecting Lithuania’s economy recovery from the effects of covid-19. More expensive energy and high inflation will have an unpredictable impact on the economy. The fish processing sector does not depend on raw materials or processed products from CIS countries, Russia, Belarus, and others, but the war affected Lithuanian trade with Ukraine. In 2022 the country fell to fourteenth place among Lithuania’s export partners from ninth place in 2021, and exports plunged around 40% each in value and volume.
In conclusion the Lithuanian fish processing sector has managed the disruption caused by the pandemic quite well. The sector now faces another difficult situation caused by the Russian invasion of Ukraine, but the expectation is that it will overcome these challenges and continue to grow and develop.