The most far reaching changes in the administration of the fisheries and aquaculture sectors in the Ukraine will reduce bureaucracy and ultimately result in higher yields.
The loss of Crimea had a substantial impact on the fisheries sector in the Ukraine. According to the State Agency for Fisheries catches plummeted by 60% from 225 thousand tonnes in 2013 (including Crimea) to 91 thousand tonnes in 2014 (without Crimea). But Ukraine has significant natural resources even without Crimea. These include inland waters (rivers, lakes, ponds, reservoirs) amounting to 1.3m ha, as well as marine waters in the Black Sea and the Sea of Azov. Altogether, Ukrainian waters, both fresh and marine, have an area of 10.4m ha.
However, this potential is woefully underutilised. Two decades of inadequate investment in the sector, whether in research, restocking, or even proper maintenance of its water bodies, has eroded production. The lack of proper fisheries monitoring and a modern catch assessment system as well as an obsolete fleet and vast bureaucracy have further undermined the sector. The inadequate controls at all levels have spawned a black market for fish and seafood that is reckoned to be almost half the size of the official market. This in turn prevents the collection of reliable information about catches and the state of fish stocks.
Steep decline in production since independence
While in 1991 Ukrainian fish supplied 95% of the domestic market, by 2014 that proportion had fallen to 18%. In terms of consumption, while each Ukrainian consumes 11.1 kg of fish per year only 1.5 kg of this is fish of Ukrainian origin. Ukrainian marine catches are dominated by goby (42% of the total in 2015) followed by Azov sprat (20%) and southern sprat (5%), while goldfish, bream and roach are the most commonly caught fresh water species. In the first 11 months of 2015 production from the fisheries sector increased by 15% over the same period last year to 57 thousand tonnes. Of this marine catches from the Black Sea and the Sea of Azov were 30 thousand tonnes, an increase of almost 50% over last year. Inland water production, both capture and aquaculture, was 27 thousand tonnes to which farmed fish contributed 15 thousand tonnes.
The decline in domestic fish production has made Ukraine dependent on imports. Over the last two decades fish and seafood have been imported mainly from Norway but also from Estonia, Iceland, and Spain, but in 2013-14 the fall in the value of the currency made imports very expensive and consumption of imported fish declined steeply. Customs statistics show that imports of frozen fish dropped from 330 thousand tonnes in 2013 to 165 thousand tonnes in the first 11 months of 2015, while imports of frozen seafood fell from 23 thousand tonnes to about nine thousand tonnes over the same period. Consumers also switched from more expensive salmon, trout and tuna to cheaper hake, Alaska pollock and capelin. Farmed salmon fillets, for example, cost UAH290 against UAH45-60 for pangasius per kilo wholesale; in supermarkets the price is 10-20% higher. The depreciation of the Ukrainian hryvnya has led to an overall increase in prices of 52% since the start of 2015. Canned fish prices, which increased 78%, and live fish, which went up 54%, were the products showing the greatest increase, but the prices of a wide range of product types – live fish, frozen fish, frozen fillets, seafood – and products – salted sprats, smoked mackerel, herring – went up by between 30 and 80%. The increase in prices has already affected the chilled products segment, where imports decreased by approximately 60%. Some stores, mostly small ones, have refused to sell chilled trout, salmon, sea bass and sea bream because of a sharp slump in demand. Besides, chilled fish can be stored for a shorter period compared to frozen products.
An opportunity for domestic producers
Demand for the most common imported fish species, herring and mackerel, has remained more or less stable. Although not as cheap as local products these pelagic species are not as expensive as certain other imported fish, herring in a supermarket, for example, costs UAH47-79 per kilo. Ukrainian processors use these species for salting and smoking. Locally farmed and fished species are very cheap compared with imports. Chilled bream, goldfish, silver carp, goby, and frozen Azov sprat retail at UAH18-32 per kilo, while pike, pike-perch, and live carp cost UAH50-70 per kilo. In comparison, a kilo of frozen Atlantic salmon costs UAH180-190 per kilo. This difference in prices suggests there may be an opportunity to boost the sales of locally produced fish and seafood, if production will allow it. So far, domestic production has not been able to meet the needs of the Ukrainian market, but the signs are promising. Catches in 2015 of all the main species, both marine and freshwater, have exhibited considerable increases over 2014. The State Agency for Fisheries is confident that the amount of domestically-sourced fish on the market can be increased by 40-50%. However, achieving this will call for a restructuring of the sector, the fish industry will have to be deregulated with a much smaller role played by the state, and the industry made more attractive for investment. Greater efforts also need to be made to develop mariculture and aquaculture as these two sectors will also contribute to an increase in domestic production.
New team brings in sweeping changes
At the end of 2014 a new minister for agriculture and fisheries, Alexey Pavlenko, was appointed and in May 2015 the State Agency for Fisheries got a new leader, Yarema Kovaliv. Among the first initiatives was the publication of a paper on reforming the fisheries sector. The paper focused on four areas, fisheries monitoring and protection, legislation, investment and aquaculture, and transparency. Since the release of the paper several new rules have been passed that simplify administrative procedures for companies and at the same time reduce opportunities for graft.
Deregulation of the commercial fishery may seem a strange solution compared to the Europe-wide trend towards strengthening fishery regulations. However, the task in Ukraine is to bring the market out of the shadows and to fight poaching. The state decided to deregulate the commercial fishery because the industry had been overregulated. In addition, in September 2015 the Ukrainian cabinet passed a resolution that, for the first time, allows entrepreneurs to lease part of a body of water like a reservoir or the sea.
Before a fishing company could start working, it had to get five permits, the process would often drag on, and the company started a fishing season belatedly or without the necessary document, which would lead to problems with inspection authorities. Furthermore, the complexity of the bureaucracy was a recipe for sleaze. Under such conditions it was simpler and more profitable to be a poacher with no need for permits nor to pay taxes. By simplifying the
licensing system and prolonging the validity of permits the State Agency for Fisheries encourages legal fishing by eliminating the advantages of poaching. The new system uses both carrots and sticks. A newly established fish patrol will help in the fight against illegal fishing. The agency is also working with the Norwegian Directorate of Fisheries to implement a system of electronic catch reporting that will further reduce poaching. And penalties for poaching have become much more severe and in some cases (such as electric fishing) will be considered criminal rather than civil offences.
Deregulation, fish patrols, a unified fisheries register, and fish stocking are just some of the actions being taken by the state to clean up and revitalize the fisheries sector. Another measure will see the creation of a financing instrument that will allow the fishing fleet to be modernized. Taken together the efforts by the new team should, over time, bring about the desired results, but it will call for perseverance and the will to fight the entrenched interests that benefit from the status quo.
