Industry proves resilient despite huge challenges
Amid the chaos created by Russia’s invasion of Ukraine, small companies supplying a key food suffer from all sides. Thus it is for Ukraine’s seafood importers. From damaged or destroyed transport infrastructure to blocks on currency conversion to pay suppliers, from delivery straight from the dock to shipments laboriously trucked through multiple countries, fish import suppliers suffer but weather the storm from war.
This is the first in a series of articles in the Eurofish Magazine dedicated to seafood businesses in Ukraine and how they work and survive during the war.
The Ukrainian Importers of Fish and Seafood Association (UIFSA) is an industry group consisting of 25 companies that together account for half of all fish and seafood imports into Ukraine, and represent about a quarter of the seafood importers operating in the country’s market. UIFSA is a founding member of Ukraine’s Business Council, comprising over 100 trade associations in many sectors of goods and services, to inform policymakers and to guide their member companies. Eurofish spoke with Dmitry Zagumenny, the head of UIFSA, about the seafood import situation in Ukraine, policies and regulations affecting its member companies, and the impacts of Russia’s war.
Imports fill the gap from vulnerable local supplies
Just as during the Chernobyl disaster, local catches of fish in Ukraine’s huge reservoirs and rivers have been banned by government due to causes beyond the fishing industry’s control. Likewise, marine fisheries have been all but shut down by the closures of activities in the Black and Azov Seas. The only fishing sector that remains unscathed is distant water fishing for krill in Antarctic waters, which while important, is carried out by only one Ukrainian vessel. Thus, domestic fish production has been put in turmoil by the war, and imports have become more important for filling the gap in consumption.
While Ukrainians like fish, production has historically been small, and imports provide most of the country’s seafood supply. Official data indicate domestic production (in 2020) was 90,000 tonnes and net imports totaled 415,000 tonnes; this production estimate is probably low because a good deal of fish harvesting or farming output (perhaps 50,000 tonnes) is not recorded. Therefore, adding official plus unofficial domestic production to net imports gives an estimated total consumption of 555 million kg. After dividing this figure by population (37 million people according to 2019 census), per capita consumption of fish and shellfish in 2020 equaled 15 kg, about 80% of which was imported.
One of the big tasks for seafood importers is meeting the food quality standards of the EU, which Ukraine is on course to join one day. This is more of an opportunity than a problem, because quality seafood products are good regardless of the motivation of the suppliers, and consumer demand for high quality seafood is always strong. The European Union-Ukraine Association Agreement, which came into force in September 2017, has spurred changes in government regulations to conform with EU standards, and UIFSA, along with other Business Council industry associations, is working with member companies to meet these standards and resolve any practical issues. Communication with state authorities—especially in the veterinary area, for perishable seafood—takes up 20-30% of an importer’s time, and the importers’ association is invaluable with this.
Huge disruptions in transport logistics
Even before the February 2022 invasion, Russia’s war was underway. The 2014 military annexation of Crimea quickly eliminated half or more of Ukraine’s fish harvesting capacity in the Black and Azov Seas. In 2013, domestic production was about 250,000 tonnes; between 2014-2017 the production was 90,000 tonnes, and most recently, 61,000 tonnes. As a result, the demand for imports has grown over recent years. The February 24 invasion had an immediate impact on imports, which fell dramatically from February to March. But imports quickly began to recover, rising every month from April through November before dipping slightly at year’s end.
A big disruption caused by the war is in the physical transport of imported seafood to Ukraine’s border. Before the Black Sea coast was closed by the war, 35% by volume of all Ukrainian seafood imports arrived by sea, particularly products destined for Kyiv or for areas to the east of the capital. Ships carrying imported seafood arrived in port and the containers were loaded directly on to trucks. Now, the ships unload in ports of other countries—mostly in Klaipeda (Lithuania), and sometimes in Turkey—and the goods are carried by truck to Ukraine’s border. At each border between an EU and a non-EU Member State there can be different regulations and import controls on products, truck/container specifications, and so on, adding to the logistical complexity in contrast to what was a straightforward change in transport mode at a Ukrainian maritime port.
A ship’s container weighs 27 tonnes, but the EU sets a truck container’s maximum size at 20 tonnes, and so the ship’s containers must be unloaded and repacked into smaller truck containers. All this must be documented by the country of reloading as well as by Ukraine, as the final destination. Before the war, a ship’s container would be reloaded in one of the ports of Ukraine and further transported by local road transport or be sitting in a licensed warehouse with the importer taking products from it when needed. Further, the veterinary service, to approve the imports into Ukraine, requires veterinary certificates from the countries through which territory the shipment travels.
Here, the UIFSA is of immense help to companies, sorting out the various domestic and foreign paperwork challenges. If a dispute arises and is serious enough for legal action—say, over Customs’ declaration of a shipment’s value—the UIFSA provides advice; such disputes take up half of the association’s time, according to its director.
The war also affected currency availability and value for seafood importers. Conversion of the Ukrainian currency, the hryvnia, to foreign currency was banned for all businesses not engaged in “necessary” goods.
Fish and shellfish were initially considered by the government to be not necessary. Over time, UIFSA worked successfully with the authorities to convince them to add seafood to the list, persuasively arguing that canned fish, for example, is a household staple, low in cost and ready to eat even if the electricity goes out. Canned fish was allowed first, followed by frozen fish, and by July 2022, all products were included.
However, the value of the hryvnia has plummeted. From 28-30 hryvnia per euro in the months before Russia’s invasion, the currency’s value has dropped by a third, to 40-41 hryvnia per euro during spring 2023. The currency is now open for conversion, but it buys a fraction of what it could not very long ago. This has hurt imports, which are correspondingly more expensive.
How the war changed the industry’s plans
Market promotion was the original focus of UIFSA. Before the pandemic, association officials and company representatives traveled to many countries, looking for opportunities for importing new products that Ukrainian consumers would enjoy. They were successful because, though Ukraine’s population was on the decline even before the pandemic and the war, both imports and per capita seafood consumption were rising. Exports of fish and seafood have also been growing: from 10,500 tonnes in 2018 to 17,000 tonnes in 2021. In 2022 exports fell to 10,000 tonnes.
The war, and just before that, the pandemic, somewhat shifted UIFSA’s focus to assistance with logistics and interaction with government authorities. Promoting demand remains important, but getting the product to Ukraine’s processors, retailers, institutional sellers, and the final consumer is an equal priority.
A battered but sturdy import sector still feeds Ukraine
Ukraine’s seafood importers stay in business despite war and pandemic because the companies are led by resourceful managers and because they are assisted by a dedicated industry association. Faced with currency restrictions, bans on maritime ship deliveries from abroad, new rules and regulations, the industry works around these challenges. Imports are again on the rise, feeding Ukraine with fish and seafood from around the world.
Eurofish International Organisation,
 EU average per capita consumption is 24 kg, but that is live-weight equivalent, whereas the estimate for Ukraine is product weight and cannot be compared. If one assumes a 0.50 conversion from live to product weight, the Ukraine number would be 30 kg live-weight equivalent.