Crab. Photo: MagadanMedia
How did the sanctions hit the fishing industry, to whom to sell the harvested crab, and what threatens the new auction campaign? In an interview with IA MagadanMedia, Mr.Mikhail Kotov, General Director of Mag-C International, President of the Magadan Fisheries Association.
Mikhail Kotov. Photo: Alexander Krylov, IA MagadanMedia
— How did the sanctions affect the export of your products?
“Perceptible, to put it mildly. And not only here: the whole fishing industry has problems.
The usual market has shrunk. American companies have thrown our products clean off the shelves. There is no longer a Russian crab, a trumpeter, for which a special brand has been created in the USA – Nord Mile. They threw it out and forgot to pay us.
Europe does not take the products of Russian fishermen – sanctions. Japan is also closed. China is still fighting the pandemic. Our vessels are waiting for unloading in ports for 30 days.
All this leads to huge losses of fishermen. There are no sales, the turnover has fallen, both for crabs and for other species: pollock, herring, halibut, cod.
According to the All-Russian Association of Fishery Exporters, of which the Magadan Association is a member, if such a situation in the foreign market is maintained, the loss of the fishing industry for the year may exceed $4 billion.
– Does this mean that it is possible to reduce the volume of fishing or even suspend it?
— Not excluded. If there is nowhere to sell the catch, we will not work. There is no point in keeping the harvested seafood in refrigerators. It will bring nothing but losses. The expansion of deliveries to the domestic market will not significantly change the situation: the Russians simply will not eat so much fish and crabs.
Of course, we would not like to put the work on pause. Stopping a business is most often a collapse. To reduce the volume of fishing means to cut staff, cut people’s salaries, social guarantees, curtail social projects. I’m not talking about taxes anymore. For example: in the first half of the year alone, our companies paid more than 230 million rubles to the budget of Magadan. For a small town, this is a serious amount.
We are trying to avoid the crisis, looking for new markets. We are negotiating with China, Malaysia, Singapore. Even with Africa, but Africa does not take gourmet products, and much of what we extract is unfamiliar to her.
We hope that everything will end soon, and those countries with which we have traditionally traded will resume cooperation.
– Maybe it is worth reorienting the production of finished products for specific markets? For example, America prefers frozen brine crab, Asia prefers live crab, and so on. Do you need to change the equipment on your ships?
– No need. We already produce almost all types of products that are in demand on the foreign market. On ships there are lines for brine freezing of crab, and for air, and in raw form. We will soon replenish the fishing fleet with two ships that will transport the crab in a live form.
The equipment is modern, the quality of products meets international standards. The problem is not technology, the problem is logistics and the crisis of world politics.
— What is the current economy at the enterprise?
– While we are pulling out at the expense of last year. In 2021, we had good financial performance. But the reserves are not rubber. According to our forecasts, by July 1 we will have accounts payable of about 2 billion rubles, and there is nothing to cover it, because there is no profit – nothing is being sold. Stocks of crab, pollock, trumpeter lie.
An interesting observation: against the backdrop of Western sanctions in many industries, the authorities are offering assistance to entrepreneurs with preferential loans, tax breaks, and something else. We do not have. They came up with one proposal for us: sell part of the quotas, for crab, for example. Here we return again to the prospect of a reduction in fishing volumes.
The prospect of new resales of quotas at auctions, which the Federal Agency for Fishery is stubbornly bringing closer, despite all economic calculations and negative expert opinions, leads to the same hopeless dead end.
We calculated: the Magadan fishermen will not survive another auction campaign, everyone will go bankrupt. Almost 60% of fishing enterprises will be closed in Kamchatka, about the same in Sakhalin.
The redistribution of the industry will be unequivocal if you remove at least one brick from the masonry, which was carefully calculated by the fishermen. When we went to crab auctions, we calculated everything, weighed it. Recalculated. Banks provided their appraisal expertise. And the basis of all calculations is the amount of quotas that the company has at the moment. If they take away a part, the entire economy of the enterprise will collapse.
Now we cannot even rely on bank loans, because they have become more expensive for fishermen. If earlier we could take a loan at 7%, now it is at 14-15, or even 20%. And for many of us, this means the cancellation or freezing of investment projects that were previously calculated under completely different conditions.
– By such projects, do you mean the construction of ships at domestic shipyards according to investment quotas?
— We are the least worried about the investment quota program. Our company is building two crabs at the Khabarovsk shipyard. One was already launched in May, the second is due to leave the stocks in the fall, and we have no doubt that this will happen. But only because in advance, even before the sanctions, they bought all the necessary equipment abroad – navigation, fishing, engines, and delivered it to the shipyard. Not all colleagues who ordered the construction of ships in Russia managed to do the same, and now they are in a difficult situation.
However, we also did not avoid it, because in addition to crab fishers in Khabarovsk, we are also building a ship in Turkey. The engine for it is produced by the Volkswagen concern, which refused to supply it, despite the fact that the contract has already been paid. The same with the fish processing equipment that was ordered from Spanish factories: due to sanctions, we cannot get it.
Two months ago we bought a ship in Japan and paid for it 100%. But Japan has decided to freeze all transactions with the Russians, and the ship is not giving us back.
What exit do you see? What kind of support do you think the industry needs?
— Firstly, the regulator needs to stop shaking the situation with endless reforms and changing the rules of the game. We will be able to survive, but only if there is stability, if it is clear that nothing will be taken away from us until the end of the year or, say, in the next couple of years. They will still be heavy. For all. Let’s take care of each other.
Secondly, to support the domestic fish industry means to stop buying fish and seafood in other countries, to free up the domestic market for our own. Both fishermen have a turnover, and the population is full, and prices will even out.
Third: introduce certain benefits for those who build ships at Russian shipyards. We need loans not at 20% per annum, but at least at 5-6%.
Fourth, in my opinion, now it would be appropriate for the authorities to introduce a state order for centralized supplies of domestic fish products. In parallel, team up with fishermen in search of new external markets. In this matter, we should not look for options alone, each on his own. This is the case when it is more correct to represent the interests of the industry abroad to the state. Our strength is in unity, and the world must see it.