RAS, foreign investors and governmental support: development potential of salmon aquaculture in Russia

FISHERY & AQUACULTURE RUSSIAN BUSINESS MAGAZINE

RAS, foreign investors and governmental support: development potential of salmon aquaculture in Russia

Inna Golffand, partner of the practice of the agro-industrial complex of NEO Center, shared with our magazine fresh analytics of the Russian salmon aquaculture market and identified the most possible prospects for its development. The expert spoke about new projects in the market and where to get financial support for the development of aqua-farms.

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Pricing in the Russian market is highly dependent on global trends. However, after the embargo was introduced, the prices for salmon in the domestic market became higher than in the external one. Currently only refrigerated «aquacultural» salmon or wild salmon from the Faroe Islands is sold in Russia.

Due to the economic crisis, fish consumption has begun to decline since 2014. The most strongly - by 13% - it fell in 2015 on the background of a significant increase in prices. In 2016, the level of fish consumption began to recover again. Thus, there is a great potential for import substitution of salmon and partially seafood, as well as the organic development of traditional fish farming directions.

The RAS is making headway

According to the latest data, projects for 51 thousand tons of various seafood products have been announced at the field of industrial aquaculture. In particular, many new projects are expected to grow salmon in RAS (recycling aquaculture system), including the development of Atlantic salmon growing technology in RAS. So far pond and pasture aquaculture have been developing more rapidly on the basis of existing fish farms due to less start-up investment.

The only producer of Atlantic salmon for a long time was the Russian Aquaculture Society, which grew it exclusively in cages. But this year the Baltic Sea company, after its bankruptcy and break in activity, also plans to launch the first cages for fish farming. Thus, the company could potentially become the second largest producer of salmon in Russia. 

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Despite the big plans, only two new RAS projects have been implemented by the moment:

1.    In 2014 F-Trout company, based in in the Moscow Region, launched a project with a capacity of 500 tons of trout per year. In the future, it is planned to increase capacity to 4.5 thousand tons per year.

2.    In 2017 the farm of the SIG company began its work in the Kemerovo region.
The design capacity of the company is 1000 tons of trout per year, but it hasn’t yet reached these volumes.

The state supports

Aquaculture is now actively supported by the state, including financial aspect. The main ways of support:

● Concessional lending in accordance with government decree 1528 (rate up to 5%);
● The subsidies for aquaculture insurance (since 1/1/2019);
● Various mechanisms for subsidizing investment costs, reimbursement of interest rates on loans for feed and fish stock, grants for cooperatives, and other measures, which are implemented at the regional level.

However, when compared with other areas of agriculture, aquaculture is less supported: at the federal level there are no subsidies for reimbursement of direct costs incurred, most of the funds come from regional budgets.

For example, the package of measures of state support for fish farming has been expanded in Karelia. In particular, new types of subsidies were introduced for reimbursement of part of the costs for the creation, reconstruction and modernization of facilities, as well as for the purchase of new equipment for fish processing. In 2018, the Ministry of Agriculture of Karelia was ready to reimburse about 30% of the amount.

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The regional authorities also subsidizes the cost of paying the down payment when entering into a lease agreement for the purchase of technological equipment and part of the interest rate on loan agreements for the purchase of feed and fish seed. The Resolution of the Government of Karelia provides a grant to support agricultural consumer cooperatives in the field of aquaculture. These measures are aimed, in particular, at supporting the establishment of an aquaculture cluster in the region.


In the Moscow Region, part of the cost of paying interest on loans for aquaculture development is subsidized. The reimbursable share of direct costs for the creation, reconstruction and modernization of agricultural facilities is 20% of the estimated value of aquaculture facilities, but doesn’t exceed their marginal costs.

Foreigners are ready to invest

Aquaculture is already actively attracting foreign investment. Norwegian company Nores Watertech and Innovative Technopark “Idea” signed a pre-investment agreement for the construction of a plant for growing salmon in Tatarstan with a capacity of 3,000 tons per year.


By the way, three Russian-Chinese projects for the cultivation the marine cultures in the Far East Region are under development. They plan to grow scallop seaside, sea cucumber, seaweed, mussels and oysters. South Korea is interested in a fish processing logistics complex at Cape Nazimova in Vladivostok. Thai investment company "TAI CHAROEN CORPORATION GROUP" shows its interest in the implementation of the investment project "Fish Valley" (UZV).

There is no clarity with domestic feeds yet

Now there are about 18 large domestic industries in Russia that manufacture two main types of feed - granulated and extruded. But the main part of the market is accounted for foreign manufacturers, who lead not only direct deliveries, but also have representative offices and partners in Russia.

In 2017, in order to develop domestic production the Authorities of Karelia, together with the Federal Agency for Fisheries, approved an action plan for the development of an aquaculture cluster in the region. Then it became known that Karelian Fish Plants-Korma LLC and the Parabola Group firm planned to start the production of feed.

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Officially, the plant of the company “Karelian Fish Plants - Korma” is already open, but currently it produces only about 2.5 thousand tons of products per year to support its own farms. The plant equipment is designed for 12 thousand tons, but these figures are only in the plans. In 2018, the company planned to start deliveries to trout growers, but no confirmation of the start of deliveries has yet been made. There is also no official information about entering the Parabola Group enterprise, although this should have already been done.

In addition to domestic projects, foreign investment is attracted to the feed production market. In the Vladimir region, the Russian-Dutch company De heus began construction of a feed plant with a capacity of 50 thousand tons per year. The launch of the company is planned for the end of 2019. The volume of investment in the project is estimated at 2 billion rubles.


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