Russian ban bad but could be worse

Pelagic industry and political leaders are investigating alternative markets for mackerel to counter a Russian ban on food imports from the EU, Norway, the US and other countries.

The embargo, taken in retaliation for western trade-sanctions, could hit about £16 million of mackerel exports from Scotland annually, and have knock on effects on the salmon market.

Industry representatives met Scottish fisheries minister Richard Lochhead in Edinburgh on Tuesday to thrash out alternative marketing arrangements.

A five-point plan to protect the pelagic fishing sector was agreed, including:

• Targeting of new and emerging overseas markets;
• Growing domestic sales with Scottish and UK retailers;
• Increasing domestic demand by consumers;
• Working with the UK government on export insurance;
• Working with the EU to implement banking of quotas.

The Scottish government has already funded marketing initiatives in the Far East and is looking to expand these and other promotions. The industry promotional body, Seafish, is to meet UK retailers to see if the quantity of mackerel sold domestically could be increased.

Export credit insurance guarantees ought to encourage exports to new markets.

Mr Lochhead said the meeting had been “extremely constructive” with everyone keen to work together to quickly find solutions.

He said: “This is a successful sector, used to adapting to changes in market conditions and with great experience exporting to a wide range of markets.”

According to Mr Lochhead up to 20 per cent of Scottish processed mackerel is exported directly to Russia. Work was ongoing to identify the knock-on effect of indirect exports through countries such as Lithuania and the Baltic States. They were also calculating the impact of fish displaced from the Russian outlet.

Shetland Catch marketing director John Angus, who was at the Edinburgh meeting, said that it was a serious situation for all food producers.

He added: “Russia is an important market for wis but not as big as it was four or five years ago when Faroe and Iceland started catching mackerel. One of their main markets was Russia and they displaced quite a lot of the Scottish mackerel that was being sold there. So the impact is less as what it would have been several years ago.

“We have already alternative markets built up that we have been supplying to for several years. Though its serious for thousands of food producers, it is not as bad as might have been.”
He said that there was no question of finishing business or having to close down lines and pay workers off.

“We will be able to sell fish elsewhere. Hopefully when the ban is over we will still have our Russian buyers.”
Mr Angus said that Shetland Catch was certainly one of the larger Scottish exporters to Russia but as the Gremista factory was the biggest producer of mackerel in Scotland, as a proportion of sales, was probably less affected than some other factories.

The mackerel market is pretty much world wide nowadays, though the main outlets are still ex-Soviet countries such as Poland, Romania, Bulgaria, Russia and Ukraine. There are also the important Far East markets – Japan, China, Korea and Taiwan and the traditional African markets of Nigeria and Egypt.

Mr Angus did not think that the increased mackerel quota for this year would change the dynamic of the global market; salesmen would still have to work hard to find alternatives.

The herring market has been unaffected by the ban and Shetland Catch had made good sales of fillets to Germany since the start of the season last month. Coldstores ought to be empty in time for the start of the mackerel season.

Mr Angus said that Russian demand for herring was mainly for the larger Altanto Scandian fish that were caught and supplied from Norwegian waters. Smaller North Sea herring processed in Shetland went to the UK, Western Europe and Africa.

Scottish Salmon Producers Association secretary David Sandison said that it was too early to say what effect the ban would have on the salmon trade. While, to his knowledge, no Shetland salmon was exported directly to Russia, the country remained the third-biggest outlet for Norwegian salmon and this could have a knock-on effect.

Mr Sandison added: “There’s the potential for a short-term drop in prices as fish destined for Russia from Norway will have to go somewhere else.”

The Russian processing sector would be hit dramatically and there were direct problems for Norway.

Mr Sandison did not foresee a massive amount of disruption to global market patterns and the overall price structure. He said that Shetland producers were pretty content with the situation at the moment despite a gradual fall in price for salmon. An anticipated small rise in price in the second half of year might be effected by the Russian embargo.

At the start of this month the Scottish First Minister Alex Salmond chaired a meeting of the government resilience committee to discuss the impact of the immediate Russian trade embargo.

Food products including fish and seafood, beef, pork, poultry, cured meats, sausages, milk and dairy products and fruit and vegetables were banned as of 1st August.

Scotland exports around £45m of food and drink to Russia annually with the mackerel industry expected to be most directly affected.
Mr Salmond said: “The Scottish government continues to make our concerns about the situation in Ukraine clear and we fully support EU sanctions against Russia.

“This action by Russia will clearly have an impact on some sectors within the Scottish economy, most notably on the mackerel industry which exports £16 million worth to Russia annually from the UK
“We will also look at developing both new international markets and domestic opportunities which will not only alleviate the impact of this ban in the short term but will also create long-lasting business opportunities which will remain open to our food sector well after this ban has been lifted.”