Since early 1990s, Ukrainian fish industry found itself in a tough situation that was made even worse by its specifics related to constant expenditures payable in currency and a lengthy manufacturing cycle. Furthermore, after the collapse of the Soviet Union, all valid fishing permits in the territory of other states were transferred to Russia. Ukrainian fishers had to start to establish international relations from a zero and to sign new inter-governmental agreements. There emerged a number of economic problems, such as a constant growth of prices for fuel and material resources, unfavourable tax policies for the branch, etc. Situation was further made worse by the fact that unlike the previous periods, it became impossible to receive governmental subsidies and loans.
This resulted not only in a collapse of all economic relations in fish industry that were established as far back as in the USSR times but also in a reduction of Ukrainian fishery fleet both due to wearing and to sales of vessels because of their being unused. As a matter of fact, Ukraine has lost its fleet for the bulk of ships were sold to individuals and float mainly under the banners of other states.
In some countries, permits for fishing in the waters under their jurisdiction are granted only to the residents, i.e. a possibility of work of foreign vessels is allowed only provided a JV is created, ships are required to pay freightage to utilize the fishing quotas, non-residents establish companies in these states, or that ships change the flag and so on and so forth. Increased salaries covering the permit fee for ocean fishery companies and for renovation of old fishery fleet also contributed to a lower fishery yield.
In view of all this, domestic fishery companies supply to the internal market not more than 10% of all fish consumed in the state. According to the estimations provided by the Ministry of Agricultural Policy, in 2005 Ukrainian fishery fleet already consisted of only 503 marine vessels, out of which 62 were ocean ships, as well as of 5, 500 small-capacity vessels (average age of these vessels is above 23 years with technical wear rate being 80%). According to the experts, if we do not buy new ships then in a couple of years, Ukrainian fishery fleet will possess not more than 17 ships capable of being used in open ocean. However, only wealthy private company can today afford buying new ships.
As a result, over the last decade, the yield of ocean fish decreased. By 2006, the yield of fish and seafood by Ukrainian fishery fleet dropped to 230, 000 tons (including those received in the domestic basins) whereas in 1995 it was over 400, 000 tons. Pursuant to the National Program for Development of Fish Industry in Ukraine (Law of Ukraine#1516-IV dd. February 19, 2004) by 2010 it is expected to increase fish yield to 750, 000 t. By this time, the share of imported fish and fish products on Ukrainian market is supposed to decrease to 30 % whereas as of today, the share of legal import only exceeds 60%. Though, neither the program of renovation of fishery fleet nor the program of development of fish industry is financed and thus, dependence on imported products remains. The fish industry at present became a virtual hostage of imported feedstock, including a “shadow” (illegal) import. Legal foreign trader turnover of fish and canned fish products in 2006 was $470 million with a dominating part being that of imported products – 96% ($452.2 mln).
A decrease of Ukraine’s internal feedstock resources had an impact on a domestic fish processing industry – plants producing canned fish products experienced huge problems related to a shortage of feedstock, privatization and restructuring of property. Endless row of change of shareholders of shore fish-processing plants resulted in a closure of many of them or underuse of their full capacity. Some plants were artificially led to bankruptcy and actually thrown out of the structure of canned fish products industry. Very often, the reason for this was seizure of land on the Crimean Peninsula or for other purposes. Thus, production of canned fish and seafood decreased from 352 million of provisions cans (pc) in 1990 to 85.9 million of provisions cans in 1995. Still, unlike fishing, the canned fish products industry used imported feedstock and restructuring of property increased its indicators and by 2007, according to preliminary estimations, achieved the level of 246 million of provisional cans (not taking into consideration products made of surimi meat and frozen semi-processed products). However, in general, fish processing enterprises even today are not using their full capacity and remain import-dependent in terms of feedstock. In addition to this, the share of foreign canned fish products in the market is still high.
Despite the fact that the bulk of shares of the shore caned fish products plants today belong not only to the Ukrainian owners, in the structure of direct foreign investments, industrial fish production accounts for less than 1% – as of the end of 2006, this figure, according to the State Statistics Committee of Ukraine, was about $9.3 mln (mainly Baltic States as well as Israel, Russia, etc). It should also be noted that the fish processing industry is more attractive than fishing. Investment of the capital in development of the fish industry (reproduction and cropping of living resources, construction of fishing vessels, etc) still remains a risky and unpredictable enterprise for a foreign investor. For instance, the interest demonstrated by Scandinavian investors, specifically from Norway, concerns mainly construction of an infrastructure for fish storage and not fishing per se. A possibility of implementation of such a project was discussed several years ago but still remained unused. Such interest was caused by the interests of Norwegian exporters since until today this state remains the largest supplier of frozen fish on Ukrainian market. And Ukraine does not have enough refrigerators that have a capacity to provide a required temperature for fish storage (-18-20 С).
Hence, irrational use of available fleet together with its wear level, lower quotas of fish yield in the world ocean, de-legalization of the market and absence of efficient governmental support as well as a number of other relevant factors resulted in a significant decrease of consumption of fish and fish products in Ukraine. Consumption of fish and fish products in Ukraine today dropped to the level of countries with nearly entirely continental territory – by 1995, consumption of fish and fish products decreased to 3.6 kg per capita whereas in 1990 this figure still was 17.5 kg per capita and the recommended consumption norm being 23.7 kg per capita.
Talking about post-Soviet states, one has to mention that according to the expert evaluation, the highest level of consumption of fish and fish products per capita is observed in Lithuania – 54.5 kg. For Norway, which is the leading exporter of fish on Ukrainian market, preliminary estimations show that an average level of consumption of fish and seafood in 2005 was 22.8 kg/capita per year (2001 – 24 kg/capita per year). At the same time, an average Ukrainian, according to the experts, consumes only 0.05 kg/year salmon fish, cf. a Finn – 3.45 kg/year, French – 1. 83 kg/year and British – 1.36 kg/year.
At present, an average annual level of consumption of fish and seafood in Ukraine is estimated at the level of 14-15 kg per capita, including 2.5-3.0 kg of canned fish and seafood (appr. 60% of domestic production). Note as well that in seaside regions as well as in Kyiv and Donetsk, the consumption level is substantially higher. At the same time, experts maintain that a physically justified annual need for fish and fish products in Ukraine is about 1 million tons …
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