1. Recent developments on the fish markets in Russia and Ukraine ”Fishery today and tomorrow” January 25, 2012 Tallinn, Estonia Ekaterina Tribilustova, Market Specialist, EUROFISH

2. Structure of presentation Russia - overview of the market -trade -tendencies Ukraine - market structure - latest trade developments

3. Russia 2011 Population: 141.7 million people Market capacity – 4 million tonnes of fish Import dependency: 22% Main part of consumers Importers Processors Producers Exporters Processors

4. Russian market Most important changes in the fishery sector since 2009: -Transition to the allocation of TAC for a 10-years period; -Securing the right to use fish grounds up to a 20-years period; -Regulation for all fish caught in Russian EZ and its territorial waters must be landed in Russian ports. 10% rate for using of bioresources when delivering fish to Russian ports and 100% when making calls to foreign ports; -Waiting procedures in Russian ports decreased to 3 hours from several days; -Decision to subsidize parts of the interest rates of Russian fish companies, etc.

5. Russian market Structure of fish supply (jan-nov. 2011) Russian market

6. Russia - catch 2011 (jan-nov)2011/2010 Total catch4 021 800+5,1% Alaska Pollock1 549 600+0,2% Cod383 800+12% Herring419 400+4,2% Flounder77 700+0,7% Crabs42 200+9,4% Macrourus21 400+4% Squids69 400+7,8% Saury62 100+200% Shrimps9 200-3,4% Navaga28 000-7% Sebastes36 300-2,2%

7. Russian market - trade Development of trade (in USD million)

8. Russian market - trade Development of export in 2005-2010 by product groups (in tonnes) 200520062007200820092010 Fresh or chilled fish, except fillets21,73,32,61,81,71,3 Frozen fish, except fillets118411931164120412371501 Fish fillets and meat, fresh or frozen59,468,25668,154,563,3 Fish salted, dried or in brine8,29,19,79,510,712,9 Crustaceans (any product form)25,726,931,227,729,833,5 Mollusks, other aquatic invertebrates12,117,816,513,915,416 Canned or preserved fish and seafood products49,843,247,148,828,226,8 Total1 360,91 361,51 327,11 373,81 377,31 654,8

9. Russian market - trade Development of import by product categories in 2005-2010 (in tonnes) 200520062007200820092010 Fresh or chilled fish, except fillets50,13064,478,689,9104 Frozen fish, except fillets658556673553527550 Fish fillets and meat, fresh or frozen78,9101169250178137 Fish salted, dried or in brine20,923,424,420,21112,9 Crustaceans (any product form)45,646,668,365,852,662 Mollusks, other aquatic invertebrates10,817,417,635,314,821,4 Canned or preserved fish and seafood products108,295,7101,1109,581,8105,4 Total972,5870,11 117,81 112,4955,1992,7

10. Russian market - tendencies 2011/2010: Import tendencies: - For the first time during the last 10 years import of frozen fish in 2011 can be down by 15-20%. 2011 (jan-nov)2011/2010 Import of fish and seafood690000-11,9% Import of preserved and canned products77800+3% of which: Frozen fish394 000-21,9% Fillets108 000-11,6% Fresh and chilled fish106 000+19,1% Dried, salted, smoked and marinated fish10 500+11,7% Crustaceans48 800-6,4% Mollusks/other aquatic invertebrates23 600+25,5%

11. Russian market - trade Frozen fish segment Total – 394 000 tonnes (-21,9%) Herring - 93 000 tonnes (-25,6%), Mackerel – 90 000 tonnes (-9,6%), Hake – 15 700 tonnes (-23%), Anchovies and Baltic sprat – 37 100 tonnes (-20,9%), Tilapia and Pangasius fillets – 34 900 tonnes (- 19,2%) Alaska Pollock fillets – 10 000 tonnes (+250%)

12. Russian market - trade Fresh and chilled fish segment The share of fresh and chilled fish in the total import volume increased from 11,5% to 15,3% Salmon and trout – 100 000 tonnes (+20%)

13. Russian market - trade Wholesale prices for frozen Baltic Sea anchovy (from Estonia and Latvia) on the Moscow wholesale market in RUB/kg

14. Russian market - processing Processing sector (Jan-Sept. 2011) National production increased by 7%, of which: - Live, fresh and frozen fish by 16,3%, - Fish fillets by 29,3%, - Salmon caviar by 39%, - Frozen crustaceans by 7,4%, - Fish liver, roe and melt by 22,9%

15. Companies Russian market - processing Biggest foreign producers on the Russian market: Biggest Russian producers:

16. Russian market - tendencies Growing catch and export, while decreasing import. During the last 3 years - active import substituting tendency (target - 80:20). Current ratio is 78:20. Stable catch growth of 4-5% is displacing import. Falling import of frozen fish but increasing import of ready-to-eat canned and preserved products and fillets. Major part of import is ready products (frozen, fresh or canned) which goes directly to the retail (via importing companies) without processing.

17. Russian market - tendencies Average annual growth of retail sales of fish and seafood is 6-7% (jan-nov. 2011). Growing consumption – 26,4 - 26,9 kg per capita (salmon, flounder, cod, herring, mackerel, saury). Increasing consumption of fresh and chilled fish, fillets, fish liver, milt and caviar, and ready-to-eat products.

18. Structure of consumer purchases in Russia -Fish and seafood – 1.7% of consumer spending, -Fish and seafood – 5,7% of per capita food product spending, -Central Federal District – the highest per capita spending for fish and seafood (6.3% or 215 RUB per month), -Moscow – 7% or 309 RUB per month Russian market - tendencies

19. WTO and the Russian market: -Lower import tariffs for ready-to-eat fish product (from 15% to 12-12,5%); -Lower import tariffs for raw material fish (form 10% to 6-8% and in some cases down to 5-3%); -Consolidation of fishery industry and merging and enlargement of the main industry players.

20. Ukraine 2011 Population: 45.9 million people Market capacity – 900 000 tonnes Import dependency: over 70%

21. Ukrainian market Structure of fish supply (jan-sept. 2011)

22. Ukrainian market - catch

23. Ukrainian market - trade Imported fish is responsible for 70% to 90% of domestic fish consumption

24. Ukrainian market - trade Export compared to import

25. Ukrainian market - trade 300 - Fish and crustaceans, mollusks and other water spineless 301 - Live fish 302 - Fish, fresh or chilled (excluding fish fillets and other fish meat of heading 0304) 303 - Frozen fish (excluding fish fillets and other fish meat of heading 0304) 304 - Fish fillets and other fish meat, whether or not minced, fresh, chilled or frozen 305 - Fish, fit for human consumption, dried, salted or in brine; smoked fish, fit for human consumption, whether or not cooked before or during the smoking process; flours, meals and pellets of fish, fit for human consumption 306 - Crustaceans, whether in shell or not, live, fresh, chilled, frozen, dried, salted or in brine, including crustaceans in shell, cooked by steaming or by boiling in water 307 - Molluscs, fit for human consumption, whether in shell or not, live, fresh, chilled, frozen, dried, salted or in brine, including aquatic invertebrates other than crustaceans and molluscs; flours, meals and pellets of aquatic invertebrates other than crust 1604 - Prepared or preserved fish; caviar and caviar substitutes prepared from fish eggs 1605 - Crustaceans, molluscs and other aquatic invertebrates, prepared or preserved 230120 - Flours, meals and pellets of fish or crustaceans, molluscs or other aquatic invertebrates, unfit for human consumption Import, tonnes

26. Ukrainian market - trade Import of fish production (groups of goods), tonnes

27. Ukrainian market - trade Export of fish production (groups of goods), tonnes

28. Ukrainian market - trade Import of fish production (by countries), tonnes CountriesJan-Sept 2010Jan-Sept 2011Difference Norway119 89688 877-26% Iceland36 39022 345-39% Estonia26 48119 226-27% Vietnam17 50012 249-30% Russia16 39912 422-24% Canada16 29611 899-27% Argentina10 2248 786-14% USA10 99112 72016% UK11 3906 290-45% Others78 75969 472-12% Total344 326264 286-23%

29. Ukrainian market - trade The most popular fish species in Ukraine: -Herring -Mackerel, -Capelin, -Hake Growing demand: -Salmon -Trout -Pangasius, -Capelin

30. Ukrainian market - consumers Fish consumption level, kg

31. Decreasing catch due to the old catching fleet, lack of the admission to fish resources and fragmented regulation of the industry Continuing high import dependency (over 70%) Decreasing imports due to the high import prices Large importing companies create entire value chains for their products (from import to retail sales) Ukrainian market - tendencies

32. Large companies create their own stores and private brands

33. Increasing prices for fish products (10%- 35% depending on species) If inflation surpasses 15%, decrease of the national production output will continue. Possible drop of fish consumption will result in reduced number of the market players and following consolidation Ukrainian market - tendencies

34. Common uncertainty depending on stability of UAH, the governmental policy towards importers and inflation rates While the Russian market is not affected by declining imports, the Ukrainian market has a deficit of fish products, enhanced by dropping supply and imports

35. Спасибо за внимание! Tänan tähelepanu! Спасибі за увагу!