Russians are back in the Norwegian fish market

When Russian trawlers switched from fresh to frozen fish in the late 1990s, many Norwegian companies went bankrupt. But now the Russians are back - and supplies of Russian fish to Norway are increasing.

The collapse of the Soviet Union had major consequences for the fish processing industries in both Norway and Russia. It created virtually overnight a completely new situation for the Russian fishing boat owners.

The fish processing industry - particularly in Finnmark - was quick to establish contact with new Russian suppliers.

From State to enterprise

In modern times, the purchase of Russian cod started as early as 1982. Norway exchanged 45,000 tonnes of cod in fisheries trade with the Soviet Union by stating a quota for species including blue whiting.

From 1988 to 2000, landings from Russian vessels in Norwegian harbours increased from 0 to almost 170,000 tonnes. Although the cod quota reduced from 1998 to 2000, landings from Russian vessels continued to grow.

A win-win situation

The Norwegian fish processing industry gained access to much needed raw materials in regions with idle production capacity near important fishing grounds. The cod that was landed was of a size well suited to fillet production and at a time of the year that the Norwegian fleet landed only small quantities of cod.

The Russian fishing boat owners gained access to technology, knowledge about and access to a well-functioning raw material market with many buyers and not least certain payments for their catches.

From fresh to frozen

Up until the mid 1990s, most of the landings were fresh cod direct to the Norwegian fish processing industry. But the Russians then changed their landing pattern. The cod was frozen on board and stored at freezer terminals for global sales.

"This change had dramatic consequences for sectors of Norway's land-based fish processing industry," says Nofima Scientist Bjørn Inge Bendiksen.

"Many companies based investments and expansions in the early 1990s on the supply of fresh cod from Russian vessels."

Increased demand for frozen raw materials from entities outside Northern Norway - both in other parts of Norway and overseas - contributed to increasing prices for raw materials. The gradual take over of this raw material source by others provided a capacity and market problem for North Norwegian producers.

There were many challenges. The drop in cod quotas, the increased level of freezing on board, global competition for raw materials and increased loan repayments associated with the capacity expansions combined with the record strength of the Norwegian krone to create the terrible bankruptcy statistics around 2002.

Where do the Russian landings go?

However, landing statistics for last year show that Russian vessels' landings in Norway are on the increase again. The Norwegian Fishermen's Sales organisation - one of the pioneers of the co-operation with the Russians - reported that in 2007 Russian fishermen sold 120,000 tonnes through the sales organisation. We know little about the reason for this surprising growth.

One explanation can be the establishment of a stricter international control regime connected with fish reloaded in the Barents Sea. Another explanation is the increasing fuel costs make the Norwegian distribution system more attractive. A third explanation is that the Russians gain access to a well developed sales apparatus where costs are low and at the same time they achieve a good price for their catch.

"The increase in Russian landings provides an opportunity for Norway's land-based fish processing industry," says Director of Research at Nofima Market Bent Dreyer.

However, in the meantime it appears that a large proportion of these raw materials are landed in Norway only to be transported in a non-processed state to an international industry in a country that pays higher prices for the fish than Norwegian producers.

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Russians are back in the Norwegian fish market