Freshwater sector suff ers more than the pelagics industry from

Freshwater sector suffers more than the pelagics industry from the impact of Covid-19 Processors of high-value freshwater species seek relief

Estonia exports species like perch and pike-perch to markets in Europe and North America. These are destined mainly for hotels and restaurants, a segment that was among the worst affected by the pandemic. Pelagic processers were spared the worst as their markets were less infl uenced.

The coronavirus has had widespread impacts on the fi sheries sector. An FAO report fi nds how aquaculture production is aff ected by the closure of markets, the shutdown of the Horeca sector, and restrictions on fl ights and cargo movements. Fisheries production, for instance, may suff er from the imposition of sanitary measures on board that make fi shing diffi cult, crews may not be able to join their vessels due to travel restrictions, and the necessary supplies of bait or ice may not be available. In the processing sector issues with cross border transport, uncertain supply of raw materials, and market restriction are among the challenges companies must face.

Pandemic’s impact expected on resource management as well

Covid-19 is also likely to have an impact on fi sheries management and policy as stock assessments, fi sheries observer programmes, and science and management meetings may be postponed or cancelled. Measures to support the diff erent elements in the supply chain extend from expanding government purchases of seafood to maintain demand and prevent a slump in prices, through extending credit and microfi nance facilities to fi sh farmers to ensuring smooth passage of goods at ports, rail terminals, and at border crossings. A survey of small-scale fi shers across 12 countries carried out by researchers at the University of Aveiro in Portugal showed that between March and June 2020 they suff ered losses of between 20 and 100 with fi shers in northern Europe and those targeting highvalue species particularly aff ected. Th e loss of the Horeca market, lack of tourists, price declines, and the closure of international markets were cited as the main impacts of the pandemic.

Th e closure of the international Horeca market had a particular infl uence on the fi shers, processors, and exporters of high value freshwater species from Estonia. In general, the export value of seafood products in nearly all categories declined— fresh, frozen, fi lleted, dried, salted, or smoked fi sh, and crustaceans— with reductions ranging from -17 to -43. Valdur Noormagi, the head of the Estonian Fisheries Association is deeply troubled by these developments. Over four fi fths of Estonia’s fi sheries production is exported, he says, and while exports of Baltic herring and sprat have continued, those of freshwater fi sh have collapsed. Baltic herring and sprat are exported in frozen blocks mostly to Ukraine, where Estonian products have a dominant share of the market. Th is trade was less aff ected by the pandemic than the Horeca market in Europe and North America which absorbs much of the high value freshwater fi sh fi llets. Th is market segment seized up with the fi rst wave of the coronavirus, recovered slightly in summer, but then broke down again and has not recovered since. Th ere are two peaks for the fi sh business, says Mr Noormagi, before Easter and before Christmas, and the timing of the pandemic could not have been worse as it started just before Easter and has continued since then. All the freshwater fi sh that should have been exported is now sitting in freezers. Coldstore capacity has been fully utilised and this is an additional expense for processors at a time when incomes are low. Th e problem is compounded by companies’ reluctance to shed labour yet at the same time they are unable to off er work.

Valdur Noormagi, head of the Estonian Fisheries Association, is concerned about the impact of the Horeca market’s closure on producers and processors of high value freshwater species.

Support for producer organisations cannot be used in freshwater sector

Th e EU has introduced measures intended to assist the sector including a new state aid framework and by clarifying the existing possibilities under the EMFF, but according to Mr Noormagi these benefi ts are not available to freshwater fi sh processors. Th e EMFF measures apply to producer organisations, he says, and in Estonia POs exist only in the pelagic sector. Th e freshwater fi sh processors, which number some 35-40 companies, are not organised into a PO, so they do not have access to this support. Eduard Koitmaa from the Ministry of Rural Aff airs cites the special compensation measure available to processors of fi shery and aquaculture products to mitigate the economic shock of a fall in sales turnover caused by the COVID-19 outbreak. Under these measures, processors can apply for compensation for a drop in sales between February and December 2020. To qualify, the decline must be attributable to the pandemic.

Pike-perch and pike are among the freshwater species that would normally be destined for hotels and restaurants in Europe and North America. The pandemic has had a substantial negative impact on this trade.

Th e total budgetary allocation for the measure is EUR5m and the compensation is capped at EUR150,000 per applicant. Th e association had asked for EUR250,000 per applicant and Mr Noormagi fears that the budget will not be used with the lower cap.

Th e domestic market for fi sh products has also weakened as consumer surveys carried out in 2020 showed. Th e cheapest products, such as canned herring, were the most popular suggesting that consumers were being careful as unemployment increases. Another factor aff ecting the fi sheries sector is the cancellation or postponement of trade fairs. For the processors these events are important to contact existing and potential clients and cannot be replaced by virtual get togethers. Mr Noormagi expects that the sector will be reshaped by the events of 2020. Pelagic processors have been less aff ected, but the freshwater fi sh processors are likely to see a restructuring; the older and more established companies will survive but the smaller younger ones that lack capital are threatened. He anticipates that fi ve or six will shut down, which will also aff ect the small communities where they are located. In 2021 the situation should look rosier as far as the virus is concerned with prospects of a vaccine and a gradual return to normal life.

Fishmeal factory jointly owned by former rivals

Compared to last year, Estonian quotas for herring have fallen slightly, while the sprat quota is stable. Th ese species are targeted by members of the Estonian pelagic producer organisations. Th e three organisations (Estonian Fish Producers Organisation, the Estonian Trawling Association, and the Estonian Commercial Fishermen Association) which together represent the bulk of Estonian catches of pelagic fi sh have joined resources to set up a fi shmeal factory with a capacity of 5–6,000 tonnes of fi shmeal and about 2,500 tonnes of fi sh oil. Th is level of production will call for some 30–40,000 tonnes of raw material. Th e factory is managed by Mart Undrest, managing director of the Estonian Fish Producers Organisation, the largest of the three POs, who has been ironing out teething issues and gradually increasing production since the factory commenced operations some eighteen months ago. Th e pandemic has not had the kind of impact on operations seen in the freshwater fi sh segment, though prices for fi shmeal did fall between the fi rst and last quarters last year. Being a global commodity, developments in countries from Peru to China can aff ect the market, but overall, says Mr Undrest, other segments in the fi sheries sector were more

seriously aff ected by the pandemic than ours.

All the raw material used in the factory comes from the members of the PO who fi sh the Estonian quotas, but who also own vessels under the fl ags of other countries. In July 2020 sprat and herring stocks in the Central Baltic and the Gulf of Bothnia were certifi ed to the Marine Stewardship Council standard and now the factory is being certifi ed to the MSC Chain of Custody standard as well. In addition, the factory will be certifi ed to the IFFO standard, a process that has been delayed by travel restrictions imposed by the pandemic. Although the two standards are similar with the IFFO more focused on fi shmeal and fi sh oil, the decision to have both was to accommodate customer preferences.

Mart Undrest, managing director of the Estonian Fish Producers Organisation, was responsible for establishing and starting up the fi shmeal and fi sh oil factory established by the three Estonian pelagic POs. Since August 2020 Toomas Kevvai has been in charge.

PO collaboration could serve as a template

Th e collaboration between the three PO’s to establish a fi shmeal factory has also led to joint eff orts in other fi elds. Ten years ago the three were competing against each other, but now the representatives get together regularly to discuss issues regarding fi shing. Th is has led to some sharing of information about vessel activities and discussions on how to address common challenges. In practical terms there has also been some cooperation to fulfi l large orders and some trade deals between the diff erent companies. Th e factory symbolises a unique joint eff ort by the three POs and could serve as model for collaboration between producer organisations in other EU countries.