Increased automation to compensate for labour bottlenecks at Banga

Latvian import and export of fish products, million euro

2015 2016 2017 2018 2019 2020 2021

Fish products, including canned fish, export 174 192 206 226 212 231.2 213.8 Fish products, including canned fish, import 145 170 166 169 176 183,7 203.65 Latvian fish products trade balance 29 22 40 57 35 47,5 10,15

Source: Ministry of Agriculture

electronic monitoring (REM) by installing cameras on board fishing vessels has not generated much interest among fishers. Only in the third attempt to get fishers to volunteer has there been some response. The Ministry of Environment and Regional Development which is responsible for the trial is discussing with pelagic fishers the possibility of their participating in the trial. The investment needed will be supported by the European Maritime and Fisheries Fund (EMFF). Although fish discards are not associated with the pelagic fishery, it would be useful to have this confirmed as it would show that the control resources to prevent fishing activities are better deployed elsewhere in the fleet.

Processing industry exports its products around the world

The pelagic fishery in the Baltic Sea and the Gulf of Riga supplies the well-known Latvian processing industry with sprats and herring. Quota utilisation is close to 100 suggesting that the fish is in demand. Most of it goes into products for human consumption. In Latvia processing companies smoke, can, salt, and marinade the fish, or freeze it into blocks which are exported. Canned sprats are exported to 40 or 50 countries around the world on all the continents. The industry promotes its products at many tradeshows where collective participation is organised by the Union of Latvian Fish Processing Industry, and a team from the Institute of Agrarian Resources and Economy which is supported by the EMFF and now the EMFAF. For many companies attending these events would not be possible without this support. The canning industry benefited from the pandemic when there was increased demand for relatively cheap, tasty, and healthful products with a long shelf life. It is experiencing something similar today where uncertainty created by the war in Ukraine, inflation, and high energy prices is increasing demand for canned goods. The steep increase in prices particularly of energy but also of other raw materials used in the production of canned goods, such as the metal for cans and lids, have triggered compensation schemes from the government that are funded by the EU. The first applications are already being processed and the money will be disbursed as soon as possible. While the scheme is available until the end of the year, Latvia together with several other Member States would like to see it extended to cover 2023. It is a burden for the budget, concedes Mr Riekstins, but there is an immediate need for the industry to increase its resilience. Temporary support for industry should keep factories running and employees in work and allow the sector to emerge leaner and stronger on the other side of this crisis.

Increased automation to compensate for labour bottlenecks at Banga

New factory will expand product range

Latvia has an ancient tradition of canning spats and today Riga sprats in oil is one of the country’s best known seafood exports. The product represents not only a distinct taste but also a special appearance. In recent years the development of cans with transparent lids has allowed producers to highlight the quality of the fish, its golden colour, and the attractive way individual fish are arranged in the can even before it has been opened.

The Union of Latvian Fish Processing Industry, a trade association, prescribes the quality of the fish, the method of preparation, and the way the fish is placed in the can, for the product to carry the “Riga Sprats in Oil” label. The label thus functions both as a mark of quality and a guarantee that the production adheres to certain standards, for example, that alder wood is used to smoke the sprats. The association has some ten members though not all of them produced canned sprats. Among those that do is the company Banga Ltd.

A 75-year-old history of canning sprats

Located in Roja on the western coast of the Gulf of Riga, Banga can trace its origins back to 1947 when it first started producing canned fish. Since 2012 production has conformed to EU standards and the company is authorised to export to the USA, Japan, and China, among other countries. Today the company is owned by the family of the managing director, Ingus Veck gans. The name Banga goes back to Soviet times when there used to be many fishing companies along the coast of the Gulf of Riga, some of whom formed an association or collective which was christened Banga, With the arrival of private ownership in the 90s the assets of the fishing association were divided. Some of the new owners got fishing vessels, the factory went to others, and so on. The original plant was not in fact located at its current location, but in another part of Roja

Ingus Veck gans, Managing Director, Banga

Mussels imported from Denmark or Chile are among the range of canned products that Banga manufactures. The raw material for the production of sprats is sourced from the local fishers ensuring it is absolutely fresh when it is processed.

near the sea. When the new plant was established it was one of the first to produce smoked sprats and to sell them to Europe. At the time they were packaged in 100 g cans and were considered a luxury product that also promoted Latvian capabilities to make excellent products.

In 2011 the Veck gans family bought the company which by then was struggling financially though still running. Over the following months and years the family invested in the company to improve the infrastructure and the technology as well as to introduce proper labour policies and generally modernise operations. This is an ongoing process and currently Mr Veck gans is overseeing an expansion of the current plant with a warehouse, and the construction of a new factory at a different location which will accomodate two new processing lines that will double the company’s output when they run at full capacity. The company will continue to produce canned fish. Smoked sprats are synonymous with Latvia for a variety of reasons. The country is located on the Baltic Sea, it has access to the most fresh raw materials, there is a long history of producing smoked sprats, the smoking is natural, the technology is developed, and customs and traditions of eating smoked sprats are embedded in Latvian culture. Until 2015 Latvian canned sprats were being exported more or less exclusively to Russia, a huge market for these products. When the Russian market closed due to sanctions and counter sanctions many companies went bankrupt as they could not replace their biggest (and often only) market quickly enough. Another problem was that many companys only worked with sprats, so the range of products they could offer was limited.

A range of products based on seven species

At Banga canned sprats represent only part of a range of products that the company manufactures. We have over 20 SKU (stock keeping units), says Mr Veck gans, which is why we need to expand our facilities. For our clients it is important that we can offer this wide range of products. In addition to canned sprats the company manufactures canned mussels, salmon, and Atlantic herring. In addition, canned tuna and cod liver under the Banga brand are also on offer but the production of these two products is outsourced. The raw materials for the products manufactured in Latvia come from different places. The sprats come of course from domestic suppliers, while the mussels are from Chile or Denmark, while the salmon comes from Norway, Scotland, or France. Altogether products under the company’s own brand account for half the production and the rest is produced under private labels both domestically and internationally. We participate in national tenders for the supply of canned fish in Australia, Europe and USA, so we export to more than 24 countries, Mr Veck gans recounts. There are two main sales channels—directly to supermarkets to whom the company supplies private label products, and distributors where it sells mainly its own brand. The company is investing a lot of time and resources in building a brand, says Mr Veck gans, creating an attractive design and following market trends so that we can increase the sales of our branded products.

The last couple of years has seen demand for canned products increase significantly due first to covid and then the war in Ukraine, says Mr Veck gans. He attributes this to the convenience that cans offer, not only in terms

Banga/Kaspars Porins

The company has invested in solar panels to become more sustainable and they also help reduce its electricity bills.

of consumption, but also for the ease of storage, transport, a long shelf life, and the tastiness of the product. Consumers who do not know whether a store will be open or whether they will be well enough to go to a store are buying larger numbers of cans to stock at home. Banga is not the only company experiencing this, all the companies in the sector have noticed this development. But another reason is also that canned seafood is becoming more popular. The old adage “eat frozen fish if you cannot get fresh and canned if you cannot get frozen”, no longer applies. Consumers, especially younger ones, are persuaded by the attractive packaging, the transparent lids that allow the contents to be inspected, the health benefits offered by fish, and the reasonable price. Banga also sells fish in glass jars, but for the moment, these ae obtained from another producer. We have a line for jars, explains Mr Veck gans, but it is not active yet. We first need to meet the demand for all our other products before we start on something new. The two new lines that will be commissioned with the new factory are for canned seafood with automated filling. Automation is becoming increasingly necessary because finding labour gets more and more difficult. The 140 people the company employs are not enough because many of the processing operations must be done manually as the technology that could replace these workers does not exist yet. While the staff in the office are young those working on the factory floor are considerably older—there are no young people to replace them as nobody wants this work. The only solution is greater automation.

Support from national government and EU funds is critical

In this we are supported by the national government and by EU funds with which we can cover some of the costs of machinery, Mr Veck gans states. We have a packaging robot that we are teaching and have made progress but need to get the speed up. At a time when costs of some inputs are rising we need to reduce the costs of others to have a viable business. Canned seafood is not the kind of product where the price can simply be increased. One inititative that the company has taken is to build a solar panel park just behind the factory which supplies 25-30 of its electricity requirements. At a time of high electricity prices this power helps the company keep its energy costs down. Another initiative was to hire a consultant to go through the factory and recommend areas where energy could be saved. A third measure was to switch from heating a warehouse with electricity to heating it with wood pellets. These innovations, the robot, the automated packaging, the solar energy, and the warehouse heating system are all thanks to support from the government and the EU. There are still limits to automation, however. While canning mackerel can be automated, canned sprats must still be done manually. But each can that can be produced automatically lowers the cost of a can that is produced manually, so the goal is to automate as far as possible.

The company meets different certification standards including MSC, IFS, and BRC and is now also looking at working with producers of certified organic products, such as, organic salmon. Another example is a sustainably certified sprat naturally smoked in an organically certified oil. These products are meant to appeal to environmentally and health conscious consumers, a segment that Banga would like to be able to cater to. Over the next couple of years, Banga looks forward to conditions returning to normal, energy costs subsiding, and demand returning to its usual level. Automation will continue to be a priority as the supply of labour is unlikely to grow, and there will been even more focus on product development including the use of new species. With its new factory and new lines Banga is well prepared to respond to the demands of its existing clients and build alliances with new ones.

Banga

Akas Street 74B, Roja Talsi district LV-3264, Latvia

Managing director: Ingus

Veck gans

Activity: Manufacture of canned fish and seafood Products: Canned sprats, mackerel, Atlantic herring, salmon, mussels, tuna, cod liver Markets: 24 countries including in the EU and Asia Clients: Retail chains, distributors