FAS found new grounds to form a fish exchange

The Federal Antimonopoly Service (FAS Russia) together with its regional bodies analyzed the market of primary wholesale crab sales. The findings can become some major grounds to form a fish exchange.

Initially the purpose of a crab market survey was to evaluate the state of its competitive environment and to clarify the share of economic entities involved in crab catching in the North and Far East fishery basins.

FAS analysis showed that most part of caught or harvested crab is exported. No more than 27% are supplied to the domestic market.

In 2014 “DV Aquaresource” Ltd. had the dominant position on the market of opilio crab in the Far East basin with 52% share. The share of opilio crab in total sales including export for the entire yield of opilio crab caught in the Far East basin equaled 20%.

“The dominant position of “DV Aquaresource” affected the price. It was sustainably higher that the average prices for opilio crab in the Far East basin on the domestic market and below the average export prices”, said the Head of FAS Department for Control over Construction and Natural Resources, Vladimir Kudryavtsev.

In the North basin opilio crab and king crab are caught and sold by the single group of persons that has monopolistic position. It comprises “Arcticservice” CJSC, “Severomorsky Alliance” OJSC, “North-West Crab-Catching Company” Ltd., and “SZRK-Murmansk” Ltd.

The monopolistic position of the Group also affected the product prices.

For instance, in 2012-2013 prices for the cooled king crab from the North basis on the domestic market was higher than the export price, while in the Far East basis, where the domestic market has a moderate level of concentration, crab was sold at the price below the export price in the same period.

FAS also revealed economic and administrative barriers preventing entry of new players on the crab market.

According to Vladimir Kudryavtsev, economic barriers are associated with considerable initial capital investments necessary to form the fishing fleet. Return on investments takes long time. The administrative barrier is allocating quotas for crab catching in accord with the “historic principle”.

“The situation on the markets of primary wholesale sales of caught (harvested) crab can be improved with introducing the norms on mandatory sale of crab products at auctions”, suggested Vladimir Kudryavtsev. “It is necessary to additionally introduce expert licenses to prevent increased prices on the domestic market. In Norway, for instance, export licenses are granted by the Expert Council with permission from the Fishery Department for one year; it costs around US$ 1700. Such practice would be useful to eliminate market power of crab harvesters and protect the interests of domestic consumers”.

FAS plans to discuss the issues exposed during the market survey at the next meeting of the Expert Council.