Aquaculture in Russian Regions Executive Summary

10/14/2019

Aquaculture in Russian regions

By Lubov Bychkova Innovation Norway Moscow [email protected]

April 2019

www.innovationnorway.no

Executive summary

• New trend in Russia - Aquaculture sector development! • Local and foreign private investors shows interest to large aquaculture projects

• Russian government identified Aquaculture as a top priority sector within the Agriculture industry. • Aquaculture is relatively young sector and has 4% of country’s fish production. However, the sector started to gain the traction and now it's considered to be a rapidly developed one, showing 29% growth during last 5 years. • Market size 2018 : 232 000 t (+7%) Plan 2030 : 700 000 t • Russia has vast water resources that are suitable for aquaculture development but only a small percent of them is in business use so far. The State Federal Agency for Fisheries by May 2019 allocated 3 700 water sites of the total area 500 000 hectare. started to actively prepare more water sites for fish farming to be allocated through the auction system. • 3 Russian Federal Districts have conditions for real development of aquaculture: Far East, South and North-West. • There are about 3,000 farms in total operating in aquaculture industry. 72% of them are pond and pasture farms, 25% are industrial (where 5 % share is mariculture and 1% only is RAS). 62% of all farm enterprises produce less then 10 tons of fish, and only 1% of them has production volume over 1,000 t. • Carp, trout, salmon and sturgeon are 4 main species in aquaculture production in Russia. • Aquaculture in Russia has some problems hampering the strong development of this business: this is the legislative base, which already needs revision and update, lack of enough volumes and high quality of local fish feed and hatcheries, not enough good roads approaching water sites for fish farms, insufficient funding and financing, lacking large and strong industrial associations capable to lobby and protect interests of aquaculture business on the top level, lack of well-educated personnel capable to operate modern industrial fish farm. • However, the ambitious goal of Russian government is to increase fish consumption in the country from 12-14 kg/capita/annum to 23 kg/capita/annum, targeted the aquaculture sector to increase the local production up to 410 000 tons by 2020 and up to 700 000 tons by 2030. • This shows huge market potential for investors, suppliers of fish farming technologies, international expertise to find the niche market in Russia and to increase sales. • Several Norwegian suppliers of marine, fresh-water and land-based technology, equipment, nets, fish feed, software, genetics, services, etc has been already involved in setting up marine and land-based sites for salmonids, having track record of sales in Murmansk, Karelia and other Russian regions. 2

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Russian seafood market overview

Total market fish & seafood volume 1,9 4,6 Mln t Mln t Import 2,7 Export 0,56 Mln t 0,17 2,7 Catch Aquaculture 3,90 Internal market

Actual consumption

146,5 18,7 kg/year Mln people 2,7 Per capita Mln t Population of RF Consumption Plans: 22-24 kg/year volume Fish & seafood consumption 3

Fish consumption potential in Russia

Population: 146,5 mln people

Kg/capita/annum

Recommended Recent Deficit Russian Market consumption volume 3,3 - 5,3 deficit 22-24 18,7 460-780 MT

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World aquaculture

Region/Country Production volume, Aquaculture species thousand tons

Asia 93 000 Carp, tilapia, fresh water catfish, crustaceans, shellfish, seaweed

North and South America 3 350 Salmonids (Chili), crustaceans

Europe 2 930 Salmon (Norway, UK), carp, shellfish (Spain, France)

Africa 1 710 Tilapia

Russia 232 Carp, white fish, salmonids, sturgeon

Pacific countries 189 Shellfish, salmonids, sturgeon

Aquaculture market size in Russia

700 Real production volumes, thousand tons

205,3 219,7 232 170,2 186 188,6 177,9 131,7 142 143,4 152,9 78,2 86,7 105,2

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2030

The Russian Federation is not yet one of the global leaders in aquaculture. However, growth rates of 10 %-15 % demonstrated in recent years inspires optimism.

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Aquaculture water resources in use and available

> 3 600 fish farming sites are in use

23% 76,0

229,2

North-West region Far East Central region

22,4 124,6 8,5 42,1 Southern region

155,6

91,6 Siberia North Caucases Volga region Urals region 31,5 1,3 79,8 17,2 20,5 27,2

258,3 1 104,1 7

Aquaculture situation in Russia

Production volume 2018 0,2 mln t Growth 5,6% 2018

However, production volumes increased threefold since 2000!

Large water Consumers resource bank 145 mln people but Old or simple but + + technology not big choice of Low fish water sites consumption for aquaculture

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Market structure, by fish species

Farmed fish species market share

65% 25% 4% 2% 9%

Carp Salmonids Invertebrates sturgeon other

Production of Carp Production of salmonids 2018 Thousand tons Thousand tons

Southern District; 58 North-West District; 58,7

Others; 16 Central North District; 22 Caucases, 16 Siberia, 2,7 Siberia,

Urals; 0,33

North-Caucases & South; 1,3

Market structure, by farm size Aquaculture farms structure, by production volume

67% 19% 12% 2%

<50 t/annum 50-100 t/annum 101-1000 t/annum >1000 t/annum

Farms sizes, by production volumes

3,2 thousand farms 8,20% 0,90% 8,80% in total 26,80%

20,10% 35,20%

13,2 thousand employees in the sector < 1 t 1-10 t 11-50 t 51-100 t 101-1000 t 1000+ t

The goal: fish farms of industrial types have to occupy 40% of the Russian market by 2030. 10

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Market structure, by production volume

o Over 71 % of farmed fish was produced by pond and pasture aquaculture farms (the farms with low technical resources )

o Industrial aquaculture is represented by fishpond Fishpond farms, 23%, farms, mariculture and RAS.

o Industrial aquaculture keeps 29 % of the total production: Mariculture farms, 5%  23 % out of it is produced by fishpond farms

RAS, 1% Pond and pasture aquaculture,  5 % by mariculture of invertebrates and 71% macrophytes  Only 1 % of farmed fish is produced on basin farms

Aquaculture production: by regions

North-West, Far East, 13,000 t+ 59,500 t +34 % +21 % Central,34,500 t Urals: 10,000 t +1,2 % +15,5 % Siberia: 6,600 t

Volga:14,100 t South,78,600 t

North-Caucasus, 18,900 t

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North-West Federal District

o North-West Federal District includes 11 subjects of Russian Federation:  Arkhangelsk, Vologda, Kaliningrad, Karelia, Komi, Leningrad region, Murmansk, Nenets district, Novgorod, Pskov, St. Petersburg

o Population: 14,5 mln people o Fresh water fund: 63 000 lakes and 27 000 rivers. This is 5,5 mln hectars of water area. Largest lakes which are also the largest in Europe: Ladoga, Onega, Pskov-Chud and Ilmen. Access to seas of Arctic and Atlantic oceans. Coast line 630 km. Fish species, 2018

o 369 water sites (21 000 hectar) are in use out of 422 sites available (25 000 hectar) in total. o Entire region produce 88% of all industrial salmonids aquaculture in the country and 65% of other fish species. Karelia produces 90% of all trout in Russia. 28% o Production volumes 2018: 59,500 t. (+41% from 2017) Plans 2020: 149,000 t o NWFD aquaculture specialization: salmonids, white fish (Coregonidae). 11% 61% Fish production 2018, 1000 t

others; Murman 1,5; 2 % sk Leningra region; Carp others Salmonids d region; 21,4; 36 9,4; 16 % % State support of NWFD 2017: 83,5 mln Rub

Karelia Republic ; 27,2; 13 46 %

North-West Federal District Leningrad region

• Leningrad region is one of the leading in commercial aquaculture. All types of fish farming activities: lake- pond cages, cold water industrial farming (cages), warm water cage farming (waters from heating plants), pasture, RAS. • 42 fish farms in total are operating in Leningrad region, including 7 state owned and private hatcheries. • Production volumes: 9 400 tons (+6% from 2017). Plan 2020 – 11 000 t, 2030 – 20 000 t. • Leningrad region aquaculture makes 16% of the total NW District production • 95% Rainbow trout. 5% - Other species: sturgeon (in warm water), carp, white fish, whiteleg shrimp • Leningrad region investors are interested in RAS aquaculture the most. Main fish species: rainbow trout (97%), the rest re white fish, frdh water catfish, nelma (Stenodus leucichthys), Lake char (Salvelinus lepechini), pike. • New opportunity: first 4 water sites (286 hectar) in Gulf of Finland waters are provided for fish farming. • 11 biggest fish farmed enterprises:

 «Rybstandard» www.interatlantic.ru (trout, carp, sturgeon, fish fry)  Trout farm «Kuzntchnoe» www.kuznechnoe.ru – trout, whitefish, sturgeon  «Econ» – 500 t of trout  «Forvat» LLC – trout and muksun  «Gavan» - 26 cages (551 tons of trout)  «SHP Salma» - trout, whitefish  «Primorskoe»\ «Laplandia» www.laplandia.spb.ru trout  «Fish Federation farms» - warm water fish farming sturgeon www.fish-rf-com  «CapshOzero» - Sturgeon  Federal fish farming center «Ropscha» - trout  «Neva» LLC – trout www.forelushka.ru «Northern Shrimp»LLC – whilteleg shrimp, 20 t/2019. Plan 2021: 200 t/annum

14 • Federal Selection and Genetic Center of Fish Breeding «ROPSHA»

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North-West Federal District Murmansk region • 17 fish enterprises farm atlantic salmon, trout, sturgeon in the region.  Farmed fish volume 2018 in the region: 21,300 t (+56% from year 2017)  3 bln Rubles of State financial support in 2018 to fish farmers have been received by 2 large farms out of 17 existing. • Russian aquaculture www.rusaquaculture.ru is the biggest farmer of Atlantic salmon in commercial volumes in the region as well as the largest in Russia.  Production of salmon in Barents and White seas, and trout in Karelia. Production volume 2018: 16,000 t/annum.  The company use Norwegian farming, packing technology, equipment as well as wellboat, smolt, feed and veterinary services.  Long term contracts for fish feed and smolt with Norway.  2 smolt plants (Villa Smolt AS and Olden Oppdrettsanlegg AS) were aquared in Norway in 2017  «Russian aquaculture» plans to built a smolt factory with capacity 4 mln units in Murmansk region to cover internal needs in salmon smolt (as there is still no market for salmon smolt in Russia). Project cost: 1,5-4 bln Rub.  Investment to Norway during 2010-2018: 1,2 bln NOK BLK-Fish LLC Plan of investment to Norway in 2019-2020: 600 mln NOK

 In 2015 Russian aquaculture and former second biggest aquaculture farm “Russky Losos” www.rusalmon.ru had negative experience and a big loss due to mass mortality of salmon in cages due to mycobacteriosis. https://youtu.be/LD3dIhC6mJA “Russky Losos” is a bankrupt now. However, it tries to recover salmon farming activity in the region.

• BLK-Fish LLC is the unique aquafarm in the world , which is growing sturgeon in Arctic region, based on warm waters from Kola nuclear station. Production BLK-Fish LLC, Murmansk region volume – 100 t of sturgeon/annum 15

North-West Federal District Karelia Republic o Karelia Republic – key region for trout farming in Russia

• 85% of all trout is produced in Karelia Republic • 67 fish farming enterprises produce 28 000 t of delicacy fish, using water sites of 54 water reservoirs. Production plan: 35 000 t/annum by 2025.  53 enterprises (out of 67 existing) are members of Karelian Association of Trout farmers, and 1 enterprise is specialized in mariculture.  14 out 67 existing enterprises are fish processing companies • Karelia Republic depends on import of genetic material due to the lack of enough production volumes and quality of it on the local market. • Government will support 2 new genetic projects:  commercial Genetic Center and the Hatchery together with French investor and supplier of genetic material - the company Vivers. KarelProductswill participate in the project from the Russian side.  State owned Hatchery on the bases of existing fish farm which is a part of state owned group of fish fry enterprises “GlavRybVod”. Project cost: 900 mln Rub. 100% State financing. Construction period: 2019-2020. • 4 RAS smolt hatcheries: Russian sea-Aquaculture LLC, KalamagiLLC, VechernyBriz LLC, VirtaLtd. • Strong dependence on imported fish feed. Local feed producers guarantee only 10% of sector needs (Karel fish factories – Feed LLC www.karelian-fish.ru . Construction of new fish feed factory as a joint venture with foreign partner (KOPK LLC) • Industrial cage aquaculture is prevailing in large lakes (Ladoga, Onega) as well as in medium size lakes and also rivers. White sea coast line has a potential for cage farming also. • Big interest to farm shelfish in White Sea • Karelia aquaculture has main key factors for development: trout demand, clean water of suitable temperature, technologies and expertise. • Deficit of natural water areas for substantial aquaculture growth. Potential for RAS farms. 16

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North-West Federal District Vologda region

o Vologda- perspective aquaculture region • 12 fish farms are registered. 7 of them are already operative. 4 years ago there only 1 farm in the region. • Water resources suitable for aquaculture: 4 large lakes, 5 water reservoirs, 4820 smaller lakes. • 16 water sites are provided for aquaculture activities. • Production volumes 2018: 174 t (growth 63% from year 2016) • Plan 2020 – 1 000 t/annum • Vologda is the biggest supplier of black caviar in Russia. • Fish species: carp, freshwater catfish (Clarias gariepinus), rainbow trout, sturgeon. Vologda produces black caviar. • State investment in Vologda region aquaculture sector: 158 mln Rub 2018-2019 Sturgeon farm “RTF DIANA”

• Public-private Investment projects with State support:  Investor: Aquaproduct LLC. – Salmon farm (RAS); Project delivery: 2020-2024 Investment volume: 1,7 bln Rub Israelian technology and equipment

 Investor: Vologda Sturgeon company LLC - Sturgeon hatchery 1st module (RAS) Capacity – 67 t of brood stock ; Project delivery: 2015-2025 Investment volume: 520 mln Rub

• AquaBioCenter Hatchery and genetic farm for tilapia and africal catfish was opened in March 2019

• Large aquaculture farms:

 «RTF «Diana» LLC- 20 years old. Producer of black caviar www.rtf-diana.ru  «SPH «Chistoje Ozero» LLC – rainbow trout  «Aquacultura» LLC – Catfish 100 t, rainbow trout 1000 t white fish 200 t 17  «Imid – Aquaculture» LLC – supplier of cages and other fish farming equipment

North-West Federal District Komi Republic

• Aquaculture in Komi is not well developed. • Potential water resources:

 3 500 rivers (biggest Pechora and Mezen) with the total length 90 000 km  Lake system of the total area 46 000 hectar

• Production volumes 2018: 5 t (350 t in 2013, 100 t in 2017) due to bancrupcy of main fish farms. Radical decrease in fish production is due to reconstruction of dam, which led to mortality of fish in most fish farms because of water level drop. 80 t of trout died. Lukoil oil & gas company operating in Komi will finance hatching of 3,4 mln of whitefish (Coregonidae) and grayling.

• 7 water sites were in use. • 31 enterprise has received state support for aquaculture activities development. • RAS is perspective. Recently RAS is only 1% of the total production volume.

• 7 Fish farms operative:

 “Nuvchim” LLC, “Kazhym” LLC, “Izvailsky-97” LLC, “RK Aquamarin “LLC, “Pechora”, “Belouje Ozero” LLC, “Juzhnoje” LLC  as well as a state owned hatchery Glavrybvod Komi.

 RAS fish hatchery “RK Bioresurs” LLC farming trout fish fry using fish farm facility belonged Heating Power plant “Sosnovsky”, producing 2,5 mln of trout fish fry annually. Demanded volumes for recreation purposes -10-15 mln fish fry.

In 2018 “RK BioResurs” (using warm water from Heating Power Plant) were reconstructed. Plan to produce 40 t of salmonids and 25t of sturgeon. Production plan 2019 – 20 t of trout. The project cost- 20 mln Rub. State budget invested 6 mln, private investors including Lukoil-Komi and RN-Severnaya neft financed the rest amount.

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North-West Federal District Kaliningrad region

• Kaliningrad region has a dense network of water resources. Most of rivers are small: 6 rivers have a length of more than 100 km. 230 thousand hectars are occupied by water reservoirs of various types. Rivers belong to Baltic Sea basin. Largest rivers – Neman and Pregol, outflowing to Baltic Sea, which is ice-free during winter time.

• 38 lakes of a total area of 10 hectar. The biggest lake is Wystiter covers the area 18 sq. km. And 4 000 of small lakes of the total area 3000 hectar.

• Fresh water fish farming specialization

• The region is oriented mostly on fish farming of carp, trout, white fish (Coregonidae), sturgeon, pike.

• Good potential of warm water aquaculture development using warm waters from Heating station and RAS for farming freshwater catfish, tilapia etc.

• Fish farms:

• Kaliningrad Center “Aquaculture” – industrial fish farming: sturgeon, trout • Private farm «Smirnov E.V.» - pond aquaculture: carp, grass carp, silver carp • State owned hatchery «ZapBaltRybvod» - whitefish and pike

North-West Federal District Arkhangelsk region

o n 2017, water bodies were surveyed for their further use for commercial fish farming (aquaculture). Research work was carried out in 3 municipal districts of the region (Primorsky, Kholmogory, Onega districts). Next year, this work will continue in other municipal areas of the Arkhangelsk region. • 8 fish farms are operative.

• Total production volume – 111 t (+15% from 2017)

• Production forecast 2019- 150 t

• 2 Reproduction hatcheries. Total production volumes 303 000 salmonids fish fry. Potential hatching volumes: 6 mln fish fry.

• Region is perspective for farming salmonids.

Fish farming structure, tons

carp, 4t 4 State support in 2018: % 3,7 mln Rub for industrial fish farming trout, 107t, 96 %

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North-West Federal District Novgorod region

• Land locked area with thousand of lakes. The biggest lake is ILMEN.

• Industrial and RAS aquaculture are the most perspective for development in the region

• Fish farming volumes (2017) – 808 t

• 14 fish farms are registered. • The most known are:

 RIF LLC- trout, whitfish  Vozrozhdenije-S Ltd, carp  Zhyvaja ryba North-West LLC - trout  Vetvenik Ltd - trout  Agropromresurs LLC – trout  Rybnaya ferma LLC – trout  Krasny Rybak Kolkhoz - carp

• Investment projects in the region:

• Rainbow trout industrial farm

 «Finnforel» will invest $80 mln in construction of rainbow trout farm in Novgorod with production capacity – 5 000 t. Investor consider water sites for the farm in the Novgorod region.

• Fish Feed factory

 Finnish investor «Aii Corporation OY» www.aii.fi will invest $50 mln in construction of feed factory.

North-West Federal District NAO and Pskov region

o Pskov region o Nenets autonomous district (NAO)

• Region is washed by waters of White sea, o 3500 lakes and 700 rivers. Chudskoye Barents and Kara seas with the coast line 3 000 km Lake is the second biggest in Europe. o Fish farming volume 2017: 359 t • Fresh water lakes of the total area 1 mln hectar, 1542 rivers with length 26624 km o Trout production potential + 800 t of • 64 water bioresources- 27 items are fishing. commercial volume of trout/annum NAO o 31 fish farms are operative (2017) on • NAO is traditionally a fishing area for salmonids, char 43 water sites. and whitefish (Coregonidae). o Industrial trout farms: • 7 fishing kolkhozes associated in the Union  “Trout farm” LLC, “Vetvenik” Ltd, «Nenetsky RybakKolkhozSojuz» are annually fishing “Agropromresurs” LLC, “Rybnaya 14 900 t ferma” LLC, “Vyrva” LLC

• Pond farm farming carp and whitefish: • Aquaculture is not developed in the region so far.  “Kolkhoz Krasny Rybak”Krasny rybak – using 500 hectar of water areas (ponds) • However, perspectives for RAS and marine and having own fish processing factory aquaculture are good, first of all for reproduction “VeRibProm” www.velribprom.ru purposes, as well as mariculture (shellfish and seaweed) are good. • RAS farms are also operative in the region • Good conditions for warm water • Regional government has a plan to construct a fish aquaculture using Heating station hatchery for 5 mln fish fry/annum of whitefish warm water (Coregonidae). Project cost: >9,7 mln RUB. Return of investment: 1,5 years 22

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Central Federal District

o Central Federal District (CFD) includes 18 regions: Moscow and Moscow region, Belgorod, Briansk, Vladimir, Voronezh, Ivanov, Kaluga, Kostroma, Kursk, Lipetsk, Orlov, Ryazan, Smolensk, Tambov, Tver, Tula, Yaroslavl.

• It’s the most crowded Russain District. Population: 37 mln people

• CFD has the smallest water fund for fishery activities, which includes fresh water reservoirs: Uglich, Ivankov, partially Rybinsk and Gorky. Large rivers of CFD (with tributaries): Volga (Oka), Don (Voronezh), Dnepr (Desna, Seim), Western Dvina. No access to the sea.

• CFD ranks first in the country in terms of polluted wastewaters in rivers. Water quality in almost all water bodies of Volga river basin does not meet regulatory requirements. Fish catch is insignificant: about 2% of the all-Russia catching volumes in inland freshwaters, which is around 2-2,5 thousand tons.

• 1/3 of catch is bream, 8% - pike perch, 80% - blue bream (Abramis ballerus), roach (Rutilus rutilus), sabrefish (Pelecus cultratus), pike (Esox Lucius), dogfish (Lota maculota).

• Total fish farmed volume 2018: 34 500 t (+1,2%) ; 2 500 t of salmonids were produced in 2018.

• 145 farms are so registered. Most of them are specialised in pasture and pond aquaculture (carp). Industiral fish farms on warm waters are few in the list.

• High cost of Land, water sites along with high market demand for delicacy fish items forced farmers and investors to switch from carp to delicacy fish items: trout, sturgeon in RAS systems.

Central Federal District Kaluga region

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Volga Federal District

o Volga Federal District includes 14 regions: Kirovsk, Nizhny Novgorod, Orenburg, Pensa, Samara, Saratov, Ulyjanovsk, Perm, Bashkortostan Republic, Mariy El, Mordovia, Tatarstan, Udmurtiya, Chuvash Republic. • Population: 29 mln people. Largest city in the District: Nizhny Novgorod • Main fishery water resource is Volga river, in the basin of which several hydroelectric power plants were built along with a number of artificial water reservoirs: Kuibushev, Saratov, Cheboksary, Gorky, Nizhnekamsk and others, that became the basis of the fishing fund of the entire District. • These artificial water reservoirs accounts for more than ¼ of the total area of all –Russia water resources. Unfortunately, water there is highly polluted. • Volga Federal District has NO access to the sea.

• Samara, Saratov, Penza regions, Tatarstan and Mordovia Republics are regions, where Aquaculture is selected as a priority area of based on water resources of Volga-Kama Reservoir basin of the total water area 1,3 mln hectar.

• Fish farming volume of VFD is on the level of 14 100 thousand tons. • 8 Hatcheries in the District

o Saratov and Penza regions are leading in the region in production volumes of farmed fish items: carp, trout, sturgeon. st th o Saratov region: the 1 in VFD and the 9 in Russia in production volumes of farmed fish. More then 290 fish farms operate 691 ponds of the total square 7 300 hectar and produce 5000 t of carp, trout and sturgeon. Pond and industrial aquaculture types only. 11 hatcheries produce 200 t of carp, trout and sturgeon juveniles. Local Feed factory “Agroresurs” produce 2,5 t of feed per day. New fish feed factory will be soon operative with production capacity 4 t/day

• Penza region: the 2nd in VFD. 122 farms operate 800 ponds as well as water sites in artificial water reservoirs and produce 2 500 t of carp family fish items. More 155 water sites will be operative in 2019.

• Bashkortastan Republic 4 farms produce about 2 000 t. 375 ponds (7000 hectar) with potential production capacity 5000 t are used 10% only. State subsidiary 2018- 22 mln Rub.  is the oldest and biggest industrial fish farm in Bashortostan. Production volumes: carp- «Karmanovsky rybkhoz» www.bashfish.ru 25 600 t, sturgeon- 100 t, trout- 50 t.

Volga Federal District Tatarstan Republic (TR) • Population 3,9 mln

• Tatarstan is the most investment-attractive regions of Russia • Aquaculture has just started its development in 2016. • Programme of aquaculture development anticipates modernisation of fish farms infrastructure in order to increase their capacity up to 600 tonnes of farmed fish per year. • Plan to establish 19 new fish farms and to use 783 ponds. The project is estimated at 1 bln Rub. • 5 trout hatcheries are in the plan of construction.

• Norwegian company Noras WatertechAS together with the local partner will invest in the construction of RAS atlantic salmon and trout farm in Tatarstan.

• Production volumes -3 000 tons of salmon with the potential to grow up to 10 000 t.

• NORAS Watertech AS and local partner the Technopark “Idea” in the fall 2017 signed a pre-investment agreement on construction of RAS salmon fish farm with 3 000 t/annum production capacity with the potential increase up to 10 000 tons.

• Project budget – 30 mln EURO.

• The farm will be located on the territory of a special economic zone, so-called Priority Economic Social &Development Area (PSEDA*) in the city Naberezhnyje Zhelny.

• As noted, in the fall of 2018, the project will involve other Norwegian suppliers and different research institutes.

* PSEDA (Priority Social & Economic Development Area) provides to project investors, as to residents of this territory, irrevocable financial aid, 10- 40% tax reduction for 10-15 years, income tax only 5% (instead of 17%) in first 5 years time, property tax is 0%, customs duty 0% as well as significant 26 reduction of other state charges.

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Volga Federal District Tatarstan Republic (TR)

• New investment project: Sturgeon and Trout fish farm/hatchery www.biosfera-fish.ru • Type of the farm : RAS • Investor: «BIOSPHERA-FISH» LLC

st o Project budget: 1 phase – 200 mln RUB o Total project cost: 625 mln Rub

• 2018 construction of the first phase of the large fish farm • Project investment of the first phase – 200 mln RUB

• Production capacity:  5 mln of starlet (Acipenser ruthenus) juveniles (1-10 g)  1 mln of trout juveniles (10-50 g)  50 tons of commercial fish – sturgeon

o Genetic material (sturgeon) will be provided by Astrakhan region

Siberian Federal District

• Siberian Federal District includes 9 regions: Altai region, Irkutsk region, Kemerovo region, Khakassia Republic, Krasnoyarsk region, Novosibirsk region, Omsk region, Tomsk region, Tuva Republic

• Population: 17,3 mln people. • Novosibirsk is the administrative center of the SFD, which is the largest in the Asian part of Russia. • North part of it (Krasnoyarsk region) is washed by waters of Arctic Ocean. Large freshwater fund of the total area of more than 7,3 mln hectar. • The variety of climate allows developing both coldwater aquaculture (whitefish (Coregonidae) and salmonids) and the one based on geothermal warm water (carp, sturgeon). • Fish farmed volume 2018: 6 600 t (2,7 thousand t of salmonids) • Pasture aquaculture type is prevailing. RAS is developing.

o Novosibirsk region - 5 industrial fish farms. • Altai region – recent production volume: 400 t. Potential: 2,5 thousand tons.  700 Lakes and ponds suitable for aquaculture with production potential 2,5 thousand tons. Only 15-20% are in use.  110 fish farming sites are so far provided by regional authotiries. 77 are in use. o Irkutsk region –Baikal fish LLC- pond farm (carp species), Irkutsk trout LLC – cage farming, Eridan LLC o Khakassia Republic - 18 lakes are used for fish farming: Biggest lake “Chernoye” of the total area 800 hectar.  Water resources are suitable for carp species and white fish (Coregonidae). Production volume 2018: 870 t.  13 pasture farms (carp species) produced 117 t, 5 cage farms produced 110 t of fish.  “Sayansk trout” LLC - Cage trout farm (production volume 640 t in 2018) o Krasnoyarsk – 6 industrial fish farms – sturgeon, salmonids, coregonidae, carp. Production 2,5 thousand tons. Potential – 7 thousand tons o Omsk – 84 water sites are operative . 50 farms: carp, salmon, sturgeon, white fish. Production volume – 60 t/annum o Tomsk- 70 ton, 24 fish farm. o Tuva Republic- aquaculture is not developed. First RAS hatchery was opened in 2017 (sturgeon juveniles) 28

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Siberian Federal District

o Kemerovo region – the biggest industrial area for coal mining. o Pollution from coal dust is a serious hazard in Kuzbass (Kuznetsk basin). 94% of water sources in the region are polluted. Kuzbass is known as the region of black snowfall. • 67 water sites are operative for fish farming. • 37 pasture farms, 6 cage farms, 1 industrial RAS farm • 2018 production volume- 1,2 thousand tons • Regional demand in salmonids – 100-150 thousand tons/year

• “Belovskoje fish farm” – the oldest and biggest in the region commercial cage farm and hatchery  Carp species, catfish, trout, sturgeon

• “Siberian Investment Group” (SIG) trout farm (RAS type) in Yugra (Kemerovo region) www.sigtfm.ru  Total capacity 2000 t of rainbow trout. Investment budget: 900 mln Rub/first year. Total investment: 1,7 bln Rub  Fist production module for 1 000 t of fish is active.  Plan 2020: construction of fish feed factory (5 000 t).  Expected revenue – 500 mln/annum, expected profit – 170 mln Rub  “SIG” plans to built similar RAS farm in Novokuznetsk.

Ural Federal District

o Ural Federal District includes 6 regions: Kurgan, Sverdlov, Tumen, Khanty-Mansiysk, Chelyabinsk, Yamalo-Nenets.

o 2018 Production volume 10 000 t (+15,5%), including 330 t of salmonids o Tumen region  Water fund available for aquaculture – 235 thousand hectar. 62 thousand hectar are in use so far (190 aquaculture sites).  78 fish farms produce 3000 t (+40% from 2017) carp, pike, peled, sturgeon  Aquaculture type: 92% pasture in local lakes.  “Sladkovsky fish farm” – is the biggest in the region RAS and pasture farm ( peled, sturgeon, tilapia), operating 22 water sites in total 16 000 hectar. Enterprise has the own fish processing factory. Production volume- 1500 t  See video: https://ядоверяю.рф/mediapasport/selskoe-khozyaystvo/ooo-sladkovskoe-tovarnoe-rybovodcheskoe-khozyaystvo/

 Sverdlovsk region  Region has good potential to restore former strenth of warm water aquaculture. Most squares of fish cages (41 200 m2 in total), and RAS basins (6000 m2) are not is use now. Profitability of existing fish farms are low. 12 cage farms (lake aquaculture) produce sturgeon, carp, catfish, trout.

o Khanty-Mansiysk- Yugra region  300 lakes and rivers with the length more then 100 thousand km  2,5 thousand fish farming sites  Aquaculture is not developed.  Fishing is traditional activity in the region- 170 enterprises are operative.  Khanty-Mansiysk-Yugra oil / gas companies operative in the region are investing annually about 140 mln Rubles for recreational fish farming operated by few hatcheries in the region.  «Yugra fish farm» www.ugrafish.ru is the biggest hatchery of sturgeon and whitefish in the region: 52 mln fish fry produced in 2018

o Cheliabinsk region  200 hectar of lakes are in use (out of 400 hectar available). 210 mln fish fry were released into lakes in 2017  230 fish farming sites are available. 186 are in use for pasture aquaculture. 30  55 farms are operative in the region (pasture, lake and warm water farms)

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Ural Federal District Yamalo-Nenets region

• Yamalo-Nenets region is on the leading places in Russia for hydrocarbon reserves, especially natural oil and gas. Today, Yamal produces about 90% of all natural gas in Russia. According to current legislation, Oil & Gas companies as main polluters pay to compensate for the damage they cause to the regional water resources. They invest into production of fish juveniles which are in a danger because of companies activities in the region. • The region’s water resources are rich and diverse: the coast of the Kara Sea, numerous bays, rivers, lakes, and underground waters. Ob Bay is one of the largest sea bays in the Russian Arctic. There are about 300 thousand lakes and 48 thousand rivers, the largest are the Ob, Nadym, Taz, and Pur rivers. • The climate: a long winter (up to 8 months), short summer, strong winds, a small amount of snow cover. The average annual air temperature is negative, in the Far North it reaches minus 10 degrees Celsius. The minimum temperature in winter drops to minus 55 degrees Celsius, in summer - up to plus 30 degrees Celsius. RAS aquaculture type is the most perspective in the region. • Aquaculture is a young activity in Yamalo-Nenets region. Local government plans to develop aquaculture on the bases of arctic lakes, which is absolutely new experience in Russia. • 10 fish farming sites of the total square 3,5 thousand hectar are provided.

• “ Sobsky fish Farm” – the first Arctic large hatchery for valuable endangered fish species: peled (Coregonus peled), muksun (Coregonus muksun), broad whitefish (Coregonus nasus) was built in the village Khapr on the river Sob.

 In March 2017 regional government and oil & gas company NOVATEK* invested 900 mln RUB in the construction of a this fish farm which is hatching now 32 mln juveniles.  RAS technology and equipment is provided by the Norwegian company Aqua Optima.  By the end of 2019 Sobsky fish farm will start harvesting commercial weight of farmed trout. • Second large fish farm/hatchery of the same kind and size will be built on the shore of the river TAZ. 31

Ural Federal District

Sobsky fish farm, Kharp, Yamalo-Nenets region

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Southern Federal District o Southern Federal District includes 8 region: Astrakhan, Adygea Republic, Volgograd, Kalmykia, Krasnodar, Rostov, Sevastopol, Crimea. • Production volumes of SFD: 78,6 thousand tons • District has access to Black and Azov seas. Russian coast line is 1200 km. 40 marine farms are established during last 2 years. • The main fishery freshwater zones are located on delta of rivers approaching the Black, Azov and Caspian Seas. Water quality there is very low. Delta of Volga river water condition is on the edge of environmental disaster. Waters of the river Don basin are recognized as «extremely dirty» due to high concentration of mercury compounds, which exceeds 4-15 times of maximum permitted levels. Nevertheless, this region shows high catching volumes of fish.

• More than 35% of all farmed seafood in the country is produced in the Russian South, including the Crimean Peninsula, Krasnodarsky Krai, Rostov, and Astrakhan regions focusing primarily on sturgeon, halibut, carp and trout. 43% of all-Russia fish farming enterprises are located in SFD.

• SFD has the most favourable climate conditions for commercial aquaculture: pasture farms in pond, lakes, salt water lagoons; warm water industrial farms, trout farming in piedmont areas. • Production volumes 2018: 78 600 t of farmed fish: carp, herbivorous fishes, trout, sturgeon, paddlefish (Polyodont spathula), African catfish (Clarias gariepinus) • Russia produces more than 60 000 t of fresh water fish. Most part of it are farmed in Rostov and Krasnodar regions.

• Rostov region has access to Azov sea. Main river- Don. Production volumes 27 thousand tons. 332 water sites on waters of Don river (25 500 hectar) are in use . 127 mln rubles of state support was received in 2014-2018. Enterprises are mostly small, but there are also bigger farms with capacity 500-1000t+/per annum.  “Rybkolkhoz Abramova” LLC – 4 500 t/year of commercial fish: carp. Pond type farm. • Crimea Republic has 64 thousand hectar of salt water area and 40,5 thousand hectar of fresh water lakes and water reservoirs, suitable for shellfish farming and fish species: mullet, flatfish, turbo etc, as well as traditional pasture fish items like carp. 72 farms produce 700 t/annum of mussels and 400 t/annum of oysters. Plan- to farm about 1 mln pieces of oysters on 8 sea water sites, which are additionally provided (540 hectar) in 2018. Shellfish farms need low-tonnage ships! • Sevastopol: production of shellfish is 76 t. • Volgograd region: fish catching volume- 5-6 thousand tons annually (catch in water reservoirs and ponds). 5 fish farms of pacture type. • Adygea Republic: Aquaculture is not a priority in the region. However, regional government is investing in recovery and reconstruction of formerly large farm/hatchery which for 8 years has been not operative due to bancrupsy. Total budget of recovery: 3 bln Rub. Production capacity of renewed factory: 12 mln fish fry (herbivorous and sturgeon). 30 ponds will be soon in use. 33 • Kalmykia Republic – aquaculture is not a priority area. Region has the access to Kaspian sea and specializes in catching fish. However, there are 7 water sites (ponds, lakes) are provided (8 000 hectar).

Southern Federal District Astrakhan region

• Astrakhan region specialization: reproduction and commercial farming of sturgeon species and common fresh water fish. • Production volumes 23,3 thousand tons. • 27 farms produce 1000 t of sturgeon, 15 t of black caviar. • Astrakhan region Aquaculture & Fishery Cluster since 2013: 46 members (fish farms, hatcheries, fishery and processing companies).  Cluster aquaculture members are specialized in farming sturgeon, freshwater catfishm pike perch, tropical crustaceans.  Steering company of the Cluster: “Astrakhan Rybkhoz”  Pasture aquaculture in ponds is prevailing in Association. Pasture activity in Astrakhan – is seasonal business. Lack of processing facilities, strong sales competition with farms of the same activities, problems in keeping the fish in ponds in winter time makes it reasonable to switch from pasture type to RAS technology. • Industrial cage farming of sturgeon species is developing in the region. Plan – to start RAS farm for breeding tilapia.

• Largest industrial sturgeon farm and hatchery “ARK “Beluga” LLC is the leading aquaculture sturgeon farm in the region (16 years old). Total area of cages in use: 20 000 m2. Brood stock of sturgeon species: 5000 heads of the most valuable species: beluga (Huso huso), sturgeon (Acipenser), sevruga/starred sturgeon (Acipenser stellatus), starlet (Acipenser ruthenus) and the most rare sturgeon specie- Bastard sturgeon (Acipenser nudiventis). Commercial herd- 150 000 heads. Some samples have the weight of about 270 kg. Caspian Beluga herd – 25% of the total production volume. Production volumes: 350 t of commercial sturgeon meat/annum, 5 t of black caviar/annum

• “Russkaya ikra” LLC www.russkaya-ikra.ru • “RK “Raskat” LLC - Fish farm and reproduction complex www.en.raskat-caviar.com • State owned association of hatcheries “Glavrybvod” has 6 farms for sturgeon juveniles in Astrakhan region. 34

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Southern Federal District Krasnodar region

• Krasnodar region has access to Black and Azov seas. Coastal like – 1200 km. Largest river in the region-Kuban.  Water area used for aquaculture includes: 20 thousand hectar of lakes and ponds, and 65 thousand hectar of channels. • Total area of hatcheries- 3,5 thousand hectar. • 30 thousand hectar of salt water lagoons are available for pasture fish farming. • 38 fish farms in the region produce 20 000 t of fish (mostly pasture) • Latest trend in Krasnodar region – the development of mariculture in waters of Black and Azov seas.

• Large JSC « Breeding trout farm ADLER» AO www.forelevoe-hozyaistvo.ru has been operative since 1964 in Sochi in mountain river. «ADLER» has the largest genetic fund for all possible trout species. The farm produces fish fry and the commercial weight up to 4,5 kg.

• New trout farm with be soon operative in 2020 with production capacity 450 t and 5 t of caviar + processing factory

• «Sea garden» LLC will start farming musses and sturgeon in Tuapse municipality of Krasnodar region in 2020.  3 Black sea water sites ( are provided Production volume of mussels – 330 t, sturgeon – 16 t. Project busget: 60 mln rub  Sea garden will be the biggest shellfish farm in Krasndar region by 2022. Recent production volume of shellfish in the region is 130 t in total/annum.

North-Caucasian Federal District (NCFD)

• North-Caucasian Federa District includes 7 republics: Dagestan, Ingushetia, Kabardino- Balkaria, Karachaevo-Cherkessia, North Osetia (Alania), Stavropol krai, Chechnia • Population: 9,8 mln people • Climate conditions of the District are favourable for aquaculture development using warm waters of heating plants and mountain lakes for trout farming. • Main rivers: Kuban, Don, Kura, Terek. IN mountain area there are artificial irrigation channels. Large resources of mineral waters. • Aquaculture volume 2018: 18,9 thousand t Potential : 24,4 thousand t • 114 enterprises are registered in the region (3 000 employees)

o Stavropol region – 39 000 hectar are available for aquaculture development.  Production volume 2018: 10 t/annum including 1,4 thousand t (15 mln fish fry which is mostly sturgeon and 1% of trout)  11 enterprises are specialized on carp species. Industrial farms produce catfish, sturgeon and trout.  2 Tribal enterprises: SPK “Stavropolsky” (carp and herbivorous) and “Forelevoe” (trout)

 11 farms altogether produce 1000+ t fish (mostly carp)  Breeding trout aquafarm “Forelevoe” www.forelevoe.ru – 80 years old enterprise, Prod volume: 100 t fish. 3 mln fish fry/annum  Kazak fish trout farm  IP «Churin»  Southern Fish farmers association  Fish farm “Triton-Atlaua LLC” (pasture type) is constructing fish processing factory/ Fish collagen 1 000 t/annum/ Investment volume: 260 mln Rub. Stavropol aquaculture sector is poorly financed by the Federal Government. Regional Government invested only 4 mln Rub in Stavropol region. 36

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North-Caucasian Federal District (NCFD)

o Dagestan Republic is the leading fishery Republic in the District as it’s the only one subject of NCFD having access to Caspian Sea.

• Local investors are willing to invest into marine aquaculture in storm and wave resist fish farming cages for salmonids and sturgeon.

 Water basin of Caspian sea coast line of Dagestan has the production volume potential of 70 000 t of delicacy fish items/annum.  Neighboring Republics in the District are offered to develop industrial farms/hatcheries to supply smolt for Dagestan cage farms.  70 fish farming enterprises of different sizes are operative in Dagestan. Most of them are small.

• The most known farms:

 “Shyrokolsky fish factory” (pond aquaculture on the area 2,5 thousand hectar, 700 t of farmed fish, including 50 t of sturgeon and 2 t of black caviar)  “Niyaro LLC” – sturgeon farm on aquaculture squares 200 m2  “DagPIRH” Ltd – sturgeon farming in basins, production volume – 11 t.

• New projects:

 “SK-AQUA” is a new industrial aquaculture Investment project in Dagestan. Production capacity: 13,7 t of black caviar and 5,8 t of sturgeon meat. Project budget: 518 mln Rub.  + 4 more new farms are projected (industrial farming of trout and sturgeon). 37

Far East Federal District

o FEFD includes 11 regions: Kamchatka, Primorsky Krai, Khabarovsk and Amur regions, Jewish Autonomous Region, Magadan, Sakhalin, Yakutia, Chukotka, Transbaikal region, Buryat region. • Far East is the biggest Federal District of Russia occupying 40% of all territory of RF and having access to the sea. The administrative center is Vladivostok which is the second large city after Khabarovsk.

• FEFD has unique conditions for the development of mariculture of seafood. • Coast line water areas:  Sakhalin: 1.4 million hectare; Primorsky Krai: 376.5 thousand hectare , and Khabarovsk Region: 420 thousand hectare.

• 82% of all sea bioresources are concentrated in the Far East. 60% of all Russian fish catch is in FEFD.

• 1300 water sites (90 hectar) are in a plan of allocation for aquaculture purposes. • There are about 70 mariculture enterprises so far registered in the Far East, which are occupying 76 hectar of water area. 60 hectar are located in Promorsky Krai. 80 more hectar are available in FEFD.

• Traditional aquaculture seafood species: sea cucumber, mussels, oysters, scallops, sea urchin, kelp. Southern part of FEFD is the best area for shellfish aquaculture. The East part is the best for kelp farming. Sakhalin and Kuril Islands suits for salmonids farming.

• Number of fish and seafood farming enterprises:

 Primorsky Krai – 15 (shellfish, sea cucumber and kelp, fish hatcheries),  Khabarovsk Krai – 1 (industrial farm for sturgeon),  Buriat Republic - 2 (carp and peled), Amursky region- 1 (industrial fish),  Sakhalin and Kuril Islands- 51 salmon hatcheries producing 1 bln fish fry for reproduction of wild salmon resources (total all-Russia hatched volumes of salmonids fry is recently 9 bln pieces).  51 salmon hatcheries include: 40 private salmon hatcheries produce nearly 70% of all salmon smolt to compensate the catching volumes. The rest 30% of hatched volumes is produced by 11 State owned hatcheries. • Recent fish & seafood farming volume is 13,200 tons/annum (+38% from 2017). The plan is to increase production up to 17,400 tons until 2020.

• 1,2 bln USD are to be invested in mariculture projects within coming 5 years. The State Far East Fund together with banks, insurance companies are preparing a special financial offer for market players. 38

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Far East Federal District

• The annual catching volumes of wild salmonids in this region: 250-300 thousand tons annually. The catching season is August-September. Only 40 thousand tons of that catch approach the local market. The majority volumes of wild salmon are the subject of export to Asia. Sustainable salmon fishing and salmon smolt farming for reproduction purposes is the responsibility of the Russian government.

• In spite of the compensational measures by private and public farms, the disbalance between catching volumes and reproduction is still 74% for Pink salmon (Gorbusha), and 25% for some important salmonids like Chum/Dog salmon (Keta).

• Russian state has a goal by year 2030 to increase production of salmon smolt up to 12 bln pieces/annum by only state hatcheries. Plus volumes of private hatcheries.

o Sakhalin and Kuril Islands • In terms of salmonids reproduction plans of Russian officials, Sakhalin and Kuril Islands are considered as the one of few most crucial regions in Russia for foreign technology suppliers and investors.

• This region is specialized on hatching activities and shows the biggest farmed volumes in comparison with other Far East regions.

• 58% of all state investments into fish reproduction projects and the majority of private investors into fish farming are concentrated in Sakhalin region.

• South of Sakhalin is suitable for aquaculture of commercial salmon. Water sites for Pacific salmon farming will be offered soon. However, most of territories in Sakhalin are traditionally wild fish catching areas.

• Conflict of interests between catching companies and aquaculture investors. • 51 salmon hatcheries producing 1 bln fish fry of Pacific salmon (86 private and 11 state owned hatcheries).  40 private salmon hatcheries produce nearly 70% of all salmon smolt to compensate the catching volumes. The rest 30% of hatched volumes are 39 produced by 11 State owned hatcheries.

Far East Federal District

o Primorsky Krai has a great future for mariculture as well as in the ocean farming. It needs relevant technology, equipment and fleet available to realize such a great aquaculture potential. 80 000 hectars of water area in Primorsky Krai will be allocated for «sea gardens» which are farming invertebrates and kelp. The Peter the Great Bay is chosen as the most suitable for mariculture activities (see the picture). • Production volume 2017 – 9,6 thousand tons (+40%) : scallops, sea-cucumber, kelp • 75 water sites (12,8 thousand hectar) are offered by local authorities. 60 are in use. • Large Russian companies and banks along with foreign investors from neighboring countries, primarily from China, Japan and South Korea, believe in the Far East potential. Chinese corporation ChinaOverseasDevelopmentAssociation (CODA) confirmed to invest $200 mln in mariculture in Primorsky Krai. Large seafood farm, processing and storage facilities are to be built.

• Water sites for fish farming are allocated to investors through the electronic auction system arranged by the Fund of Development of Far East and Baikal region.

• The investor can choose available water site selection through a specialized website www.aquavostok.ru, containing a map of the marine area, which is free from restrictions. The investor applies the electronic auction online.

• The first auction held in July 2018 and showed high demand of investors for water sites available. Water site auction lots were sold for the price 22 times higher than the starting auction price.

• There is a certain conflict of interest between salmon catching companies and fish farmers in the area of Peter the Great Bay. According to the legislation, fish catch is forbidden in the place of aquaculture objects. Several water sites which are provided for aquaculture purposes were traditionally salmon catching areas with catching quotas allocated earlier. Some new aquaculture areas are located even in protected environmental zones and not allowed to be used both for catch and aquaculture.

• Russian Ministry of Natural Resources commented that aquaculture in protected environment zones is possible if the following strict conditions are met: new aquaculture technologies have to be in place, aquaculture activities have to be supported by science, no chemicals, no fertilizers, no pharma in use.

• Norwegian scientists could be for help in case of environmental monitoring as well as there is an opportunity for Norwegian companies to transfer technology and supply equipment. 40

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Far East Federal District

Far East Federal District Summary

1. The potential for growth in the mariculture in FEFD is good. The Russian Far East has without any doubt numerous sectors to work on and develop both live seafood (shells/crustaceans, etc) and the seaweed of all kinds.

2. Primorsky Karai is the leading in mariculture of seafood and seaweed. Sakhalin and Kuril Islands have also a very big potential for farming salmon smolt and commercial fish. Norwegian suppliers of equipment and technology in this sector can have a potentially big market here. Strong competition from China, Korea, and Japan is also expected.

3. Kamchatka traditionally is a fish and crab catching zone. Due to severe climate conditions this region doesn’t match much for cage aquaculture. However, local government plans to have 30 private fish farming projects in the region and to invest 3,9 bln rubles.  First aquaculture farm in Kamchatka "Avacha-Tral" LLC with investment of 1 bln Rubles will be launced next year. Water site area: 20 km2. Farmed species: kep, sea urchin, mussels, crab juveniles, far est salmon smolt. Processing facilities construction is a part of the project.  There are rumours in the sector that large Russian market player thinks to build trout farm in one of the natural lakes in Kamchatcka and to receive 2,8 bln Rubles of state support.

1. Most of mariculture farms are located in the southern part of Primorsky Krai on a shallow waters. Russian scientists advise to use open sea waters for mariculture, which will need modern technology, equipment and the fleet as well as scientific support, where Norwegian companies can also take part.

2. Winter conditions are challenging in Primorsky Krai and Sakhalin region, which can be challenging for sea cage farming development. However, there are ice-free water sites available in the region where sea cage farming has a potential. This question needs more precise discussion of scientists and sector specialists.

3. Submersible fish cages can be the solution or fish farming based on the rather short ice period. As of today, there are no examples of using this kind of technology in the Russian Far East.

4. Kuril Islands could be of interest for marine cage farming, as islands are situated very close to the best paying seafood markets in the world and it’s the most ice free region.

5. Russian scientists from TINRO (Pacific Research Institute of Fisheries and Oceanography) www.tinro-center.ru and Far East Association 42 “Aquaculture” are very interested in finding a platform for cooperation with Norway in all aspects of aquaculture.

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Russian projects of Norwegian companies

o Akva Group • Akva group has worked strategically with Russia for years. • Key turn projects in Murmansk, Karelia, Sochi in regards of cage and land based farming (salmon, trout) • Land based farming key turn projects in Moscow and Kaliningrad (salmon, trout) • 6 complete turn key cage farms are supplied to Murmansk region. And ready to supply the 7th one. • Feed barges 650 t of feed • JSC “Russian Aquaculture” and “Russian Salmon” are the main large customers. • Negotiations with St. Petersburg regarding construction of a large RAS salmon/trout farm

o Akvaplan Niva • Akvaplan Niva has been working in Russia for 30 years • More than 400 joint reports and 150 papers in international scientific journals • Strategic cooperation agreements with Russian academic and departmental research institutes, universities, associations • 20+ aquaculture projects in Russia in the territory from Murmansk to Sochi, from St. Petersburg to Vladivostok • Projects are financed by national and international programs, research funds, industry  1994: Masterplan for aquaculture in the Northwest Russia  1997: Joint Russian-Norwegian pilot fish farm in the White Sea  2003: Upgrade of Kedrozero hatchery in Karelia  2005: Limited environmental Due Dilligence for Kivach  2007: Nelma as a potential species for aquaculture  2010: Suitability evaluation for aquaculture development in the Arkhangelsk region  2012: Whitefish hatchery in the Kola Peninsula: concept design  2017: Trout farming in the Black sea: feasibility evaluations

• Akvaplan-niva Barents – a daughter company of Akvaplan-niva established in Russia in 2006 43

Russian projects of Norwegian companies

o Skretting Aqua Optima AS • Skretting AS has sales and its own subsidiary in Moscow, Russia • Ivan Zagorsky, Head of Russian office, [email protected]

• Aqua Contractor International AS • 10 years Russia and the Baltic countries with projects in land- based fish farming, training and development of fish feed. • Most projects have been done in close collaboration with universities and students from several universities and companies, but primarily NMBU in Norway and Kaliningrad State Technical University. • Focus on smaller RAS plants and Aquaponic systems, production of a high quality fish feed for Salmon, Trout and Char, primarily based on land-based fish farming. • Jonny Bunæs, CEO, [email protected] • “ Sobsky fish Farm” (Harp, Russia) • Northern Productions AS  first Arctic large RAS hatchery for peled (Coregonus peled),  The company through its own subsidiary Lafor LLC in Russia is muksun (Coregonus muksun), broad whitefish (Coregonus nasus), launching fish farm “Ladoga Forell” in Ladoga Lake in the sturgeon in Yamalo-Nenets Federal District North-West of Russia  Private-Public financing.  Capacity 3000 t of salmonids. Plan 2019 – 1000  Capacity: 32 mln juveniles.  Water site 44 hectar  Second large fish farm/hatchery of the same kind and size will be  Lars Sundquist launched in the same Federal District in couple of years.

• Noras Watertech AS  Danil Eltekov, CEO, [email protected]  RAS salmon/trout farm in Tatarstan  Capacity – 3 000 t  Project with Norwegian investments 44

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State Regulation of aquaculture

o Russia is making efforts in developing regulatory norms for the aquaculture industry. • Currently the development of the Russian aquaculture industry is regulated by the following basic documents:

1. Concept of Development of the Fisheries Industry in the Russian Federation through 2020 (approved by Government resolution # 1265-p dated September 2, 2003; 2. Strategy for Aquaculture Development in the Russian Federation through 2020 (approved by the Russian Ministry of Agriculture dated September 10, 2007); 3. State Program “Development of Fisheries Sector”; 4. FEDERAL LAW OF THE RUSSIAN FEDERATION No. 148-FZ “About aquaculture (fish breeding) and about modification of separate legal acts of the Russian Federation” (The latest edition from 06-02-2019) is active since 2 July 2013; 5. Industry Program “Development of Commercial Aquaculture in the Russian Federation for the period of 2015-2020” (approved by Order of the Ministry of Agriculture dated January 16, 2015); o The greatest achievement in aquaculture regulation is the state approval which permits to fish farming enterprises to extend lease contracts for fish-breeding sites without auction. Federal Fishery Agency believes this measure will stimulate long-term planning and attract more investments into the sector. o Latest amendments provide to Private enterprises farming/hatching salmonids the access to water sites without the auction. o Harmonization of Aquaculture Law with other legislation.

 Some Federal Laws contradict each other which is a challenge to fish farmers. Example: While the Ministry of Agriculture put standards for minimum fish harvest volumes per water site, another Ministry of Natural Resources put an own limitation to harvesting volumes per water site, as the increase of harvest may lead to environmental impact.  There are ongoing discussions about the rules which protect the forestry area around water sites, where fish farming activities and processing factoris are planned. There is still no resolution permitting to built on-shore infrastructure around water sites.  The Ministry of Agriculture and the Ministry of Natural Resources are currently developing a regulation which will allow to use water basins located in forest areas as well as the land nearby water area for RAS aquaculture activities.  In addition, the Federal Veterinary and Phytosanitary Service is developing requirements for aquaculture products and plans to get the approval from the Government in the near future.

New in State Regulations

The Water Code of RF

o Wastewater discharge to natural water bodies (even after purification) is prohibited for fish farms.

 Recently the Water Code of RF doesn’t allow for aquaculture enterprises to intake water from natural resources and to drain it back after treatment and purification prior to discharge.  The inability for fish farms to discharcge purified wastewater will lead to stuck of the domestic aquaculture development, will lead to destruction of Russian aquaculture broodstock of main fish species.

o Fuel and lubricant warehouses and service stations are prohibited on the coast of marine or freshwater areas.

 It’s forbidden for fish farms to place fuel and lubricants warehouses on the coast of marine or freshwater areas where fish farms are located. This creates significant logistic and technological barriers for small vessels belonged to fish farms, as nearest ports with fuel stations are located sometimes in dozen of miles from aquaculture sites.

• However, it’s a paradox that a certain number of industrial fish farms have exclusively received such an approval from the Ministry of Natural Resources of RF.

o The Ministry of Natural Resources of RF together with Aquaculture association «AMKOR» have started discussionsabout adjustingthe Water Code according to needs of aquaculture sector.

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News in State Regulations

Aquaculture insurance st o Since 1 January 2019, Commercial aquaculture is the subject of State support of agricultural insurance. • The relevant law was signed last year by the President Putin and later adopted by the State Parliament. • Amendments to the Federal Law “on State Support of Agricultural Insurance” as well as in the Federal Law “On the development of Agriculture” were made accordingly. • Earlier commercial aquaculture were not the subject of Agricultural insurance with the State support, however, fish farming is initially the type of activities related to agriculture. • State support will be provided to regional budgets in the form of Federal budget subsidies for reimbursement of insurance premium. Insurance cases* o In year 2019 this legislation will concern only aquaculture objects related to farming salmonids, which are located in Republic of Karelia and Murmansk region only! • Risks to be insured: loss harvest of fish and invertebrates due to contagious diseases, fire, storm, hurricane, flood, typhoons, tsunamis, ice flow\ice damage, abnormal decrease of water level, sudden changes of water temperature, disturbance of electricity, heat, natural disasters. • Period of insurance: ≥ 1 year

*By Mr. Sergey Rybakov, Insurance broker OOO “Rifams” [email protected]

State support

Top-5 Russian regions received the biggest financing for period 2017-2020

 Murmansk: 717 mln Rub  Moscow region: 380 mln Rub  Leningrad region: 197 mln Rub  Karelia: 186 mln Rub  Rostov region: 127 mln Rub  Primorsky Krai: 82 mln Rub

Most projects are strongly supported by local authorities • Total amount of aquaculture as aquaculture is the best tool to get relatively cheap subsides provided by Russian fish for regions located far from coastlines and to create State in 2018: 782,7 mln Rub more jobs. Some regions in Russia are even forcing the development of the sector, making it one of the top (it was 546,5 mln Rub in 2017) priorities.

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Regional government support and public-private partnerships

o Aquaculture activity is the priority area of development of some of Russian regions. o Being on the rise, the aquaculture sector seems to be favored by private investors.

o Some Examples of Public-Private Cooperation projects:

 Chelyabinsk region established a special Fishery Council, headed by the Local Governor, to support aquaculture projects. The Region has adopted an own aquaculture development program. Result: the increase of aquaculture production from 3 200 t in 2013 to 5 000 t in 2017. plan 2020: 7 000 t of farmed fish.  Vologda region. Fish breeding company “Aquaproduct” established new-branded facility for farming Char with capacityof 2 500 t/annum. The investment with regional state support is projected to $25,5 million through 2021.  Siberian region (Kemerovo). The Siberian Investment Group has started aquaculture activity by opening the first phase of the rainbow trout farm with production capacity 2500 t/annum. Total investment will be $24 mln, including construction of own feed factory.  Dagestan Republic. More than 20 aquaculture projects were launched with the total investment of $8,4 mln.  Primorsky Krai region in the Russian Far East attracts attention from Asian companies due to its promising potential and geographical proximity. China’s Yantai Tunsyan Foods company together with Weng Kyan want to establish their farms in the region.  Large Russian companies and banks along with foreign investors from neighboring countries, primarily from China, Japan and South Korea, believe in the Far East potential. Chinese corporation ChinaOverseasDevelopmentAssociation (CODA) confirmed to invest $200 mln in mariculture in Primorsky Krai. Large seafood farm, processing and storage facilities are to be built.  Yaroslavl region. The Institute of Agroecology and Biotechnology is going to built a farm for African catfish (1500 t/annum) with investments $8,9 mln.  Kaluga region. Whiteleg Shrimp was launched in 2017 and will become the biggest shrimp farm in Russia by farming 35 t (plan 100 t/annum) of shrimps.  Murmansk region. “Russian Aquaculture” company, the biggest player in the industry, continue spreading wide their farming activity having regional and federal financial support. ). It was announced by “Russian Aquaculture” that one more hatchery in Murmansk region will be built in the nearest future. Project budget: 1,5 bln Rub. 49

Aquaculture unions and associations

• RosRybkhoz www.rosrybkhoz.ru (Moscow) • Aquaculture Union www.unionaqua.ru (Moscow) • VARPE www.varpe.org (Moscow) • Fish Union www.fishunion.ru (Moscow) • Union of sturgeon farmers “Osetr Union” www.osetrunion.ru/en/ (Moscow) • Fish Alliance www.fish-alliance.ru (Moscow) • Trout farmers Society www.kareliatrout.ru (Petrozavodsk, Karelia Republic) • Association of salmon farmers of Sakhalin region (Yuzno-Sakhalinsk, Sakhalin region) no URL • AstrakhanRybKhoz www.astrybhoz.ru (Astrakhan) • Far East Association «Aquaculture» (Vladivostok) no URL • Association of Mariculture companies of Primorsky Krai www.amkordv.ru (Vladivostok) • Crimean Aquaculture Association ( https://крым-аквакультура.рф (Sevastopol, Crimean Republic) • KrasnodarRyba (Krasnodar region) no URL • Association «Bolshaya Ryba» (Rostov region) no URL • Siberian Fishery Association (Tumen) no URL • BelgorodRybKhoz (Belgorod region) no URL

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Summary

o Russian aquaculture is an emerging sector, very young and can’t be counted as an industry yet.

o Recent aquaculture volumes: 232 000 tons. Plan - to reach volumes threefold, up to 700,000 t by 2030.

• Production of aquaculture species. Market structure: Carp species (61%), salmonids (28%), other fish species (5%), invertebrates (4%), kelp (2%)

o Water resources for aquaculture:

• Russia with all its water resources is a unique country having enomous potential for farming fish and seafood. • Recent aquaculture area in use: 529,8 thousand hectar (3,6 thousand water sites). More than 2 mln hectar are available.

o Russian government introduced the strategy of development of Russian regions by 2030: Fishing and Aquaculture are proposed as a perspective specialization and the point of development for 24 Russian regions out of 85 existing:

 North-West District: Karelia, Arkhangelsk, Vologda, Kaliningrad, Leningrad region, Murmansk, Nenets region  Southern District: Rostov region, Astrakhan, Sevastopol, Crimea  Far East District: Kamchatka, Primorsky Krai, Khabarovsk, Sakhalin, Republic of Sakha (Jakutia), Magadan, Chukotka  Central District: Smolensk, Jaroslavl region  Urals District: Jamal region, Jugra  Siberian District: Tomsk  North-Caucases District: Dagestan

Summary (continue)

o Regional specialization in aquaculture segments:

• South: focus on sturgeon, carp, trout (Krasnodar, Rostov, Astrakhan), mussels, oysters, halibut (Crimean Peninsula).

• Far East: reproduction of salmonids, mariculture of shellfish and kelp. Good potential in farming commercial salmon weight in submersible cages.  58% of all state and private investments into aquaculture are concentrated in teh Far East District.  Sakhalin and Kuril Islands looks most interesting regions for Norwegian marine cage technology and equipment suppliers. The region which is specialized in hatching salmonids (51 hatcheries) and having plans to increse the production of smolt from 1 bln to 12 bln as well as to develop commercial salmon fafming.

• North-West: cold-water aquaculture in lakes. Cage farming (salmon and trout). Pasture (salmon and whitefish (Coregonidae)). Heating plant warm water aquaculture. Mussels in White and Barents seas. Good potential for farming whiteleg shrimp and eel.

• Central District: RAS type, pasture in ponds and lakes: mostly carp, trout and sturgeon

• Urals: RAS, pasture,cold water cage farming in lakes (whitefish (Coregonidae) and salmonids). Heating station warm waters (Sturgeon, carp, catfish

• Siberia: both coldwater aquaculture (whitefish (Coregonidae) and salmonids) and the one based on geothermal warm water (carp, sturgeon).

• North-Caucases: warm waters of heating plants are used for sturgeon and mountain lakes for industrial farming of trout are in use.

• Volga District: pasture and industrial farming. Carp, trout, sturgeon. According to aquaculture market specialists, recently only 3 Russian Federal Districts have conditions for real development of aquaculture: Far East, South and North-West.

According to aquaculture market specialists, recently only 3 Russian Federal Districts have conditions for real development 52 of aquaculture: Far East, South and North-West.

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Summary (continue)

o Farmed fish species in focus  Trout is the most perspective fish species to farm in Russia. It’s the second after carp popular fish species, which is produced in commercial volumes in Russia.  Sturgeon (meat and black caviar is in focus). Russian State has a special Programme of sturgeon aquaculture development.

o Fish Feed  More than 90% of fish feed of high quality is imported.  40 local feed factories produced 320 thousand tons of feed for carp (containing mostly grain) and only 6 000 t of feed for valuable fish species.

 Goal: Each main aquaculture regions should have fish feed factories with state support to cover regional needs.

o Technology and equipment  The aquaculture sector in Russia today has a shortage of modern technologies, needs serious modernization of production facilities and more thorough work on irrigation of fisheries reservoirs.  There are 18 local manufacturers of fish farming equipment in Russia.

o Infrastructure  Lack of infrastructure is braking the development of aquaculture in many of new water sites as many of them are remote areas where basic infrastructure components are missing (transportation, electricity, water supply, etc.)

 Russian government support financially large projects in remote water sites and update the Federal Aquaculture legislation according to needs of sector demand.

o Russian legislation  The Federal Law on Aquaculture has been in place since 2014. Young legislation had gaps which aquaculture market players (Fish Union www.fishunion.ru , Aquaculture Union www.unionaqua.ru, etc) together with Russian government is filling in by ammendments. Aquaculture Law is recently in the process of harmonization with other Codes: Water and Land.

 Russia’s Federal government has allocated funds to market players to cover part of loans interest payments for purchase of 53 modern equipment, feed, or investment into building production capacity.

Summary (continue)

o Reproduction of Fishery resources  Today fish reproduction activity is a subject of responsibility of the State and the compensational measure by commercial companies, which activity is in a conflict of interests with fisheries. Polluters (mainly oil & gas, mining and forestry companies) invest hundreds of million rubles into hatcheryies construction and production to compensate the damage they cause to the regional environment.

 State owned association of hatcheries “GavRybVod” includes 101 farms with projected capacity 12 bln fish fry /annum. Main reproduction species: 80% carp and herbivorous, pike, perch; 11% salmonids, 7% whitefish (Coregonidae).  Private hatcheries are also involved into reproduction of fish resources financed by State and using compensational budgets provided by companies-polluters.

 Russian state has a strategy of technical modernization of recent state hatcheries, construction of new modern production facilities; improvement of legislation on reproduction of aquatic bioresources to ensure maximum survival of fish fry; expanding the list of species of aquatic resources that are objects of artificial reproduction; to increase hatched volumes of valuable fish species.  In 2018 total all-Russia hatched volumes of salmonids fry is recently 9 bln pieces.

o Genetics  Russia has a challenge with fish genetic material. It concerns salmon/trout smolt, first of all, which is crucial for North-West District as it’s the largest fish farming region for salmonids.

 There is a production of trout smolt in Karelia and in the South part of Russia. However, the quantity and quality doesn’t meet the demand.

 Different sources estimate that almost 95% of brood stock is currently imported, which is expansive and not always available. Minimum purchase at a time is 1,5 mln fish.  “Russian Aquaculture” owns 2 smolt farms in Norway (Villa Smolt AS and Olden Oppdrettsanlegg AS) with production volumes which cover only their own salmon farming needs in Russia (9,5 mln fish). It was announced by “Russian Aquaculture” that one more hatchery in Murmansk region will be built in the nearest future. Project budget: 1,5 bln Rub.

 Russian government has a goal within 5 years to completely replace the imported smolt for local ones . As for salmonids smolt, Karelia will receive biggest financing from the Government for construction of genetic centers in the region.  23 fish genetic centers are active in Russia. 54

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Summary (continue) o Science  It’s a challenge due to traditional isolation of local science and research from the industry.  Scientific research institutions will receive better financing for aquaculture programs.  Government officials are calling for improved interaction between research institutions and business.  Russian scientists from TINRO (Pacific Research Institute of Fisheries and Oceanography) www.tinro-center.ru and Far East Association “Aquaculture” are very interested in finding a platform for cooperation with Norway in all aspects of aquaculture.  Practical interaction of aquaculture enterprises and sectoral science is weak.  Insufficient orientation of science results on practical needs of aquaculture enterprises.  8 scientific and consulting aquaculture centers are operative in Russia

o Private Investment activity in aquaculture sector is on the rise  More Russian and foreign investors are recently showing interest to construction of large industrial fish farms in Russia. Several Russian regions (Republic of Tatarstan, Vologda and Lipetsk regions) announced the beginning of commercial projects (Atlantic salmon production) with foreign investments in volumes of more than 2000 tons annually.

 African Catfish ( Clarias gariepinus) is another promising target for industrial aquaculture companies.

 Joint Russian-Iranian project for farming salmon in sea cages with a total capacity of 60 thousand tons begins in the Caspian Sea. In this regard, there is the most interest to quality equipment and technology from Norway.

 Large Russian companies and banks along with foreign investors from neighboring countries, primarily from China, Japan and South Korea, believe in the Far East potential. Chinese corporation ChinaOverseasDevelopmentAssociation (CODA) confirmed to invest $200 mln in mariculture in Primorsky Krai. Large seafood farm, processing and storage facilities are to be built.

o Norwegian business in Russia  Norwegian companies providing aquaculture technologies, equipment and service have been doing this for years.  Few Norwegian companies have already running projects in Russia (Aqua Optima, NORAS Watertech AS, Agronet, Akva Group, Akvaplan niva). More companies has shown an interest also.

Summary (continue)

o Constraining factors:

 High dependence of local aquaculture on imported smolt and feed.

 Low level of local aquculture technology and equipment

 Small farms with low production volumes are dominating in the sector (< 50 t/annum)

 Weak practical interaction of aquaculture enterprises and sector science

 Lack of necessary infrastructure in the regions nearby new remote water sites available for fish farming.

 Lack of educated staff. Lack of real links of students with existing fish farms for practice and internship. 29 universities in Russia educate personnel for fish farming.

 Insufficient state support. Russian Federal government traditionally preferred to support large business which is few in aquaculture sector in Russia. However, regional government is actively finance also SME.

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Aquaculture seminar in Kazan, Tatarstan, Dec 2017 arranged by Innovation Norway-Moscow