(This article first appeared in Seafood International, April 1997. The author wishes to thank the publishers for permission to reproduce the material here.)

Introduction

Latvia, one of the Baltic Republics, has a long history of fishing, fish processing and trade in fishery products. Until 1991, as part of the former U.S.S.R, Latvia was the home of a vast expeditionary fleet of fishing, processing, refrigeration and supply ships and vessels. Latvia developed a strong domestic processing industry based on supplies from this source, and the Baltic Sea fisheries made up only a small share of the total landings. Since independence the country has pursued market economic policies, and is firmly intent on joining the EU. The privatisation of the once extensive fishery sector was completed in 1996, and the time is now ready to review how the fish industry in this (often overlooked) part of the world, is responding to the market economy.

Supplies

 
Catches of fish for the years 1991 to 1996 are shown in Table 1. The main feature is a substantial decline in the years immediately after regaining independence, from over 416,000 tonnes in 1991 to 140,000 tonnes in 1996, largely due to the decline of the distant water expeditionary fleet. Catches from this fishery now account for just 70,000 tonnes, 86% of which is sold at sea or in foreign ports.
 
 
 
 

Domestic market

 Many of the larger processors own vessels. Distribution of fish on the domestic market is direct, with little wholesale activity. Smaller processors and traders buy fish directly from independent Baltic and coastal fishermen at the landing point. Prices are determined by direct negotiation, payment is in cash, and vary according to seasonal supply and demand. Fish is rarely purchased under a supply contract. The main fishing season is in the autumn and winter.
 

Average per capita fish consumption in Latvia in 1994 was just over 11.0 kg/head, equivalent to 29,000 tonnes (at finished product weight). Estimated retail value of the domestic market is US$40 to 45 million. Fresh fish accounted for 35% of expenditure, salted and smoked fish 32%, herring for 20% and canned fish 16%. However, with a declining population and zero growth in real incomes the domestic market holds little prospects for growth in the short-term.

Exports

 Latvia’s traditional role as a fish processor and export supplier for markets in Eastern Europe, especially the CIS countries, has continued since independence, with fish exports worth a total of US$66.1 million in 1995 (excluding sales from the distant water fleet). This represents about 6.7% of all exports. Of these, as shown by Table 2, canned and preserved fish products account for 80%, the balance being frozen fish, including the re-export of US$9million worth of the frozen Atlantic herring and mackerel imports. The only significant exports to the EU are of fresh and frozen cod, recorded at US$3 million, but this figure excludes transfers at sea and landings in foreign ports.
 

 

Table 2: Principal Latvian exports of fish and fish products (Source: National Board of Fisheries, 1996)
		Quantity tonnes		Value  $US ‘000			Unit Value, $US/tonne
Code	Product	1994	1995	1994	1995			1994	1995
0302	Fish,fresh,chilled excluding fillets
030212	Salmon	n/a	4.0	n/a	13.4			n/a	3,367
030240	Herring	53.1	10.0	41.9	6.0			788	598
030250	Cod	519.8	1,821.3	362.7	1,048.9			697	575
030261	Sardines,sardinella, sprats	108.7	184.2	35.9	95.2			330	516
030264	Mackerel	n/a	723.0	n/a	22.2			n/a	304
0303	Fish frozen, excl.fillets
030322	Atlantic salmon	151.8	2.1	70.4	9.2			464	4,447
030350	Herring	1,816.5	5,382.6	1,045.9	3,132.1			575	581
030360	Cod	161.0	352.5	159.5	369.7			990	1,048
030371	sardines, sardinella, sprats	1,764.0	3,008.9	393.5	981.3			223	326
030374	Mackerel	3,538.4	3,657.9	2,103.4	2,908.9			n/a	795
0388888	Fish sold on the sea (1)	n/a	59,863.0	n/a	21,408.4			n/a	357
0304	Fish fillets
030410	fresh,chilled	41.7	45.3	152.3	73.8			3,654	1,628
030420	Frozen	528.6	479.2	1,554.0	1,523.2			2,939	3,178
03053	Fish, dried,salted in brine, not smoked
030530	Fillets	179.7	152.9	175.3	182.9			975	1,196
030559	herring salted and in brine	1,394.5	1,645.6	1,341.8	1,677.9			962	1,019
030569	other salted and in brine	500.8	1,197.2	293.6	786.1			586	656
1604	Prepared or preserved fish
160412	herring	4,654.3	4,069.0	6,295.2	6,455.2			1,352	1,586
160413	sardines, sardinella,sprats	12,804.5	21,739.9	24,047.8	46,792.3			1,878	2,152

 
 

Of the canned fish exports, the most important is the famous "Riga sprat in oil" - canned smoked sprat in oil, worth an estimated US$47 million in 1995. Russia was the main market for this product - taking 61%, compared with 20% to Ukraine and 7.5% Belarus. Some inroads have also been made to new markets such as Czek and Slovak Republics, Canada, Israel and Australia. Exports of canned sprat have doubled since 1993, and are continuing to rise. Many of the 20 or so producers of this product increased capacity during 1996, and there were several new Latvian entrants to the market. Processors have also been investing in the installation of on-shore freezing capacity to reduce problems of seasonal supplies of raw material. Purchase of frozen imports is also helping to overcome this problem.

However, there are some clouds on the horizon with this market. Price competition is developing as other Baltic producers also increase production. The Russian market is becoming increasingly subject to non-tariff trade barriers. For example in 1996, Russia restricted entry points to just three border crossings, and demanded that health certificates for Latvian fishery products were issued in Russia. Many Latvian processors are therefore seeking to diversify products and markets.

Future opportunities

With just the Baltic sea and inland fisheries available and both exploited to their full extent, opportunities are constrained by resources limitations. However the EU Phare project run by Portuguese fisheries consultants Megapesca, has identified a number of possibilities for business development opportunities in the fishery sector.

Aquaculture could provide up to 700 hundred tonnes of rainbow trout using a combination of small flow-through farms and some cage fish farms in the River Daugava. There is also potential for extensive culture of crayfish in ponds formerly used for carp farming. Facilities exist for up to 200 tonnes per year.

There are also opportunities to develop new markets and products, making better use of available resources. For example, there is potential to develop premium EU markets for Baltic salmon, which is presently mainly sold on the domestic market. Baltic salmon is very pale in colour and has a low fat content, but its delicious flavour is preferred by many over farmed salmon. Another example is the lamprey, which is caught in the rivers running into the Gulf of Riga. The product can be smoked or canned and compares favourably with eel. At least one company is seeking EU customers.

 Increasingly, Latvia is providing an important gateway to markets to the East - not only Russia, Belarus and Ukraine, but also to the Central Asian republics as well. Economic recovery will stimulate the demand for fish (and the World Bank has predicted 4% growth for 1997 in the countries of the former-Soviet Union). Latvian imports and re-export of small pelagic fish such as Atlantic herring and mackerel are expected to increase substantially. Latvia can also provide access to the higher spending market segments in western Russia. There are considerable opportunities for suppliers to link with Latvian companies, as a means of accessing these markets, capitalising on the good marketing and sales links which Latvia has retained and developed since independence.

 Latvia provides a friendly and open environment for inward investors. Additional information can be obtained from Baltic Fishery Information and from the Latvian Development Corporation.

 

EU Phare project - Technical assistance for development of private fisheries   In 1996 and 1997 the EU Phare programme contracted Megapesca Lda. to help the newly privatised fish processing companies overcome the transition to the market economy.   Project activities have included management training seminars for senior managers from fish processing companies, covering marketing, new product development, business planning, financial management and strategic management. Follow-up help was given with marketing and business planning to companies on an individual basis.   Meeting EU quality standards has been another key area for the support of the project, with an intensive training course conducted jointly by the EU specialists and Riga Technical University for quality control staff from the industry. This covered recent developments in understanding of seafood safety, the EU Directives and their approach, and importantly covered new quality management systems such as the hazard analysis and critical control point concept. In line the EU accession policy, the project helped improve governmental control and inspection, with the introduction of new inspection and approval systems, design new codes of practice and training of newly appointed inspectors.

 

Latvian fishery sector companies
The Latvian fishery sector comprises more than 80 fishing and forty processing companies which employ about 12,000 people. Some of the main firms and their product lines are as follows:
Company name	Activity
"Kaija" Joint stock company	Processing/canning/smoked/marinades/preserves
"Ventspils fish cannery" Joint stock company	Canning
"Salacgrîva-95" Joint stock company	Processing/canning
"Roja fish cannery Joint stock company	Canning/processing
"Zvejnieks" Joint stock company	Marinades/frozen fish
"Carnikava" Joint stock company	Smoked/canning
"Selga" Ltd	Smoked/marinades/preserves
"Liedags" Ltd	Smoked/marinades/preserves
"Ragaciems" Ltd	Smoked
"Berzciems" Ltd	Smoked fish/preserves
"Unda" Ltd	Canning
"Melnsils Ltd	Canning/smoked/preserves
"Kolka" Joint stock company	Canning/smoked/preserves
"Bâka-T" Ltd	Fishing/canning/frozen fish/preserves
"Kursa" Joint stock company	Fishing/frozen fish/smoked/preserves
"Pâvilosta" Joint stock company	Smoked fish/marinades/preserves
"Liepaja fish cannery" Joint stock company	Canning
"Auda" Share holders company	Fishing/canning/frozen/smoked
"Jûraslîcis" Joint stock company	Fishing/canning
"Brîvas vilnis" Joint stock company	Fishing/canning
"Silar International" Ltd	Smoked fish/marinades/canning
"Banga Seafood International" Ltd	Frozen cod/fillets/preserves/ smoked fish
Sillakas Trout Farm	Trout farming
F.A.P.S. Ltd	Trout farming/trading
RIC-Ocean Latvian-German Joint stock venture	Processing/smoked/marinades/ preserves
Licis-93 Ltd.	Preserves/marinades
Mersrags-R Joint Stock company	Canned/preserves
I.M.S. Joint stock company	canned/preserves/smoked

 

Baltic Fishery Information Ltd.  BFI was formed in December 1996 with the goal of "assisting the integration and growth of the Latvian fishery sector through training, consultancy and information exchange". BFI is providing the data, knowledge and skills necessary for Latvian companies to enter a competitive world business. BFI provides a link between the Latvian companies and the international arena. For more information on fishery business opportunities in Latvia, call Janis Abramovich at:   Baltic Fishery Information Valdemara Iela 36 Rìga LV 1010 LATVIA  Tel. +371 227 7002, +371 728 2412 Fax. +371 782 0119 e.mail: fishinfo@bfi.lv