August 29, 2018 — SEAFOOD NEWS — The Russian red king crab fishery is the most valuable crab fishery in the world, and has long attracted the attention of poachers, oligarchs, and the Russian government.

For years the government has waged a campaign against poaching, which was often undermined by bribery of border guards and local officials.  However, poaching is less of an issue now because, first, the Russians increased the quotas to allow more legal harvest, and second, the legal harvesters began pushing for enforcement as well, to protect their products from cheaper competition.

Russia has a ten year cycle for crab quotas, and another auction is coming up.

Ten years ago, to bid in the auction companies needed to demonstrate a history in the fishery.

Subsequently, the Russian government has targeted investment in domestic processing and ship building as a key national objective to be obtained through trading awards of fish quotas to companies who make investments.

The Russian Fishing Company, associated with Gleb Frank, a close advisor to Vladimir Putin, has taken advantage of this to raise funds for a number of Russian built pollock trawlers and domestic processing plants.

Other oligarchs have also come into the fishing business as fishing is one of the fastest growing Russian agricultural segments, and investments are not hindered by international sanctions.

Salmon and trout producer Russian Aquaculture is the largest player in the Russian fish business with a 22% market share and is growing fast. The partners of Russian oligarch Roman Abramovich acquired 25% in South Sakhalin fishing company Poronay, while Agama RT bought 49.99% in Russian Cod, controlled by a subsidiary of Russian Industrial Fish Company (RRPK) of Gleb Frank, the son-in-law of oligarch and Kremlin insider Gennady Timchenko.

Reportedly it was Gleb Frank’s RRPK which suggested to Vladimir Putin to redistribute crab quotas through auctions in autumn 2017, unnamed market participants told the Russian Vedomosti newspaper. RRPK has entered the market recently and spent a record-high RUB10bn on crab fishing quotas in May 2017.

The government could raise additional RUB 80bn-200bn from auctioning the quotas the state fishing agency Rosribolovstvo estimated, according to Tass.

Traditional participants in the Far East Crab industry fear getting cut back.  The governor of Primorsky region warned Putin that the local communities would suffer if this proposal is adopted. ‘Fishing Villages don’t have the money to go out and buy quota,” he said.

Further Far East companies have invested over $2 billion US in quotas from 2001 to 2017, and withdrawing quotas from these companies would lead to disruption of operations and investments by regional players.

The war over crab quotas has played out among different Russian Agencies, in particular with Rosribolovstvo the fisheries agency supporting quota auctions, and the FSB, the federal investigative service, attacking foreign ownership and trying to discredit or force sales from some previous quota holders.  The FSB has generally been thought to be attacking existing companies to force them into a situation where they can be bought by new Russian buyers.

It now appears that the government is going forward with awarding 50% of the quota in the upcoming crab auctions to “investors” without prior fishing history as a requirement.  This was announced officially as a government decree, according to the Vedomosti Daily.

This story originally appeared on Seafood News, it is republished here with permission.