Seafood imports to Ukraine: consequences of Russia’s war against Ukraine

Production proves resilient despite huge challenges
Amid the chaos created by Russia’s invasion of Ukraine, small businesses supplying key food products are suffering on all sides. So, for Ukrainian seafood importers. From damaged or destroyed transport infrastructure to currency blocks to pay suppliers, from delivering cargoes directly from the docks that are difficult to truck through several countries, fish importers are suffering but weathering the storm of war.
This is the first in a series of Eurofish articles on the maritime business in Ukraine and how they operate and survive during the war.
The Ukrainian Fish and Seafood Importers Association (UIFSA) is an industry group consisting of 25 companies that together account for half of all fish and seafood imports into Ukraine, or about a quarter of the seafood importers operating in the country. UIFSA is a founding member of the Ukrainian Business Council, which brings together over 100 trade associations across a range of product and service sectors to inform policymakers and guide member companies. Eurofish spoke to Dmytro Zagumenny, chairman of UIFSA, about the seafood import situation in Ukraine, the policies and regulations affecting member companies, and the fallout from the Russian war.

Imports fill the gap from vulnerable local supplies
As with the Chernobyl disaster, local fishing in Ukraine’s vast reservoirs and rivers has been banned by the government for reasons beyond the control of the fishing industry. In addition, marine fisheries have all but ceased due to the closure of the Black and Azov Seas. The only fishery sector that remains intact is the long-distance krill fishery in Antarctic waters, which, while important, is operated by only one Ukrainian vessel. The war thus led to instability in domestic fish production, and imports became more important to fill the gap in consumption.
Despite Ukrainians’ love of fish, production has historically been low, with imports providing the bulk of the country’s seafood supply. Official figures indicate that domestic production (in 2020) was 90,000 tonnes, with net imports of 415,000 tonnes; this production estimate is likely low because a significant portion of fish catches or fish farming (perhaps 50,000 tonnes) is not recorded. Therefore, adding official plus unofficial domestic production to net imports gives an estimated total consumption of 555 million kg. When divided by the population (37 million according to the 2019 census), per capita consumption of fish and shellfish in 2020 is 15 kg, about 80% of which was imported.
One of the big challenges for seafood importers is to comply with EU food quality standards, which Ukraine is set to join one day. This is more of an opportunity than a problem, because quality seafood is good regardless of the motivation of the suppliers, and consumer demand for high-quality seafood is always high. The Association Agreement between Ukraine and the European Union, which entered into force in September 2017, has facilitated changes in government regulations in line with EU standards, and UIFSA, together with other industry associations in the Business Council, is working with member companies to meet these standards and resolve any practical issues. Communication with government authorities – especially in the veterinary field, regarding perishable seafood – takes up 20-30% of an importer’s time, and communication with importers is invaluable here.

Huge disruptions in transport logistics
Even before the invasion in February 2022, Russia was at war. The military annexation of Crimea in 2014 quickly destroyed half or more of Ukraine’s fishing capacity in the Black and Azov Seas. In 2013, domestic production was around 250,000 tonnes; between 2014 and 2017, production was 90,000 tonnes, and more recently 61,000 tonnes. As a result, import demand has increased in recent years. The February 24 invasion had an immediate impact on imports, which fell sharply from February to March. But imports quickly began to recover, increasing every month from April to November, before declining slightly towards the end of the year. The major obstacles caused by the war are related to the physical transportation of imported seafood to the Ukrainian border. Before the Black Sea coast was closed due to the war, 35% of all Ukrainian seafood imports came by sea, mainly products destined for Kyiv or areas east of the capital. Ships carrying imported seafood arrived at the port and the containers were loaded directly onto trucks. Now the ships are unloaded at ports in other countries – mostly Klaipeda (Lithuania), sometimes Turkey – and trucks take the goods to the Ukrainian border. At each border between an EU country and a non-EU country, there may be different rules and measures to control the import of products, truck/container specifications, etc., which complicates logistics as opposed to simply changing the mode of transportation to a Ukrainian seaport.
A shipping container weighs 27 tons, but the EU sets the maximum size of a truck container at 20 tons, so the ship’s containers must be unloaded and repacked into smaller containers. All this must be documented by both the country of transhipment and Ukraine, as the final destination. Before the war, a shipping container was reloaded in one of the ports of Ukraine and then transported by local vehicles or stood in a licensed warehouse, from where the importer picked up the products if necessary. In addition, the veterinary service requires veterinary certificates from the countries through whose territories the cargo is moving to approve imports to Ukraine.
Here, UIFSA provides enormous assistance to companies by resolving various internal and external document problems. If a dispute arises that is serious enough to be considered in court (for example, regarding the customs declaration of the value of the shipment), UIFSA provides advice; Such disputes take up half the association’s time, according to its director.
The war has also affected the availability of currency and the cost for seafood importers. The conversion of Ukraine’s currency, the hryvnia, into foreign currency has been banned for all businesses that do not deal in “essential” goods.
Initially, the government considered fish and shellfish to be unnecessary. Over time, UIFSA successfully worked with the authorities to convince them to add seafood to the list, convincingly arguing, for example, that canned fish is a household staple, has a low cost, and is ready to eat even if the power goes out. Canned fish was allowed first, then frozen fish, and by July 2022, all products were included.
However, the hryvnia exchange rate has fallen sharply. From 28-30 hryvnias per euro a few months before the Russian invasion, the currency’s value fell by a third to 40-41 hryvnias per euro in the spring of 2023. This hit imports, which are correspondingly more expensive. The currency is now open for conversion.

How the war changed the industry’s plans
Market promotion was UIFSA’s initial focus. Before the pandemic, association leaders and company representatives traveled to many countries, looking for opportunities to import new products that would appeal to Ukrainian consumers. They were successful because, although Ukraine’s population was shrinking even before the pandemic and the war, both imports and per capita seafood consumption were growing. Exports of fish and seafood are also growing: from 10.5 thousand tons in 2018 to 17 thousand tons in 2021. In 2022, exports fell to 10 thousand tons.
The war, and before it the pandemic, have shifted UIFSA’s focus somewhat to assisting with logistics and interacting with government agencies. Stimulating demand remains important, but getting the product to Ukrainian processors, retailers, institutional sellers, and the end consumer is an equal priority.

A battered but strong import sector still feeds Ukraine
Ukrainian seafood importers have stayed in business despite the war and the pandemic because their companies are run by resourceful managers and because they are helped by a dedicated industry association. Faced with currency restrictions, bans on deliveries by sea vessels from abroad, and new rules and regulations, the industry is working through these challenges. Imports are growing again, saturating Ukraine with fish and seafood from all over the world.

The article was published based on materials from Eurofish Magazine No. 3 2023 (original article)