Invasive Seafood Species is Not Bad News for Bulgaria

Seafood industry highlights from a recent article by Meros’ Tina Peneva in the Bulgarian gastronomy magazine Bacchus.

Fish consumption is booming in Bulgaria

Deep-fried sprats are a favorite accompaniment to beer in the summer months.

For years, eating fish was typically a seasonal activity for Bulgarian consumers and was mainly limited to two varieties of fish. In the summer, Bulgarians would often have a plate piled high with tiny, deep-fried sprats to go with their cold beer and in the winter, many would enjoy baked, stuffed carp while celebrating the Day of St. Nicola, the Orthodox Christian patron saint of the sea and fishermen.

Until recently, the only other fish commonly found beyond the ubiquitous carp and sprats were mackerel and “white fish”, which refers to any type of white fleshed fish. Frozen fish was the norm, with some fresh seasonal exceptions along the Black Sea coast in the East or the Danube river shore in the North.

While many Bulgarian consumers continue to follow these fish consumption traditions, in the past decade, the Bulgarian fish market has seen major changes and has become increasingly complex, with new seafood industries developing around aquaculture – and around the notorious Black Sea Rapa whelk.

Source: Directorate General, Maritime Affairs and Fisheries, European Commission

Bulgarian fish consumption has been on the rise and, according to official statistics totals, it is up to at least 6.7 kg per capita per year. According to unofficial data, real consumption is actually double this volume if unregistered catch and imports are included.  This increase is due to improvements in cold chain infrastructure, modernised retail outlets, as well as changing eating habits focused on health and variety. Chilled fresh fish is becoming more accessible, especially in larger cities.

Bulgaria is a small fish in the global fish market

Only 34 seafood species are harvested commercially in the Black Sea, including various types of both fish and crustaceans. In 2016, the catch totaled 8,500 MT, according to the official statistics and as much as 10,000 MT when adding the unregulated catch.

Source: Bulgarian Fish Association

In addition to wild catch fisheries, there are now over 670 aquaculture farms in Bulgaria producing mussels and clams, as well as other cold and warm water fish varieties like sturgeon, trout, carp, silver carp and Wels catfish. The total aquaculture production in 2015 was 13,600 MT with shellfish accounting for 25% of the volume. Mussel farms are a new and rapidly developing segment in Bulgarian aquaculture with over 30 farms established along the Black Sea coast.

 2016 Seafood Trade

Black Sea fish volumes are not enough to satisfy the growing consumer demand and already over 75% of the seafood products consumed in Bulgaria are imported. The total volume of fish and seafood products imported into Bulgaria is 34,000 MT per year and over one third of this volume is frozen mackerel imported from the Netherlands, Iceland and Norway, as well as frozen Danish salmon.

Source: International Trade Center

In addition to being a net importer, Bulgaria is a key exporter of various seafood products. In 2016, the total value of seafood exports was estimated at USD 31 million. Almost one third of the exports were shipped to neighboring Romania, including not only processed seafood but live, chilled and frozen fish, shellfish and crustaceans. Spain is Bulgaria’s second largest export partner and shipments were mainly shellfish.

The notorious Veined Rapa Whelk is one of the most lucrative segments in the Bulgarian seafood industry

The veined Rapa whelk, or Rapana venosa is not native to the Black Sea and originated in the South China Sea and the Sea of Japan. Marine historians tell the story of how the whelk was transported along with ballast water to the Black Sea by Russian military ships during WWII and ever since, has become a common inhabitant of the Black Sea.

This whelk is considered one of the top 100 worst predatory invasive species in Europe,  according to the European Invasive Alien Species Gateway (DAISIE).

The Rapa whelk propagates very quickly and has no natural enemies in the Black Sea. In the past 10 years, due to global warming and the constant rise of the Black Sea water temperature, the veined Rapa whelk population has increased tremendously. It has started threatening the biological diversity of the Black Sea as the whelk eat the shellfish living in the sea, which are the natural filters for the sea water.

In order to control overpopulation by this invader, a new industry has developed in Bulgaria focusing on the harvesting and processing of Rapa whelks. The Rapa whelk is not only now the top species harvested in the Black Sea, but it is also one of the most lucrative products for the Bulgarian seafood processing industry. The annual catch is officially 3,500 MT but the actual, unofficial volume is estimated to be even more. Eight factories are processing the catch and products are exported to the key whelk consumers globally: South Korea (exports are valued 4.3 million USD) and Japan (2.4 million US) and smaller volumes to the US and China.

Kanpai! Sake needs new markets, in Japan and out

Kanpai!  Meros joined the discussion on NHK World’s current BizBuzz episode on the Japanese sake industry.  The episode can be seen streaming on NHK World for the next few weeks.

Sake, also called nihonshu, is an alcoholic beverage brewed from rice, water and the critical ingredient koji mold which helps convert the starch in rice into sugar to be fermented. Although sake is often called “rice wine” in English, this is a bit of a misnomer, as the production process is closer to beer brewing than to wine.

Within Japan, sake consumption has decreased to a minor share of the alcohol market (6%).  Sake began to be thought of as an “old man’s drink”, with younger Japanese consumers preferring beer, wine, shochu (Japanese distilled spirits) or other drinks.  With Japan’s shrinking population, Japan’s venerable sake breweries have needed to think strategically about how to maintain their industry – growing share within Japan as well as finding new markets overseas.

Japan has been seeing  growth both in younger brewers and new business models, such as Asahi Shuzo’s Dassai sake who marketed directly to Tokyo restaurants or and  start-up  Nihonshu Oendan which supports the sale and marketing of craft sakes from several breweries.  Sake brewery tours, like wine tours in California, are growing in popularity among both Japanese and international tourists.

Overseas too there has been increased interest in sake, both because of the increase in sushi and Japanese restaurants, as well as the inclusion of a sake category in major wine competitions.  For example, in Japanese sake’s top export market, the US, most Americans who have tried sake say their first experience was in a Japanese restaurant. Still, sake is a negligible share of even the US market.   To really have an impact in overseas markets, sake will need additional consumer education and will ultimately need to break out of the limited Japanese restaurant market.  Organizations like the Sake Samurai Program, Sake Education Council and WSET Sake Certification as well as direct-to-consumers sales models like Kanematsu’s Sake Network for the EU are looking to address these issues.

In this episode, Meros’ Lucia Vancura, sake expert Rebekah Wilson-Lye and host Jon Kabira discusses the changing sake market, the rise of sake sommeliers, pairing sake with non-Japanese cuisine challenges and opportunities for the sake market to grow overseas.

Meros presents overview of agricultural opportunities in the Russian Far East

Meros presented an overview of the agricultural opportunities in the Russian Far East at a seminar on September 13 held by the Japanese Ministry of Agriculture, Forestry and Fisheries (MAFF) and hosted at Nomura Research Institute. Japanese industry players and government authorities are watching Russian Far East development closely and over 40 participants from Japanese corporations, investment firms and think tanks attended the event.

With dramatic ongoing depopulation in the region – population is projected to decline by over 30% in next 30 years – the Russian government has been implementing various measures to attract people and industry to the region and to increase economic development. These measures have included establishing fourteen Territories of Advanced Development (ToR) sites where the federal government have put particular effort into helping local governments attract foreign direct investments (FDI) through numerous schemes, as well as granting one hectare of land for free to Russian citizens who can utilize the land.

Due to the stagnating prices of oil and other energy resources, the importance of the agricultural, forestry and fishery sectors in the regional economy is rising. The share of agriculture and forestry in gross regional production of the Russian Far East increased from 3.4% in 2010 to 4.8% in 2014. Moreover, the Russian government has placed an import ban on many agricultural products from countries including the US, the EU, New Zealand and Australia as a counter measure against economic sanctions. This has all led to the new Russian policy of aiming for complete food self-sufficiency by 2020. Thus, agriculture is one of the key sectors emphasized by the Russian government in their regional development plans.

Because of the geopolitical importance of the Far East region for Japan, the Japanese government also considers Japanese involvement in regional development to be important. For this reason, the Japanese and Russian governments have agreed to have a series of agricultural vice-ministerial dialogues in 2016, and the first dialogue was held June 19, 2017. This year MAFF has also organized the Russian Far East Agriculture, Forestry and Fishery Platform to exchange information with the Japanese private sector as well as to facilitate private investments in the region. The Platform’s first meeting was in Feb 2017.

Meros sees various opportunities in the Russian Far East, in terms of import substitution as well as future export potential of certain Russian agricultural products. Oilseeds (soybean), grain, livestock and vegetable industries are already attracting various investors.

However, successful business development in the Russian Far East also faces serious challenges, including an unpredictable political climate, extremely high distribution costs, labor scarcity, difficulty in long-term financing and ongoing international sanctions against Russia. There are also complaints of lack of transparency or availability of information on Russian business partners or investment targets. Since the much of the current large-scale agricultural development in the Far East is strongly driven by Russian government policy and rely on government support like subsidies and tax exemptions, potential opportunities must be evaluated within the full context of the economic and political environment.

The Far East agricultural industries also face domestic risks such as difficulty in livestock disease control, possible wheat export taxes and competition with Chinese products, along with the most critical challenge – the small and increasingly shrinking regional market. Therefore, export market development is expected to be an unavoidable.

Some opportunities that appear particularly bright, based on the current supply and demand situation, include:

Soybeans

Soybean production in the Russian Far East was around 1.5 million mt in 2016, which accounted for more than 40% of the total production in Russia. Since Russia does not have enough soybean and other protein feed ingredient domestic production, to expand Far East soybean production was one of the ag-policy agenda. The Amur region established a “Soybean Cluster” and has expanded production and processing rapidly. Major oil mills in the Far East region include Rusagro, Amuragrostsentr and ANK holdings. Amuragrostsentr is currently planning to develop an isolated soy protein factory in the Soybean Cluster with a Chinese co-investor.

The Russian government had been providing a 50% subsidy for soybean transportation from the Far East to European Russia in order to increase soybean self-sufficiency. After Russia’s WTO accession in 2012, the export tax (20%) on soybeans was eliminated, and export opportunities become a reality. Although it is unclear if transportation subsidies from the Far East to European Russia are still in effect, non-GM soybean exports to Asian countries could expand under the current circumstances, which include favorable exchange rates.

Soybean meal production also has exceeded regional feed demand, which also indicates the potential to increase export of soybean meal or other vegetable protein products.

Livestock

Livestock is another area attracting investment, especially swine production. Current regional production supplies only 26% of the regional demand. Chicken accounts for 36% of meat production; pork is 32%; beef is 24%. Only swine production has been gradually increasing over the last five years, which will be doubled or tripled within another 2-3 years with investments from Mercy Trade, Rusagro and Skifagro. Although the region is struggling to control diseases, like African swine fever and avian flu several meat processing companies have received approval to export heat-treated products to Japan.

Vegetables

Vegetable production is another industry expected to expand. Regional vegetable production currently supplies only 46% of regional demand.

The Russian government reimburses 20% of the cost to buy and set up greenhouses, under its overall policy to increase self-sufficiency by 2020. With such government support, it is planned to expand 350 ha greenhouse area in Russia, which is 15% increase from the current greenhouse area of 2,300 ha in 2016. There are various plans on investments in Far East too, and Meros estimates these will add another 40 ha of greenhouse area within the next few years if these current plans materialize.