The fishing industry of Ukraine can bring billions of hryvnias to entrepreneurs, and millions to the state budget
For this, the industry needs to be reformed. In 2023, the Ministry of Agrarian Policy launched systemic changes aimed at several goals.
The first is to simplify the conduct of the fishing business, for which it is necessary to minimize the contacts of entrepreneurs with state bodies and introduce modern digital services. The second is to de-monopolize the industry, create healthy competitive operating conditions on the market and tools for attracting investments. The third is to implement the legislative requirements of the EU, which will contribute to the European integration of Ukraine and open up European markets for our business.
For this reason, the state, in particular, fights against illegal, unaccountable and uncontrolled fishing. According to the estimates of various experts, the shadow market before the start of the reform amounted to 6 to 9 billion UAH. Individual players are not interested in the development of the industry, in the introduction of modern digital solutions and in paying taxes to the state budget. The reformers are forced to overcome the opposition of unscrupulous entrepreneurs, but they are determined to develop and improve a promising industry, which is extremely necessary in the conditions of war.
What has already been launched: eRyba platform, electronic auctions and GPS tracking of fishing vessels
The reform of the fisheries industry began in 2023 at the initiative of the Ministry of Agriculture, the Ministry of Statistics, the State Fisheries Agency and experts from the BRDO Effective Regulation Office. Law No. 2989-IX was the first step and the basis for the digitization of the industry.
The document finally established electronic auctions for the right to special use of aquatic bioresources in fishery water objects (before that, they were already operating, but based on an experimental resolution of the CMU). The competitive sale of contracts ensures that every business has equal access to a common natural resource. In this way, the industry is demonopolized, and the market comes out of the shadows. Figures to confirm: in 2023, electronic auctions brought 95 million hryvnias to the state and local budgets, in the first two months of 2024 – 45 million hryvnias. Before the reform, the amount of revenues for special use did not exceed 13 million hryvnias per year.
The law also introduced the Unified state electronic management system for the fishing industry – eRyba, which allows entrepreneurs to receive government services and permits online. It also marked the beginning of the implementation of EU legislation, which is the basis for the Common Fisheries Policy of European countries.
The first services are already available on the eRyba platform, for example, electronic declaration of the right to commercial fishing. The instrument of state regulation is a new European integration requirement for Ukrainians, similar to the European license for the right of industrial fishing. However, the Government introduced a simpler tool for business – declaration instead of licensing.
The declaration system became an important tool for bringing the market out of the shadows and made it possible for the first time to identify fish reception points as a special place of accounting for aquatic biological resources. During the reform period, 147 new fish reception points were registered, which is 42% of the total number of existing ones (349). A system of remote monitoring of vessels using GPS trackers was also implemented. Since the beginning of the tracking requirements, entrepreneurs have declared 313 new vessels. Before that, 982 ships were officially operating in this field, that is, in just two months, their number “increased” (actually – detinized) by 31%.
Before the reform of the fisheries sector, the state actually did not have reliable data either on the accounting of aquatic biological resources at fish reception points or on the fishing vessels used by the subjects of the fishery. There were cases when two fishing vessels caught under the same registration number, or when one vessel was simultaneously registered by two users, which created conditions for market shading.
How to further bring the Ukrainian fish market out of the shadows?
Full traceability of fishery products is not a whim of Ukrainian legislators, but a mandatory requirement of the EU. Ukraine can become Europe’s leading exporter of fish and mariculture, including oysters, mussels, shrimp, and sturgeon. But in order for our producers to open European markets, the reform must continue.
The Government is currently planning the following steps to combat the illegal circulation of aquatic biological resources and combat shadow business:
– introduction of digital contracts for the right to special use of water bioresources in fishery water bodies;
– transfer of the procedure for obtaining permits for the special use of aquatic bioresources in fishery water bodies for industrial fishing and experimental fishing to an online format;
– introduction of digital logs of fisheries activity;
– marking of fishing gear.
Draft law No. 9545, which is currently awaiting first reading in the Verkhovna Rada, will allow guaranteeing the legality of the origin of Ukrainian fish. The document will introduce a system of traceability of aquatic biological resources from the place of the catch for sale to the final buyer or export. The control will extend to both the field of commercial fishing and the aquaculture sector (artificial fish farming), and electronic waybills will be used for this.
Aquaculture production is a particularly promising direction of entrepreneurship, taking into account its environmental friendliness. In order to achieve sustainable extraction of aquatic bioresources, the EU reduces fish catch every year. Thus, in 2024, it is planned to reduce the catch in the Mediterranean Sea by 9.5%. In 2022, the volume of the world aquaculture market was 75.6 million tons ($289.6 billion), by 2028, according to international experts, it will reach 100.3 million tons ($421.2 billion). Unfortunately, the Ukrainian market is currently lagging behind the world market in terms of technological level and growth rate – currently we produce only 0.02% of aquaculture products in the world.
We can borrow practices for stimulating business in the field of aquaculture from successful neighbors. Norway, a major global producer, replenishes the state budget by $600 million every year only through auctions for the right to aquaculture activities in the country’s coastal zones. Only 20% of these revenues are kept by the state, 80% are directed to the Aquaculture Fund, which is redistributed to scientific developments and industry support. A similar Fisheries Development Fund can be introduced in Ukraine as part of the state budget fund of Ukraine and filled with funds received from auctions and fines for violation of fishing rules. Further, the money would be allocated to the reproduction of aquatic biological resources, the equipment of modern fish reception points, the purchase of refrigeration units, the renewal of equipment for aquaculture and the development of scientific activities.
Bill No. 8119, which is also pending consideration by deputies, is designed to increase the industry’s investment attractiveness and stimulate the emergence of new enterprises. The document will introduce competitive and transparent auctions for the sale of rights to invest in the development of aquaculture. The auction will take into account the efficiency of economic activity, the impact on the environment, the creation of new jobs, the economic benefit for the state and the possibility of entering export markets.
The last point is critically important for the import-dependent Ukrainian economy: currently 80% of the domestic consumption market consists of fish and fish products imported from abroad. Domestic aquaculture has sufficient potential to change this indicator and leave in the country at least a part of the currency that goes out of the economy of Ukraine every year – which is $389.4 million in 2023 alone.
The country should use its favorable geographical location to open new markets and sell fish and mariculture products to Europe. The fishing industry of Ukraine can become a modern and profitable branch of the economy, which will benefit both entrepreneurs and the state. But for this, the world and European partners expect from us effective solutions aimed at preserving the environment and fighting corruption risks in the industry, so the reform must continue.
The opinion was published in Delo.ua