Russia’s ongoing military aggression in Ukraine affects many parts of European economies, including the functioning of the fisheries sector.
In the Polish marine and inland fisheries, the aquaculture sector, and the processing industry liquidity and labour problems which started during the Covid-19 pandemic have been aggravated by the war in Ukraine. The disruption of supply chains in both Ukraine and Russia has caused difficulties for companies exporting their products to the East and made it necessary to find new markets.
As a consequence of the war in Ukraine costs incurred by marine fisheries increased noticeably. This follows the increase in fuel prices, which no longer shadow the world’s oil price quotations. Increases in the cost of fossil fuels and electricity directly impacts the cost of ice production, of marine fuel, of lubricants derived from oil production, and of protective clothing produced in Asian countries and transported by sea. A significant component of the cost of fishing activities is the cost of leasing fish boxes. This figure has increased with the allocation of a significant number of them to the needs of the Ukrainian fleet, which, unable to use its home infrastructure, uses the storage space in Polish ports. The increase in prices reflects the reduced supply of fish boxes available to Polish fishermen in Polish ports. This has resulted in increases in port and landing fees, the cost of repairs and maintenance of fishing boats, and prices for additional services such as transport and accounting.
Another effect of Russia’s aggression has been an increase in wage costs for employers who employed Ukrainian nationals before the war began. The companies found themselves seriously short of workers as the Ukrainians left to defend their homeland. The need to replace these workers with a new workforce generated additional costs. As recently as 2021, Ukraine and Russia were among the globally most significant producers of cereals and vegetable oils. As they are the main feed ingredients in the production of poultry, pork, and cattle, the increase in their prices has caused an upward spiral in feed and food prices and disrupted trade. Feeding the population has become a greater burden.
Since the first days of the Russian aggression, Poland has shown great commitment to helping both refugees and the people fighting for freedom on Ukrainian territory. Many businesses and individuals have shown generosity and creativity in supporting these efforts—marine fishermen included. Polish fishing organisations have donated significant quantities of fish boxes to the Ukrainians, which are useful for logistical operations, as well as fishing nets, which are used in the production of camouflage nets. The increased demand on the Polish market for new boxes and fishing gear has resulted in a marked increase in their prices.
The Polish inland fishery is mainly based on professional lake fishing and the sale of angling permits. Inland fishing activities are closely linked to aquaculture, which, in addition to fish farming and breeding (mainly carp and trout), is also involved in the production of stocking material. Both branches experienced a spike in production costs because of market disruption following Russia’s aggression in Ukraine. The increase affected the inland fisheries and aquaculture industry as a whole, irrespective of a farm’s geographical location in the country, its size, or business profile. The significant changes in costs were mainly in the material and energy prices.
Fish feed prices also increased dramatically (30-40%) due to shortages and increases in feed component prices, in particular: wheat, maize, and rapeseed-based components (including rapeseed oil), other vegetable oils or fish meal. In aquaculture, the cost of purchasing or producing fish feed is the main driver of operating costs. In addition, the drastic increase in the price of fuels, particularly diesel, which is usually purchased at retail prices, has increased operating costs. These fuels are used for vans, half-trucks, and trucks, as well as agricultural tractors (needed for hydro works, including, cultivating the bottom of earthen ponds, or hauling equipment, field supplies, transporting crew, or distributing fish) and powered boats on ponds (feeding, distributing lime oxide); and lake boats.
For aquaculture, the effects of the war have combined with the impacts of the Covid-19 pandemic. Oxygen prices, for instance, have increased by 20% compared to pre-pandemic prices. This increase is due to the rise in energy prices, the cost of which accounts for 70% of the cost of producing oxygen. As it is used to oxygenate fish-ponds and tanks—it is another element contributing to the increase in production costs in aquaculture. The upward spiral in prices resulted in a significant increase in investment costs in the construction and modernisation of fish farming facilities—in particular, increases in the costs of labour, concrete, rebar, and of specialised equipment. All these factors are driving up production costs in aquaculture. This has a significant impact on other activities as some aquaculture facilities are involved in the production of stocking material, which forms the basis of production for other fish farms as well as for inland fisheries.
The ongoing war in Ukraine continues to have a significant negative impact on the prosperity of the Polish fish processing industry. The first impact was lower demand from countries in the East and other trading partners within the European Union. The second was disruptions to supply chains. Representatives of the fish processing sector point mainly to shortages of raw materials and extended delivery times for raw and other materials. The disruption in trade flows of key commodities of the fisheries and aquaculture sector resulted in sharp spikes in the prices of key fish raw materials, such as salmon, mackerel, trout, and sprat. Changes in raw material prices are a significant factor in higher total costs, as fish raw material accounts for as much as 85% of the value of “material and energy consumption” costs. Logistical problems, decreased availability of workers, and broken supply chains create concerns about the availability of some white fish.
The war in Ukraine has also contributed to rising cost-price pressures. It is noteworthy that at least 83% of processing companies signalled an increase in input prices in April, and at least 80% an increase in finished goods prices. Faced with widespread price increases and the expected continuation of this trend, companies have opted to build up buffer stocks to offset the impact of inflation and supply shortages in the coming months. There was also an increase in electricity prices as a result of Russia’s aggression against Ukraine. This was mainly due to high generation costs, i.e. an increase in the price of coal, which is the main conventional source of electricity in Poland. Russia’s invasion of Ukraine is also translating into a sharp increase in the price of thermal coal, as selected European countries banned the import of Russian coal.
At least a partial easing of the crisis in the sector is possible thanks to the European Maritime and Fisheries Fund. EU rules allow for support from the EMFF for specific measures to mitigate the impact of market disturbances caused by the Russian-led aggression against Ukraine, such as threats to the safety of fishing activities or impediments to the viability of fishing operations that affect the supply chain of fisheries and aquaculture products. These measures will compensate operators in the fisheries and aquaculture and fish processing sectors for the additional costs they incur due to the market disruption.
Based on these European Union regulations, the Ministry of Agriculture and Rural Development has developed a war compensation scheme for the fishing sector. Under this scheme, owners of marine fishing vessels, fish processing companies, fish farmers and representatives of the inland fishing industry can apply for assistance.