Russian invasion of Ukraine: Implications for the UK Seafood Supply Chain

The recent events playing out in Ukraine over the last few weeks are unimaginable and the impacts that this will have on us all are significant. It can seem odd to be discussing the ‘price of fish’ at a time like this, but seafood is one of the most heavily traded commodities and the horrific events taking place in Ukraine will impact on businesses and consumers in the UK, Europe and beyond.

We’re keeping a watching brief on how this might impact on the UK seafood supply chain. This article gives an overview of:

• global whitefish supply and Russia’s contribution to that supply
• the UK’s reliance on Russian raw material
• implications from possible trade sanctions and inevitable trade disruption

We will be updating information here as the situation develops. Please check back for updates. If you would like further information or if your business is seeing impacts and you would like to share intel with us, please contact seafish@seafish.co.uk.

Seafood Trade and Production

Global whitefish production

Global estimates of whitefish production for 2022 is approximately 7 million tonnes, with Alaskan pollock accounting for almost 50% of this.

Russia accounts for over 40% of global whitefish production, although it’s likely to be nearer 45% following the reduction in the US pollock Total Allowable Catch (TAC). It is the primary producer of Alaskan pollock (almost 60% share following the US TAC reduction) and produces over 30% of the global Atlantic cod supply and 25% of haddock.

Russian product has traditionally been exported to China for processing. In recent years, there has been significant Russian investment in at-sea and on-shore processing capability so we expect this trade to decline in future years. However the trade link between Russia and China is still important.

The UK is heavily reliant on imported whitefish. In 2020 the UK imported 432,000 tonnes with a value of almost £800m. This compares to domestic landings of cod and haddock of 47,200 tonnes in 2020.

Imports from Russia to the UK

The UK is not self-sufficient when it comes to domestic landings of whitefish. In order to meet consumer demand, whether in fish fingers or in fish and chips, we need to rely on imports. Russia has been an important source of these imports for almost 30 years.

Direct imports from Russia accounted for 48,000 tonnes in 2020 but a considerable proportion of Chinese whitefish imports into the UK (which totalled 143,000 tonnes in 2020) will also be of Russian origin. It is also likely that some Norwegian, Polish and German imports into the UK will include Russian product. An exact figure is difficult to calculate but we estimate that it will be more than 30%. However some businesses and some parts of the supply chain will be more affected.

The challenge is that there is not an obvious or quick substitute for this product if it is no longer available to UK businesses, and nor is there an option to simply increase supply. Whitefish is a highly competitive global commodity and most supply is already under contract. Where product is available, the UK will be competing on a global market so it will not be easy to find a substitute to Russian whitefish. Any changes to the available supply will  impact production; the products we expect to find in the supermarket freezer cabinet will either no longer be available or they will see significant price increases. Estimates are that raw material prices will increase at least by 20-30% as a result of current events. Margins are already tight across the processing sector and many businesses (especially smaller businesses) will not be able to absorb these costs.

The global whitefish supply chain has also been under significant pressure in recent years due to Covid (global impact) and EU Exit (UK impact). Recently there have been constraints on production in parts of China as some of the seafood processing hubs (Zhuanghe, Dalian) were put into lockdown in December and are only now reopening. This has constrained the volume of processed seafood  available and ongoing logistic issues in the shipping and freight sector are further delaying supplies reaching the UK.  

And it’s not just whitefish imports that are affected. Russia and Ukraine combined produce a quarter of the global wheat supplies, any disruption to this supply will affect the production of the batter and the breadcrumbs used by fish and chip shops, and frozen fish products sold in supermarkets and restaurants. Ukraine is also the main global producer of sunflower oil and while there are other vegetable oils available (rapeseed etc.) disruptions to market supply, price increases and production challenges will be inevitable as businesses seek to access and use alternative products. This will impact everything from fish fingers to fish and chips to tinned mackerel and tuna.

Exports to Russia and Ukraine from the UK

There has been limited export trade to Russia following the trade ban in 2014. However, there is a sizeable pelagic trade with the Ukraine. In 2020 the UK exported £25m worth of pelagic product. There are also some exports of salmon. This product will now need to find alternative markets.

Sanctions, trade disruption and price rises

While no formal sanctions or trade measures against seafood have been put in place, the current global situation is expected to result in significant disruption to UK seafood processing; rising fuel prices, delays to supplies, competition for product. This inevitably will result in cost increases and are expected to translate into higher food prices for consumers. It is impossible to predict how much prices will rise by, but they could be as high as 20-30%.

UK seafood businesses understand how difficult this will be, particularly for low-income families who are already struggling, so there is a great deal of work happening by businesses to find ways to minimise the impact this will have on consumers.

We’re working with the seafood industry to support them with any changes they may want to make to their supply chains in light of this situation.