Faulty regulation blamed as millions of fishery support wasted

A trout farm.

PHOTO: maablogi.wordpress.com

National Audit Office says support by European Fisheries Fund has failed to increase amount of native fish on Estonian kitchen tables. Fish farmers say the expectation is unrealistic and point to faults in the regulation governing distribution of the money. 

«Few of these remain,» says Priit Lulla, shareholder in AquaMyk OÜ of Saaremaa regarding the 44 enterprises that applied for support out of European Fisheries Fund framework for 2007–2013. «The four largest farms with systems built have the houses empty and basically bankrupt.» He was referring to Torgu Kala and Arowana in Saaremaa, Piscor OÜ in Rapla Parish, and Varbla Fishing Farm in Pärnu County.

«That’s what swallows the production capacity. The other issue is that in projects presented, the capacities are bluffed,» says Mr Lulla, explaining that projected capacity is one thing – showing how much water and fish a farm can let through – while real production capacity is something different, depending on skills and competence. «A Danish designer said Estonia might grow 150 tonnes of fish per farm in a year, but how and what the size of the fish might be, that was never discussed,» he says.

Thus, lots of recipients have indeed been able to make investments, but as in fisheries like in dairying for instance the turnover flows are reckoned in years, no money was found for circulating capital. «To produce a thousand tonnes of fish, one would have to lay three million euros on the table,» says the fish farmer.

-The difficult entry into retail chains

As for Mr Lulla’s own company, since 2009 he has gotten a total of €472,173 from the fund for three projects. But he admits it is not easy going – at the time, he is in the red. But he is  not giving up. «I have been around a bit longer (since 2006 – edit) and have overcome the difficulties on my own,» explains the fish farmer whose yearly production is about 100 tonnes.

While National Audit office reports that with potential of 4,300 tonnes a year local farmers provide less than 800 tonnes for Estonian consumers, Mr Lulla is among those whose fish mainly stays in homeland. Mostly, he sells to live fish tourism firms, retail, and catering.

He does admit, however, that for a lone farmer it is hard to sell to retail chains. «Rather, we sell to small players who are also fighting for their existence. With them we may cooperate, like inventing new products. The large retailers have one goal: get it cheap and in large volumes, quality matters not.» He says the only way to survive is marketing straight to consumer.

Tough to get into the chains, agrees Martin Liiv. In team with father Aarne Liiv, they are farming fish in Jõgeva County under Kalatalu Härjanurmes. Of the fisheries fund, for two projects they have received a total of €161,771.

«There are several costly criteria which make life hard for small producers, and eat away the profit. The chains want supply volumes and stability, and standard production,» says Mr Liiv. Even so, their rainbow trout, crawfish and carp are making it to Selver, Kaubamaja, Stockmann, Rimi, Maxima and Aldar counters.

-Regulation lured seekers of easy money

Asked about the modest volumes, Martin Liiv pointed to the requirements for fisheries fund support: «The project volumes vastly differing from reality are due to serious faults in state fishery and environmental policy, out of ignorance.»

He said an environmental sustainability clause inserted let to favouring of closed water systems which has not proven fit for Estonian market as resulting in trout of 400 grams while customers want fish weighing 1.5 to 2 kilograms.

Priit Lulla agrees that National Audit Office criticism is justified regarding the very regulation by rural affairs ministry which is too short and weak. «A small farm producing ten to 20 tonnes a year yet selling it all is much more sustainable than a 100 tonne farm favoured by the ministerial measure. Therein already was an error,» he says.

Mr Lulla says a big farm is only sustainable from a thousand tonnes and up i.e. having bargain power on the market. «We have told the ministry that the regulation does not work, but in vain,» says Mr Lulla.

Meanwhile, he says, the weakness of the regulation allows for multiple interpretations in court cases. «It was like a lure that drew a dozen newcomers into the industry but nearly none of these remain,» says Mr Lulla. To this agrees a rare farmer able to present both growth in production and decent profits.

«There were people coming into fish farming we had never heard of before, and wanted to build a farm someplace – the EU money was attractive, see» says Hans Kruusamägi, a fish farmer since 1998, whose Simuna Ivax has drawn €869,207 from the fund.

-The fish feed limits

«We sell wholesale volumes: ten tonnes or around that. Not having processing option at the moment, we order pre-processing at licensed departments,» says Mr Kruusamägi whose couple-of-hundred tonnes a year goes to Selver, Prisma and other chains operating in Estonia.

«Estonian fish is good fish, we have never had problems with marketing,» he says while adding he foresees no giant leap in production volume near term.

«The key is feed, making up main part of own price. Feed costs much and at that production is very difficult in our conditions. We are not Norway, we mainly farm the fish in summer and in closed conditions you don’t grow large 1.5 kg ones,» he explains.

But he assures us that one day Simuna Ivax will make it to planned 800 tonnes a year: «We had production shrink a bit. When you are building, you cannot produce fish along with that in same volumes.»