Comprehensive analysis of challenges and opportunities of aquaculture industry in Ukraine, bestpractice experience and policy recommendations

1. 1
Roadmap on Aquaculture
Development in Ukraine
Comprehensive analysis of challenges and
opportunities of aquaculture industry in Ukraine, best-
practice experience and policy recommendations
November 2017
Kyiv, Ukraine

2. 2
EXECUTIVE SUMMARY
Sources: EasyBusiness
PROJECT DESCRIPTION PROJECT OUTCOME
CONDUCTED VALUE CHAIN ANALYSIS AND CASE STUDIES
Value chain analysis and business case studies through site visits to
companies operating within the land-based, pond-based and cage-based
aquaculture types
ANALYZED KEY MARKET INDICATORS OF AQUACULTURE INDUSTRY
Comprehensive aquaculture market assessment focused on definition of main
prospect of doing business in aquaculture and identification of key market
indicators and trends
MADE ANALYSIS OF INTERNATIONAL EXPERIENCE
Comparative analysis with international “best practice” (5 countries focused on
three aquaculture types)
DEVELOPED POLICY RECOMMENDATIONS
Specific recommendations for further development of Ukrainian aquaculture
industry were formulated
PERIOD 02/2017-09/2017DONORS STAKEHOLDERS State Fisheries Agency
A comprehensive analytical report developed
as a Roadmap for further improvement of
Aquaculture industry in Ukraine
Based on the analysis of aquaculture industry in Ukraine along with
the study of international experience, the Roadmap was developed

3. 3
In 2016, 82% of seafood demand was imported, while domestic
aquaculture has opportunity to improve its production volumes
INDUSTRY OVERVIEW
34
888991
226204211219
257245214229
266
226248
293
333350342
300
200
1 000
800
1 100
900
100
0
1 200
931
993
23
997
618
24 2424
1 064
2826 19
1 169
1 021
2008
822
779
2006
2631 31
814 806
771
31
2005 2007 2010 20142001 20092000
934
20161999 2004 20132011
984
20032002
24 22
616
872
2012
2124 23
914
1 070
29
2015
Total aquaculture production in Ukraine, thsd tons
Total catch of fish and other aquatic bioresources in Ukraine, thsd tons
Total fish and seafood products consumption in Ukraine, thsd tons, %
Sources: EasyBusiness
Financial crisis
caused the
decrease of fish
and seafood
consumption
Tough economic
situation due to the
Crimea annexation
and war caused both
decline of fish catch
and consumption

4. 4
The low level of production of domestic aquaculture producers is
mainly caused by their comparatively low competitiveness…
INDUSTRY OVERVIEW
Overview
AQUACULTURE INDUSTRY PRODUCER PROFILE VALUE BREAKDOWN OF AQUACULTURE IN UKRAINE
Business
model
▪ More than 10 years of average
life cycle
▪ Mainly pond-based aquaculture
▪ Most popular cultivated species
are carps and pike
▪ Average total production is 700
tons
▪ Average productivity is 10 kg
per hectare
▪ Average profitability is 20%
Challenges
▪ Bureaucracy and corruption
▪ Low purchasing power of
buyers
▪ Absence of governmental
support and high taxation
100
7
2
11
2
1
7
10
60
Rent
Salary
Brood stock supply
Energy resources
Feed
Fish intesification
Other costs*
Transport
Input
Production
Post
production
* - Other costs that account ~7% of production cost are distributed among
three stages and depends on the company.
Total
Sources: EasyBusiness

5. 5
… that is tightly connected to the unfavorable industry conditions for
doing business characterized by the bureaucratic legal framework
INDUSTRY OVERVIEW
Water body
lease agreement
Land lease
agreement
Waterworks
lease agreement
Special water
use permit
Veterinary
documents
Number of
Permits
Timing
(days)
Fee
(EUR)
23
827 days
3740 EUR
1 14
Only in some
cases
1 7
15 272 90 450
52 1218 0 2470
Only in some
cases
Only in some
cases
Sources: EasyBusiness

6. 6
In order to improve business environment in the Ukrainian
aquaculture industry, international experience was studied
INTERNATIONAL EXPERIENCE
Sources: EasyBusiness
PREVAILED TYPE OF
AQUACULTURE Cage-based
NORWAY DENMARK POLAND
RANKING IN THE WORLD
MAIN FISH EXPORTERS
NUMBER OF KEY
PERMITS
FISH PER CAPITA
CONSUMPTION (KG) 53.3
1
2
LITHUANIA
Land-based
13.5
3
8
Pond-based
19.0
3
79
Pond-based
12.5
3
61
NUMBER OF KEY
REGULATORY BODIES
COMPLIANCE WITH EU
REGULATIONS
3
YES
5
YES
3
YES
2
YES
GOVERNMENTAL
ECONOMIC INCENTIVES YES YES YES YES
TOTAL AQUACULTURE
PRODUCTION ($US MLN) 7607 122 12 112
UKRAINE
Pond-based
9.0
9
N/A
8
NO
NO
42
The worst performed countryThe best performed country

7. 7
Having analyzed best international practices in aquaculture industry,
a set of policy recommendations was formulated
POLICY RECOMMENDATIONS
Sources: EasyBusiness
MAIN
SOLUTIONS
TO THE
CHALLENGES
§ Approve a typical rental contract form
§ Grant a special water use permit along
with the other issued by the same institution
§ Remove the duplicated veterinary permits
Decreased the time and
money needed to receive
relevant permits
Established clear
procedures for renting water
bodies and hydraulic works
DUBLICATIONS
OF PERMITS
LACK OF
PROPER
INFRASTRUCTURE
OBSOLETE AND
UNCLEAR
PROCEDURES
UNEQUAL
TAXATION AND
TENDER SYSTEM
Increased profitability of
aquaculture companies
Increased capability and
profitability of industry
§ Clarify the legal status of water bodies
§ Establish the responsibility to provide all
relevant waterworks to the renter
§ Improve veterinary norms for examination
§ Add the aquaculture producers to the list of
special taxation treatment
§ Establish equal conditions for land tender
procedures
§ Create the aquaculture educational
centers and training platforms
§ Introduce domestic fish food production
§ Open modern research centers
RECOMMENDATIONS EXPECTED OUTCOME

8. 8
The project is sustainable and divided into 2 stages from the
development of the policy recommendations to its implementation
PROJECT SUSTAINABILITY
Sources: EasyBusiness
RESULTS OF STAGE 1
§ Duplication of permits that is
followed by the existence of
several rental contract types
§ Obsolete and unclear
procedures that facilitates
development of corruption and
bribery
§ Unequal taxation and tender
system that creates room for
untransparency
§ Studied Ukrainian aquaculture
industry along with the best
international practices
§ Compared Ukrainian and
international aquaculture
industry conditions
§ Developed policy
recommendations for
aquaculture industry
improvement
§ Adjusted current legislation
based on the policy
recommendations
§ Improved business
environment in the
aquaculture industry that
would facilitate the growth of
aquaculture production
§ Set up of new Ukrainian
aquaculture industry
businesses
RESULTS OF STAGE 2
STATUS QUO
CURRENT STATE

9. 9
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