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Russian largest aquaculture producer seeks to acquire a new hatchery

Inarctica, formerly Russian Aquaculture, is reportedly in negotiations to acquire a large hatchery near Kaluga, 200 kilometres southwest of Moscow, to strengthen its vertical integration and ramp up Atlantic salmon production.

The Russian newspaper Kommersant reported that Inacrtica was in talks to buy Aquaculture Breeding Center LLC, growing 16 million units of salmon and trout fry per year. The hatchery used to import caviar from the United States, Denmark and France, supplying clients in central Russia with broodstock during the past several years.

Inarctica breeds salmon and trout (Salmo gairdneri) at 40 water plots in the Barents Sea and lakes of Karelia in the Russian northwest. In 2021, the company saw its sales rise 80 per cent compared to the previous year, to 27,900 tonnes, which spurred revenue by 91%, to 15.9 billion roubles ($230 million). The company belongs to Maxim Vorobyov, brother of the governor of the Moscow region Andrei Vorobyov.

Inarctica confirmed the plans to acquire Aquaculture Breeding Center LLC, adding that the deal has not been finalized yet and its terms are still under discussion. The company also told Kommersant that it was elaborating on a strategy for developing this asset as a part of the holding company.

Ilya Bereznyuk, a managing partner of Moscow-based think tank Agro & Food Communications, assumed that Inarctica strives to build a closed-loop business in which it would control all stages of the supply chain. Bereznyuk went on saying that by having its own broodstock production, the company could better control the quality of the final product and mitigate rising production costs.

In addition, having broodstock production could pave the way for Inactctica to boost red fish production, said Alexander Fomin, executive director of the Russian fish market association. A research conducted by Moscow-based consulting agency SberCIB showed in 2021, Russia imported roughly 100,000 tonnes of redfish, primarily from the Faroe Islands and Chile. Since the beginning of the Russian invasion of Ukraine, the Faroe Islands have curtailed shipments to the Russian market. Also, supplies from Chile have nearly stopped.

In this background, the average price of redfish in the Russian market has nearly doubled, reaching 2,500 rubles per kg ($42) per kg of chilled fish and 1,300 rubles ($22) per kg of frozen. Tatyana Kozlova, a senior analyst of the Russian consulting group SRG, said that given the price dynamics on the market, red fish becomes “a product of the wealthy people.” She also stated that the development of salmon and trout hatcheries in the country in such circumstances is very welcomed, and this segment requires substantial state aid since the potential demand on the market is enormous.