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Calculation of mandatory requirements in the fishing industry
(extended SCM model)
Requirements group No. 7:
Veterinary and sanitary control of aquatic biological resources
(ABR) - Preparation of documents, passing expertise
July 2020
The information about research project
WHAT DID WE MEASURE? WHAT DIDN’T WE
MEASURE?
2
Notes:
Ø “Business as usual” costs are excluded from the calculations
Ø All calculations cover 15 years evaluation period
(according to duration of “catching history quotas”)
Regulatory costs in the fishing industry
Standard costs Potential losses
(waste)
Direct costs
When fulfilling requirements
ü Labor costs (preparation
and submission of
documents, training,
instructions)
ü Costs of services from
external providers
(development of
documents, training,
certification)
ü Associated costs
(transportation, postage,
administrative fees)
When fulfilling requirements
ü Costs for purchasing and
installing equipment
ü Equipment maintenance
and repair costs
During vessel downtime /
excessive mileage
ü Estimated monetary value
of under-caught ABR
ü Monetary value of fuel,
vessel maintenance, crew
remuneration for excessive
mileage
ü Taxes and
fees
ü Penalties for violation of
requirements and norms
(it is assumed that
companies fulfil 100%
of all requirements)
ü Informal
payments
(corruption)
General formula
for calculating
costs and
losses (waste)
The resulting
amount of costs and
losses (waste) is
multiplied by by the
average frequency
of a requirement
fulfilment and by the
number of
homogeneous
objects (companies
/ vessels / batches
of products)
3
Standard costs Potential losses
(waste)
Direct costs
Associated costs
transportation, postage, administrative
fees, stationery
The cost of
one
associated
cost
The number
of associated
costs
Costs of service fees from external
providers
development of documents, conducting
trainings and certification
The cost of
one service
The number
of provided
services
Labor costs
for preparation and submission of
documents, training and certification,
passing instructions
Hourly wage
rate
The number
of hours
spent
Costs of service fees from external
providers
project documentation development,
installation, repair and maintenance of
equipment
The cost of
one service
The number
of provided
services
Labor costs
for the preparation, conclusion and
certification of contracts with external
providers
Hourly wage
rate
The number
of hours
spent
Direct costs
purchase of equipment necessary to
fulfill regulatory requirements
The cost of
equipment
The quantity
of equipment
Lost profit
Estimated monetary value of under-
caught ABR
Catch value
(per hour of
vessel
operation)
The number of
downtime /
excessive
mileage hours
Vessel maintenance costs
cost of fuel spent during downtime /
excessive mileage
Fuel cost (per
hour of vessel
operation)
The number of
downtime /
excessive
mileage hours
(if any) Labor costs
during vessel downtime / excessive
mileage
Hourly wage
rate
in the fishery
The number
of downtime /
excessive
mileage
hours
The progress of
the calculations
for the group No. 7
August 2019 –
July 2020
Determination of
compliance costs,
as well as direct
costs and losses
(waste) caused by
regulatory
requirements.
Regulatory requirements related to
veterinary and sanitary control and
generating standard costs for fishing
enterprises were analytically identified in
the group No. 7.
1
10+ REQUIREMENTS FOR THE GROUP
No. 7
11 interviews were conducted with
business and experts (Moscow, regions of
the country / in person or via zoom) to
identify key issues related to the fulfilment
of the group No. 7 the requirements.
2
September - October 2019
Quantitative estimates for calculating costs and losses
(waste) were obtained during a survey of fishing
companies.
Each surveyed company received from 1 to 3 survey
forms for the group No. 7 (standard costs, direct
costs and losses).
3
November 2019 - January 2020
During the obtained data
integration, the structure and
volume of compliance costs per
1 object (company or a product
batch) were formed.
4
The results of costs and losses (waste)
calculations were verified during a
separate expert panel participated by
industry representatives, incl. by
videoconferencing from the regions.
6
March 25,
2020
Sanitary and veterinary
control
February 2020
3 – per company; 7 - per batch of products
For further calculations we used the following:
1) the number of quota-owning companies;
2) the industry-wide number of fish product
batches calculated on the basis of the total
capture volume of ABR and the average net
tonnage of fishing vessels.
5
March 2020
The calculations were adjusted based on the additional survey and analysis of open source data on
the cost of veterinary laboratory services.
7
June - July 2020
Analyzed regulatory requirements in the group №7
STANDARD REQUIREMENTS FOR A COMPANY
STANDARD REQUIREMENTS
PER BATCH
Order of the Ministry of Agriculture of Russia of October 6, 2008 No. 453
5) The need to submit an application to the territorial department of Russian Agriculture
Control Body (Rosselkhoznadzor) in the region where (from) it is planned to import / export
products
6) The need to obtain permission from the Chief State Veterinary Inspector for the export of
thermally unprocessed fish
7) The obligation to conduct an examination for parasitic purity, the presence of bacterial and
viral infections when exporting commercial marine and freshwater fish
Order of the Ministry of Agriculture of
Russia of October 6, 2008 No. 453
2) The requirement for the mandatory
inspection of an economic entity for
compliance with the requirements of the
legislation of the Russian Federation in the
established field of activity in order to be able
to export products from the territory of the
Russian Federation
Decision of the Commission of the Eurasian
Economic Union of June 18, 2010 No. 317
1) The obligation to be included in the
Register of Enterprises of the Eurasian
Economic Union in case of intention to move
controlled goods from the territory of one
Member State to the territory of another
Uniform norms for the output of products of
processing of aquatic biological resources,
VNIRO Publishing House, 2017
3) Manufacturing and prolongation of
individual product yield standards
Law of the Russian Federation of May 14, 1993 No. 4979-1; Order of the Ministry of
Agriculture of Russia of December 27, 2016 No. 589
1) The obligation to conduct a veterinary and sanitary examination of animal origin products
2) The need to issue a veterinary certificate (Form 5i) for fish, crustaceans, mollusks,
aquatic animals, other fishery objects and products of their processing exported from the
Russian Federation
Order of the Ministry of Agriculture of Russia of December 18, 2015 No. 648
4) The obligation to issue veterinary accompanying documents for fish and crustaceans,
mollusks and other aquatic invertebrates
Order of the Ministry of Agriculture of Russia of October 13, 2008 No. 462
3) In case of doubt about the safety of fish or caviar – conducting laboratory tests, including:
microbiological, toxicological studies
5
Key assumptions made during research project
CALCULATIONS OF COSTS AND LOSSES (WASTE)
65% of all product batches are
exported. The share of exports
is calculated as the exports
volume divided by the total
capture volume and multiplied
by the average ABR processing
ratio of ~67%.
100% of export batches and
30% of batches for the
domestic market undergo the
laboratory testing procedure.
Individual standards are
required for 40% of the
industry-wide number of
product positions. 20% of
positions are produced
annually, 80% of positions are
extended.
The industry-wide number of
fish product positions is equal
to the product of the number
of product types for each type
of ABR and the number of
companies that catch this type
of ABR.
6
7
REQUIREMENTS GROUP NO. 7
“Veterinary and sanitary control
(preparation of documents, passing expertise)
MOST EXPENSIVE REQUIREMENTS
COSTS ON A 15-YEAR PERIOD
DIRECT COSTS
13.56 billion RUR per year
~ 203.36 billion rubles (RUR)
AVERAGE COSTS PER 1 YEAR
~ 13.56 billion RUR
STANDARD COSTS
no
in % of the total cost for group No. 7
9 % 9.364
billion RUR
per year
The requirement of laboratory tests in
case of doubt about the safety of fish or
caviar
6
5 % 0.648
billion RUR
per year
The need for manufacturing and
prolongation of individual product yield
standards
9 % 2.562
billion RUR
per year
The requirement of issuing a veterinary
certificate (Form 5i) for fish, crustaceans,
molluscs, aquatic animals, other fishery
objects and products of their processing
exported from the Russian Federation
1
5 % 0.733
billion RUR per
year
The requirement of to conduct a veterinary
and sanitary expertise of the products of
animal origin
An example of calculating standard costs for 15-year assessment period
The requirement of issuing a veterinary certificate for fish, crustaceans, molluscs, aquatic animals, other fishery
objects and products of their processing exported from the Russian Federation (Form 5i)
COST OF THE REQUIREMENT
PER 1 BATCH
THE NUMBER
OF BATCHES*
11 531.9 RUR
FREQUENCY AVERAGE COST OF FULFILING
THE REQUIREMENT
~222 thousand 15 times in 15 years 38.431 billion RUR
WAGE RATE
430 RUR / hour
LABOR COSTS FOR THE PREPARATION AND VERIFICATION
OF THE PACKAGE OF DOCUMENTS
LABOR COSTS
1.5hours 645.0 RUR
COST OF SERVICES ON EXAMINATION OF DOCUMENTS, INSPECTION OF A PRODUCT
BATCH, ISSUANCE OF A CONCLUSION FOR EXPORT OF FISH PRODUCTS
10 530 RUR
WAGE RATE
430 RUR / hour
LABOR COSTS FOR SUBMISSION OF DOCUMENTS VIA AIS
MERCURY
LABOR COSTS
0.83hours 356.9 RUR
* equal to 65% of the total number of
batches

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Integration PowerPoint covering various areas
Integration PowerPoint covering various areasIntegration PowerPoint covering various areas
Integration PowerPoint covering various areas
 

Calculation of compliance cost: Veterinary and sanitary control of aquatic biological resources (ABR) in Russia

  • 1. 1 Calculation of mandatory requirements in the fishing industry (extended SCM model) Requirements group No. 7: Veterinary and sanitary control of aquatic biological resources (ABR) - Preparation of documents, passing expertise July 2020
  • 2. The information about research project WHAT DID WE MEASURE? WHAT DIDN’T WE MEASURE? 2 Notes: Ø “Business as usual” costs are excluded from the calculations Ø All calculations cover 15 years evaluation period (according to duration of “catching history quotas”) Regulatory costs in the fishing industry Standard costs Potential losses (waste) Direct costs When fulfilling requirements ü Labor costs (preparation and submission of documents, training, instructions) ü Costs of services from external providers (development of documents, training, certification) ü Associated costs (transportation, postage, administrative fees) When fulfilling requirements ü Costs for purchasing and installing equipment ü Equipment maintenance and repair costs During vessel downtime / excessive mileage ü Estimated monetary value of under-caught ABR ü Monetary value of fuel, vessel maintenance, crew remuneration for excessive mileage ü Taxes and fees ü Penalties for violation of requirements and norms (it is assumed that companies fulfil 100% of all requirements) ü Informal payments (corruption)
  • 3. General formula for calculating costs and losses (waste) The resulting amount of costs and losses (waste) is multiplied by by the average frequency of a requirement fulfilment and by the number of homogeneous objects (companies / vessels / batches of products) 3 Standard costs Potential losses (waste) Direct costs Associated costs transportation, postage, administrative fees, stationery The cost of one associated cost The number of associated costs Costs of service fees from external providers development of documents, conducting trainings and certification The cost of one service The number of provided services Labor costs for preparation and submission of documents, training and certification, passing instructions Hourly wage rate The number of hours spent Costs of service fees from external providers project documentation development, installation, repair and maintenance of equipment The cost of one service The number of provided services Labor costs for the preparation, conclusion and certification of contracts with external providers Hourly wage rate The number of hours spent Direct costs purchase of equipment necessary to fulfill regulatory requirements The cost of equipment The quantity of equipment Lost profit Estimated monetary value of under- caught ABR Catch value (per hour of vessel operation) The number of downtime / excessive mileage hours Vessel maintenance costs cost of fuel spent during downtime / excessive mileage Fuel cost (per hour of vessel operation) The number of downtime / excessive mileage hours (if any) Labor costs during vessel downtime / excessive mileage Hourly wage rate in the fishery The number of downtime / excessive mileage hours
  • 4. The progress of the calculations for the group No. 7 August 2019 – July 2020 Determination of compliance costs, as well as direct costs and losses (waste) caused by regulatory requirements. Regulatory requirements related to veterinary and sanitary control and generating standard costs for fishing enterprises were analytically identified in the group No. 7. 1 10+ REQUIREMENTS FOR THE GROUP No. 7 11 interviews were conducted with business and experts (Moscow, regions of the country / in person or via zoom) to identify key issues related to the fulfilment of the group No. 7 the requirements. 2 September - October 2019 Quantitative estimates for calculating costs and losses (waste) were obtained during a survey of fishing companies. Each surveyed company received from 1 to 3 survey forms for the group No. 7 (standard costs, direct costs and losses). 3 November 2019 - January 2020 During the obtained data integration, the structure and volume of compliance costs per 1 object (company or a product batch) were formed. 4 The results of costs and losses (waste) calculations were verified during a separate expert panel participated by industry representatives, incl. by videoconferencing from the regions. 6 March 25, 2020 Sanitary and veterinary control February 2020 3 – per company; 7 - per batch of products For further calculations we used the following: 1) the number of quota-owning companies; 2) the industry-wide number of fish product batches calculated on the basis of the total capture volume of ABR and the average net tonnage of fishing vessels. 5 March 2020 The calculations were adjusted based on the additional survey and analysis of open source data on the cost of veterinary laboratory services. 7 June - July 2020
  • 5. Analyzed regulatory requirements in the group №7 STANDARD REQUIREMENTS FOR A COMPANY STANDARD REQUIREMENTS PER BATCH Order of the Ministry of Agriculture of Russia of October 6, 2008 No. 453 5) The need to submit an application to the territorial department of Russian Agriculture Control Body (Rosselkhoznadzor) in the region where (from) it is planned to import / export products 6) The need to obtain permission from the Chief State Veterinary Inspector for the export of thermally unprocessed fish 7) The obligation to conduct an examination for parasitic purity, the presence of bacterial and viral infections when exporting commercial marine and freshwater fish Order of the Ministry of Agriculture of Russia of October 6, 2008 No. 453 2) The requirement for the mandatory inspection of an economic entity for compliance with the requirements of the legislation of the Russian Federation in the established field of activity in order to be able to export products from the territory of the Russian Federation Decision of the Commission of the Eurasian Economic Union of June 18, 2010 No. 317 1) The obligation to be included in the Register of Enterprises of the Eurasian Economic Union in case of intention to move controlled goods from the territory of one Member State to the territory of another Uniform norms for the output of products of processing of aquatic biological resources, VNIRO Publishing House, 2017 3) Manufacturing and prolongation of individual product yield standards Law of the Russian Federation of May 14, 1993 No. 4979-1; Order of the Ministry of Agriculture of Russia of December 27, 2016 No. 589 1) The obligation to conduct a veterinary and sanitary examination of animal origin products 2) The need to issue a veterinary certificate (Form 5i) for fish, crustaceans, mollusks, aquatic animals, other fishery objects and products of their processing exported from the Russian Federation Order of the Ministry of Agriculture of Russia of December 18, 2015 No. 648 4) The obligation to issue veterinary accompanying documents for fish and crustaceans, mollusks and other aquatic invertebrates Order of the Ministry of Agriculture of Russia of October 13, 2008 No. 462 3) In case of doubt about the safety of fish or caviar – conducting laboratory tests, including: microbiological, toxicological studies 5
  • 6. Key assumptions made during research project CALCULATIONS OF COSTS AND LOSSES (WASTE) 65% of all product batches are exported. The share of exports is calculated as the exports volume divided by the total capture volume and multiplied by the average ABR processing ratio of ~67%. 100% of export batches and 30% of batches for the domestic market undergo the laboratory testing procedure. Individual standards are required for 40% of the industry-wide number of product positions. 20% of positions are produced annually, 80% of positions are extended. The industry-wide number of fish product positions is equal to the product of the number of product types for each type of ABR and the number of companies that catch this type of ABR. 6
  • 7. 7 REQUIREMENTS GROUP NO. 7 “Veterinary and sanitary control (preparation of documents, passing expertise) MOST EXPENSIVE REQUIREMENTS COSTS ON A 15-YEAR PERIOD DIRECT COSTS 13.56 billion RUR per year ~ 203.36 billion rubles (RUR) AVERAGE COSTS PER 1 YEAR ~ 13.56 billion RUR STANDARD COSTS no in % of the total cost for group No. 7 9 % 9.364 billion RUR per year The requirement of laboratory tests in case of doubt about the safety of fish or caviar 6 5 % 0.648 billion RUR per year The need for manufacturing and prolongation of individual product yield standards 9 % 2.562 billion RUR per year The requirement of issuing a veterinary certificate (Form 5i) for fish, crustaceans, molluscs, aquatic animals, other fishery objects and products of their processing exported from the Russian Federation 1 5 % 0.733 billion RUR per year The requirement of to conduct a veterinary and sanitary expertise of the products of animal origin
  • 8. An example of calculating standard costs for 15-year assessment period The requirement of issuing a veterinary certificate for fish, crustaceans, molluscs, aquatic animals, other fishery objects and products of their processing exported from the Russian Federation (Form 5i) COST OF THE REQUIREMENT PER 1 BATCH THE NUMBER OF BATCHES* 11 531.9 RUR FREQUENCY AVERAGE COST OF FULFILING THE REQUIREMENT ~222 thousand 15 times in 15 years 38.431 billion RUR WAGE RATE 430 RUR / hour LABOR COSTS FOR THE PREPARATION AND VERIFICATION OF THE PACKAGE OF DOCUMENTS LABOR COSTS 1.5hours 645.0 RUR COST OF SERVICES ON EXAMINATION OF DOCUMENTS, INSPECTION OF A PRODUCT BATCH, ISSUANCE OF A CONCLUSION FOR EXPORT OF FISH PRODUCTS 10 530 RUR WAGE RATE 430 RUR / hour LABOR COSTS FOR SUBMISSION OF DOCUMENTS VIA AIS MERCURY LABOR COSTS 0.83hours 356.9 RUR * equal to 65% of the total number of batches