For a long time the impending plans have overshadowed all other topics in the fishing sector and even in the general debate in Iceland.

Strong protests

With a new parliamentary bill presented in May 2011 the Icelandic government is said to be ruining or at least seriously damaging what has been called “the best fishery management system in the world”. That is the general opinion of the vessel owners and other supporters of the present individual transferable quota (ITQ) system.

They have strongly protested the government’s intentions and so have the fishermen’s unions, the association of small boat owners, the Icelandic Confederation of Labor and the Confederation of Icelandic Employers, along with many municipal governments throughout the country.

When the present coalition government of the Social Democratic Alliance and the Left Green Movement took office in the spring of 2009 it vowed to change the fishing management system fundamentally by redistributing the fishing quotas through leasing.

The general plan was to deprive the present quota holders of 5% of their share every year without compensation until nothing was left in 20 years time. By doing this the government intended to get more money out of the fishing industry through the leasing of quotas and pave the way for newcomers into this field as well as formally establishing that the fish in the sea was and is truly owned by the Icelandic nation and not by individual quota holders.

Following months of debate a new bill was finally issued. It is quite different from the original plan but still totally unacceptable as far as the industry is concerned. According to the bill the present fishing vessel owners are offered to make a contract with the government guaranteeing quota shares for the next 15 years with the possibility of a renewal for additional eight years. The part of the Total Allowable Catch (TAC) that now goes to various programs supporting smaller seaside communities and small boat fishing will be gradually increased, meaning that there will be less for the ships with quota shares. At the end of the 15 years period this, “support” part is to become 15% of the TAC.

Furthermore the present fishing licence fee based on EBITA will be doubled from this year’s 2.8bn Icelandic kronas (€17m), according to the bill.

Transfer of quotas restricted

The free transfer of quotas has always been the most controversial part of the system, as it involves money changing hands for uncaught fish in the sea, a resource which is supposed to be owned by the whole nation. Some find it unethical that people can get rich this way even though the free transfer of quotas is the prerequisite for the reduction of the fleet and the rationalisation of the industry as a whole.

To meet this argument the government plans to end the permanent transfer of quotas between fishing companies but for now it will be allowed with restrictions and under the supervision of the government or the municipalities. As for the leasing of quotas, within the year it will be restricted to maximum 25% of the quota allotted to each vessel.

Admittedly the ITQ system has always been controversial in the public debate. The government maintains that its new bill aims at reaching a compromise between the nation and the industry. In order to estimate in what way the parliamentary bill would influence the economy of the fishing industry the Minister of Fisheries himself, Jón Bjarnason, handpicked a team of five economists. Their verdict turned out to be unfavourable for the Minister, to say the least, since it confirmed more or less what the opponents of the bill had maintained earlier. The economists generally opposed the idea of increasing the allotment of quotas for social purposes at the expense of the quota share holders.

It is now 4% of the total but will be 15% according to the government’s plan, as mentioned before. This would weaken individual fishing companies and decrease the fishing industry’s profitability as a whole, the experts said.

The team suggested that if certain fishing communities which had lost fishing quotas needed assistance they should be supported financially by parliament to build up long term employment. The team of economists also opposed other key factors in the bill such as a ban on mortgaging quota shares and a ban on the transferring of permanent quotas as well as further limitations on the leasing of quotas within the fishing year.

The Minister has not abandoned his plans. He says that every viewpoint will be taken into consideration in the preparation of a new bill that will be presented in the autumn. He furthermore asserts that the management of fisheries is a political decision, not solely an economical one. Many other things have to be considered such as the employment security of the people in fishing villages and various aspects regarding equality and human rights.

It is impossible to predict the outcome of this controversial issue. One thing is clear, though - the debate in parliament this winter will continue to be fierce.

Reduction of fishing fleet

The number of vessels with fishing quotas in the Icelandic fishing fleet has been dramatically reduced in recent years, thanks mainly to the ITQ system. Just six years ago fishing quotas were allotted to 1,111 vessels. At the beginning of the last fishing year only 644 fishing licenses were issued. This reduction amounts to 42%.

This has happened without any government interference. No scrapping plan. No official compensation for pulling your boat out of operation. Vessel owners have simply bought other vessel owners out of business by purchasing their quotas. In some cases fishing companies with many boats have tied up one or two boats or sold them away and added their quotas to their remaining boats.

The reduction is greatest in the small boat sector. Five years ago 626 small boats were allotted fishing quotas but today their number is only 367. In 2005 a special days-at-sea fishing system for the smallest boats (fishing with electronic reels mostly) was abolished and the owners of the boats were offered a quota instead. Most of them received very small quotas based on their fishing experience and many decided to sell their quota and pull out altogether.

Another factor contributed to this development, namely a sharp reduction in the total allowable catch of cod during the past few years. The small boats are especially dependent on cod and many of their owners saw no better solution than to pack up and leave. A very high price of cod quota at that time spurred by the eagerness of the banks to loan money during the economic upswing helped to speed up these transactions.

The reduction of the fleet is not confined to small boats. Five years ago 66 stern trawlers were in operation in Iceland but now they are 59. Boats with quotas, other than small boats, are now 123 but the number was 197 in 2005.

Saying there are only 644 fishing ships and boats left in operation in Iceland is almost correct but not entirely. Last year a new fishing system was established alongside the current individual transferable quota system. It is a free for all fishing in the summer time and requires no quota. But there are strict conditions. You can only fish with four reels per boat maximum, the daily catch must not exceed 650 kg and the fishing days are four each week, Monday-Thursday. The total allowable catch for this fishery this summer was 8,500t divided between four months (May-August) and also divided between four fishing zones around Iceland.

All in all 738 small boats signed up for this fishery during the summer of 2010, many of them boats that had already sold their quotas but also boats which temporarily left the ITQ system to take advantage of this new opportunity. Since so many boats took part in this fishery the TAC for each month and each fishing zone dried up pretty quickly, sometimes only in a few days. The total catch per boat was on average around 8t during that summer but the most successful ones caught over 30t.

This new quota free fishing system was mainly intended to give people without fishing quotas an opportunity to go fishing for commercial purposes (hitherto fishing without a license has been limited to a catch for personal use). In reality the system has transferred an additional catch to the small boat fleet since the 8,500t are subtracted from the TAC of all vessels, large and small. Needless to say this has not been received with much enthusiasm by the owners of the bigger boats.

Cod stock on the rebound

In general the fish stocks around Iceland are in a fairly good condition now. Cod is by far the most important species, earning a third of the total value of seafood export. In June the Marine Research Institute of Iceland (MRI) issued its annual report on the main fish stocks and the news regarding cod was good.

Following an all time low cod quota of 130,000t in 2007 (down from 190,000t the previous year) the stock has been gradually recovering and now the MRI proposes a quota of 177,000t for the coming fishing year. And what is more, the total allowable catch is predicted to increase to 200-250,000t during the next four to five years.

When the cod quota was cut so drastically in 2007, by a third, there was naturally uproar and confusion in the industry. Subsequently many operators had to quit altogether and sell their quotas to others. The decision at the time was very controversial and remains so. The fishermen still believe that there is a lot more cod in the sea than the scientists account for.

The director of MRI, Jóhann Sigurjónsson, is on the other hand absolutely convinced that it was vital at the time to cut the quota so dramatically in order to rebuild the cod stock. He points out that the exploitation rate has decreased significantly in recent years, from well over 30% of the stock (individuals four years and older) a few years ago to 20-22% today. Now the estimated reference biomass is 970,000t (up from 650,000t in 2007) and the spawning stock is 362,000t (up from 180,000t in 2007). The reference biomass is the largest since 1989. Decreased harvest rate is the main reason for the recent increase in stock size, Mr Sigurjónsson maintains.

Last year the Government of Iceland adopted a management plan for the Icelandic cod stock to be implemented during the next five fishing years limiting the catch to around 20% of the reference biomass. ICES has evaluated the plan and concluded that it conforms to international agreements on precautionary approach to fisheries management and maximum sustainable yield.

Good news on capelin

Further good news from the MRI report concerns capelin. The fishable capelin stock has been at a very low level during recent years and hit an all time low in 2009 when only a research quota of 15,000t was allowed. Last winter the situation had improved significantly so a catch quota of 390,000t was issued based on scientific advice. And the prospects are better still. A preliminary assessment of the stock indicates a quota of 700,000t for the next season whereof a starting quota of 366,000t has already been issued.

Capelin used to be by far the most important pelagic stock in Icelandic waters, bringing a catch of up to 1.5 million tons in 1996 and 1997. As late as 2002 the catch was 1.3 million tons. Then the capelin started behaving very strangely, most likely due to warmer sea temperature caused by the climate change. Hopefully this tiny coldwater species has now adjusted to the new environment.