Fisheries still the backbone of the economy - Not so long ago seafood amounted to 80-90% of Iceland’s total export value of goods, reports Gudjon Einarsson. The country’s economy and the rate of its currency depended, for the most part, on the fishing industry. No sovereign nation in this part of the world relied so much on its fish resources. That is still the case today, but in recent years other industries such as banking, tourism and heavy industry have been gaining ground. As late as 1996 the value of seafood was 76% of the total value of exported goods, but in 2006 it was down to 53%. Similarly, in 1996 seafood amounted to 54% of the total value of goods and services but the figure in 2006 was 32%. And seafood as a percentage of GNP was 19% in 1996 but 11% in 2006.
Value of seafood never higher
However this does not mean that the fishing industry is contributing less to the economy than before. On the contrary, the value of seafood export has never been as high as in 2006, at around 124 billion Icelandic krona (aprox. 1.8 billion USD). But radical changes have taken place in other parts of the economy. Following the privatisation of the state owned banks (that took place a few years ago) the profit of the banks last year, to a great extent from activities abroad, was similar to the total value of seafood export. And with the building of new aluminium plants in the country the export value of aluminium will, within three years, be as much as that of seafood. Aluminium has already replaced cod as the most valuable single export item.
Dramatic rationalisation
Saying this it needs to be stressed that the fishing industry is still the backbone of the Icelandic economy and the prerequisite for the existence of all coastal towns and villages around the country. Following the introduction of the system of individual transferable fishing quotas some 20 years ago, the fishing industry has gone through dramatic rationalisation, especially during recent years. The consolidation of fishing quotas through buying and selling and the merging of fishing companies has made the industry more efficient and economically viable. In times of adversity the industry has been forced to stand on its own feet and rationalise, as it can no longer ask the state for help in the form of the devaluation of the currency or other financial assistance as was the custom before.
10 largest companies control 55% of the total quota
Today the 10 largest fishing companies in Iceland control 55% of the total quota measured in cod equivalents (meaning all species measured by the worth of cod). Numerous smaller companies have the rest at their disposal. The largest company, HB Grandi, holds roughly 55,000 tonnes in cod equivalents which amounts to 11.67% of the total quota.
No fishing concern is allowed to control more than 12%, according to law.
Fishing fleet downsized
The fishing fleet has been gradually shrinking as vessel owners have been buying one another out of business and consolidating quotas on fewer ships. At the beginning of this year 1,692 registered fishing vessels remained in the Icelandic fishing fleet, down from roughly 2,000 ships seven years ago. The number of trawlers has been reduced to 63 from 91 during this time and the fleet of small boats has been greatly downsized. The number of fishermen is now 4,300 but was 7,100 only 10 years ago. Now 4,100 people work in the fishing plants, as opposed to 8,400 people in 1996. Yet the amount of fish processed is practically the same. The reduction of the work force is mainly due to advanced technology.
Stocks mostly in good condition
With few exceptions, the fish stocks in Icelandic waters are in relatively good condition. The Minister of Fisheries annually decides the total allowable catch of each species, usually closely following scientific advice. Cod is still the most important species, generating 37% of the total export of seafood. The cod stock is stable, giving 200,000 tonnes each year. Admittedly this is a lot less than it did before but the stock is not considered in any danger. The size of the haddock stock has soared in recent years, probably due to warmer sea temperature, permitting a catch of 100,000 tonnes a year. The saithe stock has also been on the rise rendering 80,000 tonnes a year. The shrimp stock on the other hand is still at a low level and the industry continues to suffer from low market prices. There is almost no fishing of shrimp taking place at present in Icelandic waters. Many shrimp factories have closed down and the few remaining ones rely almost exclusively on imported raw material.
Unusual behaviour of capelin
The capelin, usually one of the most valuable fish stock around Iceland, is also a matter of concern. The stock has been behaving strangely for a few years now, probably due to climate change, and the catch last season was reduced to only 300,000 tonnes, down from up to one million tonnes during better days some years ago. Still the season was quite good economically as the fishing companies managed to make the most of a limited catch by processing as much as possible for human consumption.
The total catch value of the Icelandic fishing fleet in 2006 amounted to 76 billion Icelandic krona (a little over one billion USD). Cod rendered 37% of the total, followed by haddock (15%), redfish (13%) and herring (8%).
On the whole, the Icelandic fishing and fish processing companies are, for the time, being experiencing favourable economic conditions due to extremely high prices for fish products on the international markets. That goes for fish for human consumption as well as fishmeal. And the ordinary fisherman also benefits through record fish prices at auction markets.
