Iceland

Cod being by far the most important fish stock in Icelandic waters, accounting for up to 40% of the total value of catch annually, this decision was a serious blow to the fishing industry as a whole, depriving it of 18% of its total revenue on average. Those who are almost solely dependent on cod fishing, such as the owners of smaller vessels, are more seriously hit than others who have more species to count on, but everybody is affected economically. And what is more, the 130,000t cod quota, the lowest cod catch around Iceland since 1918, will probably remain the same also the next fishing year and possibly longer.

Stock not in danger

This drastic action does not mean that the cod stock is in any immediate danger of extinction or that is has sunk below the line of sustainability. The biologists are however concerned about low recruitment year after year. The Maritime Research Institute has repeatedly expressed the urgent need for immediate action to increase the spawning stock biomass because of its overwhelming importance for increased recruitment. Now its recommendations have been followed to the letter. It remains to be seen what effect that will have. Surely the cod stock around Iceland has historically yielded much more catch than it does today. In the early thirties the total annual catch reached 500,000 tons (caught by Icelandic vessels and foreign fleets combined) and the same applies for the mid-fifties. During the following decades the annual catch was between 350,000 and 450,000t, but towards the end of the century it dropped below 300,000t and now eventually way below 200,000t.

Controversial decision

Many fishermen and vessel owners disagree with the Maritime Research Institute's assessment of the cod stock. They insist that there is a lot more cod in the sea than the biologists say. There is cod everywhere, they say, and it is getting increasingly difficult to avoid 'the yellow one' as cod is nicknamed. For many smaller operators the only way out of this situation of shrinking quotas is to sell their boat along with the quota. This will lead to further consolidation of the fishing quota. Naturally the quota cut has also caused reduced work in the fishing plants. Many companies have decided to close down for longer periods than the usual summer holiday breaks and some have stopped operation altogether.

Capelin fails to show up

Another shock wave hit the Icelandic fishing industry early this year when the capelin, also a very important fish stock, seemed to have failed to show up for its traditional spawning migration around Iceland. Only a fragment of what had been measured at earlier stages was to be seen now. The capelin, a cold water species by nature, has been behaving strangely for the last few years, probably due to warmer sea temperature. The annual catch dropped from around 1mt only a few years ago to 300,000t last year. This year the whole season seemed for a time to have gone down the drain and a very limited fishing was temporarily stopped. Eventually some more capelin came in unexpectedly so the fleet was allowed to resume its activity for a short while. This enabled the fishing factories to start producing the highly valuable whole frozen capelin and capelin roe for human consumption. Still the total catch was only 150,000t (50% less than the year before) and has not been so low since 1983 when there was a total fishing ban due to the collapse of the capelin stock.

Haddock stock soaring

Most other important fish species in Icelandic waters are in a relatively staple condition. The size of the haddock stock has soared in recent years, thanks to wider distribution due to warmer sea temperature, enabling a total allowable catch of 100,000t, almost as much as that of cod now. The saithe stock is also in a healthy state with a TAC of 75,000t. Furthermore the Icelandic herring stock is in a very good shape with a quota of 150,000t, well over the allotment of recent years. The shrimp stock is, on the other hand, still at a low level and the market prices for shrimp are also too low for profitable production so more and more factories have had to close down and just a few are still in operation.

Individual transferable quotas

The individual transferable quota system, introduced in Iceland in 1984, is the most important basis of the fishing industry. The system has altered the industry completely, some say for the better, others say for the worse. Initially the quotas were allotted according to the fishing experience of each vessel in operation during the three previous years, i.e. 1981-1983. Every vessel owner got his percentage of the total allowable catch of each species. A few years later the trading of fishing quotas was permitted and very soon present vessel owners started buying other ship owners out of business on a large scale in order to obtain their quotas. The rationalisation of the fishing fleet had started.

With the gradual shrinking of the cod quota due to the reduction in the total allowable catch, small operators preferred to sell and step out of the industry while others saw opportunities in adding more quotas to their collection in order to be able to keep their ships longer at sea. Today more than 80% of the total quota is allegedly in the hands of vessel owners that have bought them. Therefore it is difficult to break up the system without full compensation.

Reducing the fleet

The present quota system has certainly led to a significant reduction of the fishing fleet. In 1984 when the system took effect 106 trawlers were in operation. Now they are around 60. The pelagic fleet consists of little more than 20 active ships now compared to over 50 before. Admittedly the present ships are more powerful and sophisticated than the old ones and can carry greater loads but then the total catch of the pelagic fleet is much more than before due to new species such as blue whiting and Atlanto-Scandic herring which were not available in 1984. Only last year 10 old purse seiners were sold out of the country but two newer ones where bought instead. The number of traditional costal fishing boats has also been cut down drastically in recent years. The jobs of fishermen have been reduced from 6,400 in 1984 to roughly 4,000 today even though the total catch of the fleet is considerably greater than before. Vessel owners are eager to point out that this whole rationalisation of the fishing fleet has been paid by the industry itself without the help of government grants contrary to what is the custom in most other countries.

In recent years the renewal of the Icelandic fishing fleet, when it comes to new-building, has been slow with the exception of small boats. Last year, however, four new 29m trawlers built in Poland, were added to the fleet and three more ships of the same size, currently under construction in Taiwan, will be delivered later this year. In addition a contract for the building of two pelagic purse seiners in Chile has been signed.

Small boats pulled in

In the beginning small boats were not included in the quota system. They were allotted a limited number of fishing days instead. Gradually these boats became more powerful and technically advanced and fished much more than they were expected to do. The small boats also grew in number so in the end they too were pulled into a similar quota system as the larger ships are subject to. That has led to a great reduction in the small boat fleet as one fisherman buys another out, much in the same way as in the larger system.

At the start of the current fishing year 767 ships and boats, large and small, were allotted fishing quotas compared to 930 ships the year before. The reduction was mostly in the small boat sector but also in the number of larger boats (28) and trawlers (2). Now 432 small boats (under 15GRT) have quotas and 335 larger ships.

10 companies hold over 50% of the quota

The consolidation of fishing quotas and the merger of fishing companies has resulted in fewer and larger companies. Now over 50% of the total fishing quota measured in so called cod equivalents (meaning all species measured by the worth of cod) is in the hands of 10 fishing companies of which the largest five own 34%. Those opposed to the quota system point out that the selling of boats and quotas from small fishing communities has robbed them of their livelihood. Those supporting the system on the other hand maintain that Iceland must run its fishing industry in the most rational way possible considering the importance of it for the nation's economy.

Uncertain outlook

The export value of seafood from Iceland in 2007 amounted to 128 billion Icelandic kronas (1.9 billion US dollars), around 80% for bottom fish and shellfish and roughly 20% for pelagic species (herring, capelin and blue whiting). The figures for the current year will probably be lower due to less catches of cod and capelin but strong market prices and the devaluation of the Icelandic krona earlier this year will hopefully be of some help.

Uncertainty is probably the word to use to describe the situation in the Icelandic fishing industry at the moment. The vessel owners suffer from ever-increasing oil prices which have tripled since 2004. Now they have to spend 20% of their income on oil compared to 8% in the good old days. Sky high interest rates and growing inflation in Iceland are also a matter of great concern. On the positive side the strong Icelandic krona which has been causing the export industries difficulties for quite some time suddenly gave in to pressure in March due to economic turbulence on the international scene resulting in 25% devaluation of the krona. That means more kronas for every dollar and euro the fishing industry earns. Very high seafood prices on world markets have of course also benefited Iceland but the question remains whether these prices will prevail in the face of a possible global economic setback.