Ræðismannaráðstefna: Brynjólfur Bjarnason

Ráðstefna fyrir kjörræðismenn Íslands erlendis
Reykjavík, 2.-5. September 2001

Ræður og erindi

Brynjólfur Bjarnason, forstjóri Granda hf. og ræðismaður Chile á Íslandi
"Icelandic seafood industry"


I'd probably be the third person in this session to brag about Iceland and Icelanders and you will hear in my words things like "the most" and "the best", but that's the way we are and we believe in our country.

It's my privilege to walk you through a brief presentation of the history of the Icelandic seafood industry. I will dwell a little bit on the development on how and when the Icelandic nation gained full control of the stocks in the Icelandic waters, and I think it's very important that for you, as representatives, to learn how the Icelandic government has used a system of individual transferable quotas to control the catches and how the fishing in the industry has increased and is today; one of the most productive fishing in the world.

Just for the basics, the foundation for the success of the fisheries in Iceland is the rich marine life in our waters which is maintained by the powerful oceanic currents meeting off the coast of Iceland. They create the condition of the nutrients and temperature that is ideal for marine life and hardly paralleled elsewhere in the northern hemisphere.

The living marine resources in Icelandic waters constitute the backbone of Iceland's economy, as has been said before. It counts for close to 50% of the total export of value of goods and services, and close to 70% of the value of just exported products.

The total catch is close to 2 million tons in the year 2000 and the value 1,3 billion US$. This places Iceland at the 15th place among fishing nations of the world. It is important to realise, though, that out of the three categories of species it is the groundfish, like cod, haddock, redfish, that count for the most value. The value is around 65% for the groundfish, and the quantity just about 30%. On the opposite you see the pelagic species like the herring, capelin, which count for about 67% of the weight, but just 20% of the value. So it's the groundfish which are very important for the Icelanders, and of the groundfish the cod is around 40% of the value. So cod is the king in Iceland.

If we look at the main product classes you can see that about 63% of the products are processed and frozen. And we still believe, situated here in the northern Atlantic, that freezing fish where it's done on board vessels, today's catch as we call them, or on shore, is the best way to preserve the quality of the fish. Salted products are about 16%, fresh, flown out with airplanes, about 8%, in fishmeal about 10%.

The main market for Iceland is Europe. As you can see, two thirds of the value goes to Europe; the EU or the European Economic Area. The US account for about 16%, and Asia 15% and growing.

Now, let's go to the history of how we gained control of the fisheries. I think it's important when we go through that history to realise that in the beginning of last century, in 1901, Iceland declared a fishing limit of 3 nautical miles, which remained in effect until this was extended to 4 miles from the baseline in 1952. A scientific knowledge of the fisheries increased. It came clear that some of the most important fish stocks, most notably the cod stock, were under severe pressure by a multinational fleet, and that strict fisheries management was needed. The Icelanders campaigned for three quarters of a century to win full jurisdiction over the fishing grounds and championed the international course of coastal states to manage fisheries in the waters and prevent overfishing. Because of this the fishing limits were extended to 12 miles in 1958 and further to 50 miles in 1972. The 200 miles exclusive economic zone was fully effective from May 1976.

All the extensions of the fishing limits were opposed by other nations fishing near Iceland, and Icelanders still refer to these milestones as the "cod wars". Historically, however, the very first of these involved conflicts between Icelanders and foreign fleets and fish merchants of cod in the 15th century. Again, in modern times, all disputes have been solved by international agreements.

Just to show you how important it was to gain control of the economical zone I'll show you e.g. in 1975 foreign fleets were cathcing over 100.000 tons of cod from the Icelandic stocks. They were also catching something the quarter of the haddock catch, half of the redfish and so on and soforth. No effective fisheries management for groundfish was possible under those circumstances.

When the 200 mile limit became effective the foreign share of the catches declined as you can see from this graph. What was left there was just controlled by agreements between a few nations.

It is important for you, as I said before, to have some knowledge of the development of the fisheries management system. In the period since 1976 a fisheries management system based on scientific recommendations has been developed for the fisheries in Iceland. In that year marine scientists warned that fish mortality in the cod fisheries seemed alarmingly high, that the spawning stock was threatened, and that this level of catch could not be sustained. They advised, actually, a total allowable catch of some 230.000 tons, but the catch became 350.000 tons.

Some effort restricitions were imposed, meaning that trawlers could fish so and so many days per year, a reduction from what they usually did. But worst of all, in 1983 the spawning stock of cod was estimated at an all time low. So 1984 was the year of new measures in the groundfish fisheries. A system of individual vessel quotas, with some transfer rights, was introduced.

By this law, in the beginning, each fishing vessel received a proportion of the total allowable catch. This allocation was based on the vessel's catches in the three previous years. There was of course a serious disagreement of the necessity and fairness of such a system for the fisheries. In 1985 an effort based option in the groundfish fisheries was introduced for those that that preferred, and a significant number of vessels took that option. Catches were still far beyond recommendations. The catch was difficult to control and there was much friction within the fishing industry between those that had opted for the effort based fishing and others that felt that fisheries management based on individual vessel quotas was more effective.

Thus in 1990 the Fishery Management Act was established. By this act, the ITQ system was established for most of the commercial fishing, and the ITQ was based on that each fish species has a set tonnage quota. The fishery companies can trade, rent or sell the quota. The companies can thus focus on particular types of species or catches and produce in an efficient way for the industry and thus the economy of the country.

The Fishery Management Act of 1990 is the cornerstone of the present management system although it has undergone a series of later adjustments. One has to realise that the free access to the fisheries is considered to be one of the basic rights of the Icelandic people, but in recent years, of course, it has become quite clear that free access would lead to overexploitation. And it has proven neccessary to limit fishing efforts for most of the commercially utilised fish stocks.

Scientific assessment of marine resources and recommendations for fishing restrictions are the basis for the annual allocation of the total allowable catch. An increasing number of stocks has been managed by this process. Based on some transfer rights, when the individual vessel quota were introduced in 1984, the productivity started escalating dramatically and as you can see from the year 1983 to 1988, the productivity increased by some 50%. Catches decreased in 1992 but we kept the productivity level.

This can also be seen by the productivity, if you take the catch value per unit fishing fleet. Iceland sits there on the top where you have around 6.000 US$ per gross tonnage, where you compare with the United States of some 2.000 US$. Also, if you compare it in the productivity of the catch value per fishermen you will see the Iceland fisherman collecting some 110.000 US$ as the US around 10-15.000. There you see the best.

The overall aim of the act from 1990 is to protect marine resources and lead to an economic and efficient utilisation of the stock and thereby to strengthen the seafood industry and the employment in the country. The law also specifically states that exploitable marine stocks are the common property of the Icelandic nation.

Although the implementation has often been debated and created strong feedback from stakeholders groups, the overall aim has been fulfilled as the following points represent.

About 15 places around the country have 60% of the quota. We are having some 870 fishing vessels holding quotas. Around 100 processing companies are scattered around the country.

The Icelandic economy is a service economy but surviving on seafood export, and that is the basic, still. Changing though rapidly. Seafood is 70% of the exported products and close to 50% of the products and services.

We are having some 15 to 20 companies exporting seafood from Iceland, but two companies are representing close to 90%. This has meant in Iceland a very strong marketing.This strong marketing is based on quality from our cold and unpolluted waters. We are having concentration in the industry, and fewer and stronger companies are registered on the Icelandic stock exchange.

This gives me the opportunity to conclude in the following way:

The basis is for utilisation of the 200 mile fishing limits. Without them we would not be able to keep up the standard we are having today.

The control of the stocks is done by the ITQ system, which I want you to know something about. We are seeing effective fisheries management system here in Iceland and by comparison with many other nations I believe it's the best in the world. You are seeing high industry productivity and we are seeing some of the small communities along the coastal lines are gaining strength based on the ITQ system.

The most important thing, Iceland has managed to keep sustainable stocks in the Icelandic waters. But finally, we have enjoyed over a decade of our economic growth and economic stability and we have seen the economics in the industry.

Thank you for your attention.