Icelandic fisheries

„The fishing industry is one of the main pillars of the Icelandic economy. Responsible fisheries at the Icelandic fishing grounds are the prerequisite for the Icelandic fishing industry continuing being a solid part of the Icelandic economy and a principal pillar in Iceland's exports.“ 

(Statement on Responsible Fisheries in Iceland, 2007)

Wild capture fisheries presents a pivotal element to Iceland and its economy, still to a large extent underpinned by the industry. In 2013, the fleet‘s total catch was roughly 1.3 million metric tonnes with an export value of €1.7 billion. The fishing industry currently represents around 11% of GDP and around 27% of Iceland‘s total export revenue. However, recent research indicates that the industry‘s contribution to GDP could be as high as 27% if all the support industries are taken into account.

Iceland is Europe‘s second biggest island. The surrounding waters include the boundary between warm Atlantic waters in the south and colder waters from the north. While ocean conditions subsequently vary depending on the strength of the currents, climate in Iceland is temperate for the island‘s global position.

The ecosystem in Icelandic waters is dominated by relatively few abundant species. Cod has for centuries been the backbone of the fishing industry. Other key demersal species are haddock, saithe, redfish and various types of flatfish. However, pelagic species account for the bulk of the annual catch. Capelin, herring (the Atlanto-Scandian and the Icelandic summer spawning stocks), blue whiting and most recently mackerel are species that have made a major, albeit hugely fluctuating contribution to the annual total catch figures and thus export value.

Iceland´s policy

Iceland‘s policy on ocean issues centres on maintaining long term ocean health and biodiversity and to safeguard the productive state of the main commercial species in the waters surrounding the island. The policy‘s key elements are responsible harvesting of resources, based on efficient management that is firmly supported by sound science.

The policy is supported by three key elements. Firstly, the United Nations Convention on the Law of the Sea and secondly, the principle of sustainable development, enshrined at the 1992 United Nations Conference on Environment and Development in Rio. This is further supported by the view that responsibility for the conservation and utilisation of marine ecosystems should be managed primarily by states directly affected by the decision making and whose greatest interests are at stake.

Management system

Icelandic fisheries are managed through a catch limitation system. A fixed TAC (Total Allowable Catch) is annually issued for each species, based on scientific research and formal advice. While the TAC is the cornerstone of the management system, the catch quotas are primarily distributed through the ITQ (Individual Transferable Quotas) system where individual operators have a fixed share of the TAC.  In addition there are several side measures, mostly in the form of community quotas specifically aimed at supporting particular communities as well as an allotment for small scale coastal fisheries during the summer months.

The fishing management system is by law anchored in the formal advice presented by the Marine Research Institute. While closely followed in recent years, the advice is nonetheless subject to a wide consultative process involving industry stakeholders, universities etc. The Directorate of Fisheries, however, is in charge of administration of the quotas and keeps an up to date track of total catch and landings in an open database and oversees all quota transfers.

The initial phase of the ITQ system was implemented in 1984. This followed years of overfishing, to the point of the cod stock being seriously threatened. It replaced a system aimed at limiting catches by capacity controls and “days at sea" that soon proved to be very ineffective. Catch limitations imposed through the ITQ system initially hit the fisheries sector hard and many fishing villages around the country were hard hit. The ripple effects put the local economy under serious strain as inflation subsequently skyrocketed. But like so often before, Icelanders weathered the storm despite strong calls for easing the catch limits.

Efficiency and profitability

The curb on total catch through the ITQ system has gradually led to a major downsizing in fleet capacity. Providing the drive for innovation, implementation of advanced technology and increasing efficiency throughout the production chain, the ITQ system has subsequently turned the fishing industry into a highly profitable business despite limitations in catch. Adversity has been channelled into opportunities for growth through synchronized, albeit painful measures for many fishing towns and villages around the country.

As the system gradually matured, in particular that additional quotas were not being issued despite economic hardship, the whole industry began to change. The message was clear: To minimize cost and maximise revenues from the allotted quotas. A growing need emerged for technical advances to reduce the use of fuel with new, fuel saving engines and through more economical fishing gear. Simultaneously, demands were made for increased yield, productivity, enhanced quality and eventually product value.

Existing and newly founded domestic firms alike duly responded to this new scenario. Local market leaders in the production of fishing and fish processing equipment like Marel, Hampidjan and Pols, later followed by 3X Technology, Skaginn and Frost to name a few, along with numerous smaller companies blossomed.

They provided the sector with new equipment and innovative solutions to reduce costs and increase yield while stimulating methods for value added production and to turn “waste” into new valuable by-products. Estimates now indicate that the export product value of every kilo of cod has consequently doubled over a 10 year period (2003-2013).

Fewer vessels, increased specification

Parallel to increased efficiency and profitability within the fishing industry, the ITQ system has also led to more concentrated vessel ownership and fishing quotas. Around 85% of the quotas now belong to 50 of the largest vessel operators and fishing companies in Iceland. This development is, however, somewhat curbed through laws on fisheries management. No single company or vessel operator can hold more than 12% of the total share of the annual TAC for any particular species.

Around 40% of demersal species in Icelandic waters is still caught by deep sea trawls while several other methods are simultaneously used, depending on depth of water, type of seabed and species sought. Handline, longline, gillnets and purse seine the most commonly used gear. Yet the Icelandic fishing fleet has undergone significant changes in composition in recent years. In a nutshell, the fleet is polarizing into two dominant categories, on one side decked vessels in gross tonnage up to 25 and on the other side vessels of 1000 gross tonnes and beyond.

Decked vessels, 15 metres in total length or less, have become more powerful and efficient through constant evolution by local shipbuilders since the turn of the century. Better equipped to brave rougher conditions, this particular category of vessels is gradually replacing larger and more traditional vessels.

The fleet of Icelandic trawlers and pelagic vessels is currently undergoing a phase of renewal. Leading fishing and processing companies have commissioned the building of a number of wetfish and multi-purpose trawlers with state of the art processing and cooling equipment for enhanced quality of the catch while enabling full utilization of by-catch and by-products in general.

Production flexibility

During the 1990s there was a surge in a new generation of freezer trawlers. Frozen at sea products did fetch a significantly higher price than land frozen products. Due to high fuel costs, high salary costs at sea (due to a catch share wage system) and better products from the land based plants, freezing at sea has lost its former significance. Increased market demand for fresh seafood products in recent years plays a significant role in the design of the industry‘s new generation of wetfish trawlers.

Not only the ITQ system itself, but moreover the abolishment of quota transfer restrictions in 1990, has provided the Icelandic fishing industry with a management tool to maximize the flexibility of catch for production. Now able to tailor their fishing to market demand at each time, seafood producers can offer a remarkably stable delivery of products all year round.

Although the overall number of professional fishermen has declined sharply through the downsizing of the fleet, wages have generally risen handsomely during this progression. With a fixed minimum wage guarantee on one hand and with a proportional share of the catch on the other, competition for places has increased significantly. In recent years, vessel skippers have graced lists of the top taxpayers in every region of the country. While working at fixed rates, employees in fish processing have benefitted in various ways, most notably in job security through the industry‘s stability and the drive for a better work environment.

Responsible fisheries

While economically driven by the need to maximize its marine harvest from the waters surrounding the island, Iceland has simultaneously embraced the global call for responsible and sustainable fisheries, intertwining its own FAO-ISO based Iceland Responsible Fisheries programme with national law and international agreements. The efficiency and profitability of the fishing industry is based on the responsible management of the fisheries and the protection of the ocean environment. That is of fundamental importance, not only to the fisheries sector but to the Icelandic society at large.

Besides the ITQ system, a wide range of technical measures have been implemented in the Icelandic fisheries. Area closures and increased mesh size to protect spawning grounds, juveniles and vulnerable habitats to name but a few. Discards are prohibited by law and subject to severe punishment. To limit the negative environmental effects of the fisheries, coloured bait has been used to minimize the attraction of seabirds to swallow the hooks while seals have been kept away from fishing nets through deterring devices.

Fisheries-related education

With an increasing focus on fisheries-related education, there are now several institutions that offer courses and study programmes tailored to the needs of the industry. The Technical College Reykjavik offers studies in navigation and marine engineering. Akureyri University offers studies for Bachelor degrees in Fisheries Science and Biotechnology with studies in Aquaculture also available in co-operation with Hólar University. In 2010, the Icelandic College of Fisheries was launched in Grindavík.

Historically, Iceland‘s contribution to UN development aid has to an extent always been related to fisheries. A natural progression, the United Nations University Fisheries Training Programme was launched in Iceland in 1998 through a tri-lateral agreement between the United Nations University, the Icelandic Ministry for Foreign Affairs and the Marine Research Institute of Iceland. Offering 6 months of applied postgraduate-level training in various areas of the fisheries sector for practicing professionals in less developed countries, the UNU-FTP operates in collaboration with many agencies in Iceland, including academic institutions, private fishing companies, governmental institutions and research firms.

From waste to valuable by-products

Adjusting to a new reality, a “quantity mentality” has been replaced with a “value mentality” in the Icelandic fishing industry. Sustainability is thus underpinned by calls for increased yield, product quality, and accountability in delivery.

Meticulous market research has also opened up channels for various new products. What once was viewed as waste from fish processing is now increasingly being turned into valuable by-products for the fashion, skincare and medical industries by young, innovative domestic companies, many of which are based in small fishing towns.

Extension of the EEZ

Until the WW II Iceland had been one of the poorest countries in Europe. During the war Icelanders were catching hard and shipping demersal fish with trawlers to Britain. After the war, in the traditional fashion, a fleet of foreign, technologically advanced trawlers from many European countries flocked to the Icelandic fishing grounds. Iceland had declared full independence in 1944 and politically, overfishing became an important issue. 

Iceland initially responded in 1952 by unilaterally claiming a 4 mile Exclusive Economic Zone (EEZ), extending it to 12 miles in 1958. Fiercely contested by authorities of the foreign vessels in question, the dispute was settled in 1961.  Yet sterner measures were needed.

A decade later, Iceland was reeling following a complete failure in the herring fisheries in the late 1960s. In early 1972, the Icelandic government announced its decision to extend the EEZ to 50 miles. Again, the decision was received with hostility from British and to a lesser extent German authorities. A truce was called in 1973 but it proved short lived as the Icelandic government had, indeed, plans for a further extension.

When the government decided to extend the EEZ to 200 miles as of 15 October 1975 hell broke loose.  During the UNCLOS negotiations where Iceland had been an active participant, the idea of a 200 mile limit had been on the cards for some time. Yet as previously, it was primarily Britain that refused to acknowledge and called upon her navy to protect fishing vessels while trawling in Icelandic waters. The dispute soon reached an international level but was eventually settled in Oslo in May 1976. The 200 mile limit became internationally adopted during the 1982 UN convention on the law of the sea (UNCLOS).

Regional support plan backfires

Parallel to the extension of the EEZ to 50 miles in the early 1970s, authorities embarked on a mission so strengthen local communities all around Iceland through fisheries. With partly state funded regional support measures, over 80 trawlers were added to the fleet within a decade. Despite getting rid of foreign vessels from the Icelandic fishing grounds, this addition to the domestic fishing fleet led to overfishing. Hence the plan backfired spectacularly.

Already in 1975, ideas and plans to limit the overall catch and adjust the fleet‘s capacity accordingly had been published in an extensive report.  The hope that combined effects of major extension of the EEZ and the expulsion of foreign vessels from Icelandic waters would come to the rescue proved to be wishful thinking. The damage had been done. Just two years later, the issue came to the forefront again through a damning report from the Marine Research Institute. Painful measures were indeed unavoidable.

The road to recovery

Hotly debated at the time and still dividing opinion, the ITQ proved the turning point in the management of Icelandic fisheries when introduced in 1984. The cod stock, the industry‘s backbone, has made a healthy recovery and there was a growing consensus that by applying similar conservation measures, recovery of various other key fish stocks could be achieved.

Icelandic fisheries have come a long way since then and the fishing industry is arguably in a healthier state than ever before. Iceland has set the course for responsible and sustainable harvesting of all her marine resources within the 200 mile Exclusive economic zone.