Managing director of the Icelandic Association of Horticulture Producers Bjarni Jónsson said vegetable farmers in Iceland are concerned about new energy tariffs introduced as part of the budget bill last week—the cost of vegetable production has already increased.
Inside a greenhouse. Photo by Páll Stefánsson.
“The position is becoming terrible at horticulture producers,” Jónsson told Fréttabladid. “I have heard that some farmers are considering giving up all-year production at the beginning of next year.”
The budget bill originally stated that ISK 1 (USD 0.01, EUR 0.01) will be added to every kilowatt hour. However, Minister of Finance Steingrímur J. Sigfússon has since stated that no more than ISK 0.30 will be charged in addition to the regular kilowatt hour price.
Jónsson said horticulture producers are still concerned. While it has been discussed that they may be exempt from the new tariffs, nothing has been confirmed to that regard.
Assuming that they use 60 million kilowatt hours per year, an added tariff of ISK 0.30 can mean up to ISK 18 million (USD 143,000, EUR 90,000) markup on the industry, Jónsson explained.
The distribution cost of electricity to horticulture producers has already increased by 30 percent since January 1, 2009.
Jónsson said that although no vegetable farmer has given up yet, many farmers are in a tight situation. Some of them have temporarily turned off the lights in their greenhouses, which has resulted in eight percent lower energy usage since the beginning of this year.
However, the production level has suffered—so far 17 percent fewer tomatoes reached the market this year compared to the same period in 2008.
“It is the only savings measure,” Jónsson said, pointing out that 2009 is the first year that the level of production has dropped since electrical lighting was first introduced to greenhouses in Iceland 19 years ago. At the same time demand has remained stable, so import is bound to increase, he argued.
Minister of Fisheries and Agriculture Jón Bjarnason told Fréttabladid that the idea of the energy tariff has yet to be finalized, pointing out that a task force was established in July this year to evaluate the profitability of Icelandic greenhouse farming.
Click here to read more about the energy tariff and budget bill.