Stricter Policy for Fish Farms Following Escapes

Golli. Norwegian divers catch escaped farmed salmon in an Icelandic river, October 2023

Minister of Fisheries Svandís Svavarsdóttir presented the draft of a new legal framework for fish farming in Iceland yesterday. The draft proposes increased monitoring of fish farms and requiring licence holders to pay “a fair price” for the use of natural resources. Escaped salmon from open-net fish farms in the Westfjords have been found in rivers across Northwest Iceland and the Westfjords in recent weeks, threatening the survival of the country’s wild salmon.

“Fee collection from the sector must reflect that [fish farming] is a matter of utilising limited resources,” Svandís stated. “It is fundamental that those who profit from the use of the country’s natural resources pay a fair price for it. But it is equally important that we set ourselves ambitious, measurable goals in environmental matters and set a timetable on the way to those goals.” The objectives and strategy in the draft extend to the year 2040 and the action plan to the year 2028.

Companies can lose farming licences if fish escape

The draft also includes additional funding for research and monitoring of fish farms, to be carried out by the Food and Veterinary Authority (MAST) and the Marine and Freshwater Research Institute (Hafrannsóknastofnun). At a press conference yesterday, the Head Secretary of the Food and Agriculture Ministry Kolbeinn Árnason stated that the new regulations would be enforce through the introduction of both positive and negative incentives.

“With tax incentives on the one hand, positive incentives so that people invest in equipment so that the risk [of escaped fish] will be lower,” Kolbeinn stated. “Then we have negative incentives, which include that the company will bear responsibility for escape incidents. The consequences for a company of such an escape will be in the form of the government stripping that company of a permanent fish farming licence.”

Read More: Damning Report on Iceland’s Fish Farming Industry

The draft regulations also propose limiting farming in each fjord to a single company in order to facilitate investigation in the case of escaped fish and to limit the spread of disease. There are currently multiple fjords where more than one company is operating fish farms, particularly in the Westfjords. Companies would have until 2028 to swap licences so that only one company is operating in each zone.

Open-net salmon farms dominate industry

Open-net fish farming in Icelandic waters has grown more than tenfold between 2014 and 2021. Yearly production rose from under 4,000 tonnes to nearly 45,000 tonnes over this period. More than 99% of that production was farmed salmon.

The export value of agricultural products in 2021 was more than ISK 36 billion [$254 million; 237 million]. Most of that figure, or 76%, was farmed salmon, according to RÚV. The aquaculture industry has played a role in supporting development in the Westfjords and Eastfjords, but the largest fish farming companies in Iceland are Norwegian-owned. Escaped salmon from fish farms threatens the survival of wild salmon in Iceland through genetic mixing as well as the spread of disease.

Samherji Sells to Síldarvinnslan

Börkur ship fishing

Seafood company Síldarvinnslan has bought a 50% share in the seafood sales company Ice Fresh Seafood for ISK 4.7 billion from Samherji. Samherji’s CEO Þorsteinn Már Baldvinsson had to step down from the board of Síldarvinnslan when the purchase was decided. RÚV reported first.

Samherji has run the company Ice Fresh Seafood, which sells fish abroad through a sales network covering over 60 countries. As soon as Síldarvinnslan acquires half of the company, a certain reshuffling of the other foreign sales companies of Samherji Group and Síldarvinnslan will be carried out, transferring them partially or completely to Ice Fresh Seafood.

Purchase price considerably above book equity

Síldarvinnslan’s announcement of the purchase states that the purchase price in the transaction is considerably higher than the Ice Fresh Seafood’s equity. Síldarvinnslan is paying ISK 4.7 billion for half of Ice Fresh Seafood and the value of the company in the transaction is 76% higher than the company’s book value of equity at the end of last year. It states, however, that there are decades of knowledge and business relationships behind IFS in the main markets for Icelandic seafood. According to the CEO of Síldarvinnslan, investing in the sales company strengthens sales and marketing, allowing Síldarvinnslan to get further in the value chain.

Samherji owns over 30% of Síldarvinnslan and when its board decided to buy, Þorsteinn Már Baldvinsson, CEO of Samherji, had to step down from the board. It is stated in the announcement that he was not involved in decision-making regarding the purchase.

A pillar of Iceland’s economy

The Icelandic seafood industry is one of the country’s key industries, employing around 7,500 people or approximately 3.9% of the workforce. The seafood industry contributes around 8% directly to Iceland’s GDP, but its indirect contributions are much greater. Marine products account for 43% of the value of Iceland’s exported goods. Another large purchase in the Icelandic seafood industry was announced yesterday when Brim purchased 10.83% of Iceland Seafood International.

Just four companies hold around 60% of Iceland’s fishing quota: Samherji, Brim, KS, and Ísfélagið.

Brim buys 10.83% of Iceland Seafood International

Golli. A Brim ship in Akranes, West Iceland

Icelandic seafood company Brim has bought a 10.83% share in Iceland Seafood International (ISI), RÚV reports. The purchase entails the entire share of Bjarni Ármannsson’s company Sjávarsýn in ISI. Bjarni is also the CEO of Iceland Seafood but is resigning from the position.

Even prior to the sale, Brim was one of Iceland’s largest and most profitable seafood companies. With this purchase, the company intends to strengthen its sales network in Europe. The sale was announced to the stock exchange last night, as both Brim and Iceland Seafood are listed on Nasdaq Iceland’s main market. Brim paid over ISK 1.6 billion [$11.7 million, €11 million] for the shares.

Sold for one thousand pounds after losses

Iceland Seafood has faced difficulties in operations recently. The company sustained considerable losses in the operations of its subsidiary Iceland Seafood UK, which was eventually sold to the Danish company Espersen for the small sum of one thousand pounds. Iceland Seafood’s loss in the first half of the year amounted to ISK 2.2 billion [$16 million, €15.1 million].

The share price in Iceland Seafood last weekend stood at ISK 5.3 [$0.04, €0.04] per share and had never been lower since the company went public four years ago. The price rose by 4.72% at the opening of the market this morning in a transaction worth ISK 22 million [$160,000, €151,000].

Brim to strengthen sales network

Iceland Seafood is one of the main exporters of seafood in Iceland and operates offices in seven countries in Europe, North America, and South America. According to Brim’s CEO Guðmundur Kristjánsson, this is exactly what Brim is looking for with the purchase. The goal is to strengthen Brim’s sales network, especially with regard to markets in Europe.

Bjarni Ármannsson will step down as Iceland Seafood’s CEO and will be replaced by Ægir Páll Friðbertsson, managing director of Brim.

43% of Iceland’s exported goods

The Icelandic seafood industry is one of the country’s key industries, employing around 7,500 people or approximately 3.9% of the workforce. The seafood industry contributes around 8% directly to Iceland’s GDP, but its indirect contributions are much greater. Marine products account for 43% of the value of Iceland’s exported goods.

Consolidated wealth

Just four companies hold around 60% of Iceland’s fishing quota: Samherji, Brim, KS, and Ísfélagið. In 2021, Brim reported profits of ISK 11.3 billion [$88.8 million; €82.9 million].

In a column published in Morgunblaðið last year, Minister of Fisheries Svandís Svavarsdóttir stated that the nation viewed the consolidation of fishing quota in so few hands as deeply unjust and that it felt that this collective resource was not distributed fairly.

Opposition MP and former Social-Democratic Alliance Chairman Logi Einarsson pointed out that the wealth in the fishing industry was leading to accumulated assets in unrelated sectors, such as the media, real estate, transport, grocery stores, energy, and even insurance and banking.

Whaling Has Little Economic Impact on Iceland

hvalur whaling in iceland

Whaling in Iceland has little direct impact on the Icelandic economy. Whaling has not turned a profit in recent years for Hvalur hf., the only company that has been whaling commercially in Iceland in the recent past. While people abroad almost always see Iceland’s participation in whaling in a negative light, those views do not seem to have a measurable negative effect on Iceland’s economy, neither affecting the sale or export of Icelandic goods nor Iceland’s popularity as a tourist destination.

These are the conclusions of a report on the economic impact of whaling in Iceland, written by consulting company Intellecon for the Ministry of Fisheries, Food, and Agriculture. The report only considers whaling’s direct economic impact on Iceland; not biological, regional, or political factors. Neither does it consider the ecological impact of the practice.

Less than 1% of total seafood export

According to data gathered by the report’s authors, the export of whale products has never amounted to more than 0.6% of the total export value of seafood from Iceland – that record was reached in 2016. Despite not being an economically significant industry, however, whaling is important for the individuals it employs, who earn a higher salary whaling and processing whale meat than they would in most other industries. It bears noting, however, that the work is shift work and seasonal, usually lasting four months per year. Around 120 people worked on processing whale meat last season and the average salary of those whaling and processing whale meat was between ISK 1.7-2 million per month [$12,900, €11,800].

Read More: Sea Change

The report details various difficulties in selling whale products due to restrictions and other factors. It mentioned that “It has been difficult to get permission to sell the whale meal, e.g. in feed for pigs, as it has not met the conditions for such use.” While Hvalur hf. has burned whale oil on its ships, “Selling it for other uses has proven impossible, in part due to trade barriers on whale products.”

Hvalur hf. has only hunted fin whales in recent years, and their meat has only been sold to Japan. The consumption of whale meat has decreased rapidly there, from 233,000 tonnes in 1962 to only 1-2,000 tonnes in 2021 and 2022. Transporting whale products has also proven difficult in recent years due to pressure from organisations that campaign against whaling and the reluctance of governments to permit the transport of whale products through their countries. As a result, whale meat from Iceland has been transported to Japan across the northerly route, north of Russia and Siberia. Conditions on the route are difficult and require collaboration with Russian icebreakers.

Future of whaling decided this month

While people abroad view Iceland’s whaling in a negative light, the report did not find that these views had any negative economic impact that could be measured. They neither made it more difficult to sell Icelandic products abroad nor did they reduce Iceland’s popularity as a tourist destination.

Iceland’s Fisheries Minister Svandís Svavarsdóttir implemented a temporary ban on whaling on June 20, the day before the whaling season was set to begin. The ban expires at the end of August. Svandís has stated that a decision on the continuation of the controversial practice will be made public before the end of the month.

Icelandic State Must Pay Compensation for Misallocating Quota

The Icelandic state must compensate seafood companies Vinnslustöðin and Huginn due to the misallocation of mackerel quota from 2011 to 2018, RÚV reports. The state has been ordered to pay ISK 1 billion [$7.1 million, €6.6 million] plus legal costs of ISK 25 million [$178,000, €166,000]. Vinnslustöðin CEO Sigurgeir Brynjar Kristgeirsson says the state could have avoided the expense by negotiating directly with the company but showed no interest in doing so.

“We were pioneers in this mackerel fishing, we found the mackerel and utilised it, and in legislation, it simply says that those who start and who find the fish, should get a larger portion when it comes to allocation and setting quota,” Sigurgeir stated. Both the Parliamentary Ombudsman and the Supreme Court of Iceland came to the same conclusion. “The conclusion was that it was taken from us and given to others, who hadn’t contributed from the beginning.”

The Reykjavík District Court ruled in favour of the seafood companies in the case on Monday morning. Seven companies had originally submitted the claim for damages but five withdrew their lawsuits.

The mackerel quota which the case addresses was allocated by then-Minister of Fisheries Jón Bjarnason in 2010. Rather than allocating the entire quota to those who had experience, some was allocated to small boat fishermen and others in a pool for mid-size ships. Many immediately cast doubt on the legality of the allocation and the Supreme Court ruled that the state had broken the law: only those with previous experience fishing mackerel should have received quota.

Growing profits in few hands

During the height of the coronavirus pandemic, the seven companies who had initially sued were criticised by government officials for demanding ISK 10 billion in compensation from government coffers in the midst of a recession. As a result, five of the seven companies dropped their cases in 2020.

In a Facebook post about this week’s Reykjavík District Court ruling, Minister of Finance Bjarni Benediktsson confirmed the state would appeal. If the seafood companies were to win the case, Bjarni added, he asserted that the compensation would be extracted from the seafood industry rather than taxpayers (presumably through raising taxes on seafood companies or similar measures).

The profits of Iceland’s 10 largest seafood companies grew by 50% in 2019 and continued growing throughout the pandemic, with the price of fish rising dramatically in the wake of the Russian invasion of Ukraine. Vinnslustöðin bought Huginn in 2021 and is among Iceland’s ten largest seafood companies. Just four companies hold around 60% of Iceland’s fishing quota, which has sparked debate on the distribution of wealth in recent years.

10,000 Tonnes of Cod to Coastal Fishing Pool

fishing in Iceland

Minister of Food, Agriculture, and Fisheries Svandís Svavarsdóttir has signed a new regulation on coastal fishing allocating 10,000 tonnes of cod to the coastal fishing pool this season. The percentage of coastal fishing of the total permitted catch of cod is now almost five percent, which is similar to the fishing season of 2022, the first year that such a large part of the total permitted catch was allocated to coastal fishing.

The coastal fishing season is from May to August. The upcoming season is the 15th since coastal fishing was established. Coastal fishing in Icelandic is in part intended to open up opportunities for smaller, independent parties within the fishing industry.

Alþingi is currently reading a bill on amendments to the law on fisheries management due to the zoning of coastal fisheries. The bill was approved for submission by the government on February 24. The Ministry of Food underlined that if the bill is passed, it may be necessary to make changes to the 2023 coastal fishing regulation in accordance with legislation.