The Icelandic fishing industry: Its development and financial performance under a uniform individual quota system

Abstract

The Icelandic fishing industry has had to deal with reduced total catch for the past three decades. It has adapted well to the reduction and the Icelandic ITQ system has made this easier. The industry has adapted by reducing employment, closing factories and scrapping boats. Specialization has as well increased and the focus is more toward high-value markets. The profitability of the Icelandic fishing industry has markedly increased. This is especially true for the processing aspect of the industry where profits have soared. One of the main reasons for this increase is the ITQ management system. The rise in profitability of the fishing component, however, is considerably less than that of the processing part. This is the result of higher oil prices and the introduction of the fishing fee, and its subsequent increase, which is now a considerable expense for the fishing component of the Icelandic fishing industry. The debt levels of the industry reached a peak in 2008 after a massive escalation which began in 2004 and was mainly caused by the Icelandic financial bubble, 2004-2008, although the ITQ system also played a role here. Since 2008 the financial health of the industry has improved enormously. Currently, the financial situation of the Icelandic fishing industry is, on the average, sound; this particularly applies to the largest and smallest firms.