NZ 'can learn from Iceland's fishing industry'

19:52, Sep 15 2013

A single fact shows the mindset that has afflicted New Zealand's fishing industry: It says it can only survive with low wage Third World crews on second hand chartered boats.

In Iceland fishermen are on the top of salary lists, boats are modern and there is a queue of Icelanders wanting jobs at sea.

The dean of the school of business and science at Iceland's University of Akureyri, Ogmundur Knutsson, believes New Zealand is trapped in a low cost model.

"From what I have seen and heard... people are stuck in a box of thinking," he said in an interview.

"They don't seem to be able to break out of the box."

Te Putea Whakatupu Trust, which was established under the Maori Fisheries Act, sent a delegation to Iceland to see the world's most profitable fishery in action and they bought Knutsson to Waitangi earlier this month to explain the success.


"There is no magic, all the solutions are commercial, you can buy them," he said. "You get the specialists over, you buy it, and there is no magic."

Iceland is market driven.

"You are clearly harvest driven, stuck in the box of cheap labour and the only answer is to cut costs... if you keep on this strategy you are... just stuck."

Knutsson says New Zealand's industry is at the same place Iceland's was 30 years ago - blaming high currency for all its woes.

New Zealand boats go to sea until they have full holds, they head and gut the fish and snap freeze it. Then it is shipped off to China where low cost workers partially thaw to process and then refreeze. It is cheap and low value.

Fishing account for more than 40 per cent of Iceland's exports. Its 321,000 have a gross domestic product per person of US$39,900 (NZ$49,050) per annum - 28th in the world. New Zealand scores $30,200 (NZ$37,100) and is 50th.

Iceland's fishing industry gets no state subsidies - it is too big. It has no domestic market - it is obliged to "export or die".

With fishing so important to the economy, Iceland was obliged to go in the opposite direction to New Zealand and add value.

"If we just focussed on low value, we would be very poor quickly."

Iceland used to operate like New Zealand; fishing trips were seven to ten days and the fish was processed at sea - filleted with skin and bone on, then frozen.

Now Icelandic trawlers go to sea for no more than four days and the fish gutted and chilled - not frozen.

Trawl time - nets in the water - have gone from the old six hours to two hours.

It results in better fish.

Iceland has turned its back on the New Zealand business of sending frozen fish aboard for cheap labour processing.

Fresh chilled fish is landed dockside for high technology processing, focussing on selling fresh chilled packaged loins and fillets.

High quality fish loins are immediately processed and packaged in Iceland - and within hours the chilled fish is on a plane heading to Europe or North America.

Destined directly to supermarkets and restaurants, it will have a shelf life for 12 to 16 days.

Reykjavik is 2000 kilometres from London but Knutsson says the same system could easily apply in New Zealand, 8000 kilometres from Singapore. Airlines love it; fresh fish is a high value cargo.

Twenty five years ago Iceland's factories produced 12 kilos of fish per worker hour; now it is 35 kilos.

Knutsson says the consumers of fresh quality fish do not seem to be as sensitive to price as the other low value fishers are.

"They have increased the quality of the fish, so the value has gone up."

Fishing has become the glamour industry.

"There is a waiting list to get onto boats, to become fishermen. It is such a high paid job, and we don't need foreigners to do it," Knutsson said.

Every year Iceland publishes what each individual pays in tax; so it's possible to know accurately what everybody earns. The top 200 fishermen earn ISK2.5 million (NZ$25,350) - a month. Company CEOs take in ISK2.3 m.

Boats only go to sea when they know there is a buyer for what they catch. Supermarket chains throughout Europe can buy fresh Icelandic fish every day of the year - and often order even before the boat has cast-off. Iceland's main competitor - Norway - can only provided seasonally.

Processing labour is not as highly paid, so Iceland has gone to a high degree of automation.

And there has been a vast increase in jobs supporting fishing; from marketing to IT, from logistics to innovation.

High tech processing is spread right around Iceland's coast.

"The money is there from the product and you can pay for higher transportation costs."

Iceland has developed drugs, enzymes and leather and medical devices from fish from what is seen as waste here.

He related the case of one processing manager who had to pay somebody five years ago to pick up and dump fish skin. Three years ago the same person came and collected it without charge. Nowadays the processing factory sells the same skins.

And 97 per cent of a cod is used.

New Zealand needed some company to lead a change in culture, he said.

"It was an innovative culture, and everybody believed we should increase the value."

It was a generational shift in Iceland by people who wanted more of a market connection; they wanted to find out what the consumers wanted.

"It may be difficult for you because you are dominated by so few companies."

Knutsson was dismissive of the fish industry moans about the dollar.

"We had high kroner from 2000 to 2007 - it is just an excuse.

"We have been through all the same excuses, 30 years ago."

Fairfax Media