Nfld. & Labrador·Eye on Iceland

Daily auctions and a fishery that doesn't throw anything back

Part 2 in a series by Jane Adey about how the Icelandic fishing industry is capturing world markets and the lessons to be learned by people in Newfoundland and Labrador.

Icelandic companies talk about how they have boosted quality, price and demand

Petur Larusson holds a ling, a whitefish similiar to cod, that he sells at one of the auction markets in Reykjavik, Iceland. (Jane Adey/CBC)

Petur Larusson raises a loading door to make way for big boxes full of fresh wolfish just landed by a fisherman in Reykjavik.

The fish market right on the harbour of Iceland's capital is one of 27 in that country which supply wholesale customers in an online auction system.

"They can see it on the internet. They just go to their own computers, look at what we have to offer and buy," said Larusson, who manages the facility.

One of 27 Icelandic auction sites that sell to the highest bidder 0:19

Fish processing companies, restaurant owners, fish mongers, from within the country and outside, all compete for cod, haddock, lobster and many other species landed by harvesters. 

Larusson says most days his warehouse is filled. The auctions start at midday. In the matter of an hour, it's all spoken for.

"It all sells." 

What can we learn?

Iceland's fishing and marine innovation industries are thriving. In September, a group of harvesters, processors, researchers and government officials from N.L. travelled there to see what can be learned.  Jane Adey, host of The Broadcast, made the trip too and has developed a series called Eye on Iceland. 

The auction houses set a price for fish that's an average of the last three times it's been sold. They add on a certain percentage and once the clock starts, the price counts down.

When buyers see the amount they're willing to pay, they click and pay with online credit. The market arranges transport of the seafood to the buyer. 

It's a system Ögmundur Knútsson thinks would work in Newfoundland and Labrador.

Knútsson is studying the differences between the fishery in Iceland and in Newfoundland and Labrador in collaboration with the Fisheries and Marine Institute in a project called "PrimeFish".

Ögmundur Knútsson is involved in a research project in conjunction with the Fisheries and Marine Institute at Memorial University. (Jane Adey/CBC)

In Iceland, 80 percent of the fish is landed by large companies. The 20 percent landed by independent fishers is sold on the auction market. 

"To have an honest, open competition is good for the industry. Auction markets are quite good for punishing bad quality and they reward for good quality," says Knútsson.

"You need transparency in how the price in decided. I really haven't seen price-setting mechanisms decided by negotiation, price-setting committees — whether that is in Norway or ... as it's done in Newfoundland — that work." 

Give up gillnets

Icelandic harvesters who supply fish for auction must provide very specific details to the fish market. They report the gear type used to catch the fish, quantity, size, what kind of ice is used to cool the fish and whether it is gutted or ungutted.

"Here in Iceland, it has increased the quality by the fishermen because they get a good or bad reputation of good or bad quality," Knútsson said.

Fishermen land their catch in Grindavik, Iceland. About 20 per cent of the fish landed in that country is sold to bidders at daily auctions. (Jane Adey)

"In Iceland, since the auction markets were established, the industry has changed a lot. We're focusing on the niche market, high-end market and this is the result of better quality, better handling and auction market played a very important role in establishing this system."

In October, fishers in Iceland were getting $1.59 for cod compared with 83 cents in Newfoundland, with buyers paying top dollar for fish caught by longline or handline, as opposed to gillnets.

Years ago, 30 per cent of Icelandic fishers used gillnets but now only eight per cent do. Gillnets are still widely used in Newfoundland and Labrador. Knútsson suggested this province should move away from that gear type in a future cod fishery.  

"You are damaging the quality of the fish and it is the nature of gillnet fish to get stuck in the mesh where it's the most valuable, thickest part of the fish. It gets bruises, it gets more red and you are losing value from that," he explained.

Fish up for auction in Iceland 0:30

Iceland has 56 landing sites where product is collected for the auction markets. In Newfoundland and Labrador, there are more than 400 landing sites. Knútsson sees that as a major obstacle to moving the fishery forward.

"You need to ask yourself — 'Is that sustainable to have 400 landing sites? Will there ever be fishing that can sustain that?' So, establishing auction markets in key strategic locations could be really important." 

Nothing thrown back

Another important difference between the fishery in Iceland and in Newfoundland and Labrador has to do with the use of bycatch.

Regulations in Canada often force harvesters to throw a lot of accidentally caught fish back in the water. In Iceland, everything is kept. 

"You have to land everything, that's the rule. You can land it, you can sell it on market," explains Knútsson.

"Twenty percent goes to the crew, 80 percent go into a product fund supporting research in the industry. In other cases  if you catch species that you do not have quota, you can rent quota so you can transfer between ships and things like that."

If Icelandic fishermen accidentally haul in other fish with their halibut, they don't throw them away. There's a system where they are sold and the profits shared. (Jane Adey/CBC)
Jon Agustsson unloads his catch of lobster at the wharf in Grindavik, Iceland. His bycatch is cod and other whitefish.

He agrees wholeheartedly with the rule to retain all fish.  "If it comes aboard, it's mostly dead. If you throw it back in, it won't be used by anybody."

"It's limited resources we have from the sea," said Ögmundur Knútsson. It should be our duty to try to create as much value from the limited resources as we can and throwing away is not the way forward."

Icelanders have created value from underutilized bycatch species since the auction system started in 1987. 

"We had fish species that we threw in the ocean before the auctions but now are valuable species ... like monkfish was thrown in the ocean before but now is the most valuable species on the auction today," said Eyjólfur Gudlaugsson, CEO of RSF auctions.

Gudlaugsson says one bidder started buying when the price was very low and that created interest. When another buyer started bidding, the price went up. Today, monkfish fetches $2.20 a pound.  

Tried before, but failed

An auction market for cod was tried in this province in 2008, but failed. 

Briefing notes cited lack of harvester acceptance and lack of processor interest as possible explanations.

Derek Butler is with the group that represents Newfoundland and Labrador processors, and was part of a delegation that went to Iceland in September to look at the fishery there. (Jane Adey/CBC)

Executive Director of the Association of Seafood Producers, Derek Butler, recalls it differently.

"I remember the quip I made at one of our meetings ... you're testing a Chevrolet model to make a purchase on a Mercedez. I mean, the model ... how it was structured, how it would work, to me it was transparent then that it was inadequate," said Butler.

"There were challenges around icing provisions ... trucking ... feedback of price to harvester ... all those ingredients were missing."

Butler believes the industry can do better going forward, because it has to. He said a different kind of business model should be explored, including an auction.

In Newfoundland you can ask yourself, is the business model that you are using in the fish industry, is it sustainable? Is it working?- Ögmundur Knútsson

Ögmundur Knútsson understands not all industry practices in Iceland can be applied elsewhere but he believes Newfoundland and Labrador should give the auction model another try. 

"The key is to have a competition. Foreign buyers can come here and compete. We ban foreign investment but they can come and buy on the auction market ... and we are competing with the world in that sense. We are not trying to create a very local competition, or even trying to ban competition that in many cases I would say in Newfoundland is happening," suggested Knútsson.

"In Newfoundland you can ask yourself, is the business model that you are using in the fish industry, is it sustainable? Is it working? Doesn't it need to have some kind of external pressure to push it to move forward?" 

Cod was selling for $1.59 lb in Iceland in October, compared to 83 cents in Newfoundland and Labrador. (Jane Adey/CBC)

Back at the fish market in Reykjavik harbour, the tubs of fish are piling higher and higher. Petur Larusson has accumulated a great variety of species, everything from turbot to pollock, for the next auction.

"The fishermen are doing very well with the fish and we are getting very fresh and good fish," he said.

He likes what competition has done for the industry and he thinks harvesters are on board too. "The system seems to work. I haven't heard nothing else other than they are happy with it."