Norwegians face problems with quality issues in their catching and processing sectors. Also, the production of filleted cod has all but vanished. Their hope is to learn from Icelanders what can be improved by making a comparison study of the structure and framework of the catching and processing sectors in Norway and Iceland.
In August, representatives from Matís attended a conference at the Nor-Fishing Exhibition in Norway. The conference was organized by Nofima and its purpose was to introduce some of the work which has been done under the “Torskeprogrammet” research program. This program, “The Cod Project”, started in 2011 and will be finished by the end of 2015. The total budget is NOK 22 millions. Matis’s contribution to the conference was a presentation of a joint project of Nofima and Matís, which is a comparison study of cod fishing and processing in Norway and Iceland.
Facing quality issues
At the conference, Edgar Henriksen from Nofima and Jónas Viðarsson from Matís introduced a first draft of the project’s report on the catching and processing of cod. The project title is:
“Norway and Iceland. What is alike and unlike”
In an interview with Fiskifréttir, a national Icelandic newspaper focusing on fisheries, Jónas said the project would be concluded with a report, scheduled to be published in December. Although the work had just started, some interesting information has already been gathered which shows dissimilarities between the cod industry in Iceland and Norway.
“The Norwegians face quality issues in their cod-fishing which we have mostly resolved. They are in the process of defining the problems and identifying what they need to change. They want to approach our way of doing things” said Jónas.
One of the dissimilarities between Norway and Iceland is the distribution of catches over the year and the fishing methods for the fresh cod brought ashore. Icelanders fish the cod relatively evenly throughout the year, less during the summer but more or less in equal volume month by month during the autumn and winter. In Norway, the landing of fresh cod peaks during January through April, when the Barents Sea cod comes to the N-Norwegian cost to spawn. During these four months more than 80% of the yearly catch is landed and looking at last year’s statistics it can be seen that 30% of the yearly catch was brought ashore in one month, i.e. March. During May to December, the volume of landed fresh cod is relatively small. On the other hand, landing of cod frozen at sea is more evenly spread month by month, but the freezer-trawlers also go for the spawning cod, and the majority of their catch is during that period.
This unbalance is disruptive for marketing. Too much supply at one time may cause difficulties in sales and lower prices. Too little catch at other times can then affect secure delivery of goods. In addition, it causes difficulties for the on-shore processing when most of the cod is landed over a short period of time while little raw material is available during the remainder of the year.
High ratio inadequately bleed
Fresh cod landed in Norway is mostly caught with gillnet (43%) and Danish seine (30%). Icelanders, on the other hand, use mostly bottom trawl (49%) and longline (38%). The importance of bottom trawl stems partly from the fact that Icelandic trawlers land fresh fish, whereas in Norway the cod is frozen on board the trawlers, mostly whole frozen H&G (headed & gutted).
Jónas said that the cod that is caught with gillnets and Danish seine in Norway is of varying quality. The gillnet-fish is particularly poor. Also, the seine-catch is of low quality because the boats go for too big hauls during the spawning season.
In Iceland, the on-board handling of the catch has gone through extensive development with regard to cooling and bleeding. The quality of trawler fish has improved. The high share of longline catch also leaves an opportunity for better quality fish. Although gillnetted fish does not weigh much in the Icelandic catch, its quality has also improved. The nets are often hauled the same day they are laid and therefore more or less all the fish is still alive when bled. “In Norway they use the old methods for net fishing. The nets often lay overnight and the catch is most often so big that they cannot ensure correct handling. A study, done by Nofima earlier this year, showed that 44% of cod caught by Danish seine is inadequately bled and 37% of netted fish. This causes flawed appearance of the fillets and shortens their shelf life significantly. Also, almost one fourth of Norwegian cod caught in nets is bruised and 9% have net marks”, Jónas said.
Different quota systems
The quota systems in Norway and Iceland are very different. In Norway the quota for cod is allocated to ships and is mostly shared between the (smaller) boats that fish in coastal water and trawlers and bigger longline vessels fishing in deeper waters. Furthermore, the quotas are more or less tied to specific regions.
“Commercial transfer of quotas is limited in Norway. It is prohibited to lease or sell the quota between ships. It is only possible to sell a vessel with quota if the quota can be transferred to another vessel in whole as an effort to increase efficiency. A vessel can thus have, say, two or three quotas for cod. If a vessel needs, for instance, a quota for ten tons, in order to stay within the allocated allowable catch, it cannot do so, it must buy a whole quota. There is more flexibility to sell and lease quota here. Icelandic ships can make use of this flexibility to increase efficiency and to specialize in catching specific fish species” Jónas said.
Minimum price but not market price
The price of cod is set in different ways in Norway and Iceland. About one fourth of cod caught in Iceland is auctioned at fish markets. An official price-fixing directorate decides minimum price for fish that is landed for further processing, taking into consideration the prices at fish markets. Also, the price of fish can be negotiated between the owners and the fishermen.
In Norway, the operations of fishing and fish processing are separated. Fish processors are not allowed to own fishing vessels, although there are some exemptions to this. The processing plants buy the fish through a sales organization, Norges Råfisklag. There is a fixed minimum price, negotiated between the processors and the fishermen. In the case of stalemate, the fishermen can decide a minimum price unilaterally. Jónas says that Norwegian fishermen seem to be content with this order of things. They fear that the price could be lower if the fish is sold at auctions, for instance if the quality isn’t good enough. Minimum price is a certain guarantee. Norwegian fleet owners are not as concerned with the quality of the catch as their Icelandic colleagues, who either operate their own fish processing or sell their fish at auction markets. “The system is totally different in Norway with regard to this, and that explains mostly the quality problems the Norwegians are dealing with,” said Jónas.
It is should be mentioned, that in Norway, pelagic fish and whitefish, frozen at sea, are sold at auctions.
Fish filleting is disappearing
Fish processing in Norway consists mostly of whole freezing at sea and of producing salted fish or stock fish on-shore. There is almost no tradition of factory trawlers. Filleting on shore is also minimal, both of fresh and frozen fillets. On the other hand, Icelanders have put more emphasis on costal processing and the export of fresh products is rising, both fillets and fillet portions. “Here, the number of freezer trawlers is decreasing while there are more and more wetfish trawlers. It is the other way around in Norway. There, enormous investment in new freezer trawlers has taken place and they are all fitted to produce whole frozen headed and gutted fish”, said Jónas.
The number of fish processing companies has shrunk by 40% since 1995. Fish filleting has now all but disappeared, as said before. Now, there are only 8 plants that fillet fresh fish in all of Norway. In Iceland, the number of licensed fish filleting plants has been relatively constant during the same period.
Difference in labour cost
Jónas commented that the difference in labour cost in seafood processing in Norway and Iceland, as well as the development of the exchange rate in Iceland, have influenced this trend. Also, adverse market conditions for salted cod (baccalao) in Europe have stimulated production of fresh fillets in Iceland. “Labour cost in processing plants in Norway is so high that cod filleting is hardly profitable unless a high degree of automation can be applied. Average total salaries of employees in processing plants in Norway in 2013 were about NOK 34 thousand per month, where as in Iceland they were NOK 20 thousand. This does not tell the whole story, because behind the Icelandic salaries there are about 52 working hours per week but only 40 hours in Norway. If calculated as average salaries per hour, Norwegian employees receive NOK 200 per hour and the Icelanders get NOK 90. The difference is more than twofold”, said Jónas.
Unprocessed cod more than 40% of exports
Jónas says that the Norwegians wish to improve the quality of their raw material and to increase their production of fillets. In the year 2000, fillets were 35% of cod exported from Norway but in 2013 it was down to 11%. At the same time, export of headed and gutted cod, i.e. export of unprocessed fish, had gone from almost 20% to over 40%. The increase in export of unprocessed cod has thus increased significantly. This can partly be explained by the increased quota for cod, which the land based processing plants cannot cope with, but the main explanation is to be found in the organization of fishing and fish processing.
In Iceland, export of unprocessed cod has been relatively constant over this period, 5% or less, mostly fresh fish sold at the fish market in Grimsby. On the other hand, the share of fillets has increased and was up to 75% in 2013. “The development of the exchange rate here in Iceland has helped the filleting plants. The product price goes up, calculated in Icelandic kronas, but the relative labour cost, calculated in Euros, is considerably lower” said Jónas Viðarsson.