The export value of fish and other seafood products fell by 7.6 per cent last month, says Glitnir Bank and the 60,000 tonne reduction in cod catches is partly to blame.

There are unconfirmed reports that Iceland's fishing vessel owners have met with the Reykjavik government in the past week to discuss the deteriorating financial situation and what to do about whole fish exports.

In theory, the dramatic fall in the value of Iceland's national currency, the krona, should help seafood exports, but there is a school of thought that there could be more benefit if processed fish was exported at the expense of whole fish.

Any change in the current situation would worry the Humber markets in particular, which prefers to receive unprocessed fish.

Vessel owners are also being hit by soaring fuel costs, although these are affecting fishing fleets everywhere.

Glitnir says the goods trade deficit has been narrowing more slowly than expected. This is not just due to a fall in fish exports, but largely because the foreseen increase in the country's other big foreign currency earner, aluminium exports, has not materialised fully.

In addition, car and consumer goods imports has kept rising and the import of investment goods has contracted less than expected following the completion of large-scale industry developments.

According to figures from Statistics Iceland, the goods trade deficit was 12.5 billion kronas in February as indicated by preliminary figures.

The deficit so far this year amounts to almost 22 billion kronas, but as a comparison the deficit in the same period last year was around 8.3 billion kronas at 2007 prices.

Export value in the period is 17 per cent lower at a fixed exchange rate than in the same period last year but the value of imports 7.7 per cent higher.

The problem for Iceland is that because it has to import most consumer goods and much of its food the fall in the value of the krona is almost certain to further widen the trade deficit. Interest rates are currently running at 15 per cent.

Iceland's banks, which finance the country's fishing industry and much of the UK's processing industry insist they are well capitalised, with enough liquidity to tide them through to 2009.

If the credit crunch subsides, the issue will never be put the test. Other Nordic and Baltic fishing countries are also reported to be facing financial problems.

www.fishupdate.com is published by Special Publications. Special Publications also publish FISHupdate magazine, Fish Farmer, the Fish Industry Yearbook, the Scottish Seafood Processors Federation Diary, the Fish Farmer Handbook and a range of wallplanners.

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