Iceland review - 2015, Page 46

44 ICELAND REVIEW
meat, meat preparation and other meat
products is in breach of EEa law and
an unjustified trade barrier. The opinion
will likely be heard by the EFTa Court,
as the Icelandic government argues that
the barrier is a security measure. “For 11
centuries we have had special breeds of
farm animals in Iceland, different from
the breeds in the rest of Europe,” explains
Sigurður. The concern is that if fresh meat
containing harmful bacteria enters stores
in spite of health checks—of which there
have been examples in other countries—it
might come in contact with farm animals
and cause an epidemic. “as in the case of
the horse flu,” says Sigurður. In 2010, the
majority of riding horses in Iceland fell ill
and some died due to a previously unknown
bacteria entering the country, perhaps with
dirty riding gear. “I’m a veterinarian, so I
know what I’m talking about,” the minister
stresses. By only allowing the import of
frozen meat, Icelandic authorities have a
30-day buffer to respond, he reasons.
Not only the ESa has criticized this rea-
soning; the measure is heatedly debated in
Iceland. “It sounds like scare tactics,” says
Ástvaldur, who believes it’s only a matter
of time before freer import of agricul-
tural products will be permitted and that
Icelandic farmers must be better prepared
to handle the competition. “No country
allows unlimited import,” states Sigurður,
“it would simply be bad business.” as an
example, he mentions negotiations cur-
rently taking place with the Eu. Today, 380
tons of skyr, an Icelandic dairy product,
are imported to the Eu without tariffs and
Iceland would like it to increase to 4,000
tons. However, in turn, the Eu expects
Iceland to import a comparable amount
of a product made in member countries,
which would be much harder for the small
Icelandic market to handle, the minister
maintains.
However, Ástvaldur, Daði and others
have pointed out that when the importa-
tion tariffs on cucumbers, tomatoes and
bell peppers were lifted in 2002, the green-
house vegetable sector was quick to recover
after the original setback, especially in
the case of cucumbers, where domestic
producers now hold a 93 percent market
share. Simultaneously, the consumer price
dropped by 40 to 60 percent. “at the
same time all-year lighting became a viable
option because of cheaper electricity,” men-
tions Sigurður. Direct payment and other
support measures were introduced at the
same time. “The garden plant market col-
lapsed,” the minister adds of a sector which
underwent a similar development but was
not as successful. Haraldur attributes the
success of greenhouse vegetable producers
to a health awakening and an effective mar-
keting initiative, highlighting the products’
local origins.
a giant’S reSPonSibilitieS
In September, the Icelandic Competition
authority (ICa) fined Mjólkursamsalan
(MS), which holds a 99 percent share on
the Icelandic dairy market, ISk 370 million
(uSD 3 million) for bullying competitors
and abusing its dominant position on the
market. The ICa concluded that MS sold
raw milk to its smaller competitors at a
price 17 percent higher than to firms con-
nected with MS. Claiming that the com-
pany is operating within the legal frame-
work of the dairy industry—it is exempt
from certain competition laws—MS has
appealed the decision.
“production companies have grown into
giants, taking over the market. after a
certain point, they hinder competition and
diversity in production. What you get is a
basic product sold at the minimum price,”
says Ástvaldur. “If it turns out that MS
violated competition laws, it won’t be toler-
ated,” announces Sigurður. MS is the giant
of the Icelandic dairy industry, equivalent
to Denmark-based arla, the third-largest
cooperative dairy company in the world,
and Tine in Norway. These giants are
considered a necessity, not only by the
authorities but also small-scale dairy pro-
ducers, Daði explains. Collecting milk from
dairy farms is expensive and complicated
and small-scale producers cannot commit
to that. “Tine too was found to have hin-
dered competition and that was handled
by the authorities,” adds Haraldur. Now an
environment has been created in Norway
FArmiNG
innovation meets tradition at vogar, Mývatnssveit,
north iceland, a dairy and sheep farm, guesthouse
and cowshed café.