mackerel increased and this helped reverse the 

 decline in landings which bottomed out at 231,670 

 tons in 1991. '^ 



The largest high-seas fleet operator is J.F. 

 Kjolbro of Klaksvik. The firm operates 4 trawlers 

 which fish in the Barents Sea, Greenland, and 

 Labrador. The company produces saltfish aboard 

 their vessels for exports to Spain, Italy, and Greece. "" 

 The company purchased two of their massive stem 

 trawlers, the Sundalberg and another vessel, from 

 Norway in October 1988 and February 1989. '^ 



Fishing and the national economy are closely 

 linked in the Faroe Islands. Huge investments in 

 infrastructure since the early 1970s, together with 

 investments in, and significant subsidies to, the 

 fisheries sector eroded the country's economic basis 

 and resulted in a $1.3 billion debt by 1990.'* The 

 fishing industry generates $400 million in export 

 earnings aimually and accounts for over 90 percent of 

 the nation's total export earnings. This is far below 

 the amount needed to keep pace with the massive 

 subsidy program which has sapped the country's 

 economic strength." During the past few years, 

 subsidies to the fishing industry have been gradually 

 reduced and a complete halt in subsidy expenditures 

 is planned for the next few years.^" 



3 . Modernization Programs 



The Faerasemes Realkreditinstitut provides first 

 mortgages for up to 50 percent of the value of a new 

 fishing vessel. The Denmark Fiskeribank grants 

 second mortgages (15- to 20-percent) and the Faroese 

 Government provides, under certain circumstances, 

 the third mortgage."' An additional source of loans 

 for large fishing vessels or comes from Denmark 

 Skibskreditfond.^' 



Following the creation of many new 200-mile 

 EEZs, the Government of the Faroe Islands 

 embarked on a program to modernize both the fleet 

 and onshore processing sectors. Funds were made 

 available to encourage fishermen to look for new 

 species of fish. Many fishermen, stimulated by these 

 subsidized programs, invested heavily in ultra- 

 modem, and very expensive, new fishing vessels in 

 the late 1980s." 



The Faroese high-seas fishing fleet in 1990 

 consisted of 25 high-seas fishing vessels registering 

 24,700-GRT. The fleet includes one super purse 

 seiner registering just over 2,000-GRT (Table 1). 

 The outlook for the Faroese fisheries, including the 

 high-seas fleet, remains clouded by both economic 

 and biological considerations. 



Despite gloomy predictions about the fishing 

 industry. Fishing News International reported that 

 Faroese buyers were negotiating with Fishery 

 Products Intemational of Newfoundland, Canada 

 concerning the potential purchase of 15 stem 

 trawlers.^'' Thus, despite problems the fishing 

 industry appears optimistic and it is possible that the 

 Faroese fishing fleet could expand in the near future. 



 C«ASTAL MMIULE □»IST*NT| 



Figure 2. -Faroese fisheries catch, by fishing 

 grounds, 1989-92. 



4. Decommissioning Programs 



Unfortunately, the modemization program failed 

 to halt the country's declining catches. Faced with 

 growing economic difficulties, the Faroese decided to 

 scrap many of their vessels in early 1989." Many of 

 the vessels purchased in 1987 and 1988 are now laid 

 up as they are unable to compete economically in 

 world markets without continued subsidies, 

 particularly in the face of declining stocks at home 

 and abroad. As a result, vessels- which cost $15 

 million to build only a few years ago are being 

 offered for sale for half that price." Since 1989, 

 there has been a continuous reduction of the fishing 

 fleet. This is due mainly to bankruptcies among the 

 owners of fishing vessels. A decommissioning 

 program adopted by the Government of the Faroe 

 Islands in 1990 has also had an impact on this 

 reduction." The Faroese fishing fleet has been 



183 



