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Are the lights going out on the hothouse farming industry?

My latest post on the THINK platform:

As I wrote in an earlier post, the global aluminium industry has a strong presence in Iceland due to the country’s plentiful and relatively inexpensive green energy. Indeed, a few years ago, Icelandic authorities ventured forth into the world waving a brochure titled “Lowest Energy Prices!!” in an effort to hustle customers – with evident success.

So – just how low ARE those energy prices? The prices that the National Power Company – Landsvirkjun, a company in the public domain, is charging foreign multinational corporations in return for copious amounts of green energy?

The answer is … we don’t know.

We the Icelandic taxpayers, owners of that same National Power Company, do not know what those large multinationals are paying for our common resource, because that information is TOP SECRET.

Read the rest of the post here.

[Weather: same as last post]

Comments

comments

Comments on this entry are closed.

  • Nancy November 26, 2009, 12:07 am

    The link to the article is not working for me. Don’t know if anyone else is having problems with it…. Thank you.

  • James November 26, 2009, 12:17 am

    Has an MP tabled the question in parliament? Has anyone submitted the freedom of information request?

  • cactusZonie November 26, 2009, 12:49 am

    Of course it’s secret . The Oligarchs want it that way.

  • joeinvegas November 26, 2009, 2:18 am

    Of course they are TOP SECRET. Why should you know, just because the average person is the one paying? My goodness, next thing you’ll want to know is how much and where all of those people that killed the banks have hidden away in personal accounts.

  • Jessica November 26, 2009, 4:34 am

    It is certainly sad about the inequality of energy prices among different industries, but I would suggest that the hot-house veggie farmers *could* shave a bit off of their operating costs and even improve their sustainability in the meantime by eliminating the excessive plastic packaging. Before I moved to Iceland, I had never seen an individual cucumber in shrink-wrap plastic before. And I don’t think that bell papers need to be packaged in pairs on a foam plate wrapped in thick plastic with a shiny paper label. I’m more motivated to buy the foreign goods if they’re not smothered in packaging.

    Also, I wanted to ask what makes the Icelandic veggies grown in hot-houses more nutritious than the ‘mass-produced’ veggies grown in naturally sunny climates? Are you referring to a lack of fertilizer usage here? Sorry I’ve completely digressed from the energy issue…

  • alda November 26, 2009, 10:03 am

    Nancy – the link works fine for me, and apparently other readers too …

    Jessica – TOTALLY agree about the plastic wrapping, not to mention the foam plates. In fact, many businesses here would do well to eliminate the foam – I’m thinking particularly of the meat counter in Nóatún, which insists on putting everything in a foam dish (I usually refuse one if I catch them in time). As for the nutritional value, yes, I was thinking of the lack of pesticides and artificial soil nutrients associated with those mass-produced veggies.

  • snowball November 26, 2009, 11:03 am

    i enjoy reading your blog but sometimes u r some kind of a conspiracy spin doctor…

    just two remarks on your post.

    1) imagine the icelandic government without the revenue of the aluminium companies. then prepare to pay 2000 ISK for a beer in the future (alcoa & co are currently the cash cows for your country…dont forget that)

    2) the energy prices in iceland were never a secret, you just had to search a little bit. i remember a faz (frankfurter allgemeine zeitung) article from 2006 mentioning 29-35 EUR/MWH (from the karahnjukar project) in comparisson to 55-60 EUR/MWH in germany. geothermal energy was a little bit more expensive, but i dont remember the numbers. therefore, aluminium production in north germany was given up and allocated to iceland.

    totally curious if this post will make it through. am rather sure u will disagree about the win win situation…but could u mention then please just one alternative. nota bene, the alternative should guarantee a decent salary for thousands of peeps and a stable tax revenue for the icelandic government.

  • alda November 26, 2009, 11:03 am

    James – I have to confess that I’m not sure … but the issue has been discussed in parliament numerous times, so I’m fairly sure someone has. It always seems to strand on an “agreement” made with the multinational in question – i.e. Landsvirkjun seems to have signed some sort of confidentiality agreement that they claim cannot be broken.

    However, as yet no one has gone out picketing.

  • alda November 26, 2009, 11:06 am

    snowball – cn u pls explain 2 me how alcoa & co r cash cows fr icelandic govmt?

  • Magnús Birgisson November 26, 2009, 11:44 am

    Wow Alda…I so totally disagree with you that I dont know where to begin.

    Veggies grown in icelandic greenhouses are the same product as veggies grown in dutch greenhouses. Same process…same product. In fact…all the nutrients that for instance a tomatoe needs to be grown in a greenhouse are provided with fertilizers because they are grown in non-organic soil…ususally volcanic sand (pumice ?)

    The water is probably purer in Iceland but my Grolsch still tastes good.

    So give me a tomatoe grown in the soil in the sun in Spain any time…

    Re. energy prices. It is very easy to find out what the aluminium smelters are paying for their electricity. Over 80% of Landsvirkjun revenue comes from just 4 buyers. No mistery there. What is not ,,known” is how those revenue are split between those 4 buyers. However anyone can calculate an approximation using Landsvirkjun income statement and this has been done many times by many people.

    The secrecy around the electricity price is just a funny anachronism in todays world.

    The greenhouses do not buy the same electricity as the aluminium smelters. The are extremely small in comparison, they are distributed all over the country, they buy for a part of the year(winter) and for a part of the day(night) at a different voltage. There is no comparison. They are infact retail buyers who want to buy at whosesale prices. Well…..who doesn’t ?

    The current economic woes has nothing to do with the desicion to stop the subsidy of electricity to green houses. That desicion was taken years ago and was implemented almost two years ago. What they are in fact asking for now is that the subsidies will be reinstated.

    And I ask you…is it justifiable to use tax payers money to subsidy an industry that never has and seemingly never will be able to stand on it’s own two feet in Iceland?

    I think this industry has to prove to the rest of us that they are viable before we start diverting money from schools and hospitals and into the pockets of veggie growers.

  • snowball November 26, 2009, 11:52 am

    http://www.visir.is/article/2009791766829

    as you know german, you can find more about energy prices in this old ftd article (though posted on another site).

    http://www.island-ferienhaus.de/content/view/91/96/

    they seem to be even cheaper then the mentioned range of 29-35 EUR/MWH, more in the range of 22 EUR/MWH and below. energy prices appear to be linked to the aluminium price. the electricity bill for alcoa goes down if aluminium prices go down. thats the reason why they produce here, as simple as that.
    so an increasing fraction of the revenue of the icelandic government is basically a function of aluminium prices. the day will come when aluminium prices will skyrocket back to 3410 USD/ton :-). this day can only be good for iceland and it is probably not so far away.

    http://www.godmode-trader.de/Aluminium/Aluminiumpreis

  • sylvia hikins November 26, 2009, 12:03 pm

    Start banging your pots and pans again outside Parliament. Demand to know. This is the year you made the Government resign. Make sure your new Government continues the way you want it to be- open and accountable, even if you don’t always agree with the decisions taken. Once you take your eye off the ball the Trolls will be back in charge.

  • alda November 26, 2009, 12:26 pm

    Thanks everyone. I value your (well-formulated) opinions and feedback.

    Regarding the issue of energy prices – just because approximate figures can be gleaned through the reading of reports and making certain calculations, does not excuse the fact that the prices are not made public for everyone to see. Why should the onus be on the little people to sift through various information just to get answers? Why aren’t those figures just transparent?

  • James November 26, 2009, 1:19 pm

    “Landsvirkjun seems to have signed some sort of confidentiality agreement that they claim cannot be broken”

    And I thought one of the goals of freedom of information acts was to prevent every crooked public authority deal with a corporation being hidden forever behind non-disclosure agreements…

    In the UK, the recent freedom of information obligations on public authorities typically override any non-disclosure agreements between the authorities and corporations. Exemptions normally have to be based on public interest or similar but, then again, you can normally appeal to some kind of information commissioner to order disclosure.

    It’s particularly relevant that, in the UK, no corporation can challenge a public authority’s decision to disclose information. So, if a corporation provides information to a public authority, and the authority discloses that information in response to an freedom of information request, then the corporation has no right of appeal. It sounds like Icelandic freedom of information laws don’t have that feature, so the public authority is unfortunately still bound by the non-disclosure agreement. The solution could be for the Icelandic government to propose an amendment to its current freedom of information laws to incorporate that specific feature.

  • Joerg November 26, 2009, 2:07 pm

    I suppose, there are not just revenues (i.e. taxes) coming from the aluminium industry but also liabilities to be considered – like for the debts, incurred for providing the infrastructure. Calling the aluminium industry the cash cow for Iceland just on the base of the income side seems to be simplifying. And Iceland’s dependency on the global aluminium price should be something to worry about, particularly with regard to the fact that there exist plans to build more of those smelters. I wouldn’t consider it wise to have this dependency increased, apart from the environmental damage involved.

    I don’t really understand, why the aluminium industry is so often portrayed as the most reliable long term customer, compared to others. Apparently, if the aluminium price is down, they pay less for the energy and if they produce less aluminium, they also use less of the energy produced. And everything is calculated in the weak USD, which means a currency risk for Iceland, if most expenses are done in EUR. Sounds all pretty risk-infested for Iceland.

    Is growing tomatoes in Icelandic hothouses really generally better than doing so e.g. outdoors in Spain, just because it’s not mass production? I am not so convinced. All of them need nutrients, which in the case of Iceland have to be imported, too – and, I guess, there are also pesticides applied in the hothouses. And you can get organically farmed tomatoes from everywhere, this does not depend on a particular country. So, it’s surely a grave question, how much money should be allocated to subsidize the hothouse farmers.

  • kevin o'connor waterford Ireland November 26, 2009, 5:16 pm

    Be really interested to find out how much residential customers pay per kilowatt hour in Iceland. can someone please post here ????. Thanks.

    Here in Ireland we pay €0.16 per kilowatt hour amongst the highest prices in the EU

  • idunn November 26, 2009, 5:45 pm

    With greenhouse farming as one of the very best uses of Iceland’s resources, it should obviously be a top priority. Nonsensical if it is not. They might be allowed the lowest electricity rate available to anyone else.

    That this rate is not presently known, ‘top secret’ in regards to aluminum smelting, speaks of something very dark and wrong.

    In the long run, as nice as some shiny aluminum thing might be, and the money that may (or not) come with it, food on the table will be even nicer.

  • Peter -London November 26, 2009, 5:56 pm

    the day will come when aluminium prices will skyrocket back to 3410 USD/ton 🙂 . this day can only be good for iceland and it is probably not so far away.

    I doubt that, there is currently a very large over production of Aluminium. The price is a function of the asset bubble cause by low interest rates rather than demand, when the second part of the crash happens prices are likely to go down.

  • snowball November 26, 2009, 7:14 pm

    at orkuveita reikjavikur you pay a daily service fee of ~0,14 EUR/day plus the energy used which costs you ~0,05 EUR/kWh…only a third of irish prices (rate 1:180 ).

    regarding “invisible prices” just one thought. iceland is undercutting european prices by ~60% and more. in other words you are the toughest (some people say unfair) competitor for american and european energy producers. AND MOST IMPORTANT you are a big threat 🙂 for electricity cartels on the main land (as vattenfall, edf, eon or rwe cannot buy landsvirkjun yet). i bet steingrimurs budget with u that landsvirkjun prices are used all over europe and america in price negotiations between utility companies and their industrial customers with the consequence that utilities earn less. the argument is then if u dont sell your electricity at this price you can keep it and we go to our icelandic friends. in other words, landsvirkjun is disturbing balance sheets of major utilities and this is where the fun stops for them.
    perhaps someone finds an eu regulation which forbids “distorting competition” (yes yes this term exists in the eu), til deimis massively subsidized energy and connects this to iceland. as an outcome u might be forced to increase your prices to “competitive levels”….ooops u have contracts over 40 years with alcoa & co….sounds like a deal breaker.

    anyway, the cheap energy is just the carrot for alcoa and co. the major contribution for steingrimurs budget will be revenue generated by the increasing aluminium prices.

  • D_Boone November 26, 2009, 7:43 pm

    If what is outlined re electricity prices in Iceland is true why don’t the growers just set up a small power plant themselves and sell the excess….. I can see some small waterfall for the chop. If that is not viable we will have to wait for the greenhouse gas costs to rise so the airfreight? costs too much to ship stuff in. A much better question perhaps is just how transparent and price efficient is the wholesale and retailing of vegetables in Iceland?

  • Vikingisson November 26, 2009, 7:44 pm

    ahh, greenhouses, one of my favourite things that I want to see more of in Iceland. They should import food vs growing it themselves? You gotta be kidding me. Fertilizer, pesticides, and ‘nutrients’ have to be imported anyway? One boatload of fertilizer produces a heck of a lot more than one boatload of tomatoes. Iceland has few pests or bugs and even less in a greenhouse. That’s one of the charms of growing indoors. Iceland has been making its own fertilizer for centuries. Modern fertilizers made from hydrogen is an Icelandic forte given its expertise and abundant energy. Iceland isn’t devoid of rich soils, just not always where you need them. Greenhouses make so much sense there that to me it’s a no brainer to encourage more food self sufficiency. Sunshine through glass is the same sunshine as on the plains of Spain. Electric light during the dark months rounds out the industry.

    So, lots more greenhouses in Iceland with fair energy pricing. If they need to be a cooperative so that they can get bulk pricing then try that too. Or build them really really big. And dump the fancy packaging, it’s food ya’ll.

    More transparency in the smelter industry. The whole country should benefit, not just a few crooks and off shore moguls. There should be more aluminum manufacturing with access to really cheap metal stock and energy. That should employ more workers and offer more domestic products at lower prices with added pride. Hurry before they turn ya’ll into a dependent of China like we are in north amerika.

    So bang those Icelandic aluminum pots and pans, don’t let the wolves take over the country from the old wolves.

  • Magnús Birgisson November 26, 2009, 7:54 pm

    Idunn
    ….Icelandic greenhouse farmers already pay the lowest price of any greenhouse farmers in the world ! Still they produce the most expensive veggies in the world.

    We ofcourse could divert all the energy that we possibly could into greenhouses and produce massive amounts of tomatoes, cucumbers etc…

    And pretty soon we would be sitting on the biggest vegetable mountain in the universe since we couldn’t sell a single tomato abroad because of prices.

    And how anyone can possibly believe otherwise is totally beyond me….

  • kevin o'connor waterford Ireland November 26, 2009, 8:20 pm

    @snowball thanks yes one third of the price wow might be the cheapest in the world. Icelanders lay cable to Ireland now 3 million customers unbeatable product huge export,don’t get ripped off by alcoa give it to us, imagine if everyone in Ireland had their electricity from you paying say €700 per annum .Its goodbye to the icesave problem.

  • Vikingisson November 26, 2009, 8:45 pm

    I think we’re trying to encourage growing enough food to supply the country without importing as much. At least I am, I can’t imagine an export business beyond what is already done and makes sense, fish, lamb, and specialty items. Doing export tomatoes based on cheap energy or subsidies would be more insulting than mega smelters and all the controversy it brings. It isn’t about finding new streams of revenue, saving krona is easier and as valuable as making krona.

    So let’s fix the problems as in plural with the food production. One reason might be that imported is so expensive that by adding special packaging (we do the same thing over here to the west) we keep that special mystic that justifies yet higher prices. So catch-22, chicken or the egg. The problems that they make for themselves don’t cancel the needs they might have in other areas. oh wait, perhaps there is too much control in the hands of the same crooks that broke other things….. I dunno
    also to watch out for:: keep a sharp eye out for the Monsanto lobby and gene police. They will come to the rescue and solve all the issues with food production and 20 years from now you’ll regret it more than 100 new smelters.

    yeah, the more I think about it the more I believe that food is the key to the future. Eat first and make money later.

  • Col Matheson November 26, 2009, 11:56 pm

    If the Icelandic greenhouse vegetables are the most expensive in the world, then the airborne division must run a close second, airfreight is not cheap…for anything, never mind bulky vegetables. Does wind energy/turbines feature much in Iceland? In Scotland they are all over the place..,in fact, a Danish company manufactures them here. If the greenhouse farms are widely located, would a wind turbine not be an option, with greenhouse farming being probably the most predictable and risk free on the planet, and a government grant towards installation, the guaranteed produce would surely benefit everyone, not least the farmer and his future generations. As I remember, the one thing not in short supply in Iceland was wind.

  • Magnús Birgisson November 27, 2009, 9:20 am

    Exporting electricity through cable to other countries might just be the worst possible utilization of the resource.

    First of all, loss of energy in the cable itself results in about half actually reaching the final destination. So we automatically need double the domestic prices just to compensate.

    Also…connecting the Icelandic market to the European one would mean higher domestic prices as energy prices in Iceland adjust to energy price in Europe.

    Finally, exporting energy is just like exporting raw materials in the sense that it does not create jobs in Iceland. You only need 4-5 people to run the powerplant but the energy can create hundreds or thousands of jobs in related power hungry industries (wether it be greenhouses of aluminium smelters ;-).