Disconnected realities within Icelandic agriculture A field study of farmers' narratives on the changing landscape of domestic agricultural production in Hrunamannahreppur, Southern

Hrönn Thorkelsdóttir

Cover photo: Aerial photo of the town Fludir in Hrunamannahreppur ©Hannes Einar Einarsson, 2016.

Department of Human Geography Masters Thesis, 30 HE Credits Geography Globalization, Environment and Social Change (120 Credits) Spring Term 2020 Supervisor: Anders Wästfelt Thorkelsdóttir, Hrönn (2020). Disconnected realities within Icelandic agriculture; A field study of farmers' narratives on the changing landscape of domestic agricultural production in Hrunamannahreppur, Southern Iceland. Human Geography, advanced level, master thesis for master exam in Globalization, Environment and Social Change, 30 ECTS credits.

Supervisor: Anders Wästfelt

Language: English

Abstract This thesis is situated in the academic sphere of human geography. The overall aim is to identify the current challenges and possibilities Icelandic farmers face in terms of changes in importation laws. This research is exemplary in its field as it uses the narratives of the stakeholders, farmers in this case, as the main data source. The research questions were as following: Is there an agricultural cluster in the region and if so, how does it work; what challenges and possibilities do farmers in the municipality of Hrunamannahreppur face in terms of the recent import law and lastly; according to the farmers, how do policies and laws in Icelandic agriculture ensure long-term farming practices in Iceland. The thesis uses theories of agricultural localization theory, cluster theory and the concepts of competitive and comparative advantages along with the concept of food self-sufficiency. The methods used are semi-structured qualitative interviews during a field study in southern Iceland. Data sources include seven qualitative interviews with farmers in the selected area, a review of agricultural policies and frameworks, and other sources such as articles and media. The main findings are that there is an unexplained disconnect within agriculture and its actors, indicating that policies give preferentiality to economic gain rather than preserving long-term farming in Iceland.

Keywords Agricultural clusters, innovation, competitive advantage, comparative advantage, agricultural frameworks, sustainability, farmers’ narratives, food self-sufficiency, long- term farming, Icelandic agriculture.

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Acknowledgements

I want to extend my gratitude to the participants of the research who welcomed me with open arms in short notice to make this thesis a possibility and guide me to other interesting individuals to interview. They provided profound answers, insights, and new discoveries which were very interesting to learn about. Furthermore, an extended gratitude to all the others in the region that supported my research and rooted me on. I would also like to thank my supervisor Anders Wästfelt for constructive, enthusiastic, and inspiring comments and feedback. Lastly, I would like to thank my daughter Mariam Heba for having tremendous patience during this process, and my extended family and friends for emotional support, grammar checks and pep-talks.

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Table of Contents Acknowledgements ...... 2 1.0 Introduction ...... 5 2.0 Aim and relevance of thesis ...... 6 3.0 Background ...... 7 3.1 Natural conditions of Iceland ...... 7 3.2 Agriculture in Iceland ...... 9 3.3 Agricultural frameworks, subsidies plans, and laws ...... 10 3.3.1 Subsidies plans ...... 10 3.3.2 Agricultural framework ...... 11 3.4 Changes in importation laws ...... 12 3.5 Present day situation in Icelandic agriculture ...... 12 4.0 Theoretical Framework...... 15 4.1 Agricultural localization theory ...... 15 4.2. Cluster theories ...... 16 4.3 Clusters in Agriculture ...... 17 4.4 Competitive and comparative advantage ...... 18 4.4.1 Competitive advantage ...... 18 4.4.2 Comparative advantage ...... 19 4.5 Food self-sufficiency ...... 20 5.0 Methodology ...... 21 5.1 Methods in Human Geography ...... 21 5.2 Qualitative research strategy ...... 21 5.2.1 Critique of qualitative research ...... 22 5.3 The research processes ...... 23 5.3.1 Semi-structured interviews ...... 23 5.3.2 Location of field study ...... 24 5.3.3 Sampling method...... 25 5.3.4 The qualitative interviews ...... 25 5.3.5 Thematic coding ...... 28 5.4. Ethical statement ...... 28 5.5. Limitations and Covid-19 Statement ...... 29 6.0 Results ...... 31

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6.1 Clustering in Hrunamannahreppur ...... 31 6.2 Innovation within the region ...... 33 6.3 Advantages in the region ...... 35 6.4 Concerns on import and regulations ...... 36 6.5 Food Security ...... 37 6.6 Changing consumption patterns & market demand ...... 37 6.7 A disconnect between farmers, policies, and consumers ...... 39 6.8 Sustainable and Organic farming ...... 40 7.0 Discussion ...... 42 7.1 Localization, advantages, and importation laws ...... 42 7.2 Disconnect between actors within agriculture ...... 45 8.0 Conclusion ...... 48 Bibliography ...... 49 Appendix ...... 55

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1.0 Introduction

The conditions for agriculture in Iceland are shaped by the natural landscape and geology of the island. The island is mostly formed of lava, volcanic rock, and sedimentary rocks. There are numerous active volcanoes on the island and vast areas that are vulnerable for wind and water erosion. The agricultural sector has short cultivation cycles as temperatures are unusually low in the summer, well below average for other Nordic countries (Johannesson, 2010). Iceland has an abundance of natural resources that are unique in a global perspective; those include the access to geothermal water, high quality cold water and hydropower electricity which is not a common feature with other nearby countries in Europe. Due to its location and geological limitations the country is highly dependent on importation of for instance, oil, machinery, technical solutions, clothing, and finally food and food supplementary products.

In the context of agriculture, the country’s legal framework has gone from being a productivity rewarded sector, to regulated farming practices. This shift has seemingly decelerated the growth of the sector, limiting the aspirations of a long-term farming practice in Iceland. The frameworks are based on laws from 1985 that have not been revised or fully adapted to current environmental conditions, climate change threats, the Sustainable Development Goals (SDG’s), nor for the benefit of the farmers and the consumers. Recently, implications of law revisions, or additions, have surfaced that give the impression that the goal is neither the development of the sector nor fortifying long- term farming practices. Consumer surveys and research show that the average Icelandic consumer chooses locally produced food over imported food, therefore it is hard to comprehend the newly implemented laws on fresh produce in January of 2020. The law enables the import of fresh meat into the country, which inevitably puts the whole agricultural sector into direct competition with food producers that are of enormous scale in comparison with the Icelandic ones.

As this thesis demonstrates, allowing free flow of importation in fresh produce has gone against both the farmers’ and consumers desires. The farmers’ aspiration is to produce high-quality food with sustainable methods, to fight against climate change impacts, food insecurity and to minimize the use of artificial fertilizers. Farmers are eager to enable the re-ruralizing of the country by bringing more production units and services closer to their vicinity. Consumers have, according to former research (Halldorsdottir and Nicholas, 2016) demonstrated a clear will to purchase domestically produced food and therefore the policies are contradicting that preference. By focusing on the farmers’ narratives, this thesis has put their perspectives at the forefront which gives a fresh perspective into research on agriculture in Iceland.

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2.0 Aim and relevance of thesis

This thesis’ overall aim is to examine the possibilities and challenges that farmers in Hrunamannahreppur face in terms of competition with imported food produce and the current legal frameworks in Icelandic agriculture. The research took place in an agricultural dense area in Southern Iceland to identify if there is an active agricultural cluster and how it can be used for development in the region. Research in the Icelandic agricultural sector has predominantly been directed towards quantitative research. For instance, on soil conditions, sheep grazing, demographics, economic impacts, and the various environmental effects due to agricultural practices. By approaching this research from a human geographic perspective, a recognition of the societal aspects of agriculture in Iceland can be determined. Therefore, this research gives a platform to the farmers’ narratives in the field study location, tying together their experiences and perspectives of working within agricultural frameworks and laws in Iceland. The academic and societal relevance of this thesis is therefore to put the average Icelandic farmer’s experience into the limelight. With that goal the research is based on semi-structured qualitative interviews as empirical data with the aim to answer these three research questions: ▪ Is there an agricultural cluster in the region and if so, how does it work? ▪ What challenges and possibilities do farmers in the municipality of Hrunamannahreppur face in terms of the recent import law? ▪ According to the farmers, how do policies and laws in Icelandic agriculture ensure long-term farming practices in Iceland?

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3.0 Background

This section will begin with an overview of the conditions for farming as they are unique to Iceland. Thereafter the history of agriculture in Iceland is summarized to recognize the limitations that farmers face in terms of cultivation on the island. Followed by an overview of agricultural laws, policy frameworks and subsidy plans for each subsector within agriculture as they are contextually import in the results and discussion chapters. Finally, a short review of current discussions, media coverage and other research literature that shed light on present times in Icelandic agriculture will be depicted. 3.1 Natural conditions of Iceland

Iceland is an island that lies in the North Atlantic Ocean, just south of the Arctic Circle between the latitudes 63.2° N and 66.3°N. The shortest distance to neighboring countries is 290 km to Greenland, 800 km to Scotland and 970 km to (Britannica, 2020). The population of Iceland is currently approximately 356.000 which is a steady increase of about 2,5 percent from the year before (Eurostat, 2020). The majority of the population lives on the main island but a few thousand live on smaller islands close to the coast. The population density is low, at about 3,1 inhabitants/km2. Over 80% of the population live in or near the which is located on the south-west corner of the island as can be seen in Figure 1 below (Statistics Iceland, 2019). In comparison, the geographical size of Iceland is approximately the size of Portugal and Bulgaria while the population is similar to Malta, see Table 1 in appendix for comparison (Eurostat, 2020).

Figure 1. Population density in Iceland; the capital region can be seen where red dots form a cluster in the left corner (Byggdastofnun, 2012).

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Despite the northern location of the country the temperature is mild during the winter due to the Gulf Stream bringing warm water from the south. On the other hand, the temperatures are unusually low during the summer in comparison to other European countries due to the country’s northern location. Consequently the range of agricultural plants able to be grown is limited and that the yield season is shorter. As seen in Figures 1 and 2 the center of the country is an unpopulated wilderness. The majority of agricultural farming are in the deep valleys of the north and the southern lowlands. Due to volcanic activity in the country, as the Mid-Atlantic Ridge1 lies across it, soil is ample in the lowlands, but the composition of the soil is distinctive (Johannesson, 2010). The soil is dominated by Andosols (a dark-colored soil) while covered by vegetation which is a rather unique characteristic in comparison to other countries in the world. Although the climate is moist, the presence of deserts in Iceland is believed to be caused by an imbalance between human and nature from the time of Iceland’s settlement in 870 AD. It is estimated that vegetation covered 60 percent of the land surface before settlement, and of that around 20% was natural forest. Currently, the total amount of vegetation is 27% of the land and only 1 percent contains natural forest. There are signs of active desertification occurring in some parts of the island due to high altitudes and/or volcanic activity (Arnalds, 2008; Johannesson, 2010).

Figure 2. A map of cultivation zone types in Iceland. The green zones are high fertile cultivation areas (LBHI, 2008).

The largest urban area is the capital of Reykjavík and its surrounding suburbs, with 228.231 inhabitants (Statistics Iceland, 2020a). The capital itself evolved from a fishing village to a highly urbanized area with little agricultural nor fish production in a few decades. Urbanization trends in the capital region occurred rapidly from the 1950s due to

1 The Mid-Atlantic Ridge is a mid-ocean ridge, a divergent or constructive plate boundary located along the floor of the Atlantic Ocean. In the North, at the location of Iceland, it separates the Eurasian and North American plates. The ridges’ separation is responsible for high volcanic and seismic activity on the island (Wikipedia, 2020).

8 industrialization corresponding with trends in other European countries (Olafsson, 1997). Due to the rapid pace of urbanization, rural areas became sparser and therefore the future of farming became a concern for inhabitants of the rural areas of the country. 3.2 Agriculture in Iceland

The geographical location and have, according to earlier research, been presented as limiting in terms of agricultural production at all scales. Most of the farms, or 90%, are situated below 200 meters above sea level, which is where most of the arable land is situated. Approximately 15 percent of the island is arable which gives the impression that opportunities for expansion and introduction of new varieties in agriculture are constrained (Government of Iceland, 2019). For the most part, agricultural farms have resided in the southern part of Iceland, with 27.346 total inhabitants (Statistics Iceland, 2020b). In 2019 agriculture claimed almost 5% of GDP which means it increased slightly from the year before (Statistics Iceland, 2019).

The limitations of farming were first recognized during the urbanization phase in the 1950-70s. As the national market is small, the scale of business is trivial and transportation routes, both locally and globally, are long. A large portion of service units, such as health inspectors, veterinarians, and technical services, are considered inefficient as each unit serves a large geographical area but relatively few farms. Farmers have a proven disadvantage in the retail market with relation to importation as the market is, as mentioned above, made up of a small number of production units or farms. That exemplifies the farmers disadvantage in the consumer market (Johannesson, 2010). However, because of the abundance of natural resources such as geothermal water, hydropower electricity, pristine irrigation water and other available resources, Icelandic farmers have created innovative ideas of self-sufficient farming. Despite the innovative ideas and measures taken, Iceland’s food supply relies highly on imports; this also means fodder and other produce that is essential for farming practices. However, as the island's geographical position is remote, the slightest natural disaster or infrastructure failure can put the country's supplies at risk due to fragmented transportation links (Bailes and Johannsson, 2011). Traditional farming in Iceland is based on grass fed animals. Around 120.000 hectares of fields are yielded, and farmers harvest two to three times over the summer to have sufficient supplies for the winter season (Government of Iceland, 2009; Johannesson, 2010). Cultivation in Iceland began around the 1900s, motivated by the growing urbanization in coastal towns and in the capital region. As a result, it created a demand for locally produced food for the national market. Conversations about food security/insecurity started to arise during that period as well. To make the most of the summertime, when temperatures were beneficial for crop growing, the farmers started to use high levels of artificial fertilizers. By taking those measures, agricultural practices went from being more of a domestic food production towards being a national food production environment (Bailes and Johannsson, 2011). From 1945 to 1980 a subsidies system concentrated around cattle and sheep farming was set up to reward production in rural Iceland. During this period, a shift from using domestic animals to more technological advances occurred and importation of heavy machineries like tractors and binding machines benefitted the increasing cultivation of grass production. From 1980

9 till 1995 an overproduction of lamb meat and dairy led to the revision of the subsidy system and agricultural policies. Support for export was halted and a quota system was implemented for dairy farmers. As the consumption pattern and demand changed in the late 90’s and early 2000s, it became evident that local agricultural production covered a smaller proportion of local consumption than before. Imports were at an all-time high and arable land was being sold for other purposes, such as for summer cabins, tourism, and other derived services. The current drive is towards maintaining margins by reducing inputs as well as by increasing outputs. Dairy and sheep production are steady, but the number of traditional farms is declining. Increasing urban demand for rural estates is causing a significant rise in farmland prices. Farmers and other landowners are looking to alternative land uses in addition to food production and agriculture to become progressively more multifunctional (Johannesson, 2010). The extraordinary aspects of Icelandic agriculture is that the cows, sheep, and horses are relatively pure breeds that have remained nearly isolated since Iceland’s settlement. Although sheep production may not have profound macro-economic effects it is a vital element for a traditional way of living in rural Iceland. Due to Iceland’s isolated location the prevention of disease in animals is a high priority for Icelandic sheep and dairy farming (Halldorsdottir, 2018). 3.3 Agricultural frameworks, subsidies plans, and laws

The Icelandic Agricultural sector receives about two to three percent of total governmental expenditure (Arion Bank, 2016). Subsidies geared towards agriculture have been diminishing in the last few decades. These subsidies consist of direct payments to farmers and contributions to land reclamation and forestry from the Icelandic Food and Veterinary Authority, the Ministry of Innovation and Business among others (Government of Iceland, 2016a). Frameworks and subsidies plans vary on the type of farming carried out on the land. In this section the subsidy plans and legal frameworks will be explained to aid with comprehension of the results and discussion later in the thesis.

3.3.1 Subsidies plans

There are separate agreements for subsidies for sheep and dairy farmers but both of them include and put importance on safeguarding the relatively pure breed of the species and place value on the development of sectors, better earnings and increasing competitiveness within each sector. The dairy and sheep subsidy plans put emphasis on the recruitment of farmers, which can facilitate long-term farming in rural Iceland. Along with securing quality and variety in food products animal welfare and ensuring environmental protection and sustainable practices in land-use are of importance in the subsidies plans. The plans stress marketing, innovation, and marketing awareness in sheep farming to increase value creation and potential export opportunities. The cattle agreement especially makes a note that they want to give the industry the flexibility to prepare for increased foreign competition and create certain conditions for exploring opportunities in foreign markets (Government of Iceland, 2016b; 2016c).

In order to receive payments, sheep farmers have to fulfil certain requirements. Namely, they must be legally registered on the land and/or farm, have a tax number and their production must fall under Icelandic regulations for running a business. They need to pay

10 yearly fees into the Icelandic Farming Association and follow due diligence in reporting. It is possible to move or buy the entitlements for subsidies, but that is set to expire in 2026. To receive full direct payments, the farmer must have a minimum of 0.7 winter feed sheep for each valid payment limit, however that condition will expire in January 2021. As an example, a farmer gets on average 2.2 Euros2 per kilo, the slaughterhouse then sells the produce to retailers and is awarded the profits. Farmers pay 3.5 Euros for each animal that is bruised or dead after transportation as the abattoir will need to get rid of the carcass (Government of Iceland, 2016c; Halldorsdottir, 2018). Other additional subsidies or payments are directed for the maintenance of the farm and for wool production, among others (Government of Iceland, 2016c).

Horticulture farmers receive subsidized payments for three types of vegetables. The requirements for payments are the same as the sheep and cattle farmers regarding registration and taxation; i.e. tax number and registered owners or tenants of the land or farm. The direct payments are for tomatoes (including cherry, plum, cluster and beefsteak tomatoes), cucumbers and bell peppers. The total amount of direct payments is divided by the quantity sold of individual premium class products within the year. Tomatoes receive 49% of total payments, cucumbers 37% and bell peppers 14%. According to the agreements the main reason for subsidies on these three species is to strengthen the competitive stance of domestic producers against imports on vegetables. The tariffs on imported vegetables was abolished in 2002, allowing free importation of fresh vegetables from the EU zone. This means that the prices are somewhat fixed for those types and not for other types of vegetables such as lettuce. Geothermal greenhouse farmers are guaranteed with cost subsidies in the transmission and distribution of electricity to promote a cost-efficient working environment. Other subsidies are for transportation costs to ensure fresh produce in the markets (Government of Iceland, 2016d). It is clear that subsidies for horticulture are lacking in comparison with the other sectors in agriculture although the demand for horticultural products are rising (Bailes and Jóhannsson, 2011).

3.3.2 Agricultural framework

The latest version of the Icelandic Agricultural framework was passed in the early months of 2016. The framework concerns the common conditions of horticulture, cattle and dairy farming, and sheep farming from 2017 to 2026. The framework is valid for ten years at a time, with expected revisions and added contributions in 2019 and again in 2023. The reasons for the long period of validation is because there are significant changes being made in the working environment in agriculture and therefore a long-term framework was beneficial in comparison to the shorter ones before. The goal of the framework is to promote Icelandic agriculture and create an industry with a wide range of opportunities for development. It aims to increase value creation in agriculture and make the best use of the opportunities offered by rural areas for the benefit of farmers, consumers, and society at large (Baendabladid, n.d.). The emphasis is on organic production, animal welfare, environmental protection, and sustainable land use. This is perceived to ease the recruitment and transition of agriculture along with forest preservation and land-use research. Investment grants for pig farming are a part of the framework to strengthen that field as well and support for organic production will be tenfold from the present with

2 Currency rate from ISK to Euro 20th of May 2020 was 1 Euro = 156 ISK. (Xe.com).

11 special support introduced for goat farming, which is unprecedented. Furthermore, the agreement is accompanied by a protocol which provides for further discussions on the infrastructure of the dispersed areas and general issues regarding the regional policy of the government. The state's total expenditure on the contracts will be almost the same at the end of the contract period (at fixed prices) as they are now. All contracts are subject to a ceiling so that no manufacturer can receive more than a certain percentage of total contributions (Baendabladid, n.d.; Government of Iceland, 2016a). 3.4 Changes in importation laws

In January 2020, a new law was passed that allows relatively uncontrolled importation of fresh meat produce from the EEA zone3. By implementing this law, the Icelandic government considered their international responsibilities to the EEA agreement to be fulfilled. Furthermore, the law is supposed to protect local produce and livestock, as well as try to enhance the comparative advantage of domestic food production. Former meat importation laws entailed that to obtain a license to import meat, retailers needed a certificate that showed that the produce had been stored at -18°C for at least one month prior to being cleared through customs in Iceland. Although the fresh meat importation laws were first passed in 2007 the laws have not been updated until recently. According to the Supreme Court and the EFTA4 court the Icelandic government has therefore breached its duties under the EEA agreement by not allowing fresh meat importation from other EEA member countries in the past. In the new importation law, a clause ensures the safety of food and the welfare of animals that are being imported. The companies that import have to demonstrate that frozen poultry is not contaminated by campylobacter which has been the same requirement that is required from local poultry farmers and production lines for the last two decades (Ministry of Industries and Innovation, 2020a). Additionally, an insurance license will take effect, which means that shipments of eggs, pork, beef, and poultry must be accompanied by confirmation that no salmonella has been detected in the product. These safety measurements are in accordance with the 17-action plan to strengthen food security (Icelandic Parliament, 2019), ensure livestock protection, and improve the competitive position of domestic food production (Ministry of Industries and Innovation, 2020a). Some of these measures are directed towards the abolition of the licensing system, while others are generally intended to promote the above objectives (Government of Iceland, 2020b). 3.5 Present day situation in Icelandic agriculture

Presently, Icelandic agriculture appears to be in uncertain times, in terms of securing local production and the ability to compete with imported food. As the rules for the importation of fresh meat were discussed and the implemented in January of 2020, farmers, especially in sheep and beef farming, have raised their concerns for the future of the Icelandic sheep and beef farmer. Most of the farmers who are raising sheep and cattle cannot make it a

3 The European Economic Area (EEA) agreement guarantees equal rights and obligations within the Internal Market for individuals and economic operators in the EEA. EEA includes the member states of the EU and the three EFTA states (EFTA.int, 2020). 4 The European Free Trade Association (EFTA) states are Iceland, Liechtenstein, Norway, and Switzerland.

12 stable livelihood and therefore it is difficult for them to compete with larger foreign meat producers that can run on cheap labor. The Icelandic market accounts for only a few percentage points of the biggest productions in Denmark, for example, and therefore competition is non-existent (Ministry of Industries and Innovation, 2020a; Halldorsdottir, 2018). Agricultural policies are regarded as outdated and built on old foundations instead of following the purchasing power and inflation of the national economy. They do not fully consider new technology, climate change actions and innovative ideas that farmers have had to pay for out of their own pockets. There are more possibilities for more sustainable methods and usage of land, for instance with regard to growing year-round (or longer seasons) outdoors, the technology for in growing in greenhouses has improved and certain species such as berries, mushrooms and fruit are being grown more and more. This can only mean an advantage for the consumers in Iceland and a great unused opportunity to export goods to other countries. Measures from farmers’ associations and other subdivisions seem to be driving the development of the sector and one of those is achieving carbon neutral agriculture by 2040. The sector has always adapted with the changing landscape in economy, as they did in 2008 when the global financial crisis hit. The farmers decided to put a temporary stop to receiving subsidies in order to contribute to the nation’s recovery after the crisis (Gautason, 2019). Although agricultural practices in Iceland are among the cleanest in the world there is still a long way to go towards making it carbon neutral. Innovation of new technology is high in the sector but if nothing is done about the greenhouse gas emissions it will increase very much in the next decades because of the need for an expansion of the production (Gautason, 2019). Some believe the potential for exportation of Icelandic meat is untapped and as an example organic lamb meat was exported for the first time in 2019 to China. That might indicate that what is regarded as overproduction of lamb meat could turn into an export business and be able to facilitate global exportation growth (Baendabladid, 2019).

In the beginning of March 2020 there was implementations to prepare a new Agricultural policy for Iceland with a common vision and clear emphasis for the future as Icelandic agriculture is at a crossroads, meaning that the cooperation between divisions and sectors needs to be more streamlined for it to work towards the common goal. To summarize the enactment listed out the comparative advantage Icelandic agriculture has in terms of natural resources, healthy livestock, and little use of contaminants in food production. The goal was to emphasize innovation, product development, value creation and sustainability. It was also noted, however, that it is important to have a cohesive vision and more research and education of agriculture is needed. Lastly that the Icelandic agriculture is part of the nation’s awareness of nature and the history and culture of farming practices. Due to these facts there is a necessity for an agricultural policy that is based on heritage while still addressing the market demand and regime of the farmers (Ministry of Industries and Innovation, 2020b). As the COVID-19 pandemic started to spread to Europe and threats of borders closing or being limited, the Icelandic government took quick action to surge funds into the agricultural sector. The reasons for that seem to have mainly been to secure enough production of basic vegetables, dairy and meat for the nation. In late March of 2020, the Minister of Industries and Innovation introduced a plan to meet the expected effects of COVID-19 on agriculture and fisheries (Ministry of Industries and Innovation, 2020c). The aim of the measures is to minimize the negative impact on Icelandic agriculture and fisheries sector in both the short and long term along with creating an internal market

13 demand after the pandemic is over. To summarize, these measures are to enhance the agricultural sector with increased budgets and investments and to increase production of vegetables to keep up with the market demand with an increased share of local vegetables. The measures for the agricultural sector were eightfold and addressed issues such as increasing service and counselling, providing innovation advice and a financial influx to farmers who are experiencing difficult times during the pandemic, documentation of the farmers’ product losses and ensuring that the sector had skilled personnel for assistance. Furthermore, data collection of agricultural production, stock and forecasts was to be created with the aim of summarizing statistics on production for short- and long-term food security. Lastly measures to promote the cultivation of industrial hemp to increase value creation in Icelandic agriculture were also adopted (Ministry of Industries and Innovation, 2020c). As these measures and plans are relatively new there is little to no information that can demonstrate whether these implementations have worked or not.

Figure 3. Advertisement from food producers displaying their products in during to the COVID-19 pandemic (SG, 2020). The famers themselves and their respective associations have been a driving force in promoting Icelandic produce to consumers, with coherent packaging and stamps to name a few. Due to the fear and uncertainty of the pandemic’s impact on the nation consumers started to hoard products in supermarkets. In response to that the Icelandic Farmers Association, The Horticulture Sales Company, MS Icelandic Dairies5, different fodder providers, retailers, meat production companies, and the Agricultural University among many more, decided to make themselves visible by putting an advertisement in the media that showcased the varieties of produce available in Iceland and that there is no need to worry about food shortage. See Figure 3 (translation for text can be seen in Appendix).

5 MS Icelandic Dairies (Mjólkursamsalan) is a cooperative organization that includes over 600 of Iceland’s family-run dairy farms and other milk producers across Iceland (MS, 2020).

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4.0 Theoretical Framework

This thesis uses an agricultural geographic perspective, that means that the interest will be on the activities of the farms themselves and how they stand in terms of local and foreign markets. As economic, political, environmental, and social aspects are involved in the current agricultural theories those perspectives will have a significant influence in the paper as well (Wilson, 2009; Wästfelt and Zhang, 2016). In this chapter the theories that will be used in analysis and discussion will be explained. Those are, in displayed order, the agricultural localization theory, cluster theories, the concepts of competitive and comparative advantage and lastly the concept of food self-sufficiency. 4.1 Agricultural localization theory

Agricultural localization theory has a significant relevance to the research as the location of Iceland is unique. Iceland is an island that is geographically situated in the midst of the Atlantic Ocean, remote from large global markets. The available transportation links are with boats or by air transport. Due to Iceland’s location it means that importation of goods, whether it is food or other material items, takes more time than for other countries with a preferable geographical location. As one of the key themes in the thesis will be on the location and socio-economic practices of agriculture, hence the production in Iceland versus the import of foreign produce, it is important to have that in mind when analyzing the case of Iceland's food systems (Sinclair, 1967; Wästfelt and Zhang, 2016). The basis of the theory is from Johan von Thünen’s book called The Isolated State from 1826. In his theory, he connected spatial economics with the theory of rent, i.e. land rent. He claimed that the localization of agricultural production was determined by the distance or transportation costs to the urban market (Fontes and Palmer, 2018; Hall, 1966). His main concern was discovering and examining the laws which govern the pattern of agricultural land use existing in his time, along with his own personal experience on his farm (Sinclair, 1967). However, he did understand and made clear that this land use pattern depended upon a competition of agricultural production in a particular place or land. His deciding factor was what is called ‘Economic Rent’, which is a return of an investment in the land with transportation cost as a primary factor determining Economic Rent. Therefore, the Economic Rent can be expressed as a function of distance from the market (Sinclair, 1967). Hence, his objective was to pinpoint unspoken laws of the interaction between agricultural prices, land use, distance, and how farmers seek to maximize profit (O’Kelly and Bryan, 1996). Although his contribution to economic geography cannot be questioned, his localization theory was not without critique. He was considered to have simplified and made assumptions which were questionable as his theory was based on the land being flat and without any variations in landscape and with only one form of transportation to carry the products to a destination (O’Kelly and Brian, 1996; Sinclair, 1967). In the case of Iceland, the Von Thünen theory can be applied in a global and local perspective as the geographical location of the country is far away from global markets and most agricultural farms are not in the peri-urban areas of the highly dense capital region. Meaning that the transportation of imported goods which are viable for not only the consumers but the whole economy takes place with long transportation routes, i.e. by boat or freight flights.

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4.2. Cluster theories

In the late nineteenth century, 1890 to be exact, a British economist named Alfred Marshall contributed to what is now defined as cluster theory. In his writings he stated that clusters are a concentration of specialized industries in particular localities (Marshall, 2012). The term that he used for those localized industries were industrial districts. Marshall stated that the reasons for a geographical concentration of firms might be various. First, the needs of the manufacturers to be close to the resources on which they depend. Localization is particularly related to physical conditions, such as climate, soil, mines, quarries and access to land or water. Secondly the encouragement or financial aid from an organization that demands the product to be produced in high-quality. Third, the presence of a town as nearly all industrial districts have been focused in one or more cities. Consequently, as land values in or near cities became higher the factories or entities tended to grow in the outskirts of the city in question, therefore forming a rural district of factories. Examples of that can be seen in many Nordic and European countries such as France, Sweden, and Denmark (Belussi and Caldari, 2009). Although there are several theories that explain clusters, they all have the common ground on at least two points and Marshall’s contribution was essential in understanding spatial clustering (Vicente, 2018). Those essential points are the geographical location and then the interconnectivity of the firms or businesses in the localized cluster. Michael Porter’s cluster theory was described as geographic concentrations of interconnected institutions, companies, service providers, and firms in related industries all in a certain field or segment. Clusters, or critical masses of unusual competitive success business areas, are a striking feature of virtually every national, regional, state, and even metropolitan economy, especially in more advanced nations (Porter, 1998;2000). These clusters therefore incorporate a formation of linked industries and other entities that can be important to competition as clusters have been shown to be a driving force in increasing export and attracting investments, both local and foreign. These clusters can have specialized inputs such as components, services or being a provider of a specialized infrastructure, described in this quote by Porter (1998): Clusters also often extend downstream to channels and customers and laterally to manufacturers of complementary products and to companies in industries related by skills, technologies, or common inputs. Finally, many clusters include governmental and other institutions – such as universities, standards-setting agencies, think tanks, vocational training providers, and trade associations that provide specialized training, education, information, research, and technical support. (p.78).

The main idea from Porter's cluster and competitive strategy were that developing clusters attract skilled people by offering greater opportunities. The nation succeeds not in isolated industries but in clusters of industries connected through vertical and horizontal relationships; a nation’s economy contains a mix of clusters whose makeup and sources of competitive advantage, or disadvantage, reflect the state of the economy’s development (Toma and Turtoi, 2009). In the globalized world it is advantageous for companies to streamline their input-cost disadvantages through global sourcing which downplays the importance of competitive advantage. Competitive advantage relies on continual innovation and therefore clusters can help with competitiveness within a

16 country or across borders. The way companies are and have been looked at in terms of competitive success and configuration can then said to be achieved with clusters (Porter, 1998). Clusters can affect competition in three ways, first as an increase of productivity in the area itself, secondly by influencing the efficiency of the entity and third by encouraging formation of new business which can enlarge the cluster (Porter, 1998). As clusters increase productivity and efficiency across the services that they entail, the coordination and transactions across the firms in the cluster become horizontal and efficient. The increased efficiency can be portrayed in a specialized input into services, employees, and other public goods. Lastly, clusters stimulate innovation which creates a greater likelihood of succeeding with innovative opportunities, acquiring knowledge is easier, and experimentation is more likely to transpire given the available resources in the cluster (Porter, 1998; 2000). A GREMI cluster is known as an innovative cluster that entails a group of relationships that develop spontaneously within a given geographical area (Borisova et al., 2015). The concept was invented by the GREMI group which is an acronym for Group de Recherche Européen sur les Milieux Innovateurs (European Research Group on Innovative Milieux). The group itself was formed in 1986 to research interactions between innovation and localized factories in France. They however make a point of not defining the GREMI cluster as a theory but rather a type of cluster (Maskell and Kebir, 2006). The difference between the Porter and Marshall definitions of clusters is therefore that the GREMI clusters are not formally planned. The cluster encourages knowledge sharing, development and animation of the innovative networks within the cluster, and by that, enables a collaboration, flow of information and know-how without any risk of unilateral appropriation since the actors in the cluster are cooperating and share the same work and long-term values (Toma and Turtoi, 2009). How these cluster theories can be portrayed in agriculture is known in Europe and at currently the development of clusters is used as a first strategy of socio-economic development in agriculture, in particular with the theme of food security. The strategy is rather popular, and the Swedish, Finnish, and Danish agricultural industries can be said to be fully clustered (Borisova et al., 2015). 4.3 Clusters in Agriculture

Domestic food production is becoming more essential each year, especially with the dialogues around food security, climate change and now most recently the reality of pandemics. Previous studies have shown that the concept of cluster development is used as a key element of the strategies of socio-economic development and provision of food security of the leading countries around the world. The discussion has circulated on using these clusters to regulate socio-economic development of the regions, and for the whole country's economy. The cluster serves as a territorial and sectoral form of organizations of production that stimulates the development of specified programs for economic development. It is recommended to conduct clustering policies with cooperation of the state and regional authorities, educational and business establishments along with research and scientific organization so it can become successful in terms of socio- economic development. In agriculture this can be aided with the growth of interest in the development of cooperation and creation of agro-industrial clusters (Borisova et al., 2015). Usually agricultural clusters are planned and built in a bottom-up scheme, therefore using the economic benefit for the farmers themselves as the aim; i.e. not

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focusing on authoritarian gain. They include horizontal and vertical integrations to create the synergy the farmers and inhabitants need. As mentioned above the typical cluster includes companies from a small to a large scale that do not profit from competing with other companies in the cluster but share specialized resources. The definition of the localization of the agricultural cluster can vary and therefore is not strictly determined to one type (Borisova et al, 2015). By applying the cluster and agricultural cluster theories, along with the concepts of competitive and comparative advantage in the thesis, it can be possible to identify how Icelandic farmers have created their own cluster through the comparative advantage they possess. Unlike other developed countries and especially Nordic countries, Iceland does not have a pre-defined or built agricultural cluster with cooperation from the authorities and other entities that gain economic leverage by the cluster (Borisova et al., 2015). 4.4 Competitive and comparative advantage

4.4.1 Competitive advantage

Competitive strategy is the search for a favorable competitive position within an industry, the fundamental arena in which competition occurs. Competitive strategy aims to establish a profitable and sustainable position against the forces that determine industry competition (Cantone and Abbate, 2006). Innovation, improvement, and change is seen to be central to creating competitive advantage. Competitive advantage is seen as encompassing the entire value system, which is comprised of the value chains of the firm, suppliers, channels, and buyers. The strongest form of competitive advantage often emerges from within a geographically localized cluster. Strong clusters tend to attract more firms and the regions with a strong innovative record have an advantage in achieving more innovation and can be described as self-fulfilling (Toma and Turtoi, 2009). Porters Five Forces is a model used to analyze a firm’s relative competitive position within a given industry, see Figure 4. It gives a clear framework for assessing the effect of the external environment on a firm’s ability to sustain a competitive advantage (Srivastava, Franklin and Martinette, 2013). Porter suggests however a more generic or broad set of strategies for creating defendable position in the Figure 4. Porter's generic strategies (IfM, 2020). long-run and therefore outperforming competitors. Those generic strategies are i) cost leadership, ii) differentiation and iii) focus/niche strategy (Porter, 2000). The strategy has then two variants which are cost focus and differentiation focus. To summarize, cost leadership strategy is when a firm finds and exploits all sources of cost advantage with the aim of becoming the low-cost producer in its industry. If that

18 firm can achieve and sustain overall cost leadership, it will automatically become an above average performer in its industry. This however depends on its ability to command prices at or near the industry average. Second generic strategy is differentiation. There, a firm seeks to be unique in its industry along some dimensions and having its product or service widely appreciated by the customers. The firm selects one or more attributes that buyers feel that is important and thereby differentiates themselves from other firms with uniqueness and premium price. Focus or niche strategy is the third and last one in Porters generic strategies in competitiveness. A firm seeks a narrow competitive scope, selects segments in the industry and creates an exclusion of others. This strategy has two variants, cost focus where the cost advantage is the target segment and differentiation focus where the firm seeks differentiation in its target segment (Porter, 1985; Tanwar, 2013).

4.4.2 Comparative advantage

The theory of comparative advantage was first identified by David Ricardo in the early 1800s. Ricardo put forward a hypothesis about how certain markets can gain comparative advantage over other similar markets by using, for example, their natural resources as an advantage over others that do not have that access. Ricardo himself did not finish formulating his theory and critique from other economists has been recurrent. Using the model of comparative advantage together with the model of competitive advantage it can offer a richer analysis of the business in question, while using one of these models without the other can give a unilateral analysis (Gupta, 2015). Other models explain comparative advantage in similar ways, but with added explanations to superiority or the concept of absolute advantage by Adam Smith in his 1776 book The Wealth of Nations. His main argument was that businesses should only produce goods in which they have an absolute advantage, meaning that they can produce a product at a lower cost (and higher quality) than the other firms. Furthermore, by having absolute advantage the producer spends less time and uses fewer resources in producing the goods compared to the other. In conclusion, that specific firm, individual or country can specialize in that item or services (Argarwal, 2020; Gupta, 2015). The reasons behind the superiority in the Ricardian model can be classified into four advantages. The first is the Technological Superiority, which means that where one nation is lacking in technological advances another country can provide that solution. Thus, creating a movement of commodities across national borders can create comparative advantage for a nation that is technologically bestowed. The second is Resource Endowments, which refers to the availability of resources in a country. This can compensate for a missing technological superiority. For example, when a country has an abundance of natural resources that is needed to produce a product compared to another. That makes that country have a comparative advantage relative to the other. Human Skills are as well a form of resources as some countries that rely on technological produce require a highly skilled labor force. In return, the countries that have an abundance of skilled workers gain advantage over the ones that do not. This can however be controlled to some extent with knowledge creation and education organizations. Another resource is the available infrastructure in the country, that can boost or create what is called economies of scale (Gupta, 2015). The third is Demand Patterns which emphasizes the role of demand in the home market as a steppingstone towards success in international markets. As markets usually introduce a product to satisfy the local market they become experts in making that specific product. That knowledge can then be exported to other countries with similar demand patterns. The last

19 superiority identified in the Ricardian model concerns National and International policies. Often, policies that are aimed towards infrastructure, export promotion, education and training can be aided by and/or facilitate comparative advantage. Those can be portrayed as subsidies plans, taxation preferences, restrictions and several other means that are used to create value within domestic industries. Commercial policies that restrict importation with tariffs, restraints or import licensing have as well been used to the advantage of domestic import competing industries (Argarwal, 2020; Gupta, 2015). These restrictive policies and rules are well known worldwide, for example with the trade arrangements of the European Union (EU) and European Free Trade Association (EFTA). 4.5 Food self-sufficiency

The concept of food self-sufficiency has been in the limelight since the economic crisis in 2007-8 as food prices heightened and countries started to reflect on domestic food production at a larger scale. Food self-sufficiency can be defined in various ways and the usage of it has been rather careless and critiqued (Clapp, 2017). The FAO (1999) defines it as how a country satisfies its food needs from its own domestic production. However, as the concept has yet to be fully delineated the presence of trade with other countries has not been fully explained. Therefore, using it in guidance of policy frameworks can be problematic as all countries rely to some extent on the import of food and thus the concept cannot represent a 100% domestic food production. By defining food self-sufficiency as domestic food production that is equal to or exceeds 100% of a country’s food consumption with the inclusion of trade, it can be of better use globally. Hence, by encouraging agricultural specialization and the export of their produce to other countries. Food self-sufficiency can be measured in terms of a countries’ dietary energy production per capita, which comes down to about 2500 kcal or more per person a day, or with the self-sufficiency ratio (SSR). The SSR is equal to the food production as a ratio of available supply and are usually used for a specific commodity such as rice, wheat, maize, or cereals. The problems with these measurements are that they do not take into consideration how much import or export is conducted by a country and therefore can give a skewed image of the country’s supply. Furthermore, if a country is self-sufficient it does not guarantee food security within a country; these concepts are often mistakenly thought of as being the same (Clapp, 2017). Food security can be obtained in a country if food is available, meets nutritional standards, is accessible to all and is stable across these three mentioned dimensions (FAO, 2008). However, as Clapp (2014) states, the concept of food security does not take into consideration the importation of food. Therefore, the concept of food self-sufficiency is relevant to agriculture in Iceland as the country is highly dependent on the importation of foodstuffs and does take into consideration domestic food production.

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5.0 Methodology

In this chapter I will explain how human agency in geography has developed in academia followed by a summarization and critique of the qualitative research strategy that was applied in the thesis. A fully detailed description of the research process is explained and divided into subchapters such as location of field study, sampling method, a detailed description of the qualitative interviews that took place in the field study and lastly a depiction of the coding during and after transcribing the interviews. Finally, this chapter contains an ethical statement, reflection of the role of the researcher as well as a limitations section that will explain the turbulent effects of the COVID-19 pandemic on the data gathering, analysis and writing of the thesis. 5.1 Methods in Human Geography

Before the 1970s spatial science had been at the forefront of geography, which many considered to fall short when it came to applying science to creative, imaginative, and free-thinking human beings. Due to that critique, the term ‘human geography’ came into being. Humanistic geography was therefore the qualitative answer to the quantification of all-important things. These geographers aspired to investigate the basic human meaning in the intricates of spatial science, as people are not of any measurable size. Humans present a different kind of problem in the geographic sphere (Creswell, 2014). Human agency is of essence in human geography although there are debates on how it should be conceptualized. Human geography is therefore an amalgam of social science that stretches into both natural science and humanities and thus shares similar approaches with other social sciences, including methods for research (Flowerdew and Martin, 2005). Methodology in academic research requires the translation of epistemological and ontological guidelines and assumptions into data that can be analyzed. The stages in methodology are typically defined as the selection of objects of analysis, which may or may not be human. The following stages are the conceptualization of suitable data and the formulation of research questions. Additional stages include research ethics, reflexivity and validation of the data acquired (Del Casino, Grimes, Hanna, and Jones, 2000). In present times, human geography embodies diversity in methods and approaches as geographical research is based on philosophical assumptions or preferences. Therefore the methods in human geography are continuously being reevaluated in academia (Flowerdew and Martin, 2005). 5.2 Qualitative research strategy

As the foundation of empirical data in this research is on the narratives of the farmers themselves a qualitative research method was chosen. The method was conducted as a field study, with qualitative semi-structured interviews as the main source of empirical data along with text analysis of policies, regulations, newspaper articles and other peer reviewed articles. In general, a qualitative research method is used for the formation of primary material and the main characteristic of qualitative research is that it puts emphasis on words and not the quantification in collection and analysis of data (Bryman, 2012). It has been noted that if a researcher chooses a qualitative method in their research, they

21 represent an interpretivist position. As epistemology is the science of knowing, methodology is the science of finding out (Babbie, 2016).

Qualitative research has been gradually accepted in social science in recent years despite it being more controversial than quantitative research methods because of the seemingly lack of reproducibility and a research process (Bryman, 2012). Qualitative methods demonstrate a different approach to scholarly inquiry than methods of quantitative research. Although the processes are similar, qualitative methods usually rely on text and image data, have unique steps in data analysis, and often draw on diverse designs (Creswell, 2014). The three main features of qualitative research are firstly the inductive view, secondly an epistemological position and lastly the ontological position. An inductive view is when research is generated out of a theory while an epistemological position puts importance on the interpretation of the participants, and therefore on understanding the social world through the participants in the research. Lastly the ontological position implies that social properties are a result of interplay between individuals (Bryman 2012, p. 380). As qualitative research is a broadly applied term that covers a wide array of approaches and methods found within different research disciplines, it is problematic to explain the methodology in a streamlined way. However, it is possible to identify a study as qualitative when a research design questions the ‘what’ ‘why’ and ‘how’ rather than ‘how many’. Other methods that are unambiguously qualitative are semi-structured and in-depth interviews, focus groups and observational methods. These methods all rely on the narratives of individuals or their behavior and therefore cannot be generalized, quantified or reduced to numbers (Kvale and Brinkmann, 2014). Lastly, qualitative research tends to work backwards, meaning that the hypothesis is commonly generated from analysis of the data rather than from the beginning (Ritchie et al., 2012).

5.2.1 Critique of qualitative research

The main critique of qualitative research comes from quantitative researchers, who consider qualitative research methods too impressionistic and subjective, meaning that it relies too much on the researchers’ views of what is important or not and personal relationships with the interviewees. Qualitative research tends to have a relatively open- ended way of conducting research and that data is difficult to replicate. The results are reliant upon the qualitative researcher’s ingenuity as procedures are unstructured. Qualitative research depends on the researcher’s choice of focus while in the field; it could a product of what strikes them as significant, while others are likely to emphasize other issues. Qualitative researchers are likely to be affected by their own characteristics as well as by their own ideology and/or perspective. Because of those factors, it is difficult, or somewhat impossible, to replicate qualitative data (Bryman, 2012). Other critiques include the problems with generalization and the lack of transparency. The main concerns with generalization are that a case study of qualitative interviews should not be interpreted over a whole nation or a group of people as those findings are unique to the participants in the study. The lack of transparency refers to the difficulty in establishing what the researcher did and how he or she arrived at the study’s conclusions (Bryman, 2012). To summarize, qualitative research strategies have been critiqued since the methodology is unstructured and interpretive for each researcher. The methods applied vary, as do questions and answers, especially in thematic or semi-structured interviews.

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A person's history, background, education, age, gender, ethnicity, and other socio- economic attributes can give unique results. Therefore, it is important to list the methodology, strategy, sample size and lastly each and every step of analysis in order for the reader to follow the process from beginning to end and how decisions made along the way might or might not affect the end results. 5.3 The research processes

The act of doing research can be described as speaking a language as the researcher learns new terms while conducting the research. To explain, this involves listening to and reading from those who are already versed in the relevant practice (Flowerdew and Martin, 2005). As each qualitative research process varies in its methodology, structure and analysis the overall aims of qualitative research are generally to provide an in-depth and interpreted understanding of the world, by learning about the social and material circumstances, experiences, perspectives and background of the research subject (Ritchie et al, 2013). In this sub-chapter a detailed description of each research process will be provided, starting with a brief description of semi-structured interviews, introduction to the location of the study. Then the sampling method is presented and lastly a depiction of the interview process itself.

5.3.1 Semi-structured interviews

There are two main types of interviews in qualitative research: the unstructured interview and the semi-structured interview. In qualitative interviews the researcher’s aim is to obtain rich, detailed answers and often the purpose is to code the interviews during the analysis of results. Semi-structured interviews can provide insights into how research participants view the world and therefore allow the researcher to gain knowledge without controlling the answers too much. During semi-structured interviews, the researcher usually has a list of questions or topics that are to be covered, which is referred to as the interview guide. The interviewee does have the freedom or leeway to answer the questions as they prefer and therefore the flow and structure of questions in the interview guide may change. Often the researcher picks up themes or questions that are said by the interviewees and therefore can add or take out of the interview guide as the interview process continues (Bryman, 2012; Ritchie et al., 2013). This method thus differs from quantitative methods where analysis of data is not performed until after all the data has been collected (Kvale and Brinkmann, 2014). It is safe to say that the interview process is flexible, and emphasis is put on the understandings, behavior and expression of the person being interviewed (Bryman, 2012).

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5.3.2 Location of field study

The choice of location was multifaceted, and it is safe to state that the reasons were both personal and theoretical as well. Hrunamannahreppur is a municipality located in the southern region of Iceland. It is an area of 1.375 km2 and has a population of approximately 810 persons (Fludir, 2020; Statistics Iceland, 2020). As seen in Figure 5 the area has an urbanized zone, portrayed as the grey area in the lower left of the picture. The middle top image shows the municipality’s location in southern Iceland. The farming land is green, and the area is mountainous with and the river marks the border around it. The urbanized settlement in the municipality is called Fludir and it is located about 100 km from the capital region of Reykjavík. The location’s natural conditions are one of the reasons why it was chosen for this research as it is one of the largest agriculturally dense areas in Iceland. It has an abundance of natural resources such as geothermal water supplies, cold water wells and reasonable amounts of arable land as well as climate conditions that are more stable overall in comparison with other areas in the country. An abundance of diverse farms are situated in the area and many innovative farming practices have taken place there in the past few decades; for example, strawberry farming in greenhouses and the first mushroom farm in Iceland. Other farming practices to mention are dairy production farms, beef cattle farms, sheep Figure 5. A municipal plan for the municipality of farms, horticulture farms that Hrunamannahreppur (Fludir Municipality, 2020) produce in greenhouses as well as grow vegetables outdoors, flower farms, and other types of production such as honey(bees), tree farms, and other smaller initiatives.

Other reasons for the choice of location are personal to the researcher as I am very familiar with the area. I have both lived and gone to school there and I have family ties there to this day. In addition, I have worked at several farms in horticulture as a field worker, both inside geothermal greenhouses and outdoors with activities from clearing the old harvest from the greenhouses, planting seedlings, attending to the plants, harvesting, and packaging them. As the location of the field research had clear geographical boarders, all the participants had their farming practices within that area and therefore, I did not

24 interview anyone outside of that scope. The reason for this was to keep within the set prerequisites of a preselected location in terms of the theory of clusters as explained in the theory section above. 5.3.3 Sampling method As the aim of the research was to explore the narratives of famers in a specific area in Iceland, a pre-set criterion for the interviewees was set. A distinction is made in social research between probability and non-probability samples. Probability sampling is considered a more rigorous approach to sampling for statistical research and is therefore not used in qualitative research. In this research a purposive sampling was used, which means that the sample members were chosen with a purpose to represent a location or type. This sampling strategy thus ensures that aim of determining a cluster in the region is met (Bryman, 2012). The criteria for the sampling were as follows: farmers who have some current farming practices in the specific location of the field study. Gender, age, ethnicity, amount of land and number of animals being kept on the farm were not a criterion. However, farmers producing food, i.e. meat, vegetables, or fruit for consumption, was a criterion. The reason for that was that one of the aims of the research was to understand how farmers experience the regulatory frameworks within food production in Iceland.

A snowballing sample was used to some extent, which can be explained as an approach in which a researcher asks the first participant/s to refer or make suggestions of other people they feel might fit into the interview sampling criteria. As the population of the location is small and farmers are quite familiar with each other they might give better insight into who can provide different views or useful information that is valuable to the research. Snowball sampling can however produce a certain monogamy in answers as it can display similar or the same answers to the questions being asked. This approach can however be time-consuming and as time was limited for the field study, I used this approach to supplement the already established interviews I had when arriving to the field (Ritchie et al., 2013).

5.3.4 The qualitative interviews

Pseudonym Gender Occupation Type of farming A Female Beef Cattle farmer and teacher Beef Cattle B Male Farmer Dairy farm C Male Agricultural Consultant - Horticulture division Forestry D Male Owner of agricultural production Horticulture E Male Owner of agricultural production Mushrooms and horticulture F Male Carpenter and farmer Sheep G Male Teacher and farmer Sheep Table 2. Simplified table of participants. Detailed table can be seen in Appendix. As stated above in the methodology chapter, data was collected through semi-structured qualitative interviews with agricultural farmers in a preselected region of Iceland. The total number of participants ended up being seven from different sectors of agriculture. The farmers that participated were from different sectors in agriculture and therefore I

25 was able to gather information from almost all sectors of the practices in the municipality. All the interviewee's names have been anonymized and have the pseudonyms A, B, C, D, E, F, G as seen here in Table 2 on page 25. Farmer A went from having a mixed farm to specialize in beef cattle, Farmer B is a dairy farmer who is located on the same estate as the last two generations of his family. C is a horticulture consultant and a former horticulture farmer himself but has turned his own farming practices towards forestry and bee farming. D is the owner of an extensive horticulture farm, which contains multiple geothermal greenhouses and outdoor cultivation as well. Farmer E operates the mushroom farming production as well as having a horticulture farm with both outdoor cultivation and greenhouses. F and G are both sheep farmers with other occupations. Their farming practices are of different scales but both farms have been in their respective families for decades if not centuries and have had mixed farming practices on the land. Further details of each participant are listed, in Table 2 in the appendix. There their pseudonym, gender, occupation, the type of farming they practice and other data that are considered relevant for the presentation of the data has been collected. Four potential interviewees were contacted on Facebook Messenger and through email a few days to a week before arriving at the location of the study, Hrunamannahreppur, on February 26th, 2020. They were given a short description of the research and asked if they would have time to sit down for an interview which would be recorded anonymously for the purpose of this master’s thesis. However, no actual date or time of the interview were set as they wanted me to contact them when I was in the area and they could see better then when they had time to sit down with me for an actual interview. The purpose of contacting them through the mediums of Facebook and email were to enable me to see how willing the farmers were to contribute to my research and if the time frame that I had in the field would suffice for the research. About a month before the interviews took place, in January 2020, an interview guide was constructed which would guide me through what I wanted to ask the farmers about. After careful consideration and conversations with my supervisor I chose to have certain themes in the interviews rather than formed interview questions. I felt that it would allow the farmers to express themselves more freely which proved useful when conducting the interviews. After the first two interviews the themes slightly changed as new information emerged and issues that the farmers identified as being important, and therefore of relevance, were incorporated in other five interviews. The themes that were investigated included basic knowledge themes such as occupation to understand the extent of their farming and if they had other means of income. The location of the farms, what type of farming practices take place and how they spend their time on the farm. Themes of clusters and innovation, changes in consumption, legal frameworks, sustainability, food security. Lastly the possibilities and limitations of farming in Hrunamannahreppur and future aspirations. The themes that were later added was the seeming disconnect between farmers and policymakers and connection to consumers. The interviews themselves were conducted in Icelandic and therefore the interview guide was written in Icelandic. Due to

26 that fact, the interview guide is not included in the appendix section as the thesis itself is written in English. Before entering the field, a goal of ten interviews was set but with the understanding that conditions and other internal or external factors could change the final number of interviews. It resulted in seven farmers being interviewed in late February 2020 to the early days of March of 2020. The reason for the short period of field work was due to the overlying COVID-19 pandemic and family situations. Therefore, I was not able to stay longer in the field. The time chosen was however strategic and planned in spite of not being as long as originally intended. This period of time is before the sowing season in outdoor horticulture, before the lambs are born and also before the farmers fertilize the fields for the summer, which made it more feasible for the interviewees to take time to participate in an interview. The interviewees all decided where and when the interviews took place as I wanted the interviewee to feel comfortable and therefore a location of their choice was encouraged. Three of the interviews took place at the interviewee’s occupation, one in the residence of the researcher, three in their respective homes. All the interviews were recorded on a mobile device with consent of the interviewees after explaining that the recording would be anonymous. However, with the assumption that because of their occupation they could be identified to a certain extent as the municipality is small and it is easy to identify the interviewees because of the type of farm they own. I encouraged the interviewers to let me know if they did not want any of the recorded information to be transcribed and there were a few instances where sensitive information was not transcribed or quoted after the participants.

All interviews took place in Icelandic as mentioned above and were transcribed directly to Icelandic, therefore the quotes used throughout the thesis are translated from Icelandic to English by me. As a result, there might be some changes in the initial interpretation of the sentences although I did my best to portray the essence of the quotes. According to Kvale and Brinkman (2014) the number of informants in qualitative research methods is not the main goal, but the number that is needed for the hypothesis or the aim of the study itself. In economics the law of diminishing returns suggests that sufficient interviews have been made when a new interview will only marginally contribute to new knowledge (Kvale and Brinkmann, 2014; Samuelson and Nordhaus, 2001). By using that concept I was able to identify that similar patterns and information was being provided after the fifth interview and therefore I concluded that the interviews that I was able to obtain can give a substantial insight to the aim of the research. Each interview however presented a different set of farming practices and therefore it can be concluded that the participants can represent their respective farming group. One of the interviewees is also a consultant and has a good overview of the horticulture sectors themes and therefore was a valuable addition to the data collection.

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5.3.5 Thematic coding

Theming can be described as identifying codes from one or more data sample for an overall representation of each theme. The difference between a theme and a code is that instead of looking for one word as the code to a concept, insinuations, and discussions on a certain topic are identified as the theme (Bryman, 2012). While conducting a thematic analysis, main themes and subthemes were identified after reading and re-reading the transcripts, listening to recordings and from notes that were made during the interviews themselves. Sutton and Austin (2015) explain the importance of this process as forming an outline for the conclusion of the research as each theme identified can become a heading of a section or a chapter. The themes that are presented in the results chapter are therefore chosen because of their importance to the interviewees and were then related to the relevance of the aim and research questions. By using this technique, I was able to hear what they were saying and then what they were not saying. For instance, a lengthy pause could perhaps indicate that the participant is having a hard time talking about the issue; or is the person deciding what to say? The aim of using qualitative interviews as a method for extracting empirical data is to be able to tell the participants’ stories using examples or quotes from their own narratives, therefore giving light to the participant’s story, experience and aspirations (Sutton and Austin, 2015). 5.4. Ethical statement

The critique of qualitative research and qualitative interviews has focused on that the research methods are unstructured and unpredictable and give the researcher excessive interpretation and therefore it is imperative to consider the ethical aspects of the research (Bryman, 2012; Lewis, 2003). Informed consent of the participants is consequently vital for the ethical research process and to fulfil the ethical aspect of academic research. I made sure that the informants knew the purpose of the research, as well as getting consent for the interview to be recorded and how I would then use the data being collected. I explained to them that they could disclose information if desired, that they could stop the interview process and that they could let me know if they did not want some of the information repeated. In the cases that participants did not want those statements repeated I did not transcribe in the transcription process. The statements in this research that were excluded entailed either sensitive content or personal opinions that could create social and business setbacks for the participants in question. Anonymity of the informants is an important aspect of qualitative interview strategy as they should be provided with a platform that they feel safe and secure to explain or share their personal opinions (Bryman, 2012). No names of the informants were used, and explicit locations of the farmers are not being charted as the community is small and likelihood of dilemmas might occur within the community. However, those who were interviewed and hold a unique position in the geographical area of the research were aware that complete anonymity would be difficult. Sensitive material is therefore not quoted but used in a more general discussion. Due to my own background and connection to the place my role as a researcher is important to list here in this paragraph. As the area of research is known to me, and as the participants know me, some more than others, it might create some ethical issues in terms

28 of me being impartial to the interviewee, their story, and their experience. However, it can be beneficial as trust and a personal connection has been established. Moreover, I speak Icelandic and that made it easier for the interviewees to share more profound information. However, translation within the research process might introduce bias, and therefore the relationship with the interviewees needs to be addressed (Temple and Young, 2004). That favoritism that can be identified as my commonality with the interviewees and that I have lived and worked in the area and the agricultural sector. The farmers did not have to explain all the small details that they might consider common sense and were able to express themselves more freely. Due to that, my translation also played a part in ‘filling in the blanks’ when transcribing and translating quotes. However, it is essential to keep as an unbiased perspective as possible, to protect the integrity of the research process. As a result, it is important that I as a researcher am aware of my influence on the interviewee. I am to understand the attitudes of the farmers and through which ideas these attitudes are built up by. It is therefore highly relevant to enable a flexible and reflective approach where ideas can be expressed and developed freely by the interviewee. Equally important is that I can easily adapt to where the interview is going and not steer the answers in any direction even though the interview itself must be steered so that relevant topics are covered. 5.5. Limitations and Covid-19 Statement

The limitations of this research are, firstly, that the sample size was moderate and therefore the results cannot, according to critiques of qualitative methods, be generalized for the whole agricultural sector in Iceland. However, as information from the interviews gradually became similar in content, as mentioned in the interview chapter above, it can be said that more interviews would have given similar data. The region that the research focused on is small in size and population, but it was chosen strategically as one of the themes and theories was understanding if there was an active agricultural cluster in the area or not and the area is one of the most agriculturally dense areas in Iceland. I chose not to take interviews with consumers as the aim of the research was to give the farmers narrative room in the academic field of geography. One can argue that if a consumer survey or other qualitative interviews would have been conducted, there could have been an opportunity for a comparison of the narratives of the farmers and then of the consumers and their behavior. Instead news articles and other data from social media were used to get an overview of the mindset of the average Icelandic consumer. Therefore, it can be assumed that the interviews presented a wide selection of the farming practices available in the municipality.

As the gathering of empirical data with the field study was conducted in late February and early March data collection for this study was not directly affected, as restrictions on travelling and social distancing due to COVID-19 became a reality only after my return to Stockholm, Sweden. However, the social support of other students while conducting the analysis and the writing itself presented challenges. Workshops in the program were conducted online through an online platform called Zoom6 and as a result, the personal interaction is missing which can affect the mental state of a student during the writing

6 Zoom is a video cloud platform for video and audio conferencing, collaboration, chat, and webinars (Zoom, 2020).

29 process. Supervisor meetings were as well held online through Zoom and through email or phone. In summary, the COVID-19 outbreak did not affect the data collection to a great extent but did affect the writing process as writing in uncertain times can take the focus away from the actual task at hand. Hence, support and interaction can help along with a need for a well thought out plan on how to conduct writing in turbulent times (LSE, 2020).

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6.0 Results

This section will present the results from the empirical data gathered through qualitative interviews conducted during fieldwork in February and March of 2020. The research purpose was to identify the challenges and possibilities of farmers in Iceland within the clustered region of Fludir. The results will be sectioned into themes that were identified through coding. The themes appear in the following order: clustering, innovation, competitive and comparative advantages, regulations and import, food security and changing consumption patterns. Lastly the themes of the disconnect between farmers, policies, and consumers and the farmers discussion around sustainable and organic farming. 6.1 Clustering in Hrunamannahreppur

Although no formal clusters are in place in the Icelandic agricultural sector, other master’s students’ research in Iceland has pointed out the benefits of having such a cluster and that it might strengthen the sector on a local and global scale (Bjornsdottir, 2015; Gylfadottir, 2012). This research has supported those findings. All interviewees talked directly or indirectly about the advantages of having multiple farms in the same area, whether it was for innovative ideas, inspiration, or simply to lend a helping hand. C, who is a consultant in horticulture and former horticulture farmer, mentioned that the clustering effect was not intended or planned in any way, shape, or form. Instead, it happened naturally, at least in the horticulture sector. One of the main reasons for the flourishing of both the outdoor and indoor horticulture farms in the area is, as C mentioned, the unique access to geothermal water as well as cold water from the mountains. When the first person started to grow cauliflower, broccoli, and cabbage outside in the fields, it sparked an interest for other farmers, both those who were already doing some farming as well as others who had no ties with it. That is what happened in the case of E, who was a teacher. During the summer, he started cultivating outdoor horticulture to earn an income while the schools were closed. This passion started from there, and it grew into building greenhouses to grow bell peppers, tomatoes, and cucumbers. The reason for those species was that, as mentioned in the background chapter, there were only subsidies for those three species of vegetables. In other sectors of agriculture in the municipality, sheep and cattle farmers, A, B, F and G, agreed that the enthusiasm and innovative mindsets that locals showed in the last century enabled the development of the cluster in Hrunamannahreppur. As farms started forming all around, mostly dairy farms and mixed farming, farmers saw how successful it was to have cows and sell the dairy products, so it snowballed from there. B says it clearly with his statement:

I think there is always some sort of snowball effect, even though it's not solely economically then it is also mentally if you look back in time, at the turn of the century the cattle farmers here in the municipality and the surrounding counties went drastically down. Then there was two that started to build stables and barns, the third came in, and it ended up in ten farms in two years (B, interview, 26th February, 2020).

Since the community does not have a formal cluster, there are no policy rules, regulations, or recommendations that govern how to collaborate in the region. Due to the

31 interconnectivity of the localized cluster, a formal cluster gives, by definition, the farmers in this case, an advantage by having similar operation units nearby. This interconnectivity can mean services and knowledge centers that are intended to facilitate education and innovation as well as appropriate governmental institutions (Porter, 1998). As A, who runs the only beef cattle farm in the area, stated it is possible that because of the lack of regulations and frameworks it can be a challenge to have a farm that has distinct practices compared to other farms in the region. In terms of support, she said it matters tremendously, and it could make or break a farming practice:

…we could have perhaps kept this going if there had been more support from everyone, the municipality, the ones who purchase and other things like that, to be able to hire someone… we would have wanted support in that way because you cannot keep a company going on this amount of turnover rate… (A, interview, 26th February, 2020).

This clearly portrays that structurally there is a lack of support from top-down as the municipality does not have the means to formulate all these institutions, innovation centers and other facilitators for a successful clustering framework. Then again, the community, along with the aid of the municipality, has launched initiatives to form associations that are tailored to each sector of agriculture in the municipality. There is the Agricultural Association of Hrunamannahreppur, and there are different associations for each sector; Sheep Breeding, Cattle Breeding, Horse Breeding, Soil Conservation, Forestry, and other associations related to sports, culture, and senior citizens to name a few (Fludir, 2020). The Agricultural Association has been instrumental in the work of farmers in the area according to the farmers. They rent out agricultural machinery and other heavy equipment to farmers. By doing that each farmer does not have to invest large amounts of funds into technical solutions and machinery that will only be used for a few weeks or days a year. The Agricultural association takes care of the maintenance and organization and planning of the rents instead which is highly beneficial for the farmers’ budgets and convenience as A, B, F, and G mention. As the participants talked about cooperation within the region and in the agricultural sector many possibilities and unused opportunities presented themselves. One of the main things that came up was the benefits of having more service in the area itself, to cut transportation time and as well for the well-being of the animals that go to slaughterhouses (abattoirs) as G said.

So maybe more could be optimized, e.g., in the transportation of animals and produce. Maybe it would be more efficient to have production and slaughterhouses on site instead of in Selfoss [which is approx. 50km away], opens the ability to sell more animals on foot (G, interview, 2nd March, 2020).

A stated the same thing; the cost of butchering is one of the reasons why their farm has been having difficulties. F, G, and B, all mention the same thing, although B is not raising beef cattle but has dairy cows. The cost of butchering cattle went up 40% in 2018, and according to A, it is not possible to put that percentage on top of the price of the beef since it is already quite a price hefty product. A and her partner wanted to have a license to slaughter at their farm, both to facilitate the production line from farm to consumer and additionally providing services for other farmers in the municipalities around Hrunamannahreppur. However, since the regulations and rules for the slaughterhouses

32 are only getting stricter and more complex to navigate the possibility is slim to none, as F said:

Right now, you basically need to have a license to export if you want to do something … therefore, we cannot be competitive because the regulatory framework is working against us (F, interview, 2nd March, 2020).

A, B, F, and G state that by allowing farmers to slaughter more at home, perhaps with some regulations of the number of animals, they could benefit from that and give the consumers ‘straight from the farm’ produce. There is a farmer’s market run by horticulture farmers in the town of Fludir, however they have had to adhere to stricter regulations by moving their self-service hut, which was popular with both locals and tourists, into a regulated shop. The farmers in the region, as well as the locals, feel that this is a step backwards, as by having a fully staffed market the prices will inevitably rise with the rising cost of staff and housing. G mentioned, however, that finally, there is a veterinarian who has settled down in her hometown of Fludir and is planning to open a veterinary clinic on-site, which will benefit the farmers in the municipality and in other neighboring counties tremendously. Having services near the farms responds to the theory of clustering by Porter (1998), Marshall (2012) and other economists. The idea to strengthen the cluster by adding services like universities, governmental offices and essential services adds to the value of competitiveness within the cluster. 6.2 Innovation within the region

Farmers in the region have proven to be innovative when it comes to trying new species and techniques of cultivating. D has expanded his geothermal greenhouse farming in recent years. When he started farming in 2000, he started with outdoor horticulture, such as broccoli, cauliflower, and cabbage. He built the first greenhouse in 2006, expanded in 2008-9 and then again in 2011 and 2017. He started growing cucumbers in the greenhouses and then added tomatoes and bell peppers and lastly, he is experimenting with salads. He has implemented a fairly new technique called Hydroponic7 as seen on Figure 6, page 34. This is a water technique that is known in other parts of Europe. He, like other farmers in the region, seeks knowledge in other countries to be able to introduce innovative ideas to his cultivation and for the benefit of other growers. He stated that because the regulations do not subsidize salads, he can profit more from growing those types of produce as the prices are not controlled by a framework. E talked about his mushroom cultivation, how the previous owner started to grow the white mushrooms and that now the farm cultivates two other types as well, the brown chestnut and portobello. The company, called Fludasveppir, harvests around 11 tons a week as of now but he is interested in expanding and bringing new varieties of mushroom. He, like all the other farmers who go on trips, add to their knowledge by acquiring it in other places. Then what happens is that that knowledge can inspire others in the cluster to adapt that technique or idea as well. This correlate with what is called innovation diffusion where, in this case farmers, adopt innovative ideas in their own practice (Premkumar, Ramamurthy and

7 A hydroponic system is an automatic deep-water culture system which focuses on safe production of fresh produce. Its crops are short cycle crops that can be grown on deep water for instance herbs, cabbage, and lettuce (Viscon Hydroponic, 2020).

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Nilakanta, 1994). During these interviews, several other examples of innovation came up, for example going back to using more of the animal. G especially mentioned that he would love to see the lamb itself being handled better, therefore using the sheep's skin, wool, and horns to make decorative items for homes along with other Icelandic design. As well, introduce and market the meat cuts differently and to create a name for the area as the agricultural paradise that it is. These statements are also connected to the innovation and knowledge seeking processes that take place within clusters (Borisova et al., 2015; Porter, 2000). All of the participants mention that they own the land they are growing on. As it is difficult, and according to F, almost impossible to buy into the agricultural sector, it has not been a custom to rent land. The reasons for that are that it is expensive and not reliable if someone wants to start a farm in the area, meaning that farmers are afraid to venture into farming on a land that they cannot be secure with for a longer period. Because of the cost, it is hard for newcomers to join in and be able to start a new production in agriculture. This trend is not the same in other Nordic countries as it is considered common to rent land for agricultural use (Wästfelt and Zhang, 2016). Although there are some grants available, they have not been focused on Figure 6. Picture from farmer D and his Hydroponic cultivation in one of his the farmers that want to geothermal greenhouses. start. The innovation grants that are available for the agricultural sector facilitate mostly for those who want to start a huge business. They are not for those who already have some production and would perhaps need a financial injection to renew equipment or try out a new technique in cultivation (A, 2020). A says that it is tough when the small unit farmers do not get help to go through a difficult period in the business, which can lead to farms going bust.

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6.3 Advantages in the region

The concept of competitive advantage is to create a favorable position within an industry and, as mentioned in the theory chapter, innovation, improvement, and change are seen to be central to creating competitive advantage within a cluster especially (Porter, 1998; 2000). These farmers have shown they are fully capable of seeking knowledge and are not afraid to implement innovative ideas, whether it is introducing a new type of vegetable or introducing a sustainable and efficient technique. As the area is situated near the Golden Circle tourist route, along with having its own tourist attraction the flow of local and international tourists is plenty. A and G recognized that consumers from the city drive many kilometers, especially in the summer, to get fresh produce like strawberries and vegetables, stop at the Farmers Bistro (a bistro run by Fludasveppir mushroom farm) to get mushroom soup, mushroom ice cream and baked bread. Near Fludir is also a large summerhouse zone and as A said she had a loyal client base from the summerhouse owners, and that their business only grew because of word of mouth. E and G mention specifically the efforts made by another horticulture farmer who made a self-service hut near his production area where consumers could go and pick out vegetables or more into a small box and pay a set price,. This operation created a buzz but because of regulations they were ordered to shut it down as regulations demanded more control. In the end they built a small farmer shop on their premises where they sell produce from Fludir and surrounding areas as well. The area does have a comparative advantage relative to with other places in world because of the natural resources, as most of the farmers mentioned. The definition of comparative advantage is that a specific area gains advantage over other similar markets by using their natural resources as an advantage over those that do not have that access (Wästfelt and Zhang, 2016). The area of Hrunamannahreppur lies near the Mid-Atlantic Ridge which provides the area with abundance of hot water for example. Having access to geothermal heat and to cold water boreholes means that the farms have a private source of water. Therefore, it was relatively straightforward to start up some sort of farming, and then as a result to sell the produce for profit (C, 2020). It was because of innovative mindsets that glass greenhouses grew quickly in the area in the 1990s and farmers started to introduce and grow niche products like strawberries, raspberries, and diverse varieties of tomatoes and lettuce as C mentioned in his interview. E agreed and said that they learned a lot from each other and that the knowledge in the area is unprecedented and should be used more. He owns the mushroom farm and production and he took over from his friend who was the first one to grow mushrooms in the Icelandic market in 1982. He is aware of the privilege and comparative advantage they have in the area, both within Iceland and globally. He mentioned that because of the access to hot and cold water, individuals started growing something different than grass for the animals. When the mushroom facility was built in 1982, they started to grow corn to be able to make the compost mass for the mushroom cultivation. He is adamant that the reason that agriculture started in the region is because of the geothermal heat and the snowball effect of innovative minds. All the interviewees stated that because of the conditions and the high-quality produce being cultivated in Iceland in general there should be more export, especially of their meat.

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6.4 Concerns on import and regulations

Icelandic agricultural policies and frameworks were one of the topics that came up quite often in the interviews, some of them said that in some sectors of agriculture, the frameworks were efficient, but in others, a revamp of the rules, subsidies and other regulations is desperately needed.

B stated that although the regulation and subsidies plan for dairy production was working well, he was adamant that it was not the same for other farmers, especially those who were selling meat. By having milking cows, he allocates a certain quota of milk liters and gets paid per liter for that; overproduction gets paid the minimum unless needed. By controlling the dairy production in the country, the system can avoid overproduction of milk. The other participants agreed that the subsidies system in dairy production is working, although outdated. The horticultural farmers, such as C, D, and E, mentioned that the regulations for their sector need a comprehensive reassessment. The only vegetables that are being subsidized are bell peppers, tomatoes, and cucumbers. Other than that, they are being supplied with down paid electricity to be able to run the geothermal greenhouses with light all year round. However, as the prices are somewhat fixed on tomatoes, cucumbers, and bell peppers the farmers can sell other products such as lettuce at a higher price. That has meant that the farmers are producing the minimum amount of those three species but putting importance to expanding their cultivation with new varieties of vegetables and fruit. As C mentions, almost all of the subsidies, or at least more than 70%, are going towards dairy and meat farming but because of the changing habits in consumption and growing environmental awareness a more significant share should be going towards horticulture, corn, oats, and geothermal greenhouse cultivation. Nevertheless, it should be done in such a way that it does not harm the lives of dairy and sheep farmers. The regulatory system needs to be revamped for current times but with a long-term vision and in an environmental and sustainable way. When looking into the regulations regarding the farming practices themselves, the farmers feel the frameworks are too restrictive and licenses are costly. Nevertheless, as farmers' standards are also high, they do understand the importance of the regulations, but they feel that overall licenses, laws, and regulations are not only pricy but complicated to follow.

As mentioned in the background chapter the Icelandic government decided to retract the restrictions on the importation of fresh meat (Ministry of Industries and Innovation, 2020a). It is expected to affect the farmers hard, especially those who rely on the production of lamb meat and cattle beef. A says that she does not understand why it was done and that the whole cattle farming association is feeling the heat. The explanation that the government gave was that it was a demand from consumers, they want something cheaper, which she admits makes sense because food is expensive in Iceland (A, 2020). However, because the cattle beef farmers and the sheep farmers are not able to sell their products legally without the middleman, i.e. from their own farm, they do not see how they can compete with the influx of imported meat. A, F and G are fearful of how this will affect their livelihood, especially A, who bases her whole farming business on raising beef cattle. Those participants mention that there is already enough meat produced in the country. Hence, it is hard to comprehend what the government is thinking as the market in Iceland cannot be compared with markets in other European countries (A, 2020). Consequently, this makes it impossible for the local producer to compete with the big

36 producers in Denmark for example. The participants expressed the injustice they feel towards the favoritism of the import facilities. They are allowed to import what they want and do not have to obey the many regulations as local farmers do. Regulations are working against farmers and their success and add to the prevention of innovative cultivation according to the interviewees. 6.5 Food Security

The issues surrounding food security have been well publicized or discussed at length in the western world and that is no different for Iceland and Icelandic agriculture. B states that it is crucial to look at agriculture from a food security perspective as there is enough meat produced for the country and possibilities to produce more if needed. However, some meat cuts are not available locally at certain times; thus, importation should complement that shortage, not compete with the Icelandic produce. By doing this, it would be a possibility to strengthen the agriculture sector in Iceland and would help to introduce new types of vegetables, for example. A mentioned that consumers do not at all accept anything to be seasonal; they want everything on the shelves all the time, which is not the case in other parts of the world. All farmers said that the concept of food security could be interpreted in different ways, as C said: …do we want to go back in time and just eat potatoes and meat or work towards a future where we can provide the country with a high percentage of high quality and locally produced food? (C, interview, 27th February, 2020). The government’s newest framework regulations for agriculture seem to have food security as one of the goals. However, no step by step plan, research or other enactments have been introduced, at least none that are publicly available (Ministry of Industries and Innovation, 2020b). According to some of the interviewees the implementations of rules and regulations in Iceland’s policy environment seems to be lacking. One of the participants mentioned that they put forward these regulations and laws to create a buzz, for showmanship or before elections, which then fades away and nothing happens. In return nothing gets done and farmers are left to pick up the pieces. 6.6 Changing consumption patterns & market demand

All interviewees mentioned a changing pattern of food consumption with Icelandic people, meaning that vegetables and fruit have become a more significant portion of the dish. However, G seems to feel that the number of vegans is being exaggerated in the media as he mentioned that perhaps only around 1% are vegans indeed. He, as well as the other farmers, agree that there is a higher demand for diverse crops of vegetables. They all agree that there could be significantly more produced if they had some sort of injection of money to expand or make it easier for new farmers to buy an already established farm and/or start their farming practices from scratch. As stated by C:

…there is something called a recruitment grant, but that is for the whole agricultural sector, it's based on the fact that young people can be able to buy a business … but it's also so hard to start, in the dairy production, you have to buy such a large quota, and in

37 horticulture, if the units are functional they are costly, people who do not have a lot of equity cannot handle it (C, interview 27th February, 2020).

Iceland is considered one of the most expensive countries in the world (BI, 2020) and therefore the cost of essentials is quite high. A, D, F, and G mentioned that food costs are too high, and therefore the demand to import cheaper produce exists. However, such cheap produce is often grown outdoors in warmer climates, using cheap labor, and grown with a large number of pesticides and other unnatural accelerators, making the produce lesser quality than Icelandic produce. Food cost does, however, matter when it comes to what consumers buy or can afford, and since the middle class in Iceland is growing, they want to have the option to buy food for cheaper. F talks about the fact that there is a big group of people that do not have the option to buy only Icelandic produce, let alone organic produce, although they would want to. That group is counting the coins before going to the store, and they cannot spend more than they have, that is a reality. A agrees as she feels that people want to buy steaks and excellent meat cuts, but they can get a similar product for cheaper if it is imported.

According to A, C, E, and F, diet changes have also created increased demands for certain food types. For example, with the keto diet, there has been a higher demand for certain products in recent years as people eat no complex carbohydrates, and the diet stands on high fat, protein, and vegetables such as broccoli, cauliflower, mushrooms, etc. These vegetables are mostly seasonal products, and therefore they need to be imported because of the high demand. E had a clear example of how the consumption pattern has changed according to the demand for broccoli. He said that ten years ago, when they started growing broccoli outdoors, they produced about 10 tons over the summertime while last season, which was a dry season, they produced 100 tons. According to his informal survey the market wants even more, up to 200 tons. He identifies a significant opportunity for the farmers to produce more of these sorts of vegetables. Because of the quality of the product, they could even produce enough to export because it is a quality product produced in good soil in the most natural way possible. According to D, the horticultural farmers are not meeting the demand of the Icelandic market, and therefore importation is needed. They could do it if more people jumped on the bandwagon. He mentioned that the soil conditions and access to geothermal heat and pure irrigation water will be in high demand in the future for foreign farmers. Therefore, should not miss the opportunity to expand the agricultural sector now. All of the farmers recognized the possibilities of increasing their productivity and innovation.

Consumers have a free choice given by supermarkets, so in return, Icelandic farmers are living with increasingly stringent regulations. For instance, a consumer can buy meat from Spain, but they are not allowed to buy meat directly from the farmer where the farmer can ensure that the meat is at the highest quality possible. As imported vegetables and meat are less expensive than the locally produced alternative, there is a particular group of consumers that cannot afford the Icelandic product. As a result, the demand for cheaper produce is high, and importers, therefore, import produce from countries that is, according to this study’s participants, of lower quality. Supermarkets can price it as they want and put the profit in their pockets, as all the interviewees stated passionately. This can be interpreted as the food prices in general are too high and therefore they clash with the buying power of the nation, which all of the participants agreed with., The middle

38 class in the country is growing but still inflation and prices are higher than ever, making it sometimes impossible for people to buy locally produced food. 6.7 A disconnect between farmers, policies, and consumers

During the interviews and the analysis, an interesting theme of the lack of connection between actors occurred. This theme was about the seeming disconnect between farmers and consumers. The participants mentioned possible reasons for that, although they could not pinpoint what was causing that divide. F said one of the reasons might be because of the rapid urbanization of Iceland in the last century, that the knowledge of farm practices is starting to fade or are simply not of interest. He stated that there might be three generations that have grown up in the city and have little to no connection to farming practices, how to grow food, tend to animals or even where food comes from. Back in the day, it was customary that kids went to work on farms and as a result they gained practical skills that lasted them a lifetime. In the present, adults are not in contact with the farm life, the nature or food. As A said

.. people do not understand the connection between where meat comes from and thus, the connection with the countryside has been a little lost (A, interview, 26th February, 2020).

According to the participants, Icelandic farmers in general wholeheartedly believe that Icelandic consumers want and would choose locally produced food over imported foreign produce. They would always choose that instead of imported food because consumers know the quality of the product and can be assured in the knowledge of where it originates, as stated by D. Despite these statements, the farmers image in society has not been very positive, and when asked why, the answers fell short. D and F mentioned that the media might be presenting them damagingly and that they solely pick up on the negative news around farmers, A and G mentioned that perhaps farmers are not good at marketing themselves. That can lead to a situation where consumers do not understand what farmers do. B, F, E, G, and D all mentioned that the age of farmers is high, and as F mentioned:

… I doubt that all the sheep farmers, who are mostly 60 years old, want to go to Reykjavik to stand in the street to market themselves, but perhaps that is the issue, that we are not thinking like that (F, interview, 2nd March, 2020).

Other reasons that the participants gave for the disconnect were that perhaps the people that are put into positions of power, e.g. safety inspectors or policymakers, do not have any sort of connection to activities on the farms and therefore do not seem to comprehend issues that farmers feel are common sense. A tells the story of an inspector that came to assess the conditions that her cattle live in. That person did not understand that on a sunny and dry day the cattle is clean, and conditions are right according to his instructions. Then a few days later after heavy rains he comes back, and the cattle are covered in mud with water puddles and dirt on the field and he questioned why they were dirty. D agrees wholeheartedly and would like to see the people in these roles working for a while on the farm to be able to understand what goes on, how animals, humans and nature interact,

39 and that there is no one solution for all as each farm and their natural environment is different.

In order to connect the dots, a few of the participants mentioned that there is injustice in the policy frameworks in terms of their ability to produce food for the consumers. On the other hand, policymakers are listening to the demands of the consumer, as they want more diverse food products, cheaper food, and year-round diversity. F mentioned that the consumer does not understand that the famers and agricultural workers in, for example, Spain are getting perhaps 1/3 of the minimum pay here in Iceland. Would they want to be paid that? They do not even want to work in Icelandic agriculture. If one was looking at the market as a local market instead of thinking of Iceland in a global perspective the prices would make more sense.

Despite the promises of sustainable agriculture in Iceland the government’s measures fall short in practice. They give tremendous power to retailers by allowing unlimited imports and do not demand retailers help market the Icelandic produce (D, 2020). This can, as all the participants stated, create tremendous harm to Icelandic farming practices and will not promote farming as an occupation for newcomers. 6.8 Sustainable and Organic farming

Icelanders are known to respect and care for their nature in general and in recent years the path to implementing sustainable practices in agriculture has been prominent. Icelandic farming is considered fairly sustainable as natural resources are the foundation of farmers’ practices. However, it will, according to B and F, most likely not be completely organic until they stop using artificial fertilizer on their land for harvesting grass in the summertime. B takes his fields as an example:

…we have fields here at home where we use the manure as fertilizer and then some fields 10km away, and there we need to use about 600kg of artificial fertilizer per hectare, but here at home we use the manure and then we are only using about 300kg of artificial fertilizer, so there is a substantially less need of it where the manure is used as a natural fertilizer (B, interview, 26th February 2020).

However, Farmer E, who runs the mushroom and vegetable production, says that farmers in Iceland should make better use of the natural resources and could use substantially less imported fertilizer. In general, the farmers agreed but do however see that the artificial fertilizer aids them tremendously in growing enough hay for the whole year. C agrees with E that Icelandic farmers should be able to use less artificial fertilizer, because of the beneficial impacts of climatic changes that result in higher temperatures on the island. They are experiencing an extended season for outdoor cultivation of vegetables and by using manure as fertilizer the they are implementing organic and sustainable techniques in their farming practices. C and E mention especially the technique of crop rotation as a sustainable method in land use and it can additionally yield better produce. Crop rotation is an agricultural technique in which each field is sown with crop plants in a regular rotation. Therefore, minimizing the risks of depleting the soil of particular nutrients (Eionet, 2020). As previously highlighted, the access to quality hot and cold water is unique, even in a worldwide perspective. Therefore, by taking advantage of these

40 resources E feels that Icelandic farming could be a prototype on a worldwide scale for sustainable farming. This can however be problematic as most countries do not have access to geothermal energy and clean water. G agrees and is eager for cooperative efforts in sustainable farming as well as frameworks that support such collaboration. E talks about his crop rotation and how he produces his own organic substrate, which is the soil that the mushrooms are grown in. They use their own locally produced corn and elephant straw and mix it with chicken and horse manure that is available nearby as well. To that they mix water and calcium which is then left to compost for three weeks. They then add the spores and the mushrooms start growing. Every week there is around 60 tons of compost a week as a byproduct. E’s farm takes that byproduct, mixes it with peat and pumice to make potting soil that is great for growing flowers, trees, and vegetables. This is sold directly to individuals and is available in certain supermarkets.

Organic farming has not been widespread in Iceland, and the interviewees feel that the reasons are because it is expensive and difficult because of short harvesting seasons, low temperature, and other climatic challenges. The farmers that do go through the various and costly regulatory framework do not get significantly more for their product. Hence, there is little to no incentive to go into organic farming. As B mentioned it is not rigorously inspected if a farmer is indeed 100% organic or not. For example, if a summer is climatically harsh and the hay harvest is sparse the organic farmer might run out of hay for his animals. That means that he will have to buy hay from someone else and how can it be ensured that those have hay that meets the organic standards. This is in contrast with the trend in other countries in the European Union where subsidies for organic production is high and therefore the profit incentives to turn to organic farming are much greater (EC, 2020).

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7.0 Discussion

In the discussion chapter an analysis of the results will be deliberated in terms of the theories chosen and to give answers to the research questions. The discussion is divided into two chapters that are aimed to discuss the research questions stated in the aim of the research. The first question asked if there an agricultural cluster in the region and if so, how does it work. The first subchapter answers the first question of if there is an agricultural cluster in the region and explains how the location, advantages and other initiatives work within the cluster. The second and third question will be answered in the latter subchapter as the themes overlap in the farmers narratives. Those questions ask what challenges and possibilities do farmers in the municipality of Hrunamannahreppur face in terms of the recent import law and how policies and laws in Icelandic agriculture ensure long-term farming practices in Iceland according to the farmers in the region. 7.1 Localization, advantages, and importation laws

The von Thünen theory states that the localization of agricultural production is determined by the distance or transportation cost to the urban market. In the case of local production in Iceland, this is not the case, as most of the agriculture farms are located in the north and south, not near the capital region. Although farms were closer to the city in the past, now the location is determined by the natural resources available in each setting. Agricultural products are time-sensitive and transportation links must be kept open despite bad weather conditions. This, however, can result in certain spillage when the roads are closed because of a snowstorm, blockage because of floods or any other natural disasters. It is nonetheless important to understand that since the geographical conditions of Iceland are challenging, the urban market relies on local and global transportation routes for food products. With globalization, international transportation costs have become affordable and as the recent importation laws show, from a pure profit perspective it is economically beneficial for the government to import cheaper produce. Farmers are not able to benefit from looking at their production at a global level, however, as their production profit is place-specific. By relying on the importation of foodstuffs for earnings, the policymakers are disregarding the environmental effects of transportation, and the economic and social effects on long-term farming in Iceland. As the participants mentioned, the regulations seem to contradict the overall goals of agricultural frameworks which encourage development and promotion of long-time farming practices in Iceland. My proposal for the policymakers would be to start looking at Iceland’s regulations in agriculture from a local perspective. That means taking Iceland’s agricultural production out of the global competitive market and focus on, as E says, promoting Iceland’s agricultural practices as a model for a sustainable farming for countries with similar attributes, and make use of the comparative advantage Iceland’s location provides (E, 2020).

The agricultural sector in the municipality of Hrunamannahreppur is flourishing, and they are benefitting from each other's knowledge, innovative ideas, and competitiveness to strengthen the cluster. The cluster formation developed largely according the cluster theory of GREMI as it has formed somewhat spontaneously. The underpinnings of Porter's and Marshall’s cluster theories are evident as well in the case of the municipality.

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The practices in the region are mostly of an agricultural nature, and they seem to have accumulated there because of the need to be close to the resources they are depending on

As mentioned before, the farmers in the region said the reasons for the development of different agricultural businesses are because of the geothermal water, the weather conditions and fertile land. In addition, the town of Fludir is present which gives the cluster its heart where educational and municipal facilities are. The land values are not higher than in other parts of the country so that is not a factor in this cluster, it is more the quality of the land and resources that have had their impact on the formation. The farmers work well together in development and cooperation, encouraging and promoting innovation. They appear to share the same values and a common goal of a sustainable region that produces high quality food and agricultural products (Toma and Turtoi, 2009). It is therefore interesting to see, as the participants mentioned, how farmers would continue to improve and expand the cluster if monetary insertions from the government, municipality, or private investors would become a reality. It would enable the creation of additional production units or services. That would create employment opportunities, shorten transportation links, and provide an overall socio-economic and environmental benefit.

In terms of comparative advantage, as mentioned in the results, the location is unique in its natural resources and is not far away from urban settlements. Therefore, they do display comparative advantage compared to other places in the country and even in a global context, as the setting is geographically unique and transportation links are neither long nor expensive. This can be said to correspond to the Resource Endowments in the Ricardian model of comparative advantage as it which refers to the availability of resources in a country (Gupta, 2015). The farmers are knowledgeable in how to use the natural resources sustainably for the most part. If the farmers would take full advantage of the location and their products, exporting knowledge and skills would be a way to apply that advantage locally and, even more significantly, globally. However, as the farmers expressed, they lack support in making a name for themselves, with marketing resources distributed to the whole country’s agricultural sector with the focus group of Icelandic consumers instead of the global consumer. Competitive advantage has been widely connected with cluster formations in agriculture (Porter, 2000). As the results of this study display, the farmers in the region are innovative, driven, and knowledgeable. They seek knowledge from each other, and from abroad, to strengthen their image and to create economic gains with new produce. They are proud of their fellow farmers and instead of diminishing others’ accomplishments it drives them to do more and better. Despite regulatory difficulties in starting or expanding their businesses they take matters into their own hands and find ways to make things happen. This is evident in the services, associations, and other forms of cooperation they have engaged in, with or without financial help. The competitive advantage strategy the Hrunamannahreppur cluster represents can be narrowed to differentiation with the justification that the cluster strives to use their unique settings to create a better image for themselves. Therefore, the farmers differentiate themselves from other farms in the country. As the participants have noted, Hrunamannahreppur and the town of Fludir are known to have an abundance of niche fruits and vegetables as well as the farmers market and should take advantage of that in their marketing. As E suggested, it would be feasible to create a marketing division within the sector to promote their produce better. My suggestion is to instead create a marketing

43 division in the cluster and thereby put this self-made cluster at the forefront of innovative agricultural practices in Iceland. All the participants agreed that they can utilize the cluster formation better, and with the idea of having a slaughterhouse on site, it could mean that production from farm to consumer can take place on-site. By doing that and promoting sustainable ways of using the land with switch-cultivation and cooperation of individuals in the cluster, it can be their ‘niche’. Another proposal based on this study’s findings would be for the municipality to work towards facilitating an abattoir on site, along with other production lines such as packaging and tanning facilities8. That could furthermore strengthen the competitive advantage of the cluster as well as create more comparative advantage on a global scale as tanning products, especially high quality and ethically sourced, are in demand worldwide. This leads to the discussion about the disconnect between these three stakeholders in the Icelandic agricultural sector.

As referenced in the results, the accumulation of different farms and farming practices in the clustered area of Hrunamannahreppur, has led to a cooperation between farmers. They have worked together to make agriculture as sustainable as they can by trusting each other, respecting the land, and putting importance on producing quality food products. There is a definite will to make farming more sustainable in the area with a more streamlined quality control system. Whether that is with their own measures or with municipal and/or national aid. They all agree that land in the area is not used justly, and more of them should use the switch-cultivation strategy to keep the soil fertile and fresh, which generates higher quality food items. Organic farming in Iceland has not been considered a highly profitable practice and therefore few farmers have taken that step. Only 1% of the 15 percent of arable land is used for organic farming as farmers have not taken the plunge to become organic. A recent consumer survey showed a strong interest in having more locally organic food available, however (Gylfadottir, 2012). Incentives to become certified organic are lacking and therefore the agricultural sector in Iceland seems to be behind other European countries in converting to organic farming (EC, 2020). However, there is not a large difference between the standards for organic farming and the practices described by the farmers in this thesis. Organic farming is based on switch- cultivation of fields, use of local resources, usage of natural pesticides, and no genetically modified (GM) organisms. Organic fertilizer is used instead of artificial fertilizer and the use of hormones is not allowed. Additionally, there are specific regulations for housing and outdoor space for the animals (Häsler, 2020). In Hrunamannahreppur all of the farmers that were interviewed have used switch-cultivation in some form, and especially E says all of the farmers in the region could do more of it, and C, F and D agree. They passionately prefer and try to use natural pesticides and there have been efforts aimed at improving the welfare and living conditions of dairy farm animals. That project gave the farmers who did well on the internal inspection extra money for each liter of milk. The farmers’ goal is to be organic and sustainable, however some express that their practices are similar to organic farming practices and therefore they do not see the point of going through the licensing process, which is expensive, to just get a mark on their product. As mentioned by B and E the use of artificial fertilizer can be reduced by using manure, however some farms do not have the capacity to store hat natural fertilizer due to infrastructure challenges. To summarize, normal Icelandic agricultural production is already extremely close to being organic and with a few infrastructural changes and input

8 Tanning is the process of treating animal skin to produce leather.

44 from farmers organic farming could become a reality. It is problematic, however, to have the same standards for sustainability and organic practices as in other European countries since natural resources and conditions are unique to Iceland. Therefore, a conceptualization of these terms is needed in agricultural policies and frameworks, with importance placed on the location. Additionally, Icelandic agriculture has the potential to achieve climate neutrality much sooner than many other countries. However, the concept of what climate neutrality entails for Icelandic agriculture needs to be theorized further as importation would then have to be minimized, something that is not on the government’s agenda. The concept of food security came up during the interviews and is fully visible in the agricultural frameworks and laws. Each of the farmers mentioned that the concept needs to be conceptualized as it can be interpreted in multiple ways. The concepts of food security and food self-sufficiency are similar and therefore the more adequate word for Icelandic conditions would be food self-sufficiency as it includes the trade factor as a way of complementing the domestic food production. A final suggestion would be to break down and conceptualize these wide concepts of food security, food self-sufficiency, climate neutrality and sustainability and localize them within the circumstances of Iceland. With that, achieving these goals would become a more realistic possibility. 7.2 Disconnect between actors within agriculture

As mentioned in the results, a fundamental finding of this research was the apparent disconnect between three actors in the Icelandic agricultural sector. These are the farmers, the government and/or policymakers, and lastly the consumers themselves. The interviewees described a continuous battle between the farmers and the regulatory sector, with tedious and complex rules, expensive inspections and forms, applications, long response times, and bad attitudes towards the farmers themselves. The knowledge of farming and agricultural skills appears to have been left to the farms in the last decades, and since the regulators are based in urban areas, they seem to lack a connection to actual farming practices due to a lack of understanding. Is it a result of academic arrogance, as F and D commented that government employees spend their time becoming educated but have never held a shovel in their lives, or is it perhaps because up to three generations of the same family have remained in the city? The answers are lacking yet the disconnect is evident. Perhaps of the highly urbanized population can provide an explanation.

The second disconnect is between the farmers and the consumers. As stated by the farmers, they feel consumers want locally produced food; this statement is supported by research on consumer behavior in Iceland by Halldorsdottir and Nicholas (2016). There, 88% of consumer survey participants were satisfied with the local food they purchased. However, they did make personal justifications as to why they have not increased their consumption of local food, e.g. that it is not organically labelled or that it lacked diversity. The Horticulture Sales Company, which is a cooperative, has made efforts to label the Icelandic produce in efforts to differentiate it, however the supermarkets themselves are responsible for displaying their products. Because they are often responsible for packaging the imported produce, they use labels with Icelandic lettering to put on foreign produce. This can create a confusion for the consumers as they think they are choosing an Icelandic produce, but then the country of origin is Spain or the (C, 2020). According to A, B, F and G, the Icelandic produce is usually inadequately displayed in

45 stores, reasons for that is that the retailers gain most out of selling their own imported produce. To summarize, it can be assumed that the general knowledge of how food is produced and processed is lacking with the average Icelander (Halldorsdottir and Nicholas, 2016). The image of the farmer is damaged and disconnected from the public, and as most of the population lives in urban areas, the knowledge that was tied so closely to the nation only generations ago has faded. The narratives of the farmers support these statements significantly as they express the loss of knowledge and connection to farmers’ activities. They have identified marketing strategies as one of the things to improve. My perception of what can be improved is to boost knowledge on all stages of education to gain understanding of the conditions of the land, the history of farming, the harmony of animal and human, and general agricultural practices. Furthermore, the business sector needs to acknowledge the different environmental and social aspects of agriculture practices, as these are currently being disregarded in policies and trade agreements.

Despite consumer’s support for locally produced food policies are lifting the regulations that protect local food industries. This suggests that the regulatory system is putting the needs of retailers and the government’s own economic gains ahead of securing long-term farming and food security in Iceland. The regulations, frameworks and subsidies plans are outdated and unevenly distributed between the different sectors of agriculture. The newly passed importation strategies of the government contradict the stated goals of the agricultural frameworks, which have yet to be updated to current environmental and societal standards. The framework states that the goal is to secure a top-quality agricultural sector that offers quality products for the local market with possibilities to expand to export. Their actions fall short and give the impression of working systematically against farmers as the focus is on the economic gain of retailers who have significant control over the average buyer’s consumption patterns. That leaves the farmers fighting what seems to be a never-ending battle to establish their stance in the discussion. As mentioned above, farmers are constrained with their practices to a location and can therefore not compete with international markets, especially when taking into consideration the size of the Icelandic market in comparison with the international one.

To sum up, the farmers’ ideal role is to provide fresh and high-quality food produce and preferably facilitate a straight production line to the consumer at the best possible price. The policy frameworks are limiting that option, making farmers go through the hoops and loops of infrastructural and regulatory permits to be able to offer their products. The laws on import are loosened which creates an unfair competition to the farmers. The role of the policymaker should be to facilitate that production by having reasonable standards and regulations, provide education and knowledge and plan for the development of sustainable, long-term farming practices, as well as provide subsidies and other financial injections for innovation in the agricultural sector. The role of the consumer is complicated, however, as the market operates according to supply and demand. Therefore, the ideal Icelandic consumer might be characterized as a consumer who chooses Icelandic produce over imported but because of the lack of food types needs to rely on retailers to import what is lacking. As mentioned in the interviews the ideal image of a fully beneficial food system in Iceland is complicated. Policymakers give the impression they are more interested in pure economic gains instead of safeguarding rural communities and long-term farming. The consumers who want local produce are not

46 considered a priority as allowing importation will without a doubt mean local Icelandic farms are outcompeted.

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8.0 Conclusion

The aim of this research was to give the narratives of farmers in Icelandic agriculture a position within the academic field of human geography by exploring the possibilities and challenges farmers in a pre-selected region face in terms of policy implementations and competitiveness. The fundamental findings of this research show that first and foremost there is a general lack of understanding between several actors within the agricultural sector. The disconnect between farmers, policymakers and consumers seems to be complicated and therefore it is only possible to draw conclusions from the farmer’s perspectives in this thesis, as the research is based on their expressions, feelings, and interpretations. On the one hand the farmers are positive towards the consumers but on the other they express that the Icelandic average consumer is hard to please, is used to having a variety of food year-round and does not completely understand the concept of seasonal vegetables or fruit. It can be concluded that the agricultural policies need revising as they are built on outdated conditions in terms of social and environmental conditions and do not support long-term farming and the re-ruralization of Iceland. Furthermore, the government and policymakers need to conceptualize theories such as sustainability, organic practices, and food security in relation to the natural conditions of Iceland along with the size of the Icelandic market. However, by using the concept of food self-sufficiency instead of food security they might be able to create a strategy that can facilitate the farmers’ desires and the consumers’ needs without jeopardizing the country’s economic position. In addition, this research has established an agricultural cluster in Hrunamannahreppur which has can be identified as a GREMI cluster. The farmers, with the help of the municipality, have used their innovative ideas and driven personalities to use natural resources as the basis of the cluster, and thereby created advantages that can be evolved further with infrastructural implementations. Action from the municipality or government is needed to bring more activities into the cluster for the optimal function for the farmers, inhabitants, and other neighboring areas. This thesis has studied the famers’ narrative at a specific geographic location, however due to the country’s small size and population it can be concluded that some of the cluster findings may describe other areas in Icelandic agriculture, whether they are clustered are not. Lastly the farmers face steep challenges in terms of the importation of fresh meat, however it cannot be determined to what extent that will be as of now. This thesis adds to the growing body of literature on consumer preferences, farmers narratives in agriculture, and the discourses between the stakeholders in the agricultural sector. Further research is clearly needed to elucidate, above all, the disconnect between the farmers, policymakers, and consumers. Therefore, more comprehensive research that explores this disconnect and how it is problematic for the Icelandic agricultural sector would be highly beneficial in furthering the understanding of this fundamental, yet seemingly undervalued, sector. A comparison of consumers, governmental representatives and again farmers’ perspectives could motivate changes in policies, drive the search for more innovative ideas, and facilitate the push for a more sustainable strategy within the Icelandic agricultural policy framework.

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Appendix

Table 1. Eurostat table Eurostat (2020). Population on 1 January 2020 by age and sex. https://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=demo_pjan&lang=en

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Table 2. Full table of participants.

in text in

Reference

G, 2020 G,

F, 2020 F,

E, 2020 E,

D, 2020 D,

C, 2020 C,

B, 2020 B,

A, 2020 A,

Other notes Other

farming

innovation within sheep sheep within innovation

Has multiple ideas of ideas multiple Has

policies

knowledge from farmers in in from farmers knowledge

Wants to more Wants see

farming practices farming

cultivation and sustainable sustainable and cultivation

Innovations in mushroom mushroom in Innovations

cultivation with Hydroponic with cultivation

Innovations in salad in Innovations

Former horticulture farmer horticulture Former

organic dairy farming dairy organic

Pro-sustainability and and Pro-sustainability

because of because cost

farm, forced to quit forced farm, to quit

Sold produce straight from straight produce Sold

Typeof farming

Sheep Sheep

Sheep Sheep

horticulture horticulture

Mushrooms and and Mushrooms

Horticulture

Forestry

Dairy farm Dairy

BeefCattle

Occupation

Teacher and farmer Teacherand

Carpenter and farmer and Carpenter

production

Owner of agricultural of Owner agricultural

production

Owner of agricultural of Owner agricultural

Horticulture division Horticulture

Agricultural Consultant - Consultant Agricultural

Farmer

teacher

Beef Cattle and farmer

Gender

Male

Male

Male

Male

Male

Male

Female

F

E

G

D

C

B

A

Pseudonym

Date of interview Date

2nd March 2020 March 2nd

2nd March 2020 March 2nd

28th February 2020 February 28th

27th February 2020 February 27th

27th February 2020 February 27th 26th February 2020 February 26th 26th February 2020 February 26th

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Cover photo and figures Cover photo. Aerial photo of the town of Fludir, Hrunamannahreppur © Hannes Einar Einarsson. Retrieved from Fludir Facebook page 22nd May, 2020 at https://www.facebook.com/hrunamannahreppur/photos/a.397292636950695/122954317 0392300/?type=1&theater Figure 1. Picture of population density in Iceland in the year 2012. Retrieved from Byggdastofnun.is 15th April 2020. Figure 2. Map of cultivations zones in Iceland. Marked with green, (LBHI, 2008). Figure 3. Advertisement from farmers and agricultural companies, 2020. Translation of text is “There is enough food to go around. Food security matters to us all. Icelandic farmers and agricultural companies will henceforth ensure the production of premium foods for the country and the nation. We will make sure that there is plenty of domestic food in the country’s supermarkets. Thank you for choosing Icelandic!”. Figure 4. Porter's generic strategies (IfM, 2020). Retrieved 22nd May 2020 at https://www.ifm.eng.cam.ac.uk/research/dstools/porters-generic-competitive-strategies/ Figure 5. Map of the municipality of Hrunamannahreppur (Fludir Municipality, 2016). Figure 6. Picture from Participant D of his Hydroponic cultivation (2020).

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