Business
The economy of the Faroe Islands is mainly based on the
fishing and fish processing industry, which together
contribute almost the entire value of exports. Fishing is
mainly conducted along the coasts as well as at Greenland
and Iceland. Catches increased continuously during the 1960s
and 1970s, but stagnated during the first years of the
1980s. Due to large investments in i.a. fishing vessels
began to catch catches again during the late 1990s, and in
2003 the largest annual catch (621,000 tonnes) was reached
to date; In 2012, the annual catch was 360,500 tonnes. In
addition to sea fishing, there is also a rapidly growing
fish farming of mainly salmon.
In the early 1990s, the Faroe Islands were hit hard by
the recession, with a rapidly rising unemployment rate. Many
moved to the northern Jutland fishing towns. The Faroe
Islands were helped to clean up the economy by the Danish
state, on condition that fiscal policy went through a major
decontamination and came under Danish supervision. After
1995, the economic downturn has reversed, and despite the
financial scandal with the country's largest bank, Føroya
Banki, where Den Danske Bank sold the majority of its
ownership in the then-hit bank to the government, the
economy has developed positively during most of the 2000s.
Despite this, many economists have warned that the Faroese
economy is too dependent on the fish industry and world
market prices for fish.
Agriculture with livestock management, which used to be
an important industry, now employs less than 2% of the
professionals. However, occupational combinations (eg
agriculture and fishing) are common. About 6% of the area is
cultivated, of which 90% is used for the cultivation of
fodder plants. The rest of the land is used as pasture. The
most important agricultural products in the Faroe Islands
are sheep meat, milk, vegetables and potatoes. Production is
not enough to meet the need for food, and food imports are
significant.
In addition to fish processing, the Faroe Islands
industry includes other food industries, but also the
engineering industry. machine and ship manufacturing and
textile industry. Furthermore, coal is mined to a small
extent. About 50% of the Faroe Islands' energy needs are met
through their own produced water electricity. In 2001,
smaller oil deposits were found on Faroese territory. Since
then, several international oil companies have been
exploring for more oil, but so far no major discoveries have
been made.
Denmark's accession to international economic
associations has not automatically resulted in membership
for the Faroe Islands. Most often, the connection has come
later, such as GATT (1954 vs. 1950 for Denmark) and EFTA
(1967 and 1959, respectively), from which the Faroe Islands
formally resigned in 1973. When Denmark became a member of
the EC in 1973, the Faroe Islands were not affiliated. Since
1974, however, the Faroe Islands have a special agreement
with the EU, which in effect acts as a free trade agreement
as regards exports of fish and fish products. This agreement
was extended in 2005. In addition, the Faroe Islands receive
subsidies and transfers from Denmark annually, which
together make up 12% of the Faroe Islands' state budget.
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