HB Grandi looks to expand production of dried heads and backbones

December 20, 2013 10:14

A month ago HB Grandi’s shareholders’ meeting passed a motion to merge with Akranes company Laugafiskur ehf . The merger is backdated to the 1st of July when HB Grandi assumed responsibility for Laugafiskur’s financial commitments. Laugafiskur’s owners become shareholders in HB Grandi, according to same.

Laugafiskur is an established company with many years of experience in producing dried fish for the Nigerian market, and its origins go back to 1980 when Thorsteinn Ingason established the company as Stokkfisk at Laugar in the Reykjadalur valley.

According to Laugafiskur’s production manager Sighvatur Sigurdsson, Thorsteinn Ingason pioneered the production of dried fish heads in Iceland. The site at Laugar in north-eastern Iceland was selected for its proximity to naturally heated hot water. As well as locals, fishing companies such as Útgerdarfélag Akureyringa (ÚA) were closely involved with Stokkfisk and the company name was changed to Laugafiskur in 1988.

‘It was around 2000 that Laugafiskur became wholly owned by ÚA and that was also when all of the equipment was renewed. Here in Akranes Thorsteinn Ingason had also been drying fish in co-operation with fishing company Haförninn, but in 1987-88, this also became part of Laugafiskur and then part of ÚA a decade later,’ Sighvatur Sigurdsson said, adding that Brim then acquired ÚA in the years after 2000.

The company was later sold to Samherji, while Laugafiskur at Akranes was retained by Brim, even though the drying operation at Laugafiskur was part of the deal. Brim then continued to manage the operation until it was decided to accept HB Grandi’s offer for the company earlier this year.

New premises needed

Sighvatur Sigurdsson said that Laugafiskur now has 25 to 26 staff, including two at the company’s offices in Reykjavík. Laugafiskur has two buildings in Akranes for production with a total floor space of 2000 square metres. The larger of these, which hosts reception for raw material, production lines and drying chambers for pre-drying, was built in 2001 and the full drying process is completed and products are packed at the older building not far away.

‘The fact is that we badly need larger premises and the idea was always that the larger building would be extended so the whole process could be under one roof. We need space for the final drying stage and there is always inefficiency that comes as part of having to move products from one building to the other instead of having one seamless production line in the same place,’ he said.

Big market in Nigeria

The driving force behind the company to begin with was to produce dried cod heads for the Nigerian market, and Sighvatur Sigurdsson said that production has been extended to include dried cod backbones and other low-fat fish for the same market.

‘There is a very large market in Nigeria which has a population of 160 million people. This is a very diverse population, with one of the three main cultures there brought up to eat dried fish. We can say that our market area is what used to be referred to as Biafra. The Nigerian market for dried fish is pretty stable, although there are always fluctuations. This market was closed entirely in 1983-84 and it remained slow until 1995 when it began to pick up again. Norwegian producers supply most of the traditional stockfish that this market requires, while suppliers in Iceland have built up production of dried cod heads and backbones. We have even dried fish cutlets for this market, producing three centimetre sections from whole fish.’

Limited to 170 tonnes per week

Laugafiskur has an annual production of 6000 tonnes. Space for the final drying process has limited production capacity, but Sighvatur Sigurdsson said that this could be increased,  although the license limits their production to 170 tonnes of wet fish per week.

‘I have never been able to figure out why our production licence is limited to this amount. It should be in the interest of everyone, the company, the staff and the local authority, that we should produce as much as we can,’ he said.

Production at Laugafiskur is not a long process. The company receives fish heads, backbones and other fish parts. The raw material is washed and kept in chilled storage. From there it goes to the production lines and is put on grids for pre-drying which takes two days in drying chambers. After this, around 70% of the moisture content has been removed. This is followed by the final drying stage that brings the water content down to 13-15% by the time it is packed.

Sighvatur Sigurdsson said that the staff are optimistic that HB Grandi’s involvement means that production can be increased.

‘We have a long co-operation with HB Grandi behind us already, and they supply us with around 60% of our raw material. Other supplies come from three or four other companies, but there’s a great deal of competition for raw material. In Iceland there are probably twenty producers of dried products and we have to compete to maintain a supply of raw material,’ Sighvatur Sigurdsson said.

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