The economy of the Falkland Islands, which first involved sealing, whaling and provisioning ships, became heavily dependent on sheep farming from the 1870s to 1980. It then diversified and now has income from tourism, commercial fishing, and servicing the fishing industry as well as agriculture. The Falkland Islands use the Falkland pound, which is backed by the British pound.
Historical development
The Falkland Islands have historically been extremely isolated. During the 19th century, the supply and maintenance depot for ships at Stanley developed into a port serving ships rounding Cape Horn and for South Polar expeditions. There was also trade in cow hides from the wild descendants of cattle introduced by French settlers in the late 18th century. Sheep farming was then introduced, taking over from the cattle trade in the 1870s and becoming self-supporting by 1885. The islands also provided a base for whaling and sealing, with factories being built on East Falkland and South Georgia Island, but these industries ended.
By the Falklands War of 1982 sheep farming was the islands' only industry and their economic viability was in doubt, but after the war there was a new commitment from the Government of the United Kingdom. The Falkland Islands Development Corporation was formed in mid 1984 and in its annual report at the end of that year it set out to increase employment opportunities by encouraging diversification, to increase population levels through selective immigration, to aim for long-term self-sufficiency and to improve community facilities. To achieve this, the Corporation identified agricultural improvements, tourism, self-sufficiency in energy, development of the industrial and service sector, fisheries, and land subdivision as areas to tackle.
The largest company in the islands used to be the Falkland Islands Company (FIC), a publicly quoted company on the London Stock Exchange. The company was responsible for the majority of the economic activity on the islands, though its farms were sold in 1991 to the Falkland Islands Government. The company now operates several retail outlets in Stanley and is involved in port services and shipping operations.
By 2002 the Falklands' economy was booming, with income from tourism and the sale of squid fishing licences as well as from indigenous fishing companies with locally registered boats. Fishing boats visit the islands from Spain, Korea, Taiwan and Japan, and obtain supplies and services from the islands. An islander told the BBC that "we were the luckiest people that was ever mixed up in a war", and British diplomats joked that the Falklands should have a monument to Leopoldo Galtieri, the Argentinean dictator who invaded the islands. In 2007, Argentina withdrew from a 1995 agreement that set terms for exploitation of offshore resources. It is thought that there might be up to of oil under the sea bed surrounding the islands. Desire Petroleum and Rockhopper Exploration began drilling for oil in the vicinity of the Falklands in the first half of 2010, sparking strong protest from the Argentine government. Diplomatic disputes with Argentina disrupted tourism slightly in 2004. Buenos Aires refused permission for charter flights from Chile that served cruise ships to fly over Argentina to reach the islands.
Economic overview
The Falkland Islands have a GDP of $164.5 million, and a per capita GDP of $70,800 (2015 estimate) compared with the United Kingdom GDP per capita of $35,200 (2009 estimate). The contributors to the GDP by sector (2010 forecast) are:
Fisheries – 52.5% Government (including health and education) – 14.0% Communications, Finance and Business services – 11.4% Hospitality & Transport – 7.7% Construction – 6.6% Housing and other services – 3.2% Mining. Quarrying & Manufacturing – 2.1% Agriculture – 1.6% Utilities – 0.9% In the 2009/10 financial year, the government revenue was £42.4 million of which £14.5 million came from fishery licences and services and £10.5 million from taxes. During the same period the government expenditure was £47.6 million.
Other economic indicators include:
Electricity – production: 19 million kWh (2016 est.)
Electricity – production by source: (2016 est.) Fossil fuels: 74% Non-hydro renewables: 26%
Electricity – consumption: 17.67 million kWh (2016 est.)
Installed nameplate capacity of electric generation
12,100 kW (2016 est.)
Banking The Falkland Islands do not have a central bank but the Standard Chartered Bank has a single branch in Stanley that offers retail, commercial and wholesale banking facilities.
The constitution requires the governor of the islands to seek the approval of a British Secretary of State before assenting to any bill that affects "the currency of the Falkland Islands or relating to the issue of banknotes" or any bill that establishes "any banking association or altering the constitution, rights or duties of any such association". These restrictions effectively give the British Government the ability to prevent the island's government from declaring the islands to be a tax haven or from establishing a central bank.
Agriculture Farmland accounts for a little over 80% of the Falklands land area and a sheep appears on the islands' coat of arms, but agriculture is now less than 2% of the economy. , 670,000 sheep resided on the islands; a 2011 report estimated the sheep population at over one million.Farming In The Falklands, 29 November 2011. Roughly 40% of the national flock are on West Falkland and 60% on East Falkland. The base flock are Corriedale and Polwarth breeds with Dohne Merino, South African Meat Merinos, Afrinos and other breeds having been introduced to improve the fineness of wool and meat characteristics. The wool price suffered a slump in 2005/6 and a peak in 2008. Since 2003 the relative premium commanded by higher quality wool has increased with coarser wool missing out on the high prices in 2008. A summary of the prices for the period 2002 to 2010, which are often dictated by Australian exchange rate and weather conditions is shown below: Fibre diameterMinimum price (p/kg)Maximum price (p/kg)32 microns130 (2007)210 (2003)28 microns180 (2006)280 (2003)24 microns255 (2006)530 (2010)20 microns290 (2005)590 (2010)
Although the production of wool is spread across the islands, the breeding of animals for slaughter is concentrated on East Falkland where the EU accredited Send Bay abattoir is situated. An additional cost borne by producers on West Falklands is the fare charged for crossing the Falklands Sound. As of 2010, the ferry company making the crossing charged commercial vehicles £30 per metre for a single trip plus £2 per head of sheep. Wool on the other hand is charged "£45 per tonne delivered to Stanley".
An increasing number of farmers are supplying lamb to the Falkland Islands Meat Company. The abattoir received export accreditation in December 2002 and began exporting meat in May 2003. The number of farms supplying lambs increased from 6 in 2003 to 27 in 2007 while the number of lambs sent to the abattoir rose from 2600 to 11,963 in the same period.
Selected statistics for the year 2008-09 relating to sheep farming are given below: RegionArea used for sheep (hectares)Number of sheepSheep slaughteredWool clipped (kg)Average fleece (kg)Greasy wool yield (kg/hectare)East Falkland612,935292,91722,023923,6323.691.86West Falkland425,592182,7417,839602,6183.601.54Islands85,45828,9624,197110,5954.551.69Total1,123,985504,62034,0591,636,8453.951.70
There are also a small number of cows, pigs and horses on the islands that are reared for local use.
Fishing
Fishing is the largest part of the economy. Although Lord Shackleton's Report (1982) recommended the setting up of a fisheries limit which gave an impetus to the fishing industry, the report did not go into much detail regarding the expansion of the industry. The Falkland Islands Development Corporation which formed as a result of the Shackleton Report provided the impetus for the Falkland Islands to exploit their marine environment.
Fishing grounds The Falkland Islands' fishing waters form part of the 2.7 million square kilometre Patagonian Shelf large marine ecosystem and are located on a spur from the Patagonian Continental Shelf. Most of the fishing takes place in water up to deep on this spur or on the Burdwood Bank - another spur lying on an undersea ridge to the south of the Falkland Islands and separated from the islands by a deep channel known as the Falklands Trough. At its highest point, the Burdwood Bank is below sea level.
The principal ocean currents in the Falkland Island waters are the West Wind Drift, a cold current from the Southern Pacific Ocean that flows westwards to the south of the Burdwood Bank and the north flowing cold Falklands current, an offshoot of the West Wind Drift that curls around the east of Falklands Plateau and along the Falklands and Patagonian escarpments. It joins the saltier warm Brazil Current in the vicinity of the mouth of the Río de la Plata to form the South Atlantic Current.
In 1986 the Falklands opened up their fishing industry to outsiders with the declaration of a radius Fisheries Conservation & Management Zone centered on the Falkland Sound. This zone was later to become the Falklands Inner Conservation Zone (FICZ). Apart from the Falkland Trough, this zone lies within the continental shelf. In 1990 the Falklands Outer Conservation Zone (FOCZ) was declared – a zone that lay between the perimeter of the FICZ and the Falklands 200-nautical-mile economic zone boundary. The FOCZ includes part of the Burdwood Bank, borders on the confines of the continental shelf and includes part of the Falklands Escarpment - a undersea escarpment running east–west.
At the same time that the FOCZ was declared, the Argentine declared its 200-nautical-mile Exclusive Economic Zone (EEZ) and together with the British Government (acting on behalf of the Falkland Islands) set up the South Atlantic Fisheries Commission (SAFC) to coordinate the management of fishing stocks in the area.
Fish stocks 1 tonne= 1000 kg1 tonne= 0.984 long tons1 tonne= 1.102 short tons 1 tonne= 2204 lbs Most of the fish that are harvested in the Falkland Islands waters are either squid or finfish. Other types of fish form an insignificant part of the Falkland Islands' catch. A significant number of the fish that are taken are migratory with the spawning grounds and feeding grounds of some species being highly dependent on the water temperature.
Squid The Illex squid (Illex argentinus) which typically has a mantle length of and a weight of is the most important fish to the Falklands economy followed by its smaller cousin, the Patagonian squid (Doryteuthis gahi) which typically has a mantle length of and a weight of . Neither species was discovered in substantial numbers near the Falklands until the late 1980s.
The illex squid has its spawning grounds at the mouth of the Río de la Plata and a migratory pattern that takes it southwards along the Patagonian Shelf as far as the FICZ to its feeding grounds. It then returns to its spawning grounds via a route that lies off the continental shelf. In some years, such as 2007, it enters the FICZ with a resultant good harvest, it other years, such as 2009, it does not migrate as far south as the FICZ at all. The catch for the 2010 season in the Falklands recovered to 12105 tonnes, but still the fourth lowest since the beginning of the licensing system. This has been attributed to the lower than usual sea temperatures during the feeding season in February–May.
The Patagonian squid, unlike the Illex, remain in Falkland Island waters all year and are concentrated in the Loloigo box—an area within the Falklands Plateau to the east and south-east of the islands and are harvested during both the austral spring and autumn.
Finfish