Uses of the Icelandic sheep

Meat Production

Icelandic lamb is a wonderfully flavorful, exceptionally lean meat from animals raised with no antibiotics and no added hormones. In Iceland, the Icelandic lamb is almost exclusively bred for Icelandic meat production. As previously mentioned lambs are not fed grain or given any hormones. Lambs are slaughtered at four to five months, weighing between 70 to 90 pounds (32 to 41 kg). 
The muscle has a high proportion of Omega-3 fatty acids and iron, giving the Icelandic meat its wild game flavor. The distinctive taste is a result of the wild pastures; the grass and the aromatic and spicy herbs on which the lambs graze. Some subtle differences have been noted between the meat from lambs grazing in the highlands, the lowlands, and by the seashore. The meat is very tender and has a fine texture due to its high amount of red muscle fibers, which is influenced both by the breed and its grazing habits. Given the organic farming methods, Icelandic lamb is considered to be among the best in the world.

Wool Production

Even though the Icelandic wool counts for little of the income from sheep in Iceland (less than 15%) it is the wool for which they are known. The Icelandic fleece has an inner and outer coat typical of the more primitive breeds with the fine undercoat being called Thel, and the long, coarser outer coat called Tog. Icelandic fleeces tend to be open and not very greasy. Due to the length of fiber, the openness of the wool, the natural colors and the versatility, fleeces are usually sold through specialty markets to hand spinners. The thel is down-like, springy, lustrous and soft. The longer tog coat is similar to mohair, wavy or corkscrewed rather than crimped and is wonderful in worsted spinning. At present this wool is not suited for the industrial market in North America, both because of how rare it is and also because of its unique nature. The natural colors vary from snow white through several shades of grey to pitch black as well as several shades of morrit to brownish black. Some individuals will also show mouflon, badgerface patterns with several combinations of color and patterns. Bi-colored individuals are also fairly common.
The wool Icelandic sheep produce has no counterpart in the world. Evolving over 1100 years of exposure to the sub-Arctic climate, Icelandic wool has a distinctive combination of inner and outer fibers. The outer fibers are long, glossy, tough and water repellant, while the inner ones are fine, soft and insulating, providing a high resistance to cold. 

Skins

The lamb skin of the Icelandic sheep is excellent as a pelt skin. That is in part due to how relatively few hair follicles they have. Fashion clothing, mostly coats, as well as sheepskin rugs has long been manufactured from the pelts. These items usually demand a high price on the world market.