Glut of lamb meat won’t lower prices

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Norway’s allowance of strict market regulation in its agricultural sector has suddenly left the country with a glut of its lamb meat, often hyped as being of high quality to justify high prices. Warehouses of frozen lamb are now so stuffed with lamb that even farmers and Norway’s highly regulated meat industry are worried, but consumers can’t expect that the meat will become more available in local grocery stores or that prices will come down.

Sheep and lambs have traditionally been allowed to roam freely during the summer grazing season, like here in the mountains south of Dovre. Most are slaughtered in the fall, making that the high season for eating lamb in Norway. Now there’s a glut of lamb meat in storage lockers, because of the country’s highly regulated meat market, but Norway’s traditionally high prices aren’t likely to come down very much for consumers. PHOTO: newsinenglish.no

Consumers most always face a fairly high degree of uncertainty when they head into a Norwegian grocery store, hoping to find something nice to make for a special dinner. Lamb meat, for example, is usually only regularly available in the late summer and early fall, when fresh meat from newly slaughtered lambs comes on the market. Some also appears in the spring because of lamb’s popularity at Easter, but quantities are carefully controlled, to keep prices high for farmers and everyone involved in the food chain.

Norwegian Broadcasting (NRK) reported Monday that more than 2,257 tons of lamb and 1,155 tons of sheep meat are currently stored in the deep-freeze lockers at Nortura, the agricultural coop that regulates meat production for the Gilde and Prior meat and poultry brands respectively. Moreover, Nortura expects that the quantities of meat in the storage lockers will increase by another 1,000 tons this year.

The huge inventory of lamb, and it’s been known to exist for pork meat as well, brings into question farmers’ claims that they must have plenty of subsidies and protectionist tariffs (to keep cheaper foreign meat, fruit, vegetables and dairy products out of the country) in order to produce enough food for Norwegians and maintain self-sufficiency. The packed storage lockers at Nortura indicate there’s plenty of food available. It’s simply not being sold.

Not-so-open economy
Norwegian leaders like to refer to Norway as a “small and open economy,” but it’s not open when it comes to food. Farmers lobby hard for their protectionism that makes Norway very much a closed economy during various seasons of the year. Nortura, like Tine in the dairy business, is charged with being Norway’s “market regulator,” and keeping supply in line with demand at prices that can provide good incomes to farmers and everyone else in the meat industry.

Now it’s becoming increasingly clear that fresh lamb meat was held back last autumn, in order to justify prices charged at the supermarket that hit well over NOK 400 per kilo (more than USD 22 per pound). And now neither the farmers, Nortura nor grocery store retailers want to “dump” more meat on the market because they claim there’s a limit to how “cheap” the lamb should be.

“If you dump prices, you may well sell more,” conceded Espen Schøning Lie, responsible for fresh food at the Meny chain of grocery stores that’s owned by Norway’s dominant and powerful grocery wholesaler NorgesGruppen. “But at the same time, you create an artificial perception of what food should really cost. Then it’s unfortunate when the over-supplies decline, and you need to sell the ‘correct’ amounts of lamb meat at the ‘correct prices.'”

In other words, as NRK noted, Norwegians who begin to get used to buying meat at lower prices may begin to wonder, and question, why they should pay higher prices six months later. The farmers and the meat industry in Norway don’t want a consumer rebellion. Consumers, on the other hand, can argue that it’s the high prices that are “artificial,” not the lower prices if one follows the rules of supply and demand.

State incentives led to higher production
The current “over production” that’s stored away in Nortura’s lockers started building up after there reportedly was a “legitimate shortage” of lamb in 2014, according to the state agriculture ministry. Some farmers thus started expanding their barns to make room for more sheep, aided by financial support from the state to stimulate production. The state has also been urging consolidation of farms and ranches and more centralized processing plants to further boost food production, but the farmers are rejecting that and most other aspects of the government’s new agricultural reform. The farmers resist change and don’t want economies of scale to boost production, fearing it will come at the expense of small farms that can’t survive without subsidy and protection.

Just three years after the shortage in 2014, Norwegian lamb production has nonetheless increased by more than 2,000 tons. Prices haven’t gone down, though, and Norwegians haven’t bought (or been able to buy) more lamb. “Many farmers saw the opportunity to invest in new buildings and expand production,” Terje Wester, chief executive of private slaughterhouse Fatland, told NRK. “Production through 2015 and 2016 has been higher than what’s been sent out to the market in Norway.”

There’s also little export of lamb from Norway, which must compete against large producers like Ireland and New Zealand. The lower-production years prior to 2014 also meant that Norway imported more lamb than it exported.

Expect grilling and recipe campaigns
Meat industry officials like Sveinug Svebestad, chairman of Nortura, also complained that Norwegians mostly only eat lamb in the fall and the spring. That’s likely because it’s long been considered a seasonal meat, especially in the fall after lambs have been grazing freely during the summer, but also because it’s expensive and considered a special meal. Svebestad also complained that the grocery stores have been unwilling to keep lamb available on the shelves year-round.

“In lamb season, sales are good, but during the rest of the year, sales have gone down,” Svebestad told NRK. “It’s a paradox, when supplies are building up at the same time.” Wester somewhat agreed, but claimed all the various players in the meat market should cooperate instead of spreading blame for the glut. Others, including consumer advocates, claim the strict regulation of the market results in too much cooperation that keeps prices high.

NRK reported that last week, Nortura decided to boost its so-called “freezer deduction” so that some of the frozen meat in its lockers can be sent to those who butcher and pack meat, and produce various sorts of processed food, at “somewhat more reasonable” prices than normal. There’s no guarantee those lower prices will be passed on to the grocery stores, or that the stores will pass them on to consumers.

In a worst-case scenario, Nortura may simply destroy the meat, or dump it on overseas markets, like excess pork has been dumped in Eastern Europe. Wester had another idea: “If all of us eat two or three more lamb dinners than normal, we’d empty the storage lockers.” NRK helpfully provided links to lots of recipes that use lamb, and even a photo of mouth-watering lamb kebabs, to encourage Norwegians reading to eat more lamb.

Perhaps the glut of lamb in storage will at least result in the release of more lamb racks and other cuts, for example, in time for the summer grilling season when lamb is often hard to find. It’s unlikely they’ll be much cheaper than at other times of the year, though, prompting many Norwegians to continue driving over the border to Sweden, where frozen Irish lamb can be bought at half price.

newsinenglish.no/Nina Berglund