Dairy forced to cut costs

Bookmark and Share

Tine, the large Norwegian dairy cooperative that acts as “market regulator” and effectively sets prices, has been hit by lower milk sales and suspension of state support for exports. Tine thus needs to save half a billion kroner and may need to lay off staff.

The dairy dominates the market in Norway, commanding around 80 percent of milk sales. With small farms scattered all over the country, and surviving because of political willingness to subsidize them, Tine (pronounced “tee-nah”) faces high distribution costs and can’t consolidate many more production facilities. They’ve already been cut back from 120 to 30 today.

“We can’t get around the fact that the cows live where they live,” Tine spokesman Lars Galtung told newspaper Dagens Næringsliv (DN). “If we do anything more with production facilities, it will mean much longer transport of the milk.”

At the same time, milk sales have fallen 4 percent so far this year, at a time when lack of price supports for Jarlsberg cheese exports from Norway mean it will be cheaper to produce it in Ireland. That stands to release more milk onto the market without clear use for it. The price of milk in Norway, meanwhile, has risen to more than NOK 17 a liter (around USD 2.20 per quart).

Tine intends to cut back on consultants and boost its efforts at innovation and creation of new dairy products for Norwegian consumers. Foreign imports of cheese and butter, for example, continue to be restricted to protect Norwegian producers.

newsinenglish.no staff