New butter woes spread cost cut calls

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Norway’s two largest non-socialist parties, the Conservatives (Høyre) and the Progress Party (Fremskrittspartiet, Frp), think it’s possible to cut billions in state funding for agriculture, by reducing the bureaucracy that protects Norwegian farming and by promoting more free-market mechanisms. Their proposals come amidst complaints of high food prices and another possible butter shortage.

The debate over farming and food prices and, not least, butter supplies goes on, with politicians calling for bureaucratic cost cuts. PHOTO: Views and News

Norwegian Broadcasting (NRK) led off some morning newscasts on Tuesday with reports that state dairy cooperative Tine hasn’t been able to fill all orders for butter products in recent weeks. Grocery store officials in the large Coop and Norges Gruppen chains complained they once again weren’t able to keep their shelves filled with a complete product line.

No one expects another round of the acute butter shortage that occurred last fall and winter, when stores were empty of all butter after Tine, the so-called “market regulator,” had miscalculated domestic production. But NRK reported there is still a relatively severe shortage of the milk production needed to meet all butter market demand.

Tine’s powerful position in the market has been a matter of debate for months, as it has tried to salvage its tarnished reputation. Tine chairman Trond Reierstad has admitted he never imagined an issue like the butter “crisis” could occur and that he and other Tine officials handled it poorly. The cooperative that controls around 80 percent of the market has been advertising for another new communications adviser while its communications chief continues to fend off sour consumers.

Dairy market regulator Tine, which handles production, marketing and distribution for Norwegian dairy farmers, is under more pressure as politicians call for cost cuts and reforms. PHOTO: Views and News

Retired lawyer Olav E Klingenberg, for example, criticized Tine last month for taking the largest share of the price of a liter of milk, around NOK 15. While the farmer gets less than NOK 5 per liter and the retailer around NOK 1-2, and NOK 2 goes to VAT, Tine takes the rest to cover its costs.

Lars Galtung of Tine objected, denying Tine has a monopoly and claiming that Tine only took NOK 4 to cover its costs of transporting, packaging and marketing the milk plus another NOK 2 to cover a state tax. In doing so, though, Tine’s defense shows that it gets more than the farmer and that the much-criticized retailers get the least.

Conservative politicians started issuing calls to rein in Tine last spring, saying its behaviour and operations had actually hurt the reputation of the farmers it serves and that it had far too much power both as a producer of dairy products and a market regulator that sets the premises for competition. Tine earlier has been criticized for its response to competition from both Q-dairies and Synnøve Finden, while others question why a liter of milk in Denmark costs the equivalent of NOK 8.11 and just NOK 5.50 in Sweden, a third of the Norwegian price. Danish farmers, meanwhile, have complained bitterly over a proposal from Tine last spring to boost tariffs on imported cheese. “Norwegian farmers are content with having just 10 cows, but they still want to drive Mercedes,” Kristian Svendsen of the Danish farmers’ organization told news bureau Berlingske.

Now both the Conservatives and the Progress Party, which have been leading voter polls lately, agree on reductions in funding for agricultural protectionism in Norway. They’re urging adaptation to lower levels of import tariffs and a general restructuring aimed at bringing prices down.

Their measures came in their response to the left-center government’s subsidy package for farmers, which was angrily rejected by the farmers as being too low. Farming lobbyists were, not surprisingly, upset by the non-socialist parties’ ideas for tackling the ongoing debate over food prices in Norway.

“If we’re to have European price levels with our cost levels, the consequences will be dramatic,” claimed Nils T Bjørke of the national farm lobby group Bondelaget. He was furious with the government parties last month, but doesn’t embrace the conservatives’ ideas either.

Synnøve Finden’s chief executive, Lars Tretteteig, meanwhile, has called for a full evaluation of the milk (and thus butter) market in Norway, “in full openness.” Torgeir Trældal of the Progress Party wants to attract farmers as voters, but urges the farmers to “dare to start thinking new,” in a steadily more international market.

“I think the farmers would win more support among folks, if they demanded more commercial market freedom, instead of more state funding in their paychecks,” Trældal recently told news bureau ANB.

Views and News from Norway/Nina Berglund

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