NEWS ANALYSIS: New Agriculture Minister Sylvi Listhaug is a farmer’s daughter who has referred to the country’s highly regulated farming and food industries as a “Norwegian form of communism.” Now she’s in a position to tackle many of the aspects that make food in Norway the most expensive in the world, and the powerful farming lobby is braced for a battle to literally protect its turf.
Negotiations begin this week over how much state subsidy the farmers will receive, and over the scope of protective measures they have long enjoyed. The negotiations are critical for a government keen to reform Norwegian agriculture, and they set the stage for what many predict will be one of the major political conflicts of the year.
Food production and sales in Norway are heavily subsidized and tightly controlled through a complicated system of, among other things, direct financial support for farmers, regulation of farmland and production, large dairy and meat cooperatives that dominate the market and set prices, and high tariffs that restrict imports of cheaper and often higher-quality food products into Norway. The farmers want to boost or at least hang on to this system from which they benefit. Listhaug, keen to “modernize” food production in Norway and bring prices down, wants to change it.
The farmers are up against an agriculture minister from the reform- and free-market-minded Progress Party for the first time. They thus face the toughest challenges yet to the power they’ve accumulated over the years to ensure their income levels by keeping food prices high. Listhaug claims she wants to strengthen farming and food production in Norway just as much as they do, but rather through an easing of the strict regulations that currently control it. She and her government colleagues believe it’s fully possible to loosen state regulation and make Norwegian farming more competitive and market-oriented.
The farmers, accustomed to dealing with Norway’s other political parties that generally favour state support and regulation, are nervous. “We clearly are extra tense heading into negotiations,” Nils T Bjørke, leader of the national farmers’ organization Norges Bondelag told news bureau NTB over the weekend. He’s clinging to the fact that Listhaug represents a minority government, made up of the Progress Party and the Conservatives, that needs support from other parties in Parliament. They were expected to get it at least from the Liberal Party (Venstre), whose very name implies liberalization of state regulation, but Venstre has been backpedaling on its earlier support for reducing Norway’s controversial meat and cheese tariffs that keep many imports out of the market. Now under both external and internal pressure, Venstre seems poised to back away from its own calls for change, and maintain the status quo.
Listhaug isn’t expected to give up so easily. Always smiling and even keen to venture into barns, she’s already been on what the Norwegians call a “charm offensive” as she’s tackled, for example, the farmers’ cooperatives (Tine for dairy products, Prior for poultry and Gilde for meat) that serve as “market regulators” in Norway. That allows them to legally set production levels and prices on everything from milk to chicken to lamb. They’ve been known to quickly take over or make life difficult for upstart producers that challenge their dominance, leading to lawsuits over alleged abuse of power and violation of competition laws.
Listhaug also advocates creation of larger farms in Norway, to boost economies of scale and allow farmers to produce more than the coops’ quotas allow. That would likely result in fewer farms, but more full-time farmers. She also wants to remove price controls on agricultural land, making it easier for small farmers to sell rural property at market levels and easier for those “dreaming” of a life in the country to buy.
Last month she set up a commission to study the overall market regulation of agriculture. Its conclusions, expected during the first half of next year, are expected to propose measures that would make market regulation less dependent on the coops. That suggests alternatives to the coops, meaning Tine, Prior and Gilde (the latter two merged under meat coop Nortura) have reason to feel threatened after decades of largely going unchallenged.
Farmers hard to please
Meanwhile, the current negotiations loom between Listhaug’s ministry and the two farmers’ lobbies (Norges Bondelag and the smaller Norsk Bonde- og Småbrukarlag), which will present their demands to the state (and Norwegian taxpayers) on Friday. They’re a tough bunch to please, mounting protests and strike action even when their own farmer-friendly party, the Center Party, ran the ministry for eight years during the last left-center government coalition. The farmers didn’t think they got enough support from the Center Party, another factor behind the party’s own severe troubles.
Bjørke of the farmers’ biggest lobby wants to boost farmers’ profitability, increase food production, preserve farmland and make farming more attractive to the next generation. He claimed the farmers aren’t totally opposed to some change “and we see ourselves that it’s necessary to reduce bureaucracy and make things simpler for farmers.” He continued, however, to threaten that major deregulation will threaten the future of agriculture in Norway and he issued an ultimatum over the weekend: “Either raise (food) prices or increase funding from the state.”
Listhaug isn’t inclined to do either, and despite the Liberal Party’s sudden reluctance to liberalize farming, she has support from many Norwegian consumers, restaurant owners, retailers and top government colleagues including Foreign Minister Børge Brende.
‘No reason to fear’
Brende acknowledged in a recent commentary in newspaper Dagens Næringsliv (DN) that Norway has “one of the world’s strongest tariff barriers for agricultural products.” Countries like Brazil, members of the EU and not least developing countries want to export more of their products to Norway, from which they import fish, industrial products and energy. Norway’s protectionism has long caused trade friction with some of its most important international partners, not least the EU. Norwegian agriculture, Brende argued, must become more competitive instead of relying on more protection. “There is no reason to fear for Norwegian agriculture’s future,” Brende wrote. “We will always produce food in Norway.”
Listhaug has claimed she’s not launching a revolution in Norwegian agriculture, rather a change in course. “We must make changes that will make Norwegian agriculture more robust,” she told newspaper Dagsavisen last month. The negotiations now getting underway will set the tone for how successful she’ll be.