The Norwegian government responded to the agricultural sector’s latest request for state support on Tuesday afternoon, offering farmers an increase of NOK 150 million (USD 25 million). That’s only 10 percent of the NOK 1.5 billion in subsidies and regulatory protection farmers asked for two weeks ago, meaning a long and heated settlement debate is likely to follow.
The Norwegian Farmers’ Union (Norges Bondelag) and Norwegian Farmers and Smallholders Union (Norsk Bonde-og Småbrukarlag) said late last month a revenue increase of NOK 35,000 per farmer was needed, equaling a NOK 1.5 billion increase in total. To remain competitive in the face of Norway’s difficult climate and topography, farmers have always enjoyed high subsidies and strict market regulation, shielding them against cheaper foreign imports.
The NOK 150 million offer from the Ministry of Agriculture and Food (Landbruks- og matdepartementet) on Tuesday equated to a 3.5 percent pay rise for farmers, in line with wage increases in other sectors. A NOK 250 million cut in government support was proposed, reported Norwegian Broadcasting (NRK). All up, the offer was NOK 1.35 billion less than what farmers wanted.
The government said the proposed price increase for consumers would be NOK 340 million, almost half what it was in 2013. If the food industry and supermarket chains pass the increase onto consumers, it would amount to 140 kroner per year for the average household.
“The government’s offer can be characterized in one word: provocation,” said Merete Furuberg from the Farmers and Smallholders Union. “It is critically low and not very progressive,” said Niels Bjørke from the Farmers’ Union.
Farmers knew they would face tougher negotiations this year, because the new Progress Party (Fremskrittspartiet, FrP) Agriculture Minister Sylvi Listhaug had already said she would not increase farmers’ subsidies from the current NOK 13 billion allocation, and that she wants less regulation and more modernization of the industry. She has advocated reforms to increase the scale of production to have fewer, larger farms, which would in turn increase revenues.
More than 30 simplification measures were included in the offer, including cutting down on regulations and support schemes. Schemes and grants going directly to farmers aimed at increasing production would be prioritized.
“The offer follows up the government and Parliament’s target of increased production and agriculture over the whole country,” said chief negotiator Leif Forsell. “The offer also follows the priorities in the government’s political platform concerning fewer state restrictions, greater latitude for entrepreneurs, some shift in subsidies towards those who work in agriculture full-time and increased food production.”
Milk quota to triple
The offer included incentives for a significant increase in the milk quota. The state proposed a shared quota ceiling of 1.2 million litres of milk, a tripling of the current quota of 400,000 litres. The quota would clear the way for increased centralization and industrialization of agriculture, reported NRK.
Meanwhile, the government would remove a variety of equalization arrangements between small and large farmers, slowly reducing the benefits of running small-scale enterprises. It would remove a rule which only lets a maximum of five farmers living within 17 kilometres to enter into a partnership. The quota of milk that must be sold to the government would drop from 50 to 20 percent.
For sheep farmers, the focus would shift from the number of animals a farmer had onto slaughter grants instead, to stimulate meat production. The offer included NOK 10 million worth of subsidies for the forest industry.
Negotiations between the ministry and the agricultural unions need to be completed by May 17, Norwegian National Day, to avoid labour disruptions.