Many Norwegians are likely to be driving over the border to Sweden again this weekend to do their grocery shopping and stock up on items that are much cheaper than at home. Cross-border trade just set another new record and there’s no sign of decline.
State statistics bureau SSB (Statistics Norway) reports that Norwegians have spent NOK 16.6 billion (USD 1.8 billion) during day trips abroad in the past year. That’s up 9.6 percent, or NOK 1.5 billion, compared to the same July-through-June period the year before.
The vast majority of Norwegians’ day trips abroad are to shopping centers near the border in Sweden, several of them actually owned by Norwegian investors. SSB tracks border trade, which is largely fueled by the lower prices in Sweden, better selection in grocery stores and lower taxes on alcoholic beverages. Even though Sweden can be viewed as expensive compared to other countries in the EU, it’s cheap by Norwegian standards.
SSB reported that Norwegians also have traveled more frequently for shopping over the border durng the past year. It reported 9.2 million day trips during the 12-month period from July 1 2018 to June 30 2019, up 14 percent over the same period from mid-2017 to mid-2018. Norwegians spent an average of NOK 1,796 on each trip, down from NOK 1,866 in the prior year.
Norway’s sugar tax sweetened Swedish sales
The head of Norway’s national employers’ organization NHO, Ole Erik Almlid, worries that the record-high border trade can have serious consequences for value creation in Norway, not least for Norwegian retailers. It also leads to lost tax revenues in Norway and can threaten jobs.
“This should prompt politicians to work on reversing (recent) increases in taxes on chocolate and other products with sugar,” Almlid told news bureau NTB. He hopes it also will prompt politicians to drop proposals to raise VAT on food items.
It’s not unusual to see Norwegian shoppers in the large Swedish grocery stores pushing grocery carts filled up entirely with cartons of soft drinks. Norway’s hike in its sukkeravgift (literally, sugar tax) has made Swedish prices even more attractive for thirsty Norwegians.
Center Party paradox
Sigbjørn Gjelsvik, a Member of Parliament for the Center Party, claims the ever-growing cross-border trade undermines the Norwegian food and beverage industry. “It’s also not environmentally friendly that Norwegians make millions of trips over the border to shop, instead of shopping in their own areas,” Gjelsvik told NTB.
Few would argue with that, but the Center Party has contributed and even fueled the cross-border trade by traditionally promoting policies to protect Norwegian farmers that restrict imports and support subsidies and strict market regulation. Both, along with a concentration of ownership in the grocery retail and wholesale business, contribute to Norway’s comparatively high food and beverage prices.
Newspaper Nationen, for example, just reported that nearly 600 tons of Norwegian lamb meat has been frozen in so-called “regulation storage” to keep supply low and prices high. The Norwegian farmers’ meat cooperative Gilde expects Norwegians to pay around NOK 400 for a rack of lamb, and many do, but it can rarely be found year-round in Norwegian grocery stores not least because supply is held back. Anyone wanting lamb racks or shanks outside the traditional fresh-lamb season in the fall can drive over the border and find frozen lamb from Ireland or New Zealand, at one-third the price.
The Center Party can thus be guilty of fueling the cross-border trade they want to halt. Instead of supplying what the market wants at more reasonable prices, Norway’s agricultural policy and the farmers’ own coops keep it off the market even at a time of over-supply.
One of Gjelsvik’s Center Party colleagues has also just proposed more restrictions on imports of cheese and yoghurt to Norway, to force Norwegian consumers to buy more Norwegian cheese and yoghurt instead. The idea is to help Norwegian dairy farmers at a time when their dairy cooperative Tine no longer can send Norway’s subsidized milk abroad for production of its Jarlsberg cheese. If the Center Party succeeds, Norwegian consumers may well react by simply jumping into their cars and buying even more lower-priced cheese and yoghurt in Sweden instead, along with soft drinks, bacon, lamb and other items.