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Sunday, May 26, 2024

Egg shortage continues, food prices rise as farmers seek more funding

Norway’s powerful farm lobby is once again demanding far more state funding than even the current farmer-friendly government is offering. That sets the stage for more organized protests, at a time when consumers face empty egg shelves and rising food prices at the grocery store.

Norwegians have faced lots of empty egg shelves at local grocery stores around the country in recent months, like this one at a KIWI store in Oslo. Market regulators that function as part of Norway’s complicated agriculture policy have miscalculated supply and demand, just as farmers once again are demanding another big increase in their state subsdidy and protection. PHOTO: Berglund

All the unresolved issues within Norwegian farming have prompted various professors, economists and even market regulators like meat cooperative Nortura to suggest that Norwegian agriculture policy is dysfunctional. Even though government subsidies to farmers have increased from NOK 17 billion (USD 1.7 billion) to NOK 27 billion over just the past three years, and high tariffs protect Norwegian meat, poultry, fruit and vegetables from cheaper imports, farmers remain dissatisfied and many consumers and state officials aren’t happy either.

That came through once again on Monday, when the state agriculture department offered NOK 2.62 billion in this year’s negotiations with the organizations for both large farms (Norges Bondelag) and small ones (Norsk Bonde- og Småbrukarlag). The farmers’ representatives had already demanded NOK 3.9 billion, equal to around NOK 83,000 extra for every full-time equivalent of a farm job.

The state’s lead negotiator, Viil Søyland, had immediately branded the farmers’ demand as “very high,” and cut it by a third when she returned with a counter-offer on Monday. It boils down to an annual income hike of around NOK 70,000 and reduces the so-called “income gap” between average pay for farmers and that for teachers and nurses by around NOK 45,000. It will cost all households an average of NOK 350 extra per year, in addition to the other factors that still make Norwegian food prices among the highest in the world.

The farmers’ organizations’ reacted negatively at once. “It’s not enough,” said Bjørn Gimming, who’s leading negotiations for the large Norges Bondelag (often simply called Bondelaget). Tor Jacob Solberg of the smaller farmers’ organization also protested, and claimed there’s a need for major changes in how the whole system works.

That’s evident in the current egg shortage that’s plagued both the industry and consumers for nearly a year. It brings back memories of the butter shortage that spread over Norway several years ago when dairy regulator Tine miscalulated supply and demand while still keeping imports out. Nortura, Norway’s large farmers’ coop and market regulator for meat, poultry and eggs, had admitted to its own miscalculations and promised Agriculture Minister Geir Pollestad of the farmer-friendly Center Party that there would be enough eggs by Easter. There wasn’t, and now Norwegian consumers face more shortages for the rest of the year. Imports are now allowed, and grocery store chain REMA 1000 was the first to start bringing in eggs from Denmark last week.

Tor Jacob Solberg, leader of the Norwegian organization representing small farmers (left), and Bjørn Gimming of the organization representing large farmers, are both unhappy with the state’s offer of NOK 2.6 billion this year as negotiations began. PHOTO: Norges Bondelag/Linda Sunde

Egg prices, meanwhile, have risen and are expected to rise again, also on grain, various fruits and vegetgables and even milk, after the current Labour-Center government agreed to boost the already dominant Tine’s protection from the much smaller rival dairy coops behind “Q” and Røros products. “Q” has responded with a threatened lawsuit, claiming the state violates an earlier compromise and undermines their attempts to compete against Tine.

Gimming, meanwhile, also claims that the state’s direct funding offer to farmers (NOK 1.3 billion than the farmers want) isn’t enough to prod farmers into producing more food and boosting Norway’s degree of self-suffiency. It currently stands at an average of 40 percent regarding what farmers consider “food production” in Norway (Norwegian meat, poultry, milk, fruit and vegetables), and they want that raised to 50 percent.

The farmers’ lobby, however, tends to exclude Norwegian fish and seafood from its definition of food production. Norway’s large fish and seafood industry provides a self-sufficiency rate of fully 80 percent in Norway and could rise to 100 percent if needed. While farmers have begun to lobby for self-suffiency of their agricultural products as an important part of preparedness for a national crisis, others stress that Norwegians would hardly go hungry and may only need to change their diets to include less meat and far more locally caught fish.

Gimming and Jacobsen continue to argue that Norway also needs to discourage more farmers from giving up farming, by increasing subsidy and other forms of protection. The state’s offer isn’t enough to keep farmers farming, they claim.

That brings up, however, the major differences  between large full-time farmers and smaller so-called “hobby” farmers, or those who lack economy of scale because family farms are traditionally small in Norway. A recent state commission tasked with trying to define and assess farm income found that only around 18 percent of Norway’s roughly 40,000 farmers are full-time farmers. The commission found that Norway’s largest farms involved in egg production earn an average of more than NOK 3 million a year, while the largest grain growers earn around NOK 1.5 million. Norway’s state statistics bureau SSB reports that full-time farmers earned an average of just over NOK 720,000 a year in 2022, more than the average for teachers or nurses.

‘Farmers aren’t poor’
Ola Grytten, a professor at Norwegian business school NHH, told Nettavisen recently that it’s simply not true that Norwegian farmers are poor. He claims income differences among farmers, and the reasons for them, are downplayed by the farmers’ organizations. They lump all farmers and their farms together, whether they’re large and on flat land that offers economy of scale or whether they’re small plots in mountainous territory and unlikely to ever yield a liveable income from farming alone.

While politicians are left to ponder Norway’s farm policy, and try to either justify or rationalize it, representatives for both the state and the farmers’ organizations will negotiate over the next two weeks. They face a May 16th deadline to come to terms. If not, the funding for farmers will be settled in Parliament. Berglund



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