Why protectionism could ruin Norway’s Christmas

So the big story in today’s Danish media (okay, at least a story) is that Norway is running out of butter. Apparently, a combination of poor weather, higher than normal consumption, and possibly miscalculations on the part of the largest Norwegian dairy cooperative Tine have combined to create a shortage of about 50 tonnes of butter a week for the rest of December. This is obviously a recipe (sorry) for a huge disaster, with Christmas coming up and people not having enough butter for their cakes and cookies and such. Revolutions have started over less.

Scandinavians being what we are, this is of course just the kind of situations where people are coming up with various more or less well-thought-through initiatives to “help out” – for instance, the Danish television station TV2’s morning show Go’ Morgen Danmark somehow got hold of four thousand packages of butter, and are going to ship that off as a relief package, as it were. (By my calculations, that’s enough for each Norwegian to get exactly 200 milligrams of butter… so, yeah. Don’t use it all at once, I guess.)

But the more fundamental problem here is that for many years, Norway has maintained a set of extremely protectionist trade barriers to protect its domestic agriculture, and in particular the aforementioned Tine cooperative, which enjoys practically a monopoly on dairy products in the country. Thus, buttter imported from abroad have been subject to both import quotas and a tariff of about 25 NOK (€3.25/£2.75/$4.35) per kg, which of course means that Norway is simply not at all an interesting market for foreign distributors. And while it’s probably great for Norwegian farmers to enjoy their own little market glass bubble as long as things go well, the downside is that when a market imbalance develops, such as the current butter shortage, you’re pretty much on your own.

So to try to alleviate the shortage, the Norwegians have been shopping around for more supplies of butter especially among the other Nordic countries in recent days, such as Denmark and Iceland, and have even cut the butter tariff by almost 85% to about 4 NOK per kg – but with the understanding that it would be increased again after Christmas. Even with that gesture, other Nordic distributors have been understandably less than eager (link in Danish) to fill what is essentially a limited and temporary rush order, in the middle of a period of high demand, and with no perspectives of any long-term business relationships.

So dear Norwegians: I’m sorry that you don’t have enough butter and that this year’s Christmas could be ruined because of that. But you have really brought this upon yourself. And I’m just going to throw this out there for you to consider: Next time a polling agency calls to ask your opinion about Norwegian membership of the European Union, do think about butter and Christmas. Because if you were a member, the free movement of goods would mean you could buy just as butter as you could possibly want – and then some. I’m just saying.

Merry Christmas.

EDIT Jan 3, 2012: Just to follow up on this, despite diligent research I have been unable to find out if the Norwegian Christmas was indeed ruined this year. But apparently the shortage is now expected to persist until “some time after January”. Let’s at least hope they get it sorted out in time for Easter.

EDIT Jan 29, 2012: Find the lastest updates on this situation in this post.

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2 Responses to Why protectionism could ruin Norway’s Christmas

  1. Pingback: Cui bono? The budget impact of a British withdrawal from the EU | Facts and Norms

  2. Pingback: Norwegian butter protectionism: An update | Facts and Norms

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