The Butter Chronicles: Norway Comes Up Short

Norway is in the midst of a butter shortage. Yes, butter.  

There are a few explanations: low-carb diets have been popular, and the summer of 2011 wasn’t ideal for dairy. Olav Mellingsater for CNN writes:

A rainy summer reduced the quality of animal feed, decreasing milk production in Norway this year by 20 million liters (5.3 million gallons) compared with the same period last year, the cooperative said.

Stores are currently rationing butter sales, and some entrepreneurial spirits are selling butter online at 30 times the normal cost. There are also some gray market characters emerging from the crisis. CNN reports:

Authorities detained a Russian citizen Monday who they said was trying to smuggle 90 kilograms (200 pounds) of butter from Germany into Norway. Food safety authorities then warned people not to buy butter from strangers, Norway’s TV2 reported.

Norway is just a ferry ride from Denmark, home of a new saturated fat tax, and also a top dairy producer in Europe. Since Norway does not belong to the European Union, Danish dairy would come with high import taxes.

ADDENDUM: As a result of the butter shortage, the Norwegian government slashed these tariffs this week. Also, we incorrectly stated that Denmark was the top dairy producer in Europe. Germany and France are the largest dairy-producing countries within the EU.


G Pendergast

Poorly written laws make for inequalites and opportunities.

Morten

Or, well, you know, we could just slash those import taxes.

Colin

The weather has absolutely nothing to do with it. This shortage is entirely the creation of government and its desire to cater towards the daity lobby instead of Norwegian consumers. We've got similar garbage in the US, such as the PA Milk Marketing Board, which lists among its missions "ensuring all segments of the industry receive an equitable price for milk."

Hamed

Are you quite sure that Norway has reason to "look longingly at membership to the EU"? Do you not think that they are quite satisfied with being a member of the European Economic Area, and therefore part of the single market? Do they even have to pay import duty for items from the EU? I'm pretty sure they don't.

rick

So what is this doing to margarine sales and prices?

julie

Actually, the toll on butter is imposed by the Norwegian government, and has been temporarly lifted until New Year.

Clancy

The important thing to remember about Norway’s tariff policies is that they aren’t just protectionism for protectionism’s sake. Norway is a huge exporter of oil. The high tariffs are part of a coordinated effort to avoid the trade imbalances of massive oil exports crushing domestic industry. They should be more flexible when it comes to preventing shortages like this one, but if they adopted EU style free trade they would be in danger of becoming a nation of idle people, producing nothing, and living off imported goods purchased with oil money and completely unprepared for the day when the oil runs out. A colder, more liberal Saudi Arabia.

Nanno

Well they have converted enough oil into hard cash to last them a couple of decades, official reserve assets according to the IMF are worth a total of 50,475 million US Dollars and they have a population of roughly 5 million people. That´s a lot of butter for a long long time.

http://www.imf.org/external/np/sta/ir/IRProcessWeb/data/nor/eng/curnor.htm
http://en.wikipedia.org/wiki/Norway

E Gardarsson

And of course knocking on doors of neighbors with whom you've never spoken is unlikely to help. Why should the ones with more market based systems compromise their existing export markets to save the Norwegians from their own central planning failure?

Nir Kozlovsky

A similiar shortage occured in Israel last summer, and for exactly the same reason. An extremely hot summer caused a significant drop in milk production. Protectionist agricultural policies prevented substantial imports to relieve the shortage. The only difference is I cannot remember anybody going to jail.

Richard May, UK

This blog post is one of the least accurate I've ever seen from Freakonomics (or at least contains more obvious inaccuracies).

Firstly, as a previous poster says, Norway are a member of the European Economic Area and as such do not pay import taxes on goods from Denmark. I'm not sure how your researcher missed that.

Secondly, Denmark is clearly not the biggest dairy producer in Europe. It is however always near the top of the dairy production PER HEAD chart, although recently I believe Sweden was top. Germany is the biggest dairy producer in Europe.

Psychohistorian

"low-carb, high-calorie diets"

I'm fairly confident you meant "low-carb, high-fat diets;" I don't think anyone has ever argued a high calorie diet is conducive to weight loss.

Matthew Philips

Fixed, thank you