WORLD TRADE IDA/INV/1/Add.1/Suppl.2
14October 1996
ORGANIZATION(96-4244)
Original: English International Dairy Agreement
INTERNATIONAL DAIRY COUNCIL
Reply toQuestionnaire 5Regarding Information on
Domestic Policies andTrade Measures
NORWAY
There havebeennomajor changes inoverall guidelines intheNorwegian agricultural policy
during thelastyear. Current guidelines werelaiddown in1993bytheParliament, thechiefaimthereof
being tobolster agricultural production ingeneral thereby assuring competitive strength andinnovation
inagriculture. TheGATT/WTO Agreement isalsoexpected to,inalong-term perspective, further
more cost-efficient andcompetitive agricultural production inNorway.
Dairy production
Almost alldairies inNorway areproducer cooperatives andcollectively form theNational
Association ofNorwegian Milk Producers andtheNorwegian Dairies Association. However, two
private dairies havestarted business during thepastyear, oneofwhich produces milkfordrinking
purposes andonecheese.
Inthepresent system, receipts fromthesalesofdairy products, aswellasfunds received from
theGovernment under various programmes, arepaidtotheNorwegian Dairies Association, and
distributed bytheAssociation andthelocaldairycooperative tothedairyfarmers based upontheamount
ofmilkdelivered tothedairy. TheNational Association ofNorwegian MilkProducers isresponsible
fortheequalization ofmilkproducer prices. Itisalsoresponsible forthesaleanddistribution ofdairy
products andtheallocation ofquotas toindividual dairies fortheproduction ofcheese, milkpowder
andtheallied products forwhich outlets areguaranteed.
Furthermore, theFederation isresponsible forstabilizing themarket through storage, by
compulsory returns toproducers atreduced prices, salespromotion orbyexport.
Theprices formilkanddairy products determined under theAgricultural Agreement are
maximum wholesale prices forskimmed, low-fat andwhole milk, andaverage wholesale prices for
other dairy products.
Thetarget price formilkproducers intheAgricultural Agreement iscalculated onthebasis
ofafixed totalmilkproduction andultimate utilization ofthemilk. If,forexample, theultimate
utilization ofthemilkisdifferent fromthecalculation, because ofincreased production, therealmilk
pricetotheproducers willbelessthanthecalculated target price. Abetter adjustment oftheproduction
willtherefore givehigher producer price.IDA/INV/1/Add.1/Suppl.2
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SUPPORT PROGRAMMES
Regional supports
Thedairy farmers arepaidasubsidy foreachlitreofmilkdelivered tothedairy depending
ontheareainwhich theyarelocated. IntheAgreement for1996-97, theregional support ranges from
Nkr0.08to1.56perlitre.
Livecattle support
Support isgranted formilkcows. Itislimited toamaximum ofNkr77,000 perfarm.
Basedeficiency payment
Abasic support ispaidforeachlitreofmilkdelivered tothedairy, regardless oftheultimate
utilization ofthemilk. For1996-97 thebasic payment isfixed atNkr0.20perlitre.
Individual production quotas
Increased support ledtoamarked increase inproduction during theperiod prior to1983.
Since 1983, anannual production ceiling hasbeenfixed andproduction hasbeenstabilized around
1,800 million tons. Theproduction ceiling forthemarketing year1996-97 is1,801 million tons.
Incomparison, totaldeliveries todairies in1995 was1,807.6 million tons.
Internal prices andconsumption
Percapita consumption (inkgs.) in1995 compared to1994 forsome ofthemostimportant
products were asfollows:
Product 1994 1995
Whole milkliquid 34.19 32.89
Skimmed milkliquid 22.90 22.10
Low-fat milkliquid 80.32 79.22
Cream andsourcream 7.77 7.78
Butter/margarine 4.09 4.17
Cheese 14.42 14.74
Consumption ofwhole milkhasdecreased steadily since 1985, whereas theconsumption of
low-fat milkhasincreased strongly since itsintroduction in1984.IDA/INV/1/Add.1/Suppl.2
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Prices
Maximum andaverage wholesale prices were asfollows asof1July19961:
Product Price Nkr Price US$
Whole milk, price/lt. 6.27 0.96
Low-fat milk, price/lt. 5.89 0.91
Skimmed milk, price/lt. 5.46 0.84
Norvegia cheese, price/kgs. 41.73 6.42
Whey cheese, price/kgs. 40.66 6.26
1PriceslaiddownintheAgriculturalAgreemen t1996.ExchangerateNkr/US$asof1July1996:6.4975.
1. Currently applied customs tariffs
Tariff itemNo. Description Tariff
04.01 Milk andcream, notconcentrated, added sugar orother
sweetening matter:
.1000 Ofafatcontent, byweight, notexcluding 1% Nkr4.17/kg.
.2000 Ofafatcontent, byweight, excluding 1%,butnot
excluding 6%Nkr4.46/kg.
.3000 Ofafatcontent, byweight, excluding 6% Nkr18.53/kg.
04.02
.1000Milk andcream, concentrated, oradded sugar orother
sweetening matter:
-Inpowder, granules orother solid forms, ofafat
content, byweight, notexcluding 1.5% Nkr22.87/kg.
-Inpowder, granules orother solid forms, ofafat
content, byweight, excluding 1.5%:
.2100 --Notcontaining added sugar orother sweetening
matter Nkr23.99/kg.
.2900 --Other Nkr23.99/kg.
-Other:
.9100 --Notcontaining added sugar orother sweetening
matter Nkr11.69/kg.
.9900 --Other Nkr11.69/kg.IDA/INV/1/Add.1/Suppl.2
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Tariff itemNo. Description Tariff
04.032Buttermilk, curdled milkandcream, yoghurt, etc.,
whether ornotconcentrated orcontaining added sugar,
etc.:
Yoghurt:
.1010 -Natural Nkr8.45/kg.
-Containing fruits, nutsorberries:
.1021 --Inpowder, granules orother solid forms Nkr20.54/kg.
.1029 --Other Nkr20.54/kg.
-Other:
.1091 --Flavoured orcontaining added cocoa Nkr20.54/kg.
.1099 --Other Nkr20.54/kg.
Other:
.9001 -Flavoured orcontaining added cocoa Nkr20.54/kg.
.9002 -Containing fruits, nutsorberries Nkr20.54/kg.
.9009 -Other Nkr20.54/kg.
04.04
.1000
.9000Whey, whether ornotconcentrated orcontaining added
sugar orother sweetening matter; products consisting
ofnatural milkconstituents, whether ornotcontaining
added sugar orother sweetening matter, notelsewhere
specified orincluded: Nkr16.41/kg.
04.05.0000 Butter andother fatsandoilsderived from milk Nkr25.19/kg.
04.06 Cheese andcurd:
.1000 Fresh cheese (including whey cheese) notfermented,
andcurd Nkr24.68/kg.
.2000 Grated orpowered cheese, ofallkinds Nkr28.24/kg.
.3000 Processed cheese, notgrated orpowdered Nkr28.04/kg.
.4000 Blue-veined cheese Nkr27.15/kg.
.9000 Other cheese Nkr27.15/kg.
35.01 Casein, caseinates andother casein, casein derivatives;
casein glues:
.1000 Casein Nkr41.50/kg.
Other:
.9010 -Caseinates andother casein derivatives 15%+Nkr
40.00/kg.
.9020 -Casein glues 21.2%
2Goods imported from EFTA, EUandsome East-European countries receive preferential treatment.
Thesame goes forHS-Codes 35.01.1000 and.9010.IDA/INV/1/Add.1/Suppl.2
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REFORM OFTHE DAIRY MARKET ORGANIZATION
Thepresent-day organization ofthedairy market willbereplaced byanewsystem on
1January 1997. Thismeans ashiftfromamore bric-a-brac system builtupoverseveral decades to
acomprehensive system. Themain goals forthenewmarket organization areasfollows:
- More transparency, asimplified system;
- equal opportunities forprivate (non-cooperative) actors/dairies -more competition;
- maintain themain principle ofequalization from theoldsystem.
Administration ofthewhole system willbetransferred from theNational Association of
NorwegianMilkProducerstotheNorwegianAgriculturalMarketingBoard(Omsetningsrådet),achange
which ismeant toensure equal treatment within theMObothforcooperative andprivate operators.
Market regulation willbedivided between thetwobodies, withtheNational Association ofNorwegian
MilkProducers having executive responsibilities whereas theNorwegian Agricultural Marketing Board
willberesponsible fortheoverall administration ofregulatory functions. Thus, market regulation
inthedairy sector isaligned withother sectors.
Inthenew market organization, itwillbeeasier forthefarmers tochange dairy
company/purchaser ofthemilk. Itisallowed inthecurrent system, butrules ofprocedure inthe
National Association ofNorwegian MilkProducers makes itimpossible inpractice. Inthenewsystem,
ordinary legislation concerning competition willbeapplied.
Thenewprice equalization system includes price equalization between fourproduct groups
andthree different markets. There willbeafixed price foroneproduct ineachgroup andtheprices
forother products aretobedetermined bythemarket. Thesystem forequalization oftransports costs
willbesimplified tomake itmore costefficient.
There willalsobesome changes inthequota system. From 1January 1997 there willbean
administered system forbuying andselling quotas. Thecountry willbedivided intoeight regions.
Quotas canonlyberedistributed within eachregion. Thereason forthisisthewishtokeepupmilk
production inthedistricts.