RESTRICTED
WORLD TRADE IDA/INV/1/Add.1
21July1995
ORGANIZATION(95-2098)
Original: English International Dairy Agreement
INTERNATIONAL DAIRY COUNCIL
Reply toQuestionnaire 5Regarding Information on
Domestic Policies andTrade Measures
NORWAY
Background information
Twofactors areespecially relevant when analysing agricultural production inNorway: the
relatively lowlevel offoodself-sufficiency, andtheuseofagriculture asameans ofpreventing
population shifts away from rural areas.
Thedegree offoodself-sufficiency, measured interms ofenergy, amounts toabout 55percent.
Fishandfishproducts account foraround 5percentofthistotal. Asaresult ofthetopography and
harsh natural conditions, farmlandiswidely scattered andtheagricultural sector ischaracterized by
small farms. Arable landcovers onlyabout 3percentofNorway 'ssurface. Large andcontinuous
stretches oflandaretobefound inbutafewregions.
Therelationship between various product prices areofcentral importance toNorwegian
agricultural policy. Thisisparticularly thecaseforgrain andmilk. Inthe1960s and1970s, grain
prices werefixed atrelatively highlevels inorder tostimulate grain production incentral areas. This
made itpossible toincrease themore labour-intensive milkproduction inremote areas.
Current overall guidelines forNorwegian agricultural policy werelaiddown bytheNorwegian
Parliament in1993. Thechief aimofthese guidelines istoassure asound agriculture partly by
encouraging competition andpartly byproviding assistance inthestarting-up ofnewactivities related
toagriculture. Yearly adjustments inthegeneral agricultural policy aremade intheAgricultural
Agreement between thefarmers associations andtheGovernment afternegotiations between theparties.
OneoftheGovernment 'schiefaimsistofurther reduce thetransfers made tothefarmers. Agovernment
proposal forlimited andadministered trade inmilk quotas wasputforward before thisyear's
negotiations, buthasbeendeferred to1996.
ThenewGATT/WTOAgreementisalsopartoftheoverallframeworkofNorwegianagricultural
policies. Itwasimplemented, byandlarge, on1January 1995andinvolves ashiftfromtheprevious
quantitative restrictions onimports toatariff based import regime. Theinternal support hastobe
reduced by20percentandthesubsidized export volumes by16percentoveraperiod ofsixyears.
There havealsobeenchanges intraderelations between Norway anditspartners intradesince
theabove-mentioned guidelines wereadopted. Several ofNorway 'smostimportant trading partners
arenowmembers oftheEuropean Union asof1January 1995. Asaresult, Norway hashadto
renegotiate freetradeagreements within theframework oftheEuropean Economic Areaandthebilateral
agreements withtheEuropean Communities.IDA/INV/1/Add.1
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A. Production
Alldairies inNorway areproducer cooperatives andcollectively formtheNational Association
ofNorwegian Milk Producers andtheNorwegian Dairies Association.
Receipts fromthesalesofdairyproducts, aswellasfunds received fromtheGovernment under
various programmes, arepaidtotheNorwegian Dairies Association, anddistributed bytheAssociation
andthelocaldairy cooperative tothedairy farmers based upon theamount ofmilkdelivered tothe
dairy. TheNational Association ofNorwegian MilkProducers isresponsible fortheequalization of
milkproducer prices. Itisalsoresponsible forthesaleanddistribution ofdairy products andthe
allocationofquotastoindividualdairiesfortheproductionofcheese,milkpowderandthealliedproducts
forwhich outlets areguaranteed. Furthermore, theFederation isresponsible forstabilizing themarket
through storage, bycompulsory returns toproducers atreduced prices, salespromotion orbyexport.
Theprices formilkanddairy products determined under theAgricultural Agreement aremaximum
wholesale prices forskimmed, lowfatandwhole milk, andaverage wholesale prices forother 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.
Support programmes
Regional supports
Thedairy farmers arepaidasubsidy foreachlitreofmilkdelivered tothedairy depending
upon theareainwhich thefarmers arelocated. According totheAgreement 1994-95, theregional
support ranges from NOK 0.08to1.56perlitre.
Livecattle support
Support isgranted formilkcows. Itislimited toamaximum ofNOK 77,000 perfarm.
Basedeficiency payment
Abasic support payment ispaidforeachlitreofmilkdelivered tothedairy, regardless of
theultimate utilization ofthemilk. For1994-95 thebasic payment wasfixed atNOK 0.265 perlitre.
Lowincome subsidy
Ageneral lowincome subsidy isgiven toeachdairy holding.
Average price toproducer
Theaverage price obtained bytheproducer (atfarmgate) in1994 wasNOK 3.38perlitre.
Thisprice includes thebasedeficiency support butnottheregional subsidy.IDA/INV/1/Add.1
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Individual production quotas
Increased support ledtoamarked increase inproduction during theperiod prior to1983.
Since thenproduction hasfluctuated between 1,900 and1,950 million tonsbutdropped to1,871million
tonsin1988.
Milk production inNorway istobefurther reduced. In1994, theproduction ceiling was
1,796 million tonsmilk. Itremains unchanged in1995. In1994totaldeliveries ended at1,789 million
tons. Asystem forbuying backquotas andageneral reduction ofthequotas weremeasures usedto
reduce theproduction. Thesystem forbuying backquotas ended in1993 asitfailed toproduce the
desired result.
B. Internal Prices andConsumption
Prices ofcertain diary products aresubjected toasystem ofpricecontrol. Thewholesale prices
fixed intheAgricultural Agreement aremaximum prices.
Compensation forvalue-added taxonmilkandmilkproducts wasintroduced on1July1993.
Asaresult, thevalue-added taxonthese products wasreduced from 22percent(thegeneral level)
to15percent. Compensation forvalue-added taxrepresents forliquid milkNOK 0.42perlitreand
fordairy cheese NOK 3.09perkg.Thismeasure ispartofthegeneral economic policy andtheintention
istoinfluence foodconsumption toachieve nutritional goals. Oneofthemostimportant objectives
istoassure benefits forfamilies withsmall children andlow-income households.
Themaximum wholesale prices, average wholesale prices wereasfollows asof1July1994:
Product Wholesale price
Whole milkNOK perlitre Maximum 6.34
Low-fat milkNOK perlitre Maximum 5.99
Skimmed milkNOK perlitre Maximum 5.56
Butter NOK perkg. Average 22.14
Norvegia (full-fat cheese) NOK perkg. Average 43.21
Yoghurt NOK perlitre Average 13.71
Theconsumptionpercapitain1994ofwholemilkwas34.2kg.,low-fatmilk80.3kg.,skimmed
milk22.9kg.,cream andsourcream 9.9kg.,butter/margarine 3.9kg.andcheese 13.7kg.
Consumption ofwhole milkhasdecreased steadily since 1980. In1989 theconsumption of
whole milkwas50percentcompared with1985. Theconsumption oflow-fat milkhasstrongly
increased since theproduct wasintroduced in1984. During thelastfewyears, theconsumption of
cheese hasremained stable, while theconsumption ofbutter hasdecreased steadily.IDA/INV/1/Add.1
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C. Measures attheFrontier
1. Currently applied customs tariffs
Customs tariffs asapplicable of1January 1995
Tariff itemnumber Description Tariff
04.01. Milk andcream, notconcentrated, added sugar orother sweetening matter:
1000 ofafatcontent, byweight, notexceeding 1% NOK 4.78/kg.
2000 ofafatcontent, byweight, exceeding 1%,butnotexceeding 6% NOK 5.12/kg.
3000 ofafatcontent, byweight, exceeding 6% NOK 21.26/kg.
0402
1000Milk andcream, concentrated, oradded sugar orother sweetening matter:
-inpowder, granules orother solid forms, ofafatcontent, byweight, not
exceeding 1.5%NOK 26.24/kg.
-inpowder, granules orother solid forms, ofafatcontent, byweight,
exceeding 1.5%
2100 --notcontaining added sugar orother sweetening matter NOK 27.52/kg.
2900 --other NOK 27.52/kg.
-other:
9100 --notcontaining added sugar orother sweetening matter NOK 13.41/kg.
9900 --other NOK 13.41/kg.
04.03 Buttermilk, curdled milkandcream, yogurt, etc.,whether ornotconcentrated or
containing added sugar etc.:
Yogurt:
1010 -natural NOK 9.69/kg.
-containing fruits, nutsorberries:
1021 --inpowder, granules orother solid forms NOK 0.50/kg.
1029 --other NOK 0.50/kg.
-other:
1091 --flavoured orcontaining added cocoa NOK 0.50/kg.
1099 --other NOK 23.56/kg.*
-other:
9001 -flavoured orcontaining added cocoa NOK 0.50/kg.
9002 -containing fruits, nutsorberries NOK 0.50/kg.
9009 -other NOK 23.56/kg.
04.04
1000
9000Whey, whether ornotconcentrated, orcontaining added sugar or
other sweetening matter; products consisting ofnatural
milkconstituents, whether ornotcontaining added sugar orother sweetening matter,
notelsewhere specified orincluded: NOK 18.82/kg.
04.05.0000 Butter andother fatsandoilsderived from milk NOK 28.09/kg.
04.06 Cheese andcurd:
1000 fresh cheese (including whey cheese) notfermented, andcurd NOK 28.31/kg.
2000 grated orpowdered cheese, ofallkinds NOK 32.40/kgIDA/INV/1/Add.1
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Tariff itemnumber Description Tariff
3000 processed cheese, notgrated orpowdered NOK 32.16/kg.
4000 blue-veined cheese NOK 31.14/kg.
9000 other cheese NOK 31.14/kg.
35.01. Casein, caseinates andother casein, casein derivatives;
casein glues:
1000 Casein NOK 1.50/kg.
Other:
9010 -caseinates andother casein derivatives 13%
9020 -casein glues 24.4%
2. Asaresult oftheAgreement onAgriculture completed intheUruguay Round, Norway has
hadtoreplace thenon-tariff import restrictions bytariffs. Formilkproducts, ithasbeendecided to
apply specific rates ofdutyforalmost allproducts, theexception being products falling within
HS35.01.9010 and.9020. Thefirstreduction oftheratescompared tothebound baserateofduty
wasdoneper1January 1995. Asof1July1995, Norway willapply year2000-rates which formilk
andmilkproducts falling within HS04.01-04.06 varies between NOK 4.17/kg. andNOK 28.24/kg.
Theformer banonimports ofcertain milkproducts pursuant totheActof22June1934
concerning bansonimports andaRoyal Decree of2June1960laying down provisions regarding import
bansonmilkandcream, butter andcheese isthusabolished asthenewGATT/WTO Agreement entered
intoforce on1January 1995.
3. Bythepricepooling system theFederation ofDairies hasthepossibility toexport dairyproducts
atalower price thanonewhich canbeobtained inthehome market.
Norway hascommitted itself toreduce theuseofexport refunds fordairy products. They
include thefollowing: Butter under HScode04.05, cheese under HScode04.06 andwhey under
HScode04.04. Forthose products, Norway iscommitted toreduce thepayment ofexport refunds
by36percentandtheamount ofgoods receiving suchrefunds by21percentbytheyear2000.
D. Bilateral, plurilateral andmultilateral agreements
Within theframework ofGATT/MTN, theUnited States hasgranted Norway acheese quota
of7,200 metric tons, allofwhich isJarlsberg cheese.
TheEUhasgranted Norway aquota of2,220 metric tonsofJarlsberg cheese andRidder cheese
andNorway hasgranted theEUaquota of2,360 metric tonsofallsortsofcheese originating inthe
EU.