As part of the agricultural settlement this spring, the farmers and the state agreed on a change in how the price of milk is seen. – In the long term, the new price model will have a lot to say about the prices of dairy products, says department director Beate Berrefjord in the Competition Authority. Department director for food, trade and health in the Norwegian Competition Authority, Beate Berrefjord. Photo: Competition Authority Changing price model Until now, the farmers and the state have agreed on a target price through the agricultural settlement, which in practice has functioned as a maximum price for milk. The Norwegian Competition Authority believes that this has given consumers protection against large price increases. But now the government wants a volume pricing model: From now on, Tine will set the price of milk twice a year. Tine has a market share of around 93 per cent in raw milk. The Q dairies are the only competitor, and have the remaining 7 percent of the market. The price that Tine wants to put on milk is the price that Tine herself, but also other dairies, must pay for the milk they use to make other products such as yoghurt, cheese and sour cream. Photo: Elisabeth Sandve / news “This may mean that the company will implement increases in the milk price to a greater extent based on its own market interests than has been the case under the target price system”, wrote the inspectorate in a consultation report. – We warn against the fact that this could make it more difficult for Tine’s competitors to compete against Tine, says Berrefjord. Disagree In Norway, prices are set for agricultural raw materials in a different way than in many other countries. Elsewhere, prices are linked to international commodity exchanges. “When the dominant player is given control over the price of raw materials … there is, according to the assessment of the authority, a real risk that competition in the market will diminish over time”, writes the authority. The Ministry of Agriculture and Food, for its part, believes that the fact that Tine will now set the price of milk will not lead to changes in prices for farmers, the industry or consumers. Agriculture and Food Minister Geir Pollestad (Sp). Photo: Øystein Otterdal / Oystein Otterdal Agriculture Minister Geir Pollestad (Sp) has so far not had the opportunity to be interviewed on the matter. – Uncertainty in prices Norway is now struggling with how much support they can give to agriculture, and at the same time stay within their trade obligations towards the World Trade Organization (WTO). To remedy this, the government has decided that there will be changes to the price of milk, and it is they who have asked Tine to take responsibility. – All alternatives to the target price give greater uncertainty in the prices. But the contracting parties in the agricultural settlement have agreed that this is the alternative that gives the least uncertainty to the entire value chain, says director of industrial policy in Tine, Gunnar Dalen. Director for business policy in Tine, Gunnar Dalen. Photo: Tine He says Tine is going into this with an open mind, and says that the new price model is not set in stone. – We would like to have input from everyone about what he should look like. We have several meetings with various actors now, before he is to be put into use in April next year. – The model must take care of the farmer, industry and consumers. And he must be competitively neutral, says Dalen. Several criteria So far, Tine intends to look at the following variables when setting the price of milk: The cost development for the farmer Norges Bank’s estimate for the consumer price index going forward Statistics Norway’s price statistics for food International milk prices – The Norwegian Competition Authority believes that Tine can set the price of milk on her own market interests, and that it will lead to higher prices for consumers? – We want to compete in the same market. For Tine’s dairy, milk is bought at the same price, on the same terms as all other industries. And in the end, it is the consumers who decide whether they want to buy these products or not. We will do our bit to ensure predictability and stability, says Dalen. Published 16.10.2024, at 12.55 p.m
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The Norwegian Competition Authority fears “significantly” more expensive milk – news Norway – Overview of news from different parts of the country
