The case of the closed system

Norway is in the news this week, with the information that the drop in oil prices may affect the dairy industry in the country, due to its supports in place for Norway’s dairy industry. It has one of the highest prices for milk in the world, and very high tariffs in place for imports.

The idea of a closed system can be appealing to dairy producers. Canada is another country that has long had tariffs and high levels of protection for the industry. But the question is whether or not they work in the long run. There are import issues with the US, and the costs to the consumer are quite high.

We also have IG Milch in Austria asking for the re-introduction of milk quotas in the European Union. While I think for now, the quotas will not be reissued, we may see other systems come into play, such as higher floor prices for milk and butter. Perhaps the return of European milk lakes and butter mountains? It is a possibility, in this age of very cheap milk.

That is really the problem. Half the time, governments start with knee-jerk reactions to a fluid situation. What any of them need to do is look at perhaps a longer-term solution for the issue to hand. This is why organisations such as Dairy UK and its Roadmap is proving valuable. A hard look at the long term of milk production is required, and then a way is needed to get to where we’d like to be – where businesses are making a profit, and farmers are not being driven out by low farmgate prices, while consumers pay a fairprice for milk.

I suspect the cycle will continue with dairy, as we lurch from crisis to crisis. I wonder if the toolbox we have to sort out these issues isn’t the wrong one, but I am not sure which one is the correct one.

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