Oil prices affect Norwegian dairy supports

A 75% drop in crude oil prices is putting pressure on the Norwegian government to reduce its support to the dairy sector, according to the UK Agriculture and Horticulture Development Board. At present, Norwegian dairy farmers are highly insulated from outside competition, with tariffs on some milk imports of almost 450 per cent and the average tariff on dairy products of around 80 per cent.

However, this level of protection is quite expensive for the government and has contributed to Norway having the second highest food prices in the world. For instance, the retail price of a litre of milk is 40 per cent more expensive than a litre of milk in the UK, according to AHDB. In light of this, the OECD, in a recent report, recommended reducing support levels to the dairy sector, while, under a WTO agreement reached last December, the country plans to eliminate export subsidies for agriculture by 2020.