Post by dman on Dec 14, 2011 16:45:05 GMT -5
Yeah, supply management and tariff REALLY work now don't they.........
The Great Norwegian Butter Famine
1 comments, 0 called-out + Comment now
+ Comment now You’ll have seen the news about the Great Norwegian Butter Famine going on. But you might not have quite understood the entire lunacy of what is actually happening.
Firstly, yes, it is really true that in a modern, advanced, nation, one that regularly appears at the top of various studies about the best places to live, has an actual physical shortage of a basic foodstuff. They’re gargantually rich with oil, have some of the highest incomes in the world, regularly top the charts as being one of the most right on, socially democratic, lots of good government places and yet they cannot actually manage to keep butter on the supermarket shelves.
There are those of us not all that surprised that it’s all that lovely government which is causing the problem.
“Supermarket shelves in Norway have been stripped bare of butter after its people ate their way through the nation’s entire stockpile.
Well, so how did this happen?
“A higher demand for butter as a result of low-carb diets and increased interest in natural, home-cooked meals is one reason for the shortage, according to Tine, the country’s largest farmer-owned dairy cooperative.
Well, that’s one excuse, could even be true.
“A rainy summer reduced the quality of animal feed, decreasing milk production in Norway this year by 20 million liters (5.3 million gallons) compared with the same period last year, the cooperative said.
That’s another one, that could even be true too.
But Denmark is only just over the strait, Denmark manages to supply some large portion of the butter for the UK, a place with a population 10 times larger, so there’s no actual shortage of butter in the area. So why not just bring in a bit more?
Ah, that would be to misunderstand the Norwegian system. Which is, with the possible exception of Switzerland, the only place on the planet to have an agricultural subsidy system even more stupid than that in the European Union.
“To top that off there is a 29% tariff on imported butter, so Norway already prices imported butter away from its market.
Yet that’s not all. You might fairly assume subsidising dairy farmers might mean there is more production than would otherwise be the case, and that the lack of demand shouldn’t mean that tariffs get in the way of imports. You’re right. Norway also restricts imports to a quota. Only 575 tonnes of butter can be imported under its quota with a tariff of 60% on that.
You see the 29% tariff is actually the general tariff it applies, which is meaningless because of the quota. If there was no quota, the tariff would be 29%, but in actual fact Norway restricts imports of butter and then taxes it.
Don’t forget, this is what all of those locavores want us all to be doing. Making sure that we only eat food produced locally, none of this buying stuff on the international markets. And this is also what happens when such policies are followed, food is gargantually expensive and we get shortages. Actual real physical shortages.
But something can be done about this, right? I mean, if we’ve a shortage, we can lift the import restrictions?
“On Tuesday the authorities went along with the request, slicing the tariff (called toll in Norwegian) from the usual NOK 25.19 per kilo to just NOK 4 for the entire month of December.
OK, that’s lovely, but despite the shortages there’s not much of a stampede to fill the shelves, for a 30 day reduction in tariffs just isn’t long enough to make it worth anyone’s while. Well, not quite, there are a few entrepreneurs around:
“Authorities detained a Russian citizen Monday who they said was trying to smuggle 90 kilograms (200 pounds) of butter from Germany into Norway.
I’m actually old enough to not just remember the Soviet Union but also to have been there as an adult trying to feed myself from the stores. The idea that a Russian would one day by trying to smuggle food into a NATO member simply would not have occured to me.
But given the above explanations, is it possible to determine what really, really happened?
“Now state officials have cut fees incurred for over-production of milk in Norway in the hopes that will boost milk production and get the raw materials needed for butter-making to local dairy cooperatives like Tine.
And that is where it all makes sense. So, here’s the full picture. In order to get people to farm, thus providing local food (you know, local is good, right?), in a place which is snow and ice for half the year it is necessary to put up huge trade barriers to food coming in from places with more grass and more cows.
These trade barriers raise the internal price of milk and butter, which is the whole point of having them so as to encourage people to farm in such a frozen wasteland. However, now that you’ve got these incredibly high prices for milk and butter you find that every roadside verge supports a cow or two as the locals cash in on the incredibly high prices. Thus you now need to fine people for producing too much milk.
The fines reduce the amount of milk produced, there is now a shortage of milk and butter and you need to lift the import restrictions so that the citizenry can have a butter biscuit at Christmas time. It really would be simpler just to buy the darn butter from Denmark in the first place, like the UK does.
But then there is indeed a reason why the Swedes regard the Norwegians as the slightly slow rural younger cousins. David Ricardo published in 1817 but it seems that no one in Oslo has got around to reading him yet, nor Adam Smith from 1776.
www.forbes.com/sites/timworstall/2011/12/14/the-great-norwegian-butter-famine/
The Great Norwegian Butter Famine
1 comments, 0 called-out + Comment now
+ Comment now You’ll have seen the news about the Great Norwegian Butter Famine going on. But you might not have quite understood the entire lunacy of what is actually happening.
Firstly, yes, it is really true that in a modern, advanced, nation, one that regularly appears at the top of various studies about the best places to live, has an actual physical shortage of a basic foodstuff. They’re gargantually rich with oil, have some of the highest incomes in the world, regularly top the charts as being one of the most right on, socially democratic, lots of good government places and yet they cannot actually manage to keep butter on the supermarket shelves.
There are those of us not all that surprised that it’s all that lovely government which is causing the problem.
“Supermarket shelves in Norway have been stripped bare of butter after its people ate their way through the nation’s entire stockpile.
Well, so how did this happen?
“A higher demand for butter as a result of low-carb diets and increased interest in natural, home-cooked meals is one reason for the shortage, according to Tine, the country’s largest farmer-owned dairy cooperative.
Well, that’s one excuse, could even be true.
“A rainy summer reduced the quality of animal feed, decreasing milk production in Norway this year by 20 million liters (5.3 million gallons) compared with the same period last year, the cooperative said.
That’s another one, that could even be true too.
But Denmark is only just over the strait, Denmark manages to supply some large portion of the butter for the UK, a place with a population 10 times larger, so there’s no actual shortage of butter in the area. So why not just bring in a bit more?
Ah, that would be to misunderstand the Norwegian system. Which is, with the possible exception of Switzerland, the only place on the planet to have an agricultural subsidy system even more stupid than that in the European Union.
“To top that off there is a 29% tariff on imported butter, so Norway already prices imported butter away from its market.
Yet that’s not all. You might fairly assume subsidising dairy farmers might mean there is more production than would otherwise be the case, and that the lack of demand shouldn’t mean that tariffs get in the way of imports. You’re right. Norway also restricts imports to a quota. Only 575 tonnes of butter can be imported under its quota with a tariff of 60% on that.
You see the 29% tariff is actually the general tariff it applies, which is meaningless because of the quota. If there was no quota, the tariff would be 29%, but in actual fact Norway restricts imports of butter and then taxes it.
Don’t forget, this is what all of those locavores want us all to be doing. Making sure that we only eat food produced locally, none of this buying stuff on the international markets. And this is also what happens when such policies are followed, food is gargantually expensive and we get shortages. Actual real physical shortages.
But something can be done about this, right? I mean, if we’ve a shortage, we can lift the import restrictions?
“On Tuesday the authorities went along with the request, slicing the tariff (called toll in Norwegian) from the usual NOK 25.19 per kilo to just NOK 4 for the entire month of December.
OK, that’s lovely, but despite the shortages there’s not much of a stampede to fill the shelves, for a 30 day reduction in tariffs just isn’t long enough to make it worth anyone’s while. Well, not quite, there are a few entrepreneurs around:
“Authorities detained a Russian citizen Monday who they said was trying to smuggle 90 kilograms (200 pounds) of butter from Germany into Norway.
I’m actually old enough to not just remember the Soviet Union but also to have been there as an adult trying to feed myself from the stores. The idea that a Russian would one day by trying to smuggle food into a NATO member simply would not have occured to me.
But given the above explanations, is it possible to determine what really, really happened?
“Now state officials have cut fees incurred for over-production of milk in Norway in the hopes that will boost milk production and get the raw materials needed for butter-making to local dairy cooperatives like Tine.
And that is where it all makes sense. So, here’s the full picture. In order to get people to farm, thus providing local food (you know, local is good, right?), in a place which is snow and ice for half the year it is necessary to put up huge trade barriers to food coming in from places with more grass and more cows.
These trade barriers raise the internal price of milk and butter, which is the whole point of having them so as to encourage people to farm in such a frozen wasteland. However, now that you’ve got these incredibly high prices for milk and butter you find that every roadside verge supports a cow or two as the locals cash in on the incredibly high prices. Thus you now need to fine people for producing too much milk.
The fines reduce the amount of milk produced, there is now a shortage of milk and butter and you need to lift the import restrictions so that the citizenry can have a butter biscuit at Christmas time. It really would be simpler just to buy the darn butter from Denmark in the first place, like the UK does.
But then there is indeed a reason why the Swedes regard the Norwegians as the slightly slow rural younger cousins. David Ricardo published in 1817 but it seems that no one in Oslo has got around to reading him yet, nor Adam Smith from 1776.
www.forbes.com/sites/timworstall/2011/12/14/the-great-norwegian-butter-famine/