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Norwegian dairy giant call for tariff relief as butter crisis bites

By Ben Bouckley , 29-Nov-2011

Leading Norwegian butter producer TINE has called upon the country’s agricultural authority to temporarily suspend customs duties on butter imports, to avoid shortages over the Christmas period.

A combination of unusually low autumn milk production and increased production lay behind the shortage, the co-operative giant said, with further milk supplies in October not as large as expected.

Norwegian milk production was around 25m gallons less year-on-year, Norway’s largest dairy product producer TINE said in a statement, while increased demand for butter and other cooking products “further reinforced” a market imbalance.

A TINE spokesman told FoodNavigator.com this morning: “The situation has arisen due to an unexpected and unusual combination of increased demand of butter and an unusually low input of milk to TINE.

He added: “A rainy summer has given fodder of a lower quality, which in turn has given less milk (20m liters less year to date 2010 versus 2011) and milk with a lower fat content.”

Butter demand rising

Expanding on market trends, the spokesman said: “Increased demand for butter and other cooking products reinforces this imbalance in the market. People prepare more food from scratch in their homes and the trend of ‘low carb/high fat diets’ is growing in popularity.”

As a result, TINE announced yesterday that it was asking the Norwegian Agricultural Authority [SLF] to reduce customs duty on butter until the New Year to ensure sufficient butter for Norwegian consumers.

The company said that updated market forecasts showed that there was a current supply shortfall of around 50 tonnes of butter per week.

In the run-up to Christmas, TINE said it would continue to deliver butter to customers as per usual, but that amounts supplied would be “somewhat less than normal”.

To date, TINE said it had taken several measures to increase its butter production, including importing 150 tonnes of butter for industrial production and reducing cheese production in favour of butter.

The spokesman said: To remedy the situation, we have chosen to import a limited amount of butter for use as an ingredient in (other) industrial food production. This will help ensure that more of the Norwegian milk can be used as a base for producing butter (and sour cream and cream).

“It is important to note that at the same time Norwegian milk production is starting to pick up now after a slow start this autumn. This will off course give us the possibility to increase our production in the weeks before Christmas.”

SLF considers TINE request

Thus far in 2011, TINE said it had shipped 1,000 tonnes more butter to consumers than at the same time last year.

But company director Elizabeth Morthen said the company’s steps to address the shortfall were not enough.

She said: “This will not be sufficient, and we therefore recommend the introduction of reduced tariffs to facilitate imports.”

The company spokesman added: We are confident that our production rate within weeks will be sufficient to cover for the demand in the consumer market.”

A spokesman for the SLF confirmed that there had been a butter shortage in Norwegian shops, and asked whether it would support TINE’s call said:

“It’s a little early to say at the moment. We only received the letter [from TINE] yesterday, but we expect to make a decision by the end of today or tomorrow.”

Dairy cooperative TINE is owned by 15,084 farmers, who deliver 1.4bn litres of cow’s milk and about 19m litres of goat’s milk a year.

*The SLF released a statement late on Tuesday stating that tariffs on butter imports would be cut to 4kr (Norwegian krone) per kg for the month of December, compared with the usual level of 25.19kr.

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