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Policies for the Future of Farming and Food in Norway

image of Policies for the Future of Farming and Food in Norway

Norway is performing unevenly across its four agricultural policy objectives. While Norway enjoys a high level of food security and is meeting its aim of maintaining agricultural production across the country, both environmental performance and the efficient creation of value added along the food chain are compromised by support policies linked to production levels. Support to producers relative to gross farm receipts is the highest among OECD countries, with 59% of farmers’ revenues coming from government support. Only 3% of total support to agriculture is dedicated to research and innovation. Moreover, while Norway has strong public research institutions and well-designed tax deductions, the private sector lacks the right policy incentives to innovate.

This review proposes a new policy approach, centred around innovations that would enable Norway to achieve its objectives and improve the productivity, sustainability and resilience of its agro-food sector. Specific recommendations include increasing the responsiveness of the sector to markets, giving farmers greater flexibility in making production decisions, placing greater emphasis on agri-environmental outcomes, and increasing the role of the private sector in research and innovation.

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Agro-food value chains in Norway

Agro-food value chains in Norway are largely shaped by the primary market regulation provisions of agricultural policies, including target prices and production quotas (for dairy) and import tariffs and quotas. The agro-food industry is highly concentrated in Norway, particularly at the wholesale level but also at the retail level. Agriculture is an exception for both competition policy and for trade policy. Attempts by the government to increase the number of competitors in the dairy industry by subsidising the purchase of domestic primary production are unlikely to deliver significantly more competitive and innovative domestic markets. There are costs in terms of high food prices, low variety and lack of innovation associated with the market regulation policies; these costs deserve to be compared with the potential gains in terms of other agricultural policy objectives. A gradual reform to increase responsiveness of the agro-food value chain to market signals and generate innovation opportunities warrants consideration as part of the agricultural policy debate.

English

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