European Crisis

Norway produces all of its own dairy: milk, cheese, and butter.

Much like New Zealand, the dairy industry here is tightly regulated, and controlled by a monolith, Tine AS.

And, as in New Zealand, while it’s technically possible for farmers to choose who they sell their milk to, in practice they do not have a choice.

Tine controls everything.

And now they have made a blunder.

Someone in accounting, or maybe it was finance, or maybe it was the new project manager from Sweden, no-one knows who exactly, but someone miscalculated the country’s butter requirements for December and January.

The warning signs were there: reduced milk production due to the rainy summer, and gradual increase in demand due to a low-carb diet fad.  But, they were recognised too late.

The results have been devastating.

We have run out of butter.  Supermarkets are cleared out.  There is no butter left in Bergen, Oslo, Trondheim, Tromsø and the towns and villages in between.

In a desperate attempt to ease the situation Jens Stoltenberg lifted butter import tariffs on Denmark, and tried to convince the Danes to sell us some of theirs to relive the shortage.

It hasn’t worked.

A butter black market has quickly sprung up.  People are flying to the UK, returning with (and smuggling) a few dozen kgs back and selling it online.

It is possible to buy a 1/2 kg block for around 300NOK.  Now even for Norway, that’s just ridiculous.

This is a serious state of affairs indeed.

We, ourselves, have just 250g left.  It’s enough to make a batch of Christmas cookies, but not enough for a gingerbread house.

Yesterday in language class, I discussed the gravity of the situation with one of my classmates, a professor of finance, and lecturer at the university.   I learned he had two blocks of butter stashed in his fridge.  I tried to convince him to trade it in exchange for some home-brew.

He wasn’t keen.

A wise man.

So, I asked him whether this crisis would be the trigger event for a complete global financial collapse.

December and Christmas have very strong cultural roots here, and butter plays a pivotal role.  If Norwegians don’t have butter, they can’t make gingerbread houses, can’t bake Christmas cookies, and can’t fill their houses with delicious wafty smells of buttery meat.  Christmas will be a disappointment.  In turn this will influence spending and could spell a mini recession.  And from there, could it be an even more sinister downward spiral?

The finance professor looked at me.

He solemnly shook his head and said “I don’t know, it’s just too early to tell”.

 

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3 Responses to European Crisis

  1. michelle says:

    Also Colbert has good coverage on the crisis here

  2. CeilingCat says:

    So the weird bit is that I can look up the weekly European butter price, and it’s at a 1 year low, suggesting there is not actually a supply problem
    See website here:
    http://future.aae.wisc.edu/data/weekly_values/by_area/1701?tab=prices

    Price on Dec 10 was USD$4712/metric ton, which means your 500g block should be costing about NOK 14. Ok, you’ve got to add packaging on top of that, but it gives you a reference point.

    That suggests the problem is all due to the tariffs, and that the market can’t adapt due to them.

    Maybe they should borrow Sir Roger Douglas for a couple of weeks, to jet in, dismantle the tariffs and fly out again. (And weirdly, the black market you described is actually market adaption, which is helping correct the problem – it’s just incredibly inefficient due to being illegal, and hence requiring a much higher profit margin to be worth it. I wonder if the government just said “For the next 4 weeks, you can bring in as much butter as you want with no tariffs” then the whole problem would get solved by enterprising people with mini-vans. Though I can see potential for the entire European butter mountain from 2009 being shoveled into containers and sent to Norway… And with free cold storage it would be a great place to keep it…grin)

    Anyway, the contrast with the NZ economy is interesting. Oh, and the ferries to Denmark are offering butter in the on-board duty free shops if you get really desperate.

    (I’m assuming you can’t slum it with Margarine – unobtainable as well?)

    • michelle says:

      Sweet regulation.

      A 500g block normally costs around 25 NOK, that includes the 14% VAT – so probably not too bad?

      According to our local news a Russian man was caught trying to smuggle in 90kg, apparently had he been successful, and if Internet prices are anything to go by, it would have been worth around 28,000 NOK.

      For now, I’m saving our meager stash, just in case. No more butter spooning allowed.

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