Ola Hammer Langleite
Dairy farmer in Snåsa, Tine owner and civil engineer in industrial economics and technology management
The Q dairies have been in the market for so long now that they also have to stand on their own two feet.
This is a debate post. Opinions in the text are at the writer’s expense.
The Norwegian Directorate of Agriculture has decided to stop payment of distribution subsidies to the Q dairies. The grant amounts to NOK 59 million out of a total of NOK 197 million that is used to subsidize Tine’s competitors. The purpose of the extraordinary support schemes was to increase the competitiveness of private dairies in a Tine-dominated market in the early 2000s.
Telenor also had a monopoly in its telecommunications market a few years ago. When the monopoly was dissolved, no one paid the private players to compete with Telenor.
High barriers to entry may have made these subsidies necessary in the beginning to ensure competition in the dairy market. Examples are large and expensive production facilities, competence-demanding production, heavy logistics, four large grocery chains that controlled the market, difficult for “challengers” to enter.
But the situation now is that the Q dairies have achieved a market share of 50 percent in Oslo. The Norwegian Directorate of Agriculture rightly claims that there is no longer a basis for this special subsidy.
Must stand on their own two feet
I think they should go even further and take away all the special subsidies that the large, private dairies have.
The child benefit is also taken away when the children in the family have reached the age of 18. The Q dairies have been in the market for so long now that they also have to “stand on their own two feet”.
Instead of complaining, they can raise the price of milk!
The Q dairies buy the milk more expensive (pay more to a few large farmers near their two large dairies in Gausdal and Jæren) and sell the milk cheaper than Tine – and complain that they do not make money when the distribution subsidy falls away. Instead of to complain can they raise the price of milk!
Tine is left with all other dairy farms across the country and has 34 production facilities and terminals around Norway. The whole country’s resources are used, whether the dairy farms are small or large, whether they are in Fjaler in Sogn, in Hallingdal, Salten in Nordland or elsewhere.
Fortunately, there are other government schemes that to a certain extent ensure equalization of various costs in milk production on small and large farms throughout the country, that the entire country’s grazing and rough resources are used, and that our fine cultural landscapes are maintained.
The little one, kind?
People in Norway like the story of “the small, kind” versus “the big, naughty”. In this context, the Q dairies try to present it as if they are “the small, kind” and Tine “the big, naughty”.
Facts: Tine is owned by 9140 milk producers with an average income below the average for Norwegian workers.
Behind Synnøve Finden and the Q dairies it says capital strong investors with billion-dollar assets. It is these rich owners many actually supported during the Tine boycott in 2005.
Synnøve Finden then received massive press coverage. Tine, the dairy farmers in Norway, received no press coverage, and people were led behind the light. That Tine was acquitted in the trial afterwards was hardly mentioned.
I hope that the case of the Q dairies’ distribution subsidy will not be as skewed in the Norwegian media as the Tine / Synnøve Finden case was in 2005.