Norwegian butter crisis predicted a year in advance in "funny" ad from butter monopolist

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33 Responses to “Norwegian butter crisis predicted a year in advance in "funny" ad from butter monopolist”

  1. LaHaine says:

    I know this problem from the past in the East Block, but I thought capitalism would prevent this kind of shortages.

    • Mordicai says:

      Wait, are you suggesting that capitalism might not be a magical panacea for every economic woe?

    • howaboutthisdangit says:

      If the company has a monopoly, they may even be tempted to create false shortages, just to jack up prices.  Capitalism + corporate greed = shafted consumers.

    • Entrope says:

      Capitalism would help, yes.  Calling the shortage “Atkins-fueled” gives short shrift to two other major factors: bad weather, which reduced milk production, and extremely high import tariffs on butter.  The shortage got a lot better when the government cut the import tariffs by 80%, which made it practical for TINE SA to use imported butter in a lot of its prepared foods, and redirect the domestically produced butter to store shelves.

      I am curious whether — ignoring the tariff protections — TINE SA is a government-encouraged monopoly, or if it got and maintains its monopoly position through an endogenous mechanism like economies of scale.  A quick search didn’t shed light on that.

      • Vincent Maldia says:

        if there are insanely high tarrifs then its not really a free market isn’t it?

        I know that europe is full of socialist states. Is this one of them? That would explain a lot

        • Entrope says:

          No, it’s not really a free market — and that was a large part of my point.  Norway does have a lot of socialist characteristics.  It also has a lot of oil resources, which makes it easier to pay for the socialist benefits — most of the time.

    • niktemadur says:

      Looks like we’ve reached Peak Butter, and it’s all downhill from here.

  2. Brian Bishop says:

    While capitalism and free markets may not produce sufficient quantities of certain goods (education, defense, health care, etc.), I’m pretty sure that they could handle producing sufficient quantities of butter. Corporatism and government monopolies on the other hand obviously can not.

  3. bkad says:

    I thought the story was about an insane, unexpected fad, not about economic systems. Maybe I’m just cynical, but I don’t think any human economic or government system can overcome human herd behavior. Why do we have to make everything political?

    • The problem is that human behaviour isn’t factored into standard economics; that’s why it’s flawed and a bit of an academic exercise.  Behavioural economics is where the actual knowledge is at.

      So really it’s a bit of both; but then every aspect of economics involves people.

      • digi_owl says:

        Standard economics are assumptions piled upon assumptions sprinkled with simplifications turned “reality”. Reading Steve Keen’s, Debunking Economics, shows how deep a rabbit hole it really is.

  4. StaneStane says:

    It has nothing to do with Atkins. Finland has been stricken by same butter shortage this year, but problem is much more mundane, and yes it has a lot to do with East Bloc in several ways. Big suppliers in Nordic countries have exported huge amounts of butter to Russia this year underestimating the demand from local markets. Big dairy companies in these countries effectively act as a cartel as they all operate across borders.

    The reason why Russia is such a huge food importer is screw ups form olden Soviet times which devastated agriculture there. The shortage in Nordic countries is more of an Liberatrian screw up when commodity flow is commanded by free market price and demand.

    • dnebdal says:

      I don’t think Tine exports to Russia, actually. I know the Swedish and Finnish dairies have some connection, but Norway is a more closed and isolationist dairy market.

  5. dnebdal says:

    I guess it’s worth pointing out that they’re not an absolute monopoly; there is one large competing dairy, and you’ll find their milk in most stores. They don’t seem to sell plain butter, though, and I have no idea why.  They  make spiced butter, and sea-salt gourmet butter, but no blocks of plain butter. There’s also a bunch of small (single-farm, or small district) butter makers, but they don’t make enough to have a large impact.

    Oh, and Finland has a shortage of butter too: The explanation I’ve seen there is that it’s more profitable to export to Russia than to sell it locally.

    edit: Also, the word “butter” looks really odd to me now.

    • digi_owl says:

      There is also the issue of mixing roles. When Tine was the national company for all things dairy, they could dictate how much milk each farmer could deliver. This power was retained when the production monopoly was disbanded. Why this was not put in the hands of a independent office i do not know. In the end it came down a perfect storm of factors, so trying to nail it down to a single cause is bordering on futile.

  6. awjt says:

    Butter is better when you save it for special occasions: a pie crust, frying a nice piece of fish or finishing a sauce.  If you eat it all the time, like bacon or pancetta every day for breakfast, it loses its lustre.

  7. Ah, Atkins.

    Fear not, half of Norway will have colon cancer and sever vitamin deficiencies in no time; then there’ll be plenty of butter to go around.

    Atkins “diet” indeed.

  8. niro5 says:

    Tine also makes a killer Jarlsberg.  If Norway had a Jarlsberg shortage, there would be revolution over night.

  9. Spinkter says:

    Butter means butyric acid, which is the fatty acid component of a very handy short-chain triglyceride.   If you need quick energy, you can do no better than SCTs.    Your body can’t do much with SCTs except burn them for energy.     

    If butter’s not your thing, try coconut oil.   Coconut oil gets me going like a rocket.

  10. woid says:

    Børk, børk, børk.

  11. millie fink says:

    Atkins? Ugh!

    McDougall FTW.

    Doctors have blamed the Atkins diet for a worrying increase in the problem of constipation – a key factor in causing bowel cancer.

    Specialists claim that rising sales of laxatives and other remedies in the last two years are being driven by the enormous popularity of the diet.

    A report . . . suggests Atkins can result in a range of bowel problems and also reduced sex drive.

    One of Britain’s top bowel experts, Roger Leicester, said: ‘Bowel cancer is more likely to develop when people eat a lot of animal fat and there is slow-moving transit of food through the gut.

    Mr Leicester, a consultant colorectal surgeon at St George’s Hospital, South London, said a report on better bowel health makes clear that a healthy diet means eating much more fibre than Atkins allows.

    Read more: http://www.dailymail.co.uk/health/article-193698/Atkins-diet-cancer-risk.html#ixzz1ibPjJ900

    http://health101.org/art_Atkins_diet.htm

  12. LowerHater says:

    As usually with these “Socialists getting what they deserve”memes, the truth is even more interesting and poses some great points to consider. Matthew Yglesias (Slate) did an amazing job covering this:
    http://www.slate.com/articles/business/moneybox/2011/12/norwegian_butter_battle_an_absurd_dairy_shortage_and_its_very_valuable_economic_lessons_.single.html

    To sum up, why the shortage:
    - Norway deliberately sets high tariffs on a number of goods. So when there is a demand spike, trade barriers delay the influx of imports to take up the slack.
    “Protectionist commies!” you (or Fox News) sneer, from your office on the upper floors of the Chicago Board of Trade. “See what you get when you interfere with the free market. No butter for you!”

    But the more interesting bit, that Yglesias nails, is looking into why Norway set the tariffs in the first place:

    - Norway is crazy oil rich
    - Oil production is mostly for export, capital intensive and employs few
    - this drives up the value of the local currency, making it cheaper to buy your product from abroad
    - putting all domestic producers of tradable goods out of business
    - Free trade economics would say, “No biggie, redistribute all that oil income to the peoples and let them buy all the cheap foreign butter they want!”
    - Congratulations, you now have the entire country on the dole (ie. Saudi Arabia). Or worse (and more common) you now have a crazy rich robber class and crushing poverty (ie. Nigeria)
    - This is known at the “Dutch Disease” or the curse of oil.

    Instead, the Norwegian government puts the money in a citizen pension system that only invests abroad and places tariffs on many commodities. This has the effect of:
    - Limiting the appreciation of the local currency, the Krone
    - Keeping Norway’s producers and products competitive in the local market (ie. in business, employing Norwegians)

    Essentially, I quote from the article “Norwegians are accepting lower living standards than they might
    otherwise enjoy for the sake of a long-term strategy of not becoming a
    Saudi-style oil monoculture.”

    Geez, once again those forward thinking, sensible Scandinavians show us how its done. And they’re tall, gorgeous and have some of the most amazing skiing in the world.

    I’m moving (back) to Sweden!

    • Entrope says:

      - Free trade economics would say, “No biggie, redistribute all that oil income to the peoples and let them buy all the cheap foreign butter they want!”

      Wait, what?

  13. AirPillo says:

    The Atkins diet is so bloody strange.

    “I lost 80 pounds on the Atkins diet, and died of a heart attack anyway!”

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