It seems that the Norwegian egg-business is always in trouble somehow. Just like farmers elsewhere complaining about the weather, it’s an endless moaning.
EU is pushing for a shorter shelf-life on eggs to be able to make a more rapid response against salmonella, and while Norway isn’t in EU and generally don’t have the salmonella issue, they still have to trade with EU. Fear of chicken flu is also lowering the demand for eggs.
Overproduction is bad because it can make the price go so low that it doesn’t make sense for anyone to do. Especially in a country like Norway where the cost of living is extremely high. They simply can’t compete, so the state offers money to keep the businesses closed while the free market can’t pay them, and to keep domestic production from competing too much internally.
It’s not uncommon to see this situation in EU, where it is sometimes possible to buy a plot of agricultural land and do nothing with it only to get paid by EU for leaving the land alone. The EU is a trade union, so the main purpose internally is to direct the trades to those who can do it best and cheapest within the borders. It’s a good thing though. In the 1990s there was a massive overproduction of all kinds of foods that would eventually rot up in stocks all over Europe. Overproduction is a cost if the goods cannot be sold.
Norwegian eggs are not exactly a big business, but I do believe it’s a net export for them, so I think the subsidy is made to keep the egg producers in business even if the export is lowering for different reasons. If they didn’t pay chicken producers not to produce, the producers would have to stop production due to low revenue from temporarily missed sales and eventually leaving Norway without a realistic capability of producing for their own market.
Anyway, it backfired at the Easter peak demand. It may still make sense later.
Why is overproduction a bad thing? Doesn’t everyone just get cheaper food as a result?
It seems that the Norwegian egg-business is always in trouble somehow. Just like farmers elsewhere complaining about the weather, it’s an endless moaning.
EU is pushing for a shorter shelf-life on eggs to be able to make a more rapid response against salmonella, and while Norway isn’t in EU and generally don’t have the salmonella issue, they still have to trade with EU. Fear of chicken flu is also lowering the demand for eggs.
Overproduction is bad because it can make the price go so low that it doesn’t make sense for anyone to do. Especially in a country like Norway where the cost of living is extremely high. They simply can’t compete, so the state offers money to keep the businesses closed while the free market can’t pay them, and to keep domestic production from competing too much internally.
It’s not uncommon to see this situation in EU, where it is sometimes possible to buy a plot of agricultural land and do nothing with it only to get paid by EU for leaving the land alone. The EU is a trade union, so the main purpose internally is to direct the trades to those who can do it best and cheapest within the borders. It’s a good thing though. In the 1990s there was a massive overproduction of all kinds of foods that would eventually rot up in stocks all over Europe. Overproduction is a cost if the goods cannot be sold.
Norwegian eggs are not exactly a big business, but I do believe it’s a net export for them, so I think the subsidy is made to keep the egg producers in business even if the export is lowering for different reasons. If they didn’t pay chicken producers not to produce, the producers would have to stop production due to low revenue from temporarily missed sales and eventually leaving Norway without a realistic capability of producing for their own market.
Anyway, it backfired at the Easter peak demand. It may still make sense later.