End of Jarlsberg Exports Spells Trouble for Norwegian Dairy

(Bloomberg) --

The Jarlsberg cheese being eaten as far away as Sydney, across Europe and the U.S. will soon be Norwegian in recipe only.

As export subsidies end, the country’s best known brand is soon going to be made exclusively outside Norway for cheeselovers across the world, which has the local dairy industry reeling.

The maker of Jarlsberg, Tine SA, on Friday announced it will cut the equivalent of 400 jobs in order to save 1 billion kroner ($110 million). Measures to cut costs and tease out growth will lead to an 8-10% drop in milk production and a considerable decrease in dairy farmer income in 2020 and beyond, it said.

“The combination of strong import growth, the loss of Jarlsberg exports, changes in consumption patterns and strong subsidies of competitors is a severe combination for Norwegian dairy production” Chairwoman Marit Haugen said in the statement.

Production of the cheese for export from Norway became unprofitable when the Norwegian government in 2015 decided to end agricultural export subsidies that saw Australians, Canadians and Americans buying Jarlsberg for less than consumers in its homeland.

Tine has now placed production in other countries such as Ireland and the U.S. to meet international demand. Local Norwegian demand is still going be covered by domestic production.

Cheese exports were an anomaly in a country whose farmers are otherwise protected by restrictive tolls, wholesale price target setting and financial subsidies, resulting in some of the world’s highest food prices and poorest supermarket selection. Support through the national budget and protectionist measures account for 53% of gross agricultural income, according to OECD data.

To contact the reporter on this story: Stephen Treloar in Oslo at streloar1@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net

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