NORWAY: ESTIMATES OF SUPPORT TO AGRICULTURE`

Contact person: Darryl Jones

Email: darryl.jones@oecd.org

Tel :

(33-1) 45 24 14 80

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(33-1) 44 30 61 02

DEFINITIONS AND SOURCES

Country Total Support Estimate (TSE) and derived indicators in Table 1 cover all agricultural production, i.e. all agricultural commodities produced in the country. Definitions of basic data sets refer to the specific name of the programmes with specific budget lines indicated in square brackets. For the Producer Support Estimates (PSE) and Consumer Support Estimates (CSE), the description of policy measures indicates the commodities covered by the measures, as well as the method of allocation of the corresponding transfers among commodities. "MPS commodities", which vary across countries, are those for which market price support is explicitly calculated in Table 2.

Market Price Support (MPS) and Consumer Support Estimates (CSE) by commodity in Table 2 are calculated for the following commodities: wheat, barley, oats, milk, beef and veal, pigmeat, poultrymeat, sheepmeat, wool and eggs. Definitions are provided only for basic data sets from which all the other data sets in this table are derived, following the formula indicated in each commodity table. Specific sources are indicated in brackets.

Producer Support Estimates (PSE) by commodity in Table 3 are calculated only for commodities produced in the country within a common set of commodities (wheat, maize, barley, oats, rice, sorghum, soybeans, sunflower, rapeseed, sugar, milk, beef and veal, pigmeat, poultrymeat, sheepmeat, wool and eggs), provided that the value of production of that commodity exceeds 1 per cent of the total value of production in the country concerned. All data sets in the calculation of PSE by commodity come from Tables 1 and 2 where definitions are included.

Definitions of the indicators, criteria of classification of programmes included, and methods of calculation can be seen in OECD, Methodology for the measurement of support and use in policy evaluation [http://www.oecd.org/agr/policy].

Table 1. NORWAY: Total Support Estimate

Definitions:

I. Total value of production (at farm gate): Total agricultural production valued at farm gate prices, i.e. value (at farm gate) of all agricultural commodities produced in the country [1].

1. Of which share of MPS commodities (%): Share of commodities for which MPS is explicitly calculated (in Table 2) in the total value of agricultural production.

II. Total value of consumption (at farm gate): Consumption of all commodities domestically produced valued at farm gate prices, and estimated by increasing the value of consumption (at farm gate) of the MPS commodities according to their share in the total value of agricultural production [(II.1) / (I.1) x100].

1. Of which MPS commodities: Sum of the value of consumption (at farm gate prices) of the MPS commodities as indicated in Table 2.

III.1 Producer Support Estimate (PSE): Associated with total agricultural production, i.e. for all commodities domestically produced [Sum of A to H; when negative, the amounts represent an implicit or explicit tax on producers].

A. Market Price Support: On quantities domestically produced (excluding for on-farm feed use -- excess feed cost) of all agricultural commodities, estimated by increasing the MPS for the MPS commodities according to their share in the total value of agricultural production [(A.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the MPS (net of price levies and excess feed cost) for the MPS commodities as calculated in Table 2.

B. Payments based on output

1. Based on unlimited output

Deficiency payment for wool [B.1150.73.01]: Payment per tonne to producers of wool, since 1991.

Deficiency payment for meat [B.1150.73.15]: Payment to farmers (via the meat industry) per tonne of meat produced, since 1995, including a base deficiency payment, a regional deficiency payment and an extra regional payment for meat in northern Norway. . Allocated to beef, pork and sheepmeat based on the value of production.

Transport payment for grains [part of B.1150.73.05]: Payments to producers, under the grain and feed-stuff market regulation, which also includes: a price reducing payment and an on-farm storage payment for grains, a payment to stimulate on-farm consumption of feed grains, a transport subsidy for feed grains, and a regional price support payment. In 1995, the regulation was replaced by the grain and feed-stuff market system described below [B.1150.76.01]. Allocated to cereals based on the value of production

On-farm storage payment for grains [part of B.1150.73.05]: Payment to producers under the grain and feed-stuff market regulation. In 1995, the regulation was replaced by the grain and feed-stuff market system described below [B.1150.76.01].

Regional deficiency payment for meat [B.1150.73.06]: Regionally differentiated payment per tonne to producers of meat, until 1994. Allocated to beef, pork and sheepmeat based on the value of production.

Base deficiency payment for meat [B.1150.73.07]: Payment per tonne to producers of pork (until 1991), beef and sheepmeat (until 1994). Until the early 1990s, part of the payment was used to stimulate on-farm consumption of feed grain, and it was paid per tonne of feed grains milled and used on the farm.

Payment to high quality eggs [B.1150.73.07]: Payment to producers per kg of high quality eggs, provided until 1987.

Regional deficiency payment for cereals [part of B.1150.73.05]: A regionally differentiated per-tonne payment for grains in less-favoured areas provided under the grain and feed-stuff market regulation, until 1991. Allocated to cereals based on the value of production.

Transport payment for meat and eggs [B1150.73.08]: Payment to producers of meats and eggs delivered to the packing plant or slaughterhouse. Combines, as from 1994, the transport subsidies for eggs [previously 74.16] and for meats [previously 74.18]. Allocated to specific commodities based on actual payments.

Extra regional payment for meat production in Northern Norway [B.1150.73.09]: Payment per tonne to producers of meat, until 1987, then folded into the regional deficiency payment for meat. . Allocated to beef, pork and sheepmeat based on the value of production.

Price support for eggs: Payment introduced in 1999 to support egg producers.

Transport payment for meat [B1150.74.18]: Payment to farmers per kg of meat (except poultry) delivered to the slaughterhouse, until 1993. . Allocated to beef, pork and sheepmeat based on the value of production.

Transport payment for eggs [B.1150.74.16]: Payment to farmers (via the marketing co-operatives) per kg of eggs delivered to the packing plant, until 1993.

2. Based on limited output

Price support payment for milk and milk products [B.1150.73.13]: Payment to dairy farmers, including a base payment and a regional payment per litre of milk for a limited output (due to the milk quota system).

Structural payment to milk producers [B.1150.74.11]: Payment based on the volume of milk deliveries and granted up to 30 000 litres per farm (15 000 for goat milk). Prior to 1993 it was included in price support payment for milk and milk products. From 2003 onwards, the basis for payment changed to one determined by animals numbers.

Subsidy for regional dairy plants: Payment per litre of milk (paid via the dairy plants) to farmers who deliver milk to regional district dairies instead of local dairies, to encourage the restructuring of dairy processing. Applied from 1982 to 1991.

Contract production scheme for eggs: Payment per kg of eggs of A-class quality, granted from 1983 to 1996 to egg producers that deliver to an authorised wholesaler under a supply management contract.

C. Payments based on area planted/animal numbers

1. Based on unlimited area or animal numbers

Natural disaster payments [B.1150.50.02]: Payments to compensate for crop losses, the restoration of damaged grassland, and the purchase of feed. Compensation for crop losses, which is usually the largest component, is granted if specific crop yields fall short of 70 per cent of the 5-year average. The payments account for the difference between farm sales and 70 per cent of the revenue that would have been obtained on the planted area with normal yields. Allocated to cereals, milk, beef and sheepmeat based on the value of production. [The entire budget line is currently classified according to the crop loss component. Could the budget line be disaggregated? Payments for the restoration of grassland and for the purchase of feed could be separated out and classified as payments based on fixed input use and payments based on variable input use, respectively].

Acreage and cultural landscape scheme for grains: Payment per hectare to producers granted from 1991 to 1993 to reduce the intensity of production and conserve cultural landscapes. Allocated to cereals based on actual payments.

In 1994 this programme was brought together with several others to form the Acreage and cultural landscape scheme [B.1150.74.17]. However, a breakdown of the total expenditure under the Scheme into the various sub-programmes is available and so they continue to be allocated under their historical PSE categories. The total expenditure for this budget item is disaggregated into five sub-groups: (i) payments for cereals, potatoes, vegetables, and fruits and berries (C.1. Payments based on unlimited area); (ii) payments for coarse fodder (E.1. Based on variable input use); (iii) payments for mountain dairy operations and for production in steep areas (E.3. Based on fixed input use); (iv) payments based on changed soil conservation - a per-hectare payment for not cultivating erodible soils in autumn, differentiated by erosion risk and a per-hectare payments for planting cover crops in cereal fields and for seeding grass around water courses - (F.2 Based on constraints on fixed inputs); and (v) payments for young farmers (G.1 Based on farm income level).

In 2003, the Acreage and Cultural landscape was split into two separate programmes. Acerage support programmes continued for cereals, potatoes, vegetables, fruits and berries, and coarse fodder. A new Cultural Landscape payment was introduced, classified under payments based on historical entitlements.

2. Based on limited area or animal numbers

Production payment for livestock [B.1150.74.14]: Headage payment granted at specific rates for bovine animals, pigs, goats, hens, horses, rabbits and sheep, degressive with animal numbers and limited to a certain number of animals per farm. Before 1996, the payment rates were based on standard labour requirements (in man-years), which were linked to animal numbers and calculated on the basis of actual hours worked as recorded by a network of sample farms. There was an upper limit per farm of two-man years, and different rates applied in the northern and southern parts of the country. Allocated to all livestock products.

Structural payment to milk producers [1150.74.11]: Payment based on the number of animals, increasing up to 5 dairy cows or 27 milking goats, i.e. the same rate is paid for all farms with five or more cows. From July 2002 the scheme also applied for beef production on suckler cows, and the same rate is applied for all farms with more than 40 suckler cows.

D. Payments based on historical entitlements

1. Based on historical plantings/animal numbers or production

2. Based on historical support programmes

Cultural Landscape Support [B.1150.74.17]: A standard annual payment of NOK 2 000 per hectare paid on all agricultural land in recognition of the contribution made to the cultural landscape.

E. Payments based on input use

1. Based on use of variable inputs

Fuel tax concession: value of the fuel tax concession to farmers.

Payment for producing coarse fodder [B.1150.74.21]: Acreage payment for forage production, the payment rate being based on the ratio of animals to fodder area and reduced if the farm is considered to have too many or too few animals in relation to the fodder area. Granted from 1982 to 1993 and included in the acreage and cultural landscape scheme in 1994. Allocated to milk, beef, sheepmeat and wool based on the value of production. Since 1994 payments have been provided under the Acreage and cultural landscape scheme [B.1150.74.17].

Support for meadowseed production and storage [B.1150.77.12]: Payment for the production and storage of meadowseed to reduce the price of seed to farmers. Until 1994, support for meadowseed production is in a separate budget line [B.1150.74.12]. Allocated to milk, beef, sheepmeat and wool based on the value of production.

Acreage support to mountain farmers [B.1150.74.18]: Acreage payment for grass fodder production in mountain areas, based on the distance between the farmstead and the fields. Intended to compensate for the higher labour and transportation costs in cases where the fields are removed from the permanent farm residence. Allocated to milk, beef, sheepmeat and wool.

Transport payment for feed-stuff: Payment to producers under the grain and feed-stuff market regulation, which was replaced by the grain and feed-stuff market system [B.1150.76.01] in 1995, to reduce the transport cost of feed. Allocated to milk, beef, sheepmeat and wool based on the value of production.

Payment for feed grain use on the farm: Payment to producers under grain and feed-stuff market regulation, which was replaced by the grain and feed-stuff market system [B.1150.76.01] in 1995, to encourage the use of own-grown feed grain on the farm. . Allocated to milk, beef, sheepmeat and wool based on the value of production.

Feed price reducing grant: Payment to producers under the grain and feed-stuff market regulation, which was replaced by the grain and feed-stuff market system [B.1150.76.01] in 1995, to reduce the price of feed grain. Allocated to milk, beef, sheepmeat and wool based on the value of production.

Transport payment for inputs: Payment to retailers per tonne of transported fertilisers, lime, silage liquid and carbondioxid (for greenhouses) to reduce the price paid by farmers. Granted until 1990 (after 1986 only for the transport of lime in Northern Norway) and allocated to cereals, milk, beef, sheepmeat and wool.

Transport payment for feed grain: Payments for the transport of feed grain from the silos to the processing plants and for the transport of feed compounds from the processors to the farmers. Granted under the grain and feed-stuff market system, which in 1995 replaced the grain and feed-stuff market regulation [B.1150.73.05].

2. Based on use of on-farm services

Insemination and veterinary services [B.1150.77.11]: Public expenditures on insemination, the travel costs of veterinarians and general administrative support for veterinary services. Allocated to milk, beef, pork, sheepmeat and wool based on the value of production.

Pest and disease control [B.1132]: Public expenditures for research, on-farm advice, excursions, lectures and meetings related to pest and disease control. Allocated to cereals based on the value of production. From 1994 pest and disease control expenditures are included in support for research stations, which is classified under IV.I -- Research and development. [More information is needed on the implementation of this programme].

3. Based on fixed inputs

Vacation and replacement scheme [B.1150.78.11]: Payments to farmers to reimburse documented expenses for hiring replacement labour during the vacation of the farm family or periods of illness. In the case of temporary disablement, an extra payment can be provided after the vacation replacement limit has been exhausted. Allocated to all commodities based on the value of production.

Interest rate concessions: Calculated as the difference between the interest rate charged to farmers by the State Bank of Agriculture and the market interest rate multiplied by the volume of outstanding loans, plus the loan subsidies granted by the Agricultural Development Fund [B.1150.50.11]. Allocated to all commodities based on the value of production.

Compensation for animal losses [part of B.1150.50.13]: Payment under the small animal fund to compensate for losses of animals during the pasturing season in the mountains.

Compensation for losses due to predators [B.1150.1427.73]: Payment administered by the Environment Ministry to compensate for farm animals killed by preserved species of predators.

Mountain dairy farming [B.1150.74.18]: The aim of the grant is to encourage mountain dairy farming and thereby ensure the cultural landscape of mountain dairy farming areas. The payment is connected to summer dairy operations and is given as a fixed amount per "mountain farm". Prior to 2002, in budget item 1150.74.17.

Farming in steep area [B.1150.74.18]: The subsidy is given to compensate for the disadvantage of farming in steep areas.The grant is paid on a per hectare basis on the land that is greater than 1:5 but at least 50% of the farm must be equal to or steeper than 1:5. Prior to 2002, in budget item 1150.74.17.

Assistance in case of illness [B.1150.78.12]: Payment based on labour replacement costs in the case of illness of the farmer. Split out of the vacation and replacement scheme (see above) in 1996 and supplements that scheme. Allocated to all commodities based on the value of production.

Other welfare schemes [B.1150.78.15]: Payments to reduce the administrative expenditures of (i) municipalities and companies that supply replacement labour for farmers in the case of illness or vacation and (ii) of organisations that advice farmers on health- and safety-related issues. Split out of the vacation and replacement scheme (see above) in 1996. Allocated to all commodities based on the value of production. [The data available do not allow to separate out the second item and classify it as a payment based on on-farm services].

Payment for cash crops [B.1150.74.22]: Payment to producers based on the standard labour requirement in crop production and granted from 1982 to 1992. The payment increased up to a labour requirement of one man-year and declined thereafter (e.g. in southern Norway a barley farm with 4 hectares received the same payment as a farm with 67 hectares, while a 35-hectare farm got a larger payment). No payment was made to farms with a standard labour requirement of more than 2 man-years. Payments were higher in the northern part of the country and differed by location. Allocated to cereals based on the value of production

F. Payments based on input constraints

1. Based on constraints on variable inputs

2. Based on constraints on fixed inputs

3. Based on constraints on a set of inputs

Agricultural Development Fund [B.1150.50.11]: Concessionary loans and grants to farmers for specific investment projects, including the purchase of land and intergenerational farm transfers and, more recently, for structural adjustment and rural development projects. Since 1997, the extended support for landscape maintenance and development (previously B.1150.77.08, see below) is also part of the Fund. The expenditures recorded here are net of interest subsidies and loan concessions (which are classified as payments based on fixed inputs) and of landscape payments (classified below), but include payments to farmers.

Extended support for landscape maintenance and development: Payments granted to farmers through management agreements between farmers and the governments to support: the development of access to agricultural fields for recreational purposes (paths and touring roads); the reconstruction and maintenance of cultural assets; the protection of traditional landscapes that can not be provided through ordinary agricultural practices; the protection and development of areas with high biological diversity including wetlands and water courses; and restrictions on the use of pesticides and fertilisers. Can be granted to a group of co-operating farmers. Introduced in 1991 as an extension of the acreage and cultural landscape scheme and included in the Agricultural Development Fund [B.1150.50.11] since 1997.

Support to organic farming [part of B.1150.77.16]: Payment per hectare or per animal head to support conversion to organic farming. Ggranted since 1990, with specific rates for grains, fruits and vegetables and coarse fodder. Allocated to all commodities except pork, poultry and eggs. [Support for inspection, research, advice, market promotion, organisation and information related to organic farming, included in the same budget line, is classified under IV.I -- Research and development.]

Changed soil conservation [B.1150.74.18]: The subsidy is given farmers who undertake certain cultivation practices that reduce the risk of soil erosion. The grant is given on a per hectare basis.

G. Payments based on overall farming income

1. Based on farm income level

Young farmers [B.1150.74.17]: The subsidy is given to strengthen the income of young farmers, especially women. The grant is given as a fixed amount per farm. Young farmers are defined as those under 35 years of age. It was introduced in 1999 but only lasted for three years (i.e. until 2001).

Income Tax Deduction: Tax deduction introduced in 2000 which allows farmers with a positive income to deduct up to NOK 36 000 from their total income, providing a maximum tax saving of NOK 10 000 per farmer.

2. Based on established minimum income

H. Miscellaneous payments

1. National payments

2. Sub-national payments

III.2 Percentage PSE [(III.1) / ((I) + (Sum of B to H)) x 100]

III.3 Producer NPC: For all agricultural commodities the Producer NPC is estimated as a weighted average of the producer NPC calculated for the individual MPS commodities and shown in Table 2. For each commodity Producer NPC = [domestic price received by producers (at the farm gate) + unit payments based on output] / border price (also at the farm gate).

III.4 Producer NAC [1 / (100 - (III.2)) x 100]

IV. General Services Support Estimate (GSSE): Total budgetary expenditure to support general services provided to agriculture [Sum of I to O].

I. Research and development

Agricultural experimental groups [B.1150.77.03]: Public expenditure for research linked to model farms. [More information is needed on the implementation of this support].

Research, advisory and training services ["Group 1" expenditures]: Public expenditures for research, advisory and training services linked to model farms.

Services for organic farming [part of B.1150.77.06]: Public expenditures for inspection, research, advice, market promotion, organisation and information linked to organic farming. (Acreage and headage support for organic farming is classified under III.1.C.1).

Research for grains [part of B.1150.76.01]: Public expenditure for research on grain production under the grain and feed-stuff market system.

Agricultural research stations [B.1112]: Public expenditure for agricultural research stations. Since 1994 it includes also pest and disease control expenditures for crops, which before were classified under payments based on the use of on-farm services (see above). Most of the pest and disease control expenditures are for a specific weed in oat seed production. [The pest and disease control expenditures should be split out and classified under III.1.E.2].

Small animal fund [part of B.1150.50.03]: Public expenditure under the small animal fund used to support agricultural research.

J. Agricultural schools

[No data available. Agricultural subjects are taught as optional subjects in high schools].

K. Inspection services

Veterinary services ["Group 2" expenditures]: Public expenditures for veterinary research and administrative support for institutions monitoring animal health.

Norwegian Agricultural Inspection Service [B.1110]: control and inspection of plant and input goods to agriculture. In recent years expenditure has exceeded income.

Norwegian Food Safety Authority [B.1115]: Established in January 2004 as the responsible authority for all matters related to health, quality and other consumer interests in feed and food production and marketing, including the functions of the veterinary services and the Norwegian Agricultural Inspection Service.

L. Infrastructure

Land purchases, land registration and land allocation ["Group 3" expenditures]: Public expenditures to support the classification of soils, the production of soil maps, and land purchases for infrastructure development (e.g. railroads) and the settlement of land use disputes. [More information on the elements of this expenditure group is needed].

Early Retirement Scheme [B.1150.78.16}: Programme introduced in 1999 to assist farmers leaving the sector whereby producers older than 62 years and spouses older than 57 years are paid to retire from farming. Producers participating in the scheme are not allowed to continue farming. The producer must have been a farmer for at least 15 years before retirement. The payments are given as an annual lump sum during a 5 year period or less.

Purchase of milk quotas [B.1150.77.18]: State purchases of milk quota from producers who are ceasing milk production. Quota holders have to sell their entire quota and are not allowed to restart milk production.

M. Marketing and promotion

Market promotion fund [B.1150.70.01]: Public expenditure under the market promotion fund to support food storage, market promotion and food aid, including the school milk, fruits and vegetables schemes, the promotion of organic produce and the production of potato spirit. [More information and data on the elements of this programme are needed. The school milk scheme should be classified as a transfer from taxpayers to consumers].

Market regulation fund [B.1150.70.02]: Public expenditure for marketing promotion of BF, PK, SH (from 1979 to 1993), PT and EG (from 1980 to 1991).

N. Public stockholding

Storage for food security [part of B.1150.76.01]: Public expenditures under the grain and feed-stuff market system to support food storage for food security purposes.

O. Miscellaneous

Norwegian Agricultural Authority: The NAA was established in 2000 under the authority of the Ministry of Agriculture to be the primary organisation responsible for the implementation of Norwegian agricultural policy. The NAA was formed through the merging of several administrative authorities including the Norwegian National Grain Administration, the Agricultural Marketing Board (AMB), the Meat Transport Funding Office, the Agricultural Price Reporting Office and parts of the State Bank of Agriculture. This expenditure represents budgetary transfers association with the administration costs of the NAA.

V.1 Consumer Support Estimate (CSE): Associated with agricultural production, i.e. for the quantities of commodities domestically produced, excluding the quantities used on-farm as feed -- excess feed cost. [Sum of P to S; when negative, the amounts represent an implicit tax on consumers].

P. Transfers to producers from consumers: Associated with market price support on all domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(P.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the values of transfers from consumers to producers associated with market price support for the MPS commodities as calculated in Table 2.

Q. Other transfers from consumers: Transfers to the budget associated with market price support on the quantities imported of domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(Q.1) / (I.1) x 100].

1. Of which MPS commodities: Sum of the transfers to the budget associated with market price support on the quantities imported of the MPS commodities as calculated in Table 2.

R. Transfers to consumers from taxpayers

Consumer subsidy for wheat [part of B.1150.76.01]: Public expenditure under the grain and feed-stuff market system, which in 1995 replaced the grain and feed-stuff market regulation [B.1150.73.05], to compensate flour mills for the prices paid to wheat producers. Interrupted in 1986 and granted again from 1996. [More information on this measure is needed].

Consumer subsidy for milk: Payment granted by the Ministry of Consumer Affairs to dairy plants to lower the price of processed milk products. Replaced by a VAT concession in 1994.

Consumer subsidy for beef and veal: Payment made to slaughterhouses until 1987 to reduce the consumer price of beef and veal.

Consumer subsidy for sheepmeat: Payment made to slaughterhouses until 1987 to reduce the consumer price of sheepmeat.

S. Excess Feed Cost: Associated with market price support on quantities domestically produced and used on-farm as feed as calculated in Table 2.

V.2 Percentage CSE [(V.1) / ((II) - (R)) x 100]

V.3 Consumer NPC: For all agricultural commodities the Consumer NPC is estimated as a weighted average of the consumer NPC calculated for the individual MPS commodities and shown in Table 2. For each commodity Consumer NPC = domestic price paid by consumers (at the farm gate)/ border price (also at the farm gate).

V.4 Consumer NAC [(1 / (100 -(V.2)) x 100]

VI. Total Support Estimate [(III.1) + (IV) + (R)] and [(T) + (U) - (V)]

T. Transfers from consumers [(P)+(Q)]

U. Transfers from taxpayers [(III.1)-(P)+(IV)+(R)]

V. Budget revenues [(Q)]

Sources:

Landbruksdepartementet (Ministry of Agriculture).

Det Kongelige Arbeids- og Administrasjonsdepartement, Jordbruksoppgjoret 1998 – endringer i statsbudsjettet for 1998 m.m.

Table 3. Producer Support Estimate by commodity

Definitions and Sources: see Tables 1 and 2 above.