Norwegian butter crisis
Acute butter shortage and price inflation struck Norway in late 2011.
In late 2011, Norway faced a sudden butter shortage that drove prices sharply higher. Supplies vanished within minutes of reaching store shelves, and the Danish tabloid B.T. described the situation as "smør-panik," or "butter panic."
The trouble started with heavy summer rains, which reduced cow grazing and cut milk production by about 20 million litres. That pushed up butter prices. At the same time, demand surged: sales rose 20 percent in October 2011 and another 30 percent in November. By mid-December, a 250-gram pack of imported Lurpak butter cost 300 Norwegian kroner (about €39, £32, or $50). Butter is a staple of the Norwegian Christmas diet and is especially popular among those on high-fat, low-carbohydrate diets.
The shortage persisted because high import tariffs protected Norway’s domestic dairy industry, meaning 90 percent of butter sold in the country was locally produced. The dairy industry estimated a shortfall of 500 to 1,000 tonnes, while demand had risen 30 percent since 2010. Tine, the largest dairy cooperative and market regulator, produced 90 percent of Norway’s butter. Dairy farmers blamed Tine for not raising production quotas and for exporting too much butter even as a domestic shortage loomed.
Under criticism, Tine asked the government to cut tariffs so cheaper imports could fill the gap. The government reduced the import duty by 80 percent, to 4 kroner per kilogram from 25 kroner. But a Tine spokesman said this would likely not bring large supplies until January 2012. Some called for reforming Norway’s state monopoly on dairy, created after World War II to support small farms. Critics argued it was a de facto monopoly that failed consumers.
The crisis sparked varied responses. A Norwegian newspaper offered half a kilogram of butter to new subscribers. Students auctioned butter online to raise money for graduation parties. Authorities caught several people trying to smuggle butter across the border. Swedes posted ads offering to drive butter to Norway for up to 460 kroner per packet. Danish dairy businessman Karl Christian Lund handed out thousands of packs in Kristiansand and Oslo to promote his butter. Swedish supermarkets near the border gave free butter to Norwegian customers; stores at Svinesund reported selling twenty times the normal amount, with nine out of ten buyers being Norwegians. A Danish TV show made an “emergency ap
- start_date
- late 2011, around November
- cause
- heavy rains reduced milk production by about 20 million litres; demand increased 20% in October 2011 and 30% in November
- peak_price
- NOK 300 (€39; £32; $50) for a 250 g pack of imported Lurpak butter by mid-December 2011
- import_tariff_reduction
- cut by 80% to NOK 4 per kilogram from NOK 25
- estimated_deficit
- 500 to 1,000 tonnes
- retailer_losses
- estimated NOK 43M
Lore & Background
Heavy rains during the summer affected the grazing of cows and reduced milk production during the summer months by about 20 million litres, which led to increased butter prices. At the same time, demand increased rapidly – a 20 percent increase in sales in October 2011, with a further 30 percent rise in November. An acute shortage resulted in prices soaring. A single 250 g pack of imported Lurpak butter cost NOK 300 by mid-December 2011. For Norwegians, butter forms a staple part of the Christmas diet, and is particularly popular as part of a fat-rich, low-carbohydrate diet.
Reader's Guide
The Norwegian butter crisis highlighted the vulnerabilities of a protected domestic dairy market. Shortages persisted as a result of high import tariffs on butter to protect the domestic dairy industry against foreign competition, which meant that 90 percent of the butter on sale in Norway was produced domestically. Tine, which produced 90 percent of Norwegian butter at the time and was both the largest dairy cooperative in the country and the market regulator, was blamed by dairy farmers for not informing them about higher demand quotas and exporting too much butter despite a looming domestic shortage. The crisis prompted calls for reform of the state monopoly, which was created after the Second World War to keep prices high to protect small farms, but according to critics, it is a de facto monopoly that failed to meet the needs of consumers. The event also spurred cross-border responses, including smuggling attempts, Swedish supermarkets offering free butter to Norwegian customers, and a Danish television show gathering 4,000 packs for distribution.
Did You Know?
- A Norwegian newspaper sought to attract new subscribers by offering them a half kilogram of butter.
- Students auctioned butter on the Internet to raise funds for graduation parties.
- Swedes posted online adverts offering to drive butter to Norwegians at prices up to NOK 460 per packet.
- Danish dairy businessman Karl Christian Lund handed out thousands of packs of butter in Kristiansand and Oslo.
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