Agricultural cooperatives in Norway
Starting with small local cooperatives, through increased cooperation between cooperatives, each sector now has one national cooperative with members from across the country.
Distribution and pricing
The farmers’ products have to be sold in a market, and processed and packed according to consumer preferences. Agriculture production takes place in rural areas spread across the country, while the majority of the consumers live in or near the cities. Only a few farmers, living near to cities, are able to bring products directly to the consumer or store.
Most products need processing before they can be sold. One single small farmer cannot invest in the necessary equipment for this alone. In addition, if the farmers are going to market one by one, competition between them will bring their prices down.
Against this background, Norwegian farmers started to develop their cooperatives more than 100 years ago. Members cooperated in collecting products from the farmers and bringing them to market after the necessary processing. The alternative was to let middlemen take care of the marketing.
Norwegian farmers started to develop their cooperatives more than 100 years ago
But the farmers soon learned that this would not give them a fair share of the market value for their products. Today Norwegian farmers have cooperatives in all sectors. They are mainly organized as single-purpose cooperatives. Starting with small local cooperatives, through increased cooperation between cooperatives, each sector now has one national cooperative with members from across the country. The market share of the cooperatives is high. In the dairy sector more than 90 per cent of the milk produced is delivered to the cooperative. For meat, eggs and grain it is 60-70 per cent, and for vegetables approximately 50 per cent.
The cooperatives also have a role in implementing agricultural policies. They secure the best possible price for the farmers’ products within the negotiated target price. The cooperatives are also obliged to collect products from non-members if they ask. This secures access to the market for family farmers across the country.
On the other hand, farmers do have some exemptions from ordinary competition rules. Firstly, the farmers are allowed to cooperate in the market through their cooperatives. Secondly, the cooperatives are allowed to have a high market share because of their role in implementing agricultural policy. At the same time, the authorities have tools to make sure the cooperatives are not misusing their position.