Agricultural Policy Monitoring and Evaluation 2024

21. Norway

Main findings

Support to agriculture

Norway provides the highest relative levels of agricultural support among the 54 countries analysed in this report. In 2021-23, transfers to producers (Producer Support Estimate, %PSE) constituted 49% of gross farm receipts, the highest proportion in the OECD.

Domestic market prices are maintained through border protection and market regulations. Market Price Support (MPS) decreased in recent years, however, it remains high and constitutes the second largest component of producer support (33% in 2021-23), affecting most commodities except sheep meat and wool. Payments based on current production factors, such as land area and animal numbers, form the largest share of producer support (36%).

Support for general services, measured by the General Service Support Estimate (GSSE), accounts for a relatively small portion of total agricultural support. In 2021-23, GSSE accounted for 4.6% of total sector support, equivalent to 3.8% of the value of agricultural production. Nearly two-thirds of GSSE is allocated to agricultural education services at the Norwegian University of Life Sciences, with most of the remaining funds directed towards agricultural product-safety and inspection services managed by the Norwegian Food Safety Authority.

Total support (TSE) amounted to 83% of the value of production at farmgate prices. Although this represents a significant decrease from the 125% average recorded in 2000-02, it remains substantially higher than the OECD average of 23%.

Key recent policy changes

Norway’s Agricultural Agreement is set to embrace a more climate- and environmentally conscious approach. This strategic pivot aligns with the objectives outlined in the 2023 Climate Agreement between the Norwegian Government and the farmers’ unions. Recognising the urgency of climate action, the agreement has elevated climate and environmental initiatives to a top-tier priority. Consequently, funding for targeted climate and environmental schemes has seen a substantial increase. The parties have agreed to allocate NOK 9.3 billion (USD 881 million) to climate and environmental measures, representing nearly a third of the Agricultural Agreement’s total budgetary framework.

The annual Agricultural Agreement has marked a substantial increase in support for agricultural producers. In particular, the government has earmarked NOK 888 million (USD 84 million) in response to escalating input costs and to adjust for inflationary pressures, in 2023. This allocation is specifically intended to offset the discrepancy between projected and actual farmers’ incomes, providing a financial buffer to ensure the stability and continuity of agricultural operations.

The recent settlement has underscored the economic aspects of dairy farming, particularly milk production. In an effort to balance production with sustainability, the milk quota’s production ceiling will undergo a reduction. For cow’s milk, the quota will decrease from 900 000 litres to 700 000 litres. Similarly, for goat milk, the new ceiling is set at 350 000 litres.

The maximum land conversion away from agriculture was lowered from 300 ha/year to 200 ha/year in 2023.

Assessment and recommendations

• The annual agricultural negotiations in Norway play a crucial role in shaping the country’s agricultural policies by facilitating a dialogue between the government and farmer representatives. These negotiations ensure that the interests of farmers are considered in policy decisions, however, they may lessen the mid- and long-term transitional objectives of the agricultural sector. Norway should explore wider stakeholder engagement in agricultural policymaking. Reviewing the annual negotiations between the government and farmer representatives to ensure alignment with current and emerging policy objectives is essential. Implementing a multiyear framework agreement and involving a wider range of stakeholders could enhance performance concerning environmental and social objectives.

• The largest part of Norway’s support to agriculture relates to targeted support mechanisms that are connected to production. A large part of this support targets the livestock sector. Re-orienting (a part of) this support towards general services and making the support less-commodity specific may help Norway reorient its production along its consumer preferences and climate change objectives. This approach can provide income support and complementary incentives to maintain agricultural land while improving environmental performance.

• Norway’s nitrogen and phosphorus surpluses highlight significant environmental pressures from the agricultural sector, with levels among the highest in the OECD. These surpluses may negatively impact soil, water, and air quality, underscoring the need for improved nutrient management practices in the agricultural sector. Promoting the development of environmental plans at the farm level is crucial. Establishing a robust system to monitor the agri-environmental performance of farms will help ensure sustainable agricultural practices and improved environmental outcomes. In addition to creating the Bionova tool for decreasing emissions along the value chains, Norway may consider providing farmers with tools to guide emission and pollution reduction from at the production side.

• Norway sets high ambitions for most of its sectors in the Green Industrial Initiative. It incorporates some of its sectors’ strength in the bioeconomics development area. Norway should find a larger role for the agricultural sector in its Green Industrial Initiative as it would offer new opportunity for the sector to provide fossil fuel replacements (such as bio-plastics) and to reduce Norway’s overall GHGs emissions.

Development of support to agriculture

Figure 21.1. Norway: Development of support to agriculture

Table 21.1. Norway: Estimates of support to agriculture

Million USD

	1986-88	2000-02	2021-23	2021	2022	2023p
Total value of production (at farm gate)	2 533	2 052	3 991	4 140	4 080	3 754
of which: share of MPS commodities (%)	73.28	80.83	73.12	71.64	73.56	74.16
Total value of consumption (at farm gate)	2 687	2 085	4 176	4 457	4 156	3 916
Producer Support Estimate (PSE)	2 844	2 339	2 937	2 996	2 956	2 861
Support based on commodity output	2 070	1 348	1 271	1 434	1 337	1 043
Market price support¹	1 397	1 011	962	1 111	1 040	734
Positive market price support	1 397	1 011	978	1 112	1 040	783
Negative market price support	0	0	-17	-1	0	-49
Payments based on output	673	337	310	323	297	309
Payments based on input use	250	117	216	194	236	217
Based on variable input use	149	71	124	103	154	116
with input constraints	0	0	0	0	0	0
Based on fixed capital formation	91	38	81	80	73	90
with input constraints	0	0	0	0	0	0
Based on on-farm services	11	8	10	11	10	10
with input constraints	0	0	0	0	0	0
Payments based on current A/An/R/I, production required	524	871	1 065	1 005	1 026	1 163
Based on Receipts / Income	0	49	93	81	98	98
Based on Area planted / Animal numbers	524	822	972	923	928	1 065
With input constraints	371	644	816	756	779	914
Payments based on non-current A/An/R/I, production required	0	0	380	357	350	432
Payments based on non-current A/An/R/I, production not required	0	0	0	0	0	0
With variable payment rates	0	0	0	0	0	0
with commodity exceptions	0	0	0	0	0	0
With fixed payment rates	0	0	0	0	0	0
with commodity exceptions	0	0	0	0	0	0
Payments based on non-commodity criteria	0	3	6	6	6	6
Based on long-term resource retirement	0	0	0	0	0	0
Based on a specific non-commodity output	0	3	6	6	6	6
Based on other non-commodity criteria	0	0	0	0	0	0
Miscellaneous payments	0	0	0	0	0	0
Percentage PSE (%)	71.44	69.03	49.19	49.72	49.30	48.65
Producer NPC (coeff.)	4.11	2.56	1.40	1.47	1.40	1.36
Producer NAC (coeff.)	3.50	3.23	1.97	1.99	1.97	1.95
General Services Support Estimate (GSSE)	129	158	153	168	152	139
Agricultural knowledge and innovation system	74	62	97	107	96	88
Inspection and control	5	25	34	37	34	31
Development and maintenance of infrastructure	29	54	13	15	13	12
Marketing and promotion	21	15	9	10	9	9
Cost of public stockholding	0	2	0	0	0	0
Miscellaneous	0	0	0	0	0	0
Percentage GSSE (% of TSE)	4.04	6.16	4.61	5.03	4.56	4.30
Consumer Support Estimate (CSE)	-1 388	-1 036	-876	-1 100	-869	-658
Transfers to producers from consumers	-1 675	-1 101	-961	-1 119	-965	-799
Other transfers from consumers	-178	-75	-81	-122	-39	-82
Transfers to consumers from taxpayers	220	71	207	172	225	225
Excess feed cost	244	70	-41	-31	-90	-2
Percentage CSE (%)	-56.34	-51.15	-21.80	-25.69	-22.10	-17.84
Consumer NPC (coeff.)	3.23	2.28	1.33	1.39	1.32	1.29
Consumer NAC (coeff.)	2.29	2.05	1.28	1.35	1.28	1.22
Total Support Estimate (TSE)	3 193	2 568	3 297	3 336	3 333	3 224
Transfers from consumers	1 853	1 176	1 042	1 242	1 004	881
Transfers from taxpayers	1 518	1 467	2 336	2 216	2 368	2 424
Budget revenues	-178	-75	-81	-122	-39	-82
Percentage TSE (% of GDP)	3.49	1.42	0.64	0.68	0.58	0.67
Total Budgetary Support Estimate (TBSE)	1 796	1 557	2 336	2 225	2 293	2 490
Percentage TBSE (% of GDP)	1.96	0.86	0.45	0.45	0.40	0.52
GDP deflator (1986-88 = 100)	100	163	375	327	419	378
Exchange rate (national currency per USD)	6.88	8.59	9.59	8.59	9.61	10.56

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for Norway are: wheat, barley, oats, milk, beef and veal, sheep meat, wool, pig meat, poultry and eggs.

Source: OECD (2024), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

Main policy instruments

The strategic objectives of Norway’s agricultural and food policies are set out in the 2016 White Paper “Change and development – A future oriented agricultural production”. These include:

• safeguarding food security and maintaining preparedness

• maintaining agricultural production in all parts of the country

• increasing value creation

• ensuring sustainable agriculture and lower greenhouse gas emissions.

The Agricultural Agreements in Norway function as a structured mechanism where an annual negotiation process takes place between the government and farmers’ representatives. These negotiations culminate in an annual agreement that outlines the terms of financial support for the farming community. The mechanism is designed to adjust target prices, provide budgetary allocations, and offer tax incentives. Target prices are provided for milk, grains and some fruits and vegetables.

The principal policy instruments supporting agriculture include border measures, budgetary payments differentiated by commodity and region, and domestic market regulation based on the Marketing Act. This act covers certain types of meat (beef, mutton, pork and poultry); milk, butter and cheese; eggs; cereals and oilseeds; potatoes, vegetables, fruit and berries; and fur skins.

Dairy production is controlled by a milk quota system. Milk quotas are farm-specific and tradeable only within the same regional area. Quotas were introduced in 1983, with trading of quotas being introduced in 1997 and leasing of quotas allowed since 2009.

Various direct payments are provided to farmers, including acreage and headage payments, as well as payments based on product quantities for meat. Many of these are differentiated by region and farm size to equalise incomes across all types of farms and regions. This is designed to maintain the geographic distribution of farms and production in the country.

Since 2004, agri-environmental measures have been implemented as part of the National Environmental Programme (Nasjonalt miljøprogram), which aims to contribute to sustainable agriculture production with reduced greenhouse gas (GHG) emissions, as well as to fulfilling Norway’s international commitments on environment and climate in the agricultural sector.

The most important agri-environmental measures are the Acreage and Cultural Landscape Support (Areal- og kulturlandskapstilskudd), which provides payments to farmers as an incentive for land to remain in production and prohibits major changes to the natural landscape, such as levelling agricultural land, spraying edge vegetation or channelling rivers or streams. There are requirements and support for livestock on pasture, with extra payments for grazing on unimproved land. Other measures include those for organic agriculture, payments for regional environmental programmes for specific agri-environmental measures, Special Environmental Measures in Agriculture (Spesielle Miljøtiltak I jordbruket) and organised grazing measures (Tiltak I beiteområder). Environmental levies are applied on agricultural pesticides.

The Selected Cultural Landscapes in Agriculture (Utvalgte kulturlandskap I jordbruket, UKL) initiative supports farmers who want to make an extra effort to care for the environmental values of cultural landscapes in 51 selected areas deemed important or exceptional. The investment is based on voluntary agreements between the state and landowners. Co-ordination of these cultural landscapes nationally is the responsibility of the Norwegian Directorate of Agriculture, in collaboration with the Norwegian Environment Agency and the National Heritage Board. Each of the selected areas is co-managed by the municipality, landowners and agricultural enterprises, in collaboration with regional agricultural, natural and cultural heritage management.

The Regional Environmental Programme includes payments to reduce water pollution from agricultural fields, environmentally-friendly spreading of manure, management of fields deemed of high natural value or with special biodiversity, and maintenance around heritage sites in the agricultural landscape.

Article 19 of the European Economic Area (EEA) Agreement concerning trade in basic agricultural products is reviewed periodically. The last round of these reviews was finalised in April 2017 and changes agreed entered into force in October 2018. Under the EEA, tariff rate quotas (TRQs) expanded on several products, including meat, cheese, vegetables, and certain products used in the food industry for making processed agricultural goods. Through the European Free Trade Association (EFTA),1 Norway has negotiated 30 free trade agreements (FTAs) with 41 partner countries. All agreements include agricultural products, although average tariffs remain above those outside the agricultural sector. For agricultural products, simple average MFN applied tariffs were 37.1% (comparing with 3.2% for other commodities) in 2017.

In 2017 the government introduced the Climate Change Act as part of its goal to transition to a low-emission society by 2050. The act prescribed into law the country’s targets for emissions reductions by 2030 and 2050 which are to be reviewed every five years. In 2021, these economy-wide targets were officially set at a reduction in emissions of at least 50-55% by 2030 and 90-95% by 2050 relative to 1990 levels (an increase in ambition from the reduction targets of 40% and 80-95% prescribed in the initial 2017 iteration of the act). The government has since announced its intention to increase its 2030 target to a minimum reduction of 55% based on 1990 levels and submitted it ahead of the UN Climate Change Conference (COP27) in Egypt.

The agricultural sector in Norway also has a sectoral target to reduce net CO₂ equivalent emissions by 5 million tonnes (or around 70% of agricultural emissions including land use and land use change) in the 10-year period 2021-30 and the responsibility for reducing emissions is shared between the agricultural sector and the government. This target was formed as part of the 2019 annual agreement with the farmers’ organisations and was included in the government’s climate action plan in 2021 (Norwegian Ministry of Climate and Environment, 2021[1]).

The shared responsibilities of mitigation agricultural and food emissions are explicitly stipulated in a Letter of Intent between the agricultural organisations and the government. The agricultural sector is expected to achieve a substantial share of the emission reductions, for example through breeding programmes, better fertiliser management and a switch to fossil-free energy use. The government’s efforts to promote changes in consumption patterns may indirectly reduce greenhouse gas emissions that are accounted for in the agricultural sector. These efforts include initiatives to achieve the goal of reducing food waste by 50 % by 2030 and to persuade people to follow the dietary recommendations from the Directorate of Health.

Fossil fuel emissions from the agricultural sector are subject to the nation’s carbon tax. A combination of economic and regulatory instruments exists to reduce run-off and comply with commitments of the EEA agreement for water protection. For instance, autumn tillage is restricted in areas surrounding the vulnerable Oslofjord estuary to reduce run-off.

For animal welfare reasons, routine prophylactic use of antibiotics and the use of antibiotics as growth promoters in animal feed are banned. Veterinary services are provided in the whole country to ensure all animals have access to treatment. Investments to promote animal welfare are given priority in the ordinary investment programme for agriculture. A new white paper on animal welfare is due to be presented to the parliament in 2024.

Innovation for sustainable productivity growth

Several factors are favourable for creating profitable and green jobs in Norway – including abundant natural resources, industrial experience, digital literacy, and a skilled workforce. In addition, significant emission reductions across all sectors is among Norway’s key policy objectives.

To achieve this, Norway launched, in 2022, the Green Industrial Initiative. It identifies 9 strategic sectors and outlines nearly 150 actions to enhance their competitiveness, innovation, and sustainability, including for the agricultural sector. The initiative also aims to increase Norway’s exports of green goods and services, creating new opportunities for growth and jobs.

The Norwegian Government has updated its Green Industrial Initiative with a new roadmap that reflects the latest developments and challenges in the green transition. The roadmap was a joint endeavour of the Ministry of Trade and Industry and Ministry of Agriculture and Food. It emphasises the importance of the Green Industrial Initiative as a guiding framework for Norway’s economic transformation and climate action.

The roadmap provides a vision for the nine priority sectors, including implementation measures. For the agricultural sector the measures include, among others:

• establishment of the Bionova tool (a tool to help reducing emissions through supporting innovation and value creation within the bioeconomy related to agriculture, forestry and aquaculture)

• stimulation of knowledge-based development of regulation for circular bioeconomics

• stimulation of market access for circular bio-based products

• stimulation of more sustainable feed.

The National environmental framework (2023-26) outlining the comprehensive environmental strategies and initiatives for the period 2023 to 2026 was officially released in September 2022. This document encompasses a broad spectrum of environmental actions at the national, regional, and local levels. While numerous initiatives detailed within are integral to the yearly agricultural accord, the framework itself is distinct and not a part of the agreement.

The public funding of research and innovation targets the four strategic objectives of Norway: food security and preparedness, agriculture throughout the country, increase value creation, and sustainable agriculture with lower emissions of greenhouse gases. As such, all public funding of R&I contributes to sustainable productivity growth within the agriculture sector. Particular emphasis is placed on research, innovation and technology development that will contribute to enough, healthy and safe food produced on Norwegian farms and increase self-sufficiency.

Recent policy developments

Domestic policy developments in 2023-24

Norway’s Agricultural Agreement is set to embrace a more climate- and environmentally conscious approach. This strategic pivot aligns with the objectives outlined in the 2019 Climate Agreement (2021-2030) between the Norwegian Government and the farmers’ unions. Funding for targeted climate and environmental schemes has increased to NOK 9.3 billion (USD 881 million), representing nearly a third of the Agricultural Agreement’s total budgetary framework.

The annual Agricultural Agreement for 2023 contains a substantial increase in support for agricultural producers. In response to increasing input costs and to adjust for inflationary pressures, the government has earmarked NOK 888 million (USD 84 million). This allocation is specifically intended to offset the discrepancy between projected and actual farmers’ incomes, providing a financial buffer to ensure the stability and continuity of agricultural operations. The enhancement of welfare schemes aims to increase the social support within the agricultural sector.

In an effort to bring production within sustainable limits during the 2023 agricultural negotiations, parties decided to reduce the milk quota’s production ceiling in 2024. For cow’s milk, the quota will decrease from 900 000 litres to 700 000 litres. Similarly, for goat milk, the new ceiling is set at 350 000 litres. These adjustments are designed to apply uniformly to either a single enterprise or an individual agricultural property, ensuring a fair and standardised approach to dairy production across the sector.

To preserve the productive capacity of agriculture, in 2023 the ambition for limiting land conversion away from agriculture was further strengthened to a maximum of 200 ha per year, down from 300 ha per year set previously.

Policies to mitigate emissions from agriculture

In 2023, an inventory committee has been established to monitor the 2019 climate agreement for agriculture. The deal sets a shared goal of reducing emissions and enhanced removals by 5 MtCO₂‑eq. overall in the 10-year period 2021–30, a reduction of approximately 10% compared to the Business as Usual (BAU) projections. The committee’s first status report is expected to be delivered in 2024.

Policies to facilitate climate change adaptation in agriculture

Particular policies and measures to foster adaptation contained in a 2023 White Paper include support for investments in drainage systems to handle excessive water, and for cropping practices that abate erosion and run-off. Support is also provided for contingency storage of seed and grain, research in crop and livestock varieties suited for Norway’s northern position, and for conservation and management of genetic resources, including the Svalbard Seed Vault, that all support the availability of food, seed and breeding material under a changing climate.

Norway’s Strategy for Climate Change Adaptation and the Fight Against Hunger (Norwegian Ministry of Foreign Affairs, 2023[2]), launched in April 2021, aims to reduce climate change vulnerability and hunger in developing countries. The strategy follows Norway’s commitment at COP26 in Glasgow to double its climate finance. Norway’s investments are expected in five main areas:

• early warning systems and climate services

• nature-based solutions

• climate-resilient food production

• infrastructure

• innovative development financing mechanisms.

Norway will also mainstream environmental and climate issues in all funding decisions and enhance support for building resilient societies that can adapt to climate change. Sustainable and climate-smart food production and food security will be prioritised.

The Ministry of Agriculture and Food has prepared an action plan for the conservation and sustainable use of Norway’s national genetic resources for food and agriculture. The action plan is directed at preserving the national genetic resources in crops, livestock, and trees – both in a dynamic way in the field, in nature, in the barn, and also as seeds, tissues and sperm in frozen gene banks.

Beyond preserving Norwegian biodiversity, Norway is also storing seeds from all over the world. In February 2024 around 14 000 seeds were deposited in the Svalbard Global Seed Vault. The seed vault now has more than 1.2 million seed duplicates from about 80 countries.

Trade policy developments in 2023-24

In March 2024, the European Free Trade Association (EFTA) members and India signed a Trade and Economic Partnership Agreement (TEPA). This agreement is designed to enhance market access, streamline customs procedures, and foster investment opportunities between the parties. The TEPA is expected to lead to increased trade and investment flows, job creation, and economic growth, with EFTA countries committing to investing USD 100 billion and creating 1 million jobs in India over the next 15 years.

As part of its commitment to global health and safety standards, on 15 February 2024, Norway contributed NOK 16 million (USD 1.5 million) to the Standards and Trade Development Facility (STDF) to help developing economies and least-developed countries (LDCs) meet international sanitary and phytosanitary (SPS) standards, facilitating their access to global markets. Meeting international SPS requirements can be particularly challenging for developing countries due to the technical and financial constraints they often face.  

Policy context

Key economic and agricultural statistics

Norway is a small, open economy. Norway boasts one of the world’s highest GDP per capita at USD 114 932 in 2023, underpinned by its substantial petroleum sector. Agriculture amounts to about 1.7% of Norway’s GDP (Table 21.2). Farmland in Norway accounts for about 3% of the mainland land mass. The agricultural sector tends to focus on a limited selection of goods. About 71% of agricultural value stems from livestock, due to extensive grasslands. Crop cultivation is located in most suitable, central regions, while milk and meat production thrive in less favourable rural areas. Sheep farming, cattle rearing for both dairy and beef, and cereal cultivation, predominantly for livestock feed, are the mainstay activities. The industry is characterised by small-scale family-owned farms, a significant number of which operate in isolated areas.

Table 21.2. Norway: Contextual indicators

	Norway		International comparison
	2000*	2022*	2000*	2022*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	166	627	0.4%	0.5%
Population (million)	4	5	0.1%	0.1%
Land area (thousand km2)	365	364	0.4%	0.4%
Agricultural area (AA) (thousand ha)	1 042	985	0.00%	0.00%
			All countries1
Population density (inhabitants/km2)	12	15	52	64
GDP per capita (USD in PPPs)	36 989	114 932	9 363	25 965
Trade as % of GDP	27.5	33.1	12.3	16.6
Agriculture in the economy			All countries1
Agriculture in GDP (%)	2.0	1.7	2.9	3.8
Agriculture share in employment (%)	4.1	2.2	-	-
Agro-food exports (% of total exports)	0.8	0.5	6.4	8.0
Agro-food imports (% of total imports)	5.6	9.4	5.8	6.9
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	29	29	-	-
Livestock in total agricultural production (%)	71	71	-	-
Share of arable land in AA (%)	84	82	32	34

Note: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; International Labour Organization (ILO); UN Comtrade; World Bank, WDI; FAO database and national data.

Norway’s economic and social achievements continue to be noteworthy. The nation’s commitment to reducing inequality and ensuring universal access to essential public services such as health and education has been effective, resulting in one of the smallest income disparities and lowest poverty rates in the OECD.

However, Norway has seen a spike in consumer price inflation. The inflation rate stood at 5.5% in 2023, which was influenced by several factors (Figure 21.4). The Norges Bank decided to raise the interest rate to 4.5% in December 2023 to address the high inflation, which was still markedly above the 2% target. The increase in the interest rate was aimed at reducing the risk of inflation remaining high over an extended period. While the economy was cooling down, inflation was persistently high, driven by increased business costs, prospects of continued high wage growth, and a depreciating krone, which contributed to keeping inflation elevated.

In 2023, Norway’s GDP growth was recorded at 1.2%, which is below the OECD average of 1.7% (OECD, 2023[3]). The high GDP per capita is supported by a substantial petroleum sector and a regulatory environment that promotes business growth.

Norway primarily imports agricultural goods, with the exception of fish, and these goods make up about 10% of its total imports. In contrast, agro-food commodities constitute only about 1.2% of Norway’s total exports (Figure 21.5). The European Union (EU) is Norway’s chief commercial ally, responsible for nearly two-thirds of the country’s import and export activities. Within the EU, Sweden and Denmark combined are the destination for one-third of Norway’s agro-food exports. Beyond the EU, the United States and Japan stand out as significant markets for Norwegian agro-food products. The majority of Norway’s agro-food imports are ready for consumer use, while just over half of the exports are intended for additional processing.

Agricultural output in Norway increased at an average rate of 1.1% between 2012 and 2021, in line with the global average growth rate (Table 21.3). This growth in Norway has been primarily driven by productivity improvements, as indicated by the total factor productivity (TFP) measure. The intensification of intermediate inputs, such as the use of fertilisers, is a second important part of the growth in agricultural output (Figure 21.6). Norway’s productivity rate has been plateauing recently, the high use of nitrogen fertilisers, coupled with a reduction in total agricultural land and non-decreasing livestock numbers, has led to minimal environmental improvements (Table 21.3). Currently, Norway’s nitrogen and phosphorus surpluses, which negatively impact soil, water, and air quality, are among the highest in the OECD.

Table 21.3. Norway: Productivity and environmental indicators

	Norway		International comparison
	1991-2000	2012-2021	1991-2000	2012-2021
			World
TFP annual growth rate (%)	5.7%	1.1%	1.7%	1.1%
			OECD average
Environmental indicators	2000*	2022*	2000*	2022*
Nitrogen balance, kg/ha	85.3	94.5	32.1	28.2
Phosphorus balance, kg/ha	12.0	11.0	3.3	2.3
Agriculture share of total energy use (%)	1.6	1.5	1.7	2.0
Agriculture share of GHG emissions (%)	8.7	9.6	8.7	10.1
Share of irrigated land in AA (%)	4.2	3.3	-	-
Share of agriculture in water abstractions (%)	..	..	47.0	49.5
Water stress indicator	..	..	8.7	..

Note: * or closest available year.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Historical trends in agricultural policies

Historically, Norway’s agricultural policies relate to food security and ensuring farm incomes, employment opportunities and regional distribution of production. Today, these objectives are complemented by consumer and societal concerns such as sustainability and environmental issues, climate, food safety and animal welfare, cultural landscape, innovation, agri-tourism, and the small-scale food industry. Norway adopts a four-pillar approach to implement these objectives: i) border protection; ii) legal frameworks to secure family-owned farms; iii) annual negotiations between the state and farmers’ organisations to determine producer prices, budget transfers and allocation of funds; and iv) domestic regulations to balance the market through producer co-operatives.

Since the mid-1980s there has been modest policy reform towards market orientation, and modest reductions in the level of support. Farmers in Norway remain heavily supported through border measures, domestic market regulations, budgetary payments and tax breaks, however, some policy reforms were conducted since then. These trends are summarised in Table 21.4.

Environmental cross-compliance was introduced in 1991 with the Acreage and Cultural Landscape Programme which grants payments on the condition that farmers meet cultural landscape requirements. Norwegian agri-environmental policies are underpinned by the premise that certain environmental public goods are most cost-effectively provided through positive externalities of agricultural commodity production.

Prompted by the WTO Uruguay Agreement on Agriculture, in force since 1995, a number of changes were introduced to agricultural policies, to improve cost efficiency and market orientation, including increased flexibility in milk quotas, removal of administered prices for eggs, poultry, pork, beef and sheep, and phasing out of export subsidies. But high levels of protection remain against imports of the most important and sensitive agricultural products, such as meat, dairy, eggs and grains. Moreover, the primary agricultural sector is exempt from standard competition law.

Most of Norway’s tariff rate quotas (TRQs) were eliminated in 2000 when the WTO bound tariff rates became equal to the in-tariff quota rates. Tariffs for some products, particularly livestock products are set between 100% and 400%. However, there is a system of “open periods” allowing imports at reduced tariff rates in the event that domestic prices rise above threshold levels due to a deficit in domestic production. Since 1 January 2015, Norway has unilaterally eliminated import duties on 114 agricultural tariff lines. While these duties were low (and not important for protecting Norwegian agricultural production), their elimination resulted in reduced customs procedures and administrative costs. Export subsidies were abolished at the end of 2020.

Table 21.4. Norway: Agricultural policy trends

Period	Broader framework	Changes in agricultural policies
Prior to 1985	Closed economy	High agricultural import tariffs and non-tariff measures Administered prices of agricultural products Production quotas of certain products
1985-1994	Modest domestic reforms	Modest reduction in agricultural import tariffs Removal of several administered prices Increased flexibility in the milk quota system
1995-2000	Implementation of the WTO Uruguay Agreement on Agriculture; more emphasis on environmental sustainability issues	Modest import tariff reduction; tariffication of non-tariff measures Introduction of environmental cross-compliance
2000-present	Continuation of trade reforms	Lower border protection Abolition of export subsidies Removal of several administered prices Introduction of environmental programmes

References

[1] Norwegian Ministry of Climate and Environment (2021), Norway’s Climate Action Plan for 2021-2030, http://www.government.no/.

[2] Norwegian Ministry of Foreign Affairs (2023), Climate Change, hunger and vulnerability: strategy for climate change adaptation and the fight against hunger.

[3] OECD (2023), OECD Economic Outlook, Volume 2023 Issue 1, OECD Publishing, Paris, https://doi.org/10.1787/ce188438-en.

[4] OECD (2021), Policies for the Future of Farming and Food in Norway, OECD Agriculture and Food Policy Reviews, OECD Publishing, Paris, https://doi.org/10.1787/20b14991-en.

Note

← 1.  EFTA comprises Iceland, Liechtenstein, Norway and Switzerland.