”Norwegian agricultural policy and reindeer herding: challenges and opportunities”

Innlegg på landbruksrettskongress, Røros, 7.mars 2005 av Statssekretær Leif Helge Kongshaug, Landbruks- og matdepartementet

First of all, thank you very much for the invitation to your congress. It is a great pleasure for me to welcome all of you to Norway and to the town of Røros for this 23 ^rd >European Agricultural Law Congress and Colloquium of the C.E.D.R.

I would like to begin by saying that I think Røros is a very good location for this conference. Not only is it a beautiful town, but also, this historical site represents a good example of Norwegian cultural heritage and rural specificity. It is located in an area that is partly populated by the Sámi people, which is an ethnic minority group of indigenous people in Norway. Reindeer husbandry is an important part of the Sámi culture and history and although only a small percentage of the Sámi population today is involved in reindeer husbandry, it still constitutes an important symbol of their culture and identity. I will come back to this issue later in my speech.

I would like to give you some facts about Norway and Norwegian agriculture since agricultural law is the topic of this congress. Then I will move on to talk about our main agricultural policy goals followed by this sectors’ main challenges. Before coming back to the issue of reindeer husbandry and the Sámi people, I will give you a brief overview of the strategies that the government has chosen in order to meet the challenges in the agricultural policy area and which possibilities that exists in order to reach our domestic agricultural policy goals.

Norway is the northernmost country in Europe. Its mainland extends from 58 to 71 degrees North, a total distance of about 1 750 km, greater than the distance between Oslo and Rome. Røros, where we find ourselves now, is still in the southern half of the country. Total population is approximately 4,5 million and the average population density is only 14 people per square kilometer, the second lowest in Europe (only Iceland has a lower density). The arctic and sub arctic climate is harsh and characterized by low temperatures. The topography is mountainous, and arable land represents only 3% of the total area in Norway. These three percent are mainly located close to the areas with the highest population density, something that has caused conflicts in certain municipalities on whether to use the land for extending the towns or for continued agricultural purposes.

The agricultural sector is characterized by small-scale farming and the average farm size is around 17 hectares arable land. The main productions are dairy and meat products, cereals and temperate fruits and vegetables. About three quarters of farm-income is derived from livestock production and one quarter from crop production. The production is almost entirely destined for the national market. Export of agricultural products amounts to only 5 percent of total agricultural production. The self-sufficiency in agricultural products is approximately 50 percent on a calorie basis.

All the disadvantages stemming from harsh climate, long distances, mountaneous topography, low population density and a small-scale agricultural structure certainly result in high costs and a low degree of competitiveness at world market prices. Now, you may ask, why do we hold on to costly agricultural production in this cold corner of Europe? Well, there are several reasons for this and I will try to explain some of them through giving you an account of our main agricultural policy goals.

There are three main goals of the Norwegian agricultural sector. The first goal is to produce safe and healthy food of high quality in the light of consumer preferences. Every government has an obligation to ensure food security for its people. As food security has a long-term aspect to it, it is necessary to uphold a certain level of domestic production. This is mainly due to the fact that it is relatively easy to “switch off” agricultural production, but it may take time to “switch it back on”. In a situation where agricultural production is drastically reduced, it may take decades to restore the productivity and overall production.

The second agricultural policy goal is that the agricultural sector shall produce other goods and services in accordance with the sectors overall resources. This goal is linked to environmental aspects of our agricultural production. Agriculture contributes to environ­mental goods such as biological diversity, cultural landscapes and cultural heritage. On the negative side, agricultural activity may cause water and air pollution.

In Norway, thousands of years of farming have formed the landscape and contributed to develop habitats for a considerable number of species. Preserving bio-diversity therefore depends on the maintenance of these landscapes, and in several cases, also specific farming methods may need to be continued. The cultural landscape also provides recre­ational, aesthetic, and historical qualities, which are demanded by the public.

Thirdly, it is set as a goal for the agriculture that it shall produce public goods such as viable rural communities, a broad range of environmental and cultural benefits. For Norway, as well as most other countries, it is an important policy objective to ensure economic and social viability of rural areas. Viable rural areas are necessary to ensure a balanced territorial develop­ment and also a key factor in preserving the cultural heritage of Norway. With our low population density of only 14 people per square kilometer and very long transport distances, the maintenance of rural areas is challenging.

Even though agriculture only contributes with 4% of the total employment at a national level, it still is the main employer in many rural municipalities. Agricultural employment is gradually decreasing and substantial efforts have been made to diversify the rural economy and generate alternative employment opportunities in the rural areas. On average, agriculture contributes to 16% of total employment in those communities that are classified as rural.

Additionally, these average figures may understate the real importance of agriculture in ensuring rural employment for several reasons. Some of these are the fact that agriculture contributes to substantial employment in other sectors. So-called threshold effects are important especially in Norway where several rural communities have critically low population levels. Agriculture is a localized and site-dependent activity, which relies on harvesting of natural resources. This physical dependence turns agriculture into a fairly stable source of employment in a long-term rural development perspective.

As you understand, Norwegian agriculture is a contributor of much more than private, marketable products such as food and fibre. These are products that can be bought and sold in an international market and therefore are easy to put a value on. However, simultaneously with the production of such products, other goods of a more public character are supplied. Therefore, the Norwegian agricultural sector contributes to achieve several central societal goals. As such, the agricultural production has a number of functions in the Norwegian society and we therefore say that it is “multifunctional”. This concept pretty much forms the base on which we build our agricultural policies. Support and protection measures in the agricultural sector are not primarily based on income considerations, but aim at ensuring a sufficient level of public goods, such as national food security, viability of rural areas and environ­mental protection, demanded by the Norwegian society.

- And the rural and cultural viability of Røros, as you will see during your stay here, is a good example of such values. Food and food processing is also important for local and national distinctive character, experiences, culture and tourism as a foundation for production of values and industrial and commercial developments. Also, reindeer herding, which I will come back to later, plays a role here.

As you may be aware of, these public goods that I speak of, are referred to as non-trade concerns in the World Trade Organisation (WTO) Doha negotiating mandate. Most of these goods cannot be disassociated from the agricultural production activity itself, as they are provided jointly with, and therefore depend on continued and ongoing agricultural production. Because Norwegian production conditions are unusually disadvantaged, high levels of support and protection are required to sustain this production and thereby safeguard these non-trade concerns.

Norway stands together with several other countries in the WTO in arguing that non-trade concerns are of vital importance in the ongoing negotiations. Together with nine other net food importing countries (among others, Switzerland, Japan and Korea) we form the so-called G10 group. As a member of this G10 group, we have increased our influence in the negotiations. G10 and Norway also have several positions that are similar to those of the European Union. We share several agricultural political goals, especially those related to multifunctionality. The aspect of the agricultural sector as an important contributor of public goods is emphasized in European Union agricultural policies as well.

International trade negotiations, contributing to uphold a pressure for continued liberalisation of international trade, is one important factor in forming the challenges facing the Norwegian agricultural sector.

Such an international pressure for freer world trade, combined with the high cost-level and demanding production conditions, especially due to climatic conditions, form a basis for the increased challenges that the Norwegian agricultural sector faces. At the same time, the number of active farms is constantly decreasing while the consumers have increased their focus on lower food prices and greater diversity. This calls for a need to implement new strategies that increase the efficiency in the sector and find new ways to develop profitable income sources in the agricultural sector.

For Norway, it is a main goal in the ongoing WTO negotiations to ensure a possibility for national policy design, which ensures that an active agriculture can be upheld all over the country. In order to keep this goal, domestic production of key agricultural products is of vital importance as a means of safeguarding domestic non-trade concerns. A future final WTO-agreement will have consequences for the Norwegian agricultural sector and it will demand adjustments.

Additionally, Norway is faced with the fact that we have a higher cost-level than most countries and this is especially challenging in comparison with the EU as our main trading partner. Even though we have several common political goals relating to multifunctionality, our prices differ and this gives Norway a disadvantage when competition increases. Some of the higher Norwegian costs relates to difficult climatic conditions, which of course is a challenge that is hard to overcome (!).

So now, the question is, how can we meet the future and the challenges that come with it, in a way that allows us to also reach our national political goals?

In order for the agricultural sector to survive in the future, it is necessary to adapt to the new societal demands. Adjustment is needed also independently of the WTO agreement. There is a need for increased sustainable efficiency in the traditional agriculture, as well as finding new income sources for farmers and the rural population.

The Norwegian government has begun its work to develop a strategy that can contribute to reach the domestic policy goals and help the sector adapt as smoothly as possible to the ongoing changes. It is necessary to start the process of adjustment now, in order to avoid drastic and sudden changes in the future. The government is prepared and well on its way with this work through a project it has called “Agriculture plus”. The goals of this strategy is 1) Develop­ment of viable rural areas with modern terms of living, 2) Market oriented prod­uction of goods and services, including small-scale productions, and 3) Increased delegation of authority to regional and local level within the agricultural and forestry policy.

A realistic and viable agricultural policy must base itself on structural changes as well as cost reductions and improving the efficiency throughout the production chain. Contributions to this adjustment process must be made from every link in the production chain, from the primary producer through the processing industry and all the way to the consumers. This means a more efficient production, increased market orientation, and larger freedom to establish new and viable industries. Increased efforts will be made in establishing alternative employment – and income sources on farms where agriculture and forestry has reduced its role. On these farms, it will be increasingly important to focus on development of products and services that the society demands. This also calls for a critical view and through­fare of the property rights policies in order to make adjustments that open up for new actors to establish and engage themselves in agricultural properties that no longer are in active use.

There are large, unused possibilities in using the agricultural sector and the rural municipalities resources in new ways. An important part of the “Agriculture plus” strategy is to give the local authorities increased responsibilities and resources, and thus more possibilities to shape and design policies that are adapted to their local conditions. This relates both to local settlements and developments of industry and commerce. With their local knowledge they are the best qualified to know how the challenges for the rural areas can be met in the best possible way. Cooperation with other sectors and industries is essential in making the most out of our rural resources. One such sector may be the reindeer husbandry, which I mentioned in the beginning of my speech.

Reindeer husbandry is, as already mentioned, tightly connected with the Sámi people and their culture. The Sámi are indigenous people constituting an ethnic minority in Finland, Norway, Sweden and Russia. In total, the Sámi population numbers approximately 80 000 people. However, the majority, at least 70 %, lives in Norway. It is mainly Sámi, and only Sámi of reindeer herding families, that are entitled to practice reindeer husbandry in Norway. The exemption from this rule, however, is that a limited reindeer herding activity consisting of approximately 10 000 animals outside the main Sámi pasture areas, is practiced by both Sámi and Norwegians.

The main political goal for the reindeer husbandry sector is that it shall be run in a way that is ecologically, economically and culturally sustainable. Even though it is a relatively small sector on a national level, it is of large importance for several regional areas in Norway, both for economical, cultural, and employment reasons.

In total, there are 2800 reindeer owners in Norway and 2000 of these are located in Finnmark county, in the far north of Norway. Reindeer are herded over an area of approximately 140.000 square kilometres, equivalent to approximately 40% of the total land area in Norway. Only a minor part of the reindeer herders are located in the southern part of this area, meaning around Røros. Still, this sector and the local landowners have been in conflict over the rights to use the privately owned land for several years. The Sámi have a common right (sedvanerett) to practice reindeer herding on the main parts of this private land. However, this common right is difficult to combine with how some of the landowners perceive the rights to use their land. For the Norwegian government, it is a prioritized task to contribute to create enough understanding, trust and experience among those in conflict in order to make sure that reindeer herding can be practiced without causing disputes.

It is only a few decades ago that the reindeer owners mainly utilized the skin, the antlers and the milk from the reindeer. Today, production of reindeer-meat constitutes the main income source for the reindeer owners. The skin and the antlers are still used, now mainly in handy-craft productions. The reindeer meat is a highly valued product, and the opportunities within the domestic markets are favourable. A good example of how new income sources can be found is an initiative that has been made to produce dried reindeer meat. This has become a success and is sold as a delicacy in stores in larger cities like Oslo.

Now, to sum up, the Norwegian agricultural and reindeer activity are facing large challenges in the future. However, the government has initiated domestic policies and projects, and international negotiating strategies that will ensure viable conditions for the sector in the future. We will make sure that the sector will continue its role as a provider of a large spectre of both marketable food products and non-tradable public goods, such as bio-diversity, rural development and food security.

Finally, I would like to wish you luck and all the best for the rest of your congress. I hope you will get both professional benefits and an impression of our country during your stay here. From the program it certainly seems as if there are several possibilities for professional and social exchanges.

Thank you for your attention!