Grocery Exchange, Grocery | Increased prices for butter: – Tine must explain this

– We can acquit the farmers of the price increase for butter, but not Tine. Tine and the grocery stores have to explain this. For Tine, it is the case that they almost have a monopoly on butter. They are a monopolist, says Ivar Gaasland, social economist and associate professor at BI, to Nettavisen.

In late January to early February, the price of Tine Dairy butter increased by almost 18 percent.

The low-price chain Extra was the first chain to increase the price. The competitors, Kiwi and Rema 1000, soon after increased the price by 10 percent.

When Extra caught that Kiwi and Rema 1000 were not going to settle for the same price, they priced the butter the same as the competitors.

The online newspaper has previously documented that individual goods have become up to 70 percent more expensive.

The price increase for butter was part of the announced increase in February. The suppliers have an agreement with the grocery chains that they can increase the prices on 1 February and 1 July each year.

Also read: Up to 70 percent price increase in the grocery store: Grocery expert warns

Norwegian milk is not affected by higher raw material prices

Norwegian milk is produced in Norway, and is not affected by the economic fluctuations in the world’s raw material or freight market.

Sindre Ånonsen, communications manager at Tine, confirms to Nettavisen that it has become more expensive for grocery stores to buy butter.

– There has been a moderate price increase from us for butter, but it is the store chains that set the price.

Tine will not answer questions about how big the mark-up to the grocery chains is.

Gaasland says that the increased price of butter can not be explained by the fact that it has become more expensive for Tine to buy milk from Norwegian farmers.

– Tine can raise the price of butter without the farmer getting paid more, Gaasland tells Nettavisen.

The price of Norwegian milk is regulated in the annual agricultural settlement in May. Thus, the price is the same now as it was in May last year.

Also read: On this date, grocery customers should dread: – Significantly higher than normal

The price increase for butter can not be explained

The social economist says that it is important that Norwegian consumers are informed that the price increase for butter is due to Tine and the grocery industry charging extra.

– When one chain adjusts the price up, the others follow. They move in time. In a way, a signal is given that the others will also raise the price, says Gaasland and emphasizes:

– If it were logical that Tine raises the price of butter, they should raise the price of the other dairy products as well.

Gaasland believes that the Norwegian grocery industry occasionally balances on a knife edge.

– It is not allowed to talk together about prices, but many implicit signals are conceivable, which are difficult to prove, Gaasland concludes.

Also read: Test of food prices: Extra is completely crushed by Kiwi and Rema 1000

The Norwegian Competition Authority is concerned

Sigurd Birkeland, Grocery Project in the Norwegian Competition Authority, follows Gaasland’s concerns to a great extent. He says that the audit has been concerned about prices in the Norwegian grocery industry for years.

– The Norwegian Competition Authority is concerned that the grocery industry is increasing prices in step, and that they are raising prices at the same time.

Birkeland refers, among other things, to the processing of the ongoing investigation case, which among other things deals with this, where the Norwegian Competition Authority announced fees of a total of NOK 21 billion just over a year ago. He emphasizes that the case is still not finished.

– The price changes in February and July often show that the grocery industry raises prices more than the suppliers recognize themselves in. The competition in the industry is weaker than we in the Norwegian Competition Authority would like, says Birkeland.

He says there is a lot of attention around this in the media, and that some players in the market communicate and give some signals about prices around the dates 1 February and 1 July.

– Here it is important that the players keep their tongues straight in their mouths and stay within the competition law, says Birkeland.

– Misunderstood approach

– It will be a slightly misunderstood approach to this from Gaasland. We do not want to be “acquitted,” as he calls it. Tine is the farmers’ own company, owned in collaboration and controlled by the farmers and the owner democracy, says Ole Martin Buene, communications director at Tine, to Nettavisen.

He says that Tine’s task is to be the farmer’s tool for getting sales for milk into the market.

– We enter into negotiations with the chains to cover increased costs and create value for our owners. Our price adjustments into the negotiations are admittedly more moderate than what we have seen examples of out to the consumer, Buene believes.

The raw material price for milk is regulated through the agricultural agreement. Tine says they are concerned with having a target price that means that they have competitiveness on all their products, both with and without strong customs protection.

– That is why the result for Tine as an industrial player becomes so important for the farmer. Because we succeed in the market and are able to deliver good financial results, this forms the basis for post-payment to the owners, he says, and adds:

– In the financial situation many of them are in now, this becomes extra important. We present the results and the post-payment for 2021 next Wednesday.

–