A new agricultural trade agreement between the state and farmers was signed Friday at the cost of close to ISK 14 billion (USD 109 million, EUR 99 million) a year, with the cost gradually decreasing, year by year, Vísir reports. That’s an increase of more than ISK 900 million (USD 7 million, EUR 6.3million) a year. The agreement, which is good for ten years, has caused quite a stir already.
The Ministry for Agriculture claims the agreement is in the interest of farmers, consumers and society as a whole. Minister of Fisheries and Agriculture Sigurður Ingi Jóhannsson called it a milestone, since it includes a major change in farmers’ work conditions.
Andrés Magnússon, head of the Federation of Trade and Services claims there is no sign consumers will benefit from this agreement in any way, Vísir reports.
“If we look at this in its entirety,” Andrés said, “we’re talking about direct and indirect support of the agricultural sector, amounting to between ISK 22 and 24 billion (USD 171-186 million, EUR 155-168 million)a year, and in ten years’ time we’re talking about between ISK 220 and 240 billion(USD 1.7-1.8 billion, EUR 1.6-1.7 billion), paid by tax payers in one way or another.”
Vísir points out, by comparison, that the Icesave agreements, rejected in a national referendum in 2009, would have cost taxpayers almost ISK 208 billion (USD 1.6 billion, EUR 1.5 billion) for the following eight years, or less than the agricultural trade agreement.
That comparison caused Prime Minister Sigmundur Davíð Gunnlaugsson to comment in his blog that this was as ironical a comparison as possible. “Support for domestic food production is about saving foreign currency,” he wrote, “using the country’s resources to create quality products at a competitive price.”
CEO of Kú, a dairy product company which is in competition with the much larger MS Iceland Dairies (Mjólkursamsalan), voiced his disapproval of the agreement with mbl.is. “It’s very serious when things are arranged so that all pricing decisions will be given to MS Iceland Dairies. At the same time, MS Iceland Dairies is not subject to competition laws, because it would then be monitored regarding pricing and business practices by the Icelandic Competition Authority, just like all other companies in the business.” He stressed how tough competition with MS Iceland Dairies has been for smaller dairy product companies in the past.