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Excess Dairy Sold Abroad For Less

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Excess Dairy Sold Abroad For Less

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Photo: Geir Ólafsson.

Excess butter and milk from MS Iceland Dairies was sold to foreign buyers at only a fraction of the prices found in Icelandic stores, Vísir reports. The chairman of the board of Auðhumla, the parent company of MS Iceland Dairies, says production is too high relative to domestic sales.

More than 1,550 tonnes of cheese and 400 tonnes of butter are registered in the inventory of MS Iceland Dairies (Mjólkursamsalan), a cooperative organization of over 700 of Iceland’s dairy farms and milk producers. Cheese stocks have increased by 300 tonnes in the last twelve months, though the company has exported 500 tonnes during the same period at a very low cost.

Pálmi Vilhjálmsson, managing director of the production division of MS, stated in a newsletter to farmers that cheese stocks were on the higher side while milk protein was being exported in the form of skim milk powder. He stated that milk protein production was 17 million litres in excess of domestic sales.

“There is a quite a lot produced relative to sales. Probably we are selling 145 million litres of milk but the production will be around 151 million litres,” said Egill Sigurðsson, chairman of the board of Auðhumla.

MS has sold about 500 tonnes each of butter and cheese to foreign buyers in order to lower its inventory. Butter was sold abroad at ISK 350 per kilo and cheese at ISK 211, only a fraction of the prices found in Icelandic stores. Egill claims, however, that it is not possible to compare the export prices of dairy with those in Icelandic stores, as store prices reflect store mark-up and value-added tax.

Icelandic Federation of Trade Secretary General Ólafur Stephensen states the price difference between exported cheese and that sold in Icelandic stores should not come as a shock. “In the shelter of very high cheese tariffs here in the country domestic producers can maintain prices which are much higher than those of the global market. Foreign buyers would never purchase Icelandic cheese at the prices offered to Icelanders. If cheese stocks are growing of course MS can use the opportunity and lower cheese prices to increase demand here in the country.”

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