The door half open for farm sales in Norway

Farm sales have been on Norway’s political agenda for many years. While the proposal enjoys broad political support, earlier legal analyses have raised concerns. They suggest that new sales channels outside the state monopoly could violate the European Economic Area (EEA) Agreement and weaken Vinmonopolet’s position.

As part of the EEA, Norway must comply with EU trade laws. Therefore, creating new sales channels exclusively for domestic producers may conflict with EU rules on non-discrimination. Currently, alcohol above 4.7 % ABV  is sold through the national retail monopoly. Introducing additional sales channels could increase the share of alcohol sold outside the state system, and potentially undermine its role as an alcohol policy instrument.

But actually, there is already some direct sale of alcohol from farms and breweries in Norway. The sale of alcoholic beverages such as beer and cider up to 4.7 % ABV requires only a municipal sales license. Since 2016, some farms have also been allowed to sell fruit wines, cider, and mead above the 4.7% limit. This is possible because the EEA Agreement does not cover these agricultural products. To this year, less than 50 licenses have been granted.

Main findings of the report

Drawing on Finland’s experience with farm sales and recent changes in Sweden, the new legal analysis leaves the door only half open for farm sales in Norway. But not without reservations.

The report concludes that a licensing system with new sales channels exclusively for Norwegian producers would restrict the free movement of goods, though such restrictions may be justified if they protect public health. Farm sales would be easier to justify if there were clear criteria for the type of producers and products that are covered, as well as limits on production- and sales volumes. A new law must also ensure that any additional sales channel does not significantly increase access to alcohol.

Norway would also need to justify any discrimination between domestic and foreign producers. Previous case law, e.g the Finnish Visnapuu decision, indicates that farm sales are not necessarily an unjustified barrier to trade. However, the EU court provided little guidance on the requirements of EU law.

The report argues that Vinmonopolet could likely maintain its monopoly status even in the face of limited farm sales. Still, the risk to the monopoly would be further reduced if the proposed scheme is limited to producers and products with specific characteristics, and limited production and sales volumes.

The analysis argues that the introduction of farm sales, by itself, does not represent a significant liberalization of Norwegian alcohol policy. Yet, if this change is followed by additional liberalizing measures, it could make it increasingly difficult to justify other elements of the policy, such as the retail monopoly and the advertising ban.

The report also highlights considerable uncertainty regarding the legality of farm sales. Should the law be challenged, the burden of proof will lie with Norway, and there is a possibility that the EU/EFTA courts could rule against it. Legal experts suggest that the law on farm sales could still be reversed, preserving the retail monopoly, particularly if the farm sales licenses explicitly state that they can be revoked should the law be found to conflict with EEA regulations.

Next steps

There is broad political support for farm sales. The populist Progress Party has called for farm sales as part of its broader alcohol-liberalization agenda. Similarly, the Conservative Party wants greater flexibility for small producers. The agrarian Center Party supports farm sales as a part of a rural development agenda, and in the most recent election cycle, the Labour Party has come out in favor of farm sales, partly as a response to the right’s complaints about rigid rules. During the campaign, the Prime Minister Jonas Gahr Støre personally said that he wanted to look at the issue.

There may be a parliamentary majority in favor of farm sales. However, there is also strong support for preserving the retail monopoly and ensuring compliance with EU law. Any future proposal will have to reconcile these priorities. The issue now lies in the Ministry of Health and Care Services. If farm sales is important to the Government, the report provides an opening to proceed. If it is less important, the report also provides reasons to pause.

The article is written by

Stig Erik Sørheim, Head of international department at Actis,

on request of PopNAD