Gross domestic product in the 3rd quarter of 201927 August 2021
WORLDLINE, BITCOIN SUISSE PARTNER27 August 2021
Switzerland running low on butter and potatoes
Import quotas to protect farmers from outside competition are tightly managed in Switzerland. However, when Swiss farm production dips or demand rises, quotas are often eased to allow more low tariff imports. This week, Switzerland’s government extended quotas on butter and potatoes in response to shortages.
On 22 June 2021, Switzerland’s Federal Office for Agriculture (FOAG) announced it would increase the amount of butter that can be imported into Switzerland at preferential tariffs for 2021 by 1,000 tonnes, reflecting a level of demand that’s currently outstripping reduced local production. A factor behind this appears to be increased Swiss cheese production, a product with higher added value than butter that is competing for dairy output. 1,000 tonnes of extra butter is a relatively small increase.
Switzerland’s population consumes around 40,000 tonnes of butter a year. 1,000 tonnes is about 10 days of consumption. However, more may be required before the year is out.
On 26 June 2021, FOAG announced it would allow an extra 5,000 tonnes of lightly taxed potatoes to be imported into Switzerland this year. Last year’s hot summer and this year’s cold spring cut local potato production. In addition, increased time spent at home during the pandemic has increased demand for the starchy tuber. Import quotas and their associated tariffs are an invisible tax on consumers.
They allow local farmers to charge higher prices for their products before being out competed on price by their imported equivalents. But they mean consumers pay more than they would have without tariffs. However, many farmers in Switzerland struggle to make a living despite large direct payments and import quotas. Average Swiss farm sizes are small, the terrain is often challenging and labour and other costs are high. Farmers in neighbouring nations are also heavily subsidised.