A bill presented to parliament would render it illegal after 2025 to possess animals for the purpose of killing them "for the sale or any other use of their fur."
The proposed ban is the result of an agreement reached in January 2018 when the right-wing government expanded to include the small Liberal Party, which insisted on the measure.
While the fur sector has largely come to terms with the idea of a gradual dismantling of their industry, it was critical of the compensation the government was offering farmers, calling it a "historic betrayal".
"We're being offered a few kroner, which is far from compensating for the planned dismantling of farms," Guri Wormdahl, a spokeswoman for the fur farmers' organisation Norges Pelsdyralslag, told AFP.
"The way it has been designed, it will lead farmers straight to bankruptcy," she said.
The government has estimated it will have to pay farmers around 500 million kroner (52 million euros, $54 million) in compensation for either the dismantling or reconversion of their businesses.
According to Norges Pelsdyralslag, the country's fur farming industry employs around 500 people and has annual sales of 300 million kroner.
Norway accounts for around one percent of global mink fur production and between two and three percent of fox fur production.