Because the government has not written a perspective letter for agriculture, we have invited people to do so. Today the perspective of agricultural economist and Rli member Krijn Poppe.
Perspective in Parkstad Holland
Over the past 75 years, we have built an agribusiness cluster with impressive results, including more than 100 billion in exports and a value added of 7 percent of our economy. It has also provided cheap food, so that the Dutch spend only 12 percent of their income on food. This success has come with many changes. For example, farm workers and farmers’ sons had to do something else, and the horse was replaced by the tractor, the local cooperative by a multinational.
This cluster also has excellent prospects for the future. We have good soil and a good climate. It’s true that 1 percent of the destination area changes every year, but that’s nothing new. 1.5 million hectares of agricultural land remain under protection. Our city dwellers want to preserve the open space between the cities. We are also close to the ports and knowledge institutions, surrounded by millions of innovative consumers. Many companies also trade with farmers across the border. In short, the perspective of the cluster is fine.
As before, this does not automatically apply to all farmers who depend on that cluster, because scaling will continue unabated. There are more and more companies with 300 hectares and a low cost price; international markets and robotics force us down to just 5,000 farmers through prolonged attrition. Still, it doesn’t have to go so fast in Parkstad Holland, it’s not the Midwest of the USA here. Cities also need services: public such as landscaping, water storage, etc., and private such as care, recreation and local products.
The world is changing
At the same time, it is clear that the world is changing. Over the past 75 years, innovation has focused on lowering costs and increasing production. That is going to change. Even cheaper food so that consumers have more money to spare for a new mobile phone or extra holiday by plane is not necessary. The fact that some are now unfortunately dependent on the food bank is an income problem, not a price problem. We will need to focus our innovation on the challenges of the next 25 years: climate change, declining biodiversity and overpriced health care related to lifestyle (and therefore nutrition). The perspective lies in solving these challenges. Whoever wants to keep what he has will have to change.
We strive for a level playing field with other countries, but let’s be honest: the wealthy city dwellers of the water-rich Netherlands will make higher demands than the inhabitants of Poland. And we are already much more intensive in some regions with more emissions per hectares than in other countries. The neighbors for cheap food, we the emissions are no longer acceptable.
75 years ago, government and industry largely agreed on the strategy: cost price reduction in exports through specialization and economies of scale. This succeeded, but now also has negative environmental consequences. This means that government and industry have come to face each other, despite the fact that farmers have already achieved enormous environmental results. I would like to go back to the situation 75 years ago, when government and industry completely agree on a strategy that gives perspective and gives farmers the appreciation they have long been entitled to: Let’s go with a little less volume for the most sustainable production with the highest price. The better we succeed in this, the more production is possible, the less rapid the increase in scale must be.
A new strategy means a reorganization. The government will help with this with a clear process. This cabinet allocates 24 billion (10 times the farmer’s income in livestock farming) to arrange this together. This help comes in the following form:
- For each area, the requirements for sustainable production are examined, these are translated to the individual company (buildings and grounds) and these are reflected in a new environmental approval, so that the farmers know where they are heading towards 2040 with milestones.
- There will be a digital management dashboard with indicators such as the substance balance, with which certification is possible, so that investments in sustainable solutions count.
- 10 billion euros will be earmarked for the purchase of emission allowances, especially in areas with excessive emissions. We will skim again and ban external net. Farmers who believe their target is not feasible can surrender their rights for payment until mid-2024. When the environmental approval is violated, the rights also expire.
- Another 10 billion euros are spent on public services such as water storage, landscape management, etc. For half a million hectares, that is an amount of €1,000 over 20 years.
- There is still 4 billion euros reserved to buy up to a maximum of 500 companies that are completely stuck in the middle of nature reserves.
- In some areas, a land development process by lot will be useful.
- As a result, sustainability will increase significantly in the coming years and sales organizations will be able to raise prices for the most sustainable farmers. These sales organizations have an obligation to buy sustainably as a non-binding contribution.
This perspective gives entrepreneurs clarity to adapt their revenue model themselves. A choice between increasing scale or providing more services. Or stop in the long term, there is no shame, just like in the past. In short: the prospects are good, but challenging. I appeal to all entrepreneurs to support our new strategy: the most sustainable production with the highest price.