Smaller EU countries debate specialization versus self-sufficiency
Tuesday, February 9, 2016
Experts question the economic and social sense of producing large amounts of grain, meat and milk in high population countries with limited farmland. Importing food crops and processing them for domestic and export markets might make more sense
by NORMAN DUNN
Opinion leaders in the agri-sector over here are rethinking the food production role of smaller European countries. Is self-sufficiency a sensible target nowadays? Does it really make sense to produce commercial beef, for instance, on fertile French, German or Dutch lowland pastures costing over C$6,000 an acre? The same question can also apply to field vegetables, top fruit and flowers in northwestern Europe because, further south into warmer climes, production could be much more efficient.
The size of present-day bulk carriers means that transport costs are not the issue they were even 20 years ago, although nowadays greenhouse gas emissions from these ships are an important factor. Still, an argument I have often heard in Germany is that it costs more per ton to transport wheat 200 kilometres by road than to ship grain from Argentina to a German port.
Right now, around 20,000 weaner hogs leave Denmark every week of the year for feeding and slaughter in other European lands where there's cheaper feed, lower labour costs and ultra-efficient slaughterhouses.
The core argument here is that some Danish producers find it better to specialize in piglet production. Land prices for feed production and processing costs in their country are now just too high for competitive pork production.
Such a development could now be taken a lot further in the Netherlands, an even more crowded country with the highest land and labour costs. There, the Agricultural Economics Institute (LEI) of Wageningen University organized a debate at the beginning of 2015 around the question: Should grass roots farming – the bulk production of commodities like meat, milk, potatoes, grain and even greenhouse flowers – be better left to other countries and Dutch skills in processing, technology and marketing put more to work instead?
Opinion leaders from research and food processing took the podium to discuss more concentration on added-value specialities such as quality seed, livestock breeding, cheese production and livestock housing equipment. The Netherlands is already the world's second largest exporter of agricultural products (earning the equivalent of C$150 billion in 2014). Some 24 per cent of these exports actually comprise goods that have been bought into the country, processed and shipped out again.
Also importing raw material then processing it and marketing it abroad is the milk sector. Currently in the Netherlands, there's little margin in milk production left for farmers, but Dutch processors remain among the world's most efficient. Milk and dairy product exports represented 4.7 per cent of world trade in 2014. Out of 12.6 billion kilograms produced in that year, 65 per cent went abroad after processing.
Right now, with ultra-low prices for greenhouse tomatoes, field vegetables, pork and even chicken meat, plenty of farmers are talking about getting out. More work opportunities in the often very profitable processing of imported farm products would certainly make sense in this scenario.
Not everyone agrees with this approach, though, pleading for retention of grass roots production in smaller countries. Many even want more financial support to secure farm survival. One argument is that the highest-earning agritechnological developments nowadays in the Netherlands were created in that country because a sizeable farm business base was present. Think of swine housing ventilation and computer control, slaughterhouse equipment or the robot milker.
Would this important dairy technology export from the Netherlands have been developed without the initial home demand from a huge grass roots industry?
The consensus among the experts, however, seemed more in favour of emphasis on value-added processing and export. But, as they also argued, there's also a good case for retaining some primary production, not least as a motor for continued innovation. BF
Norman Dunn writes about European agriculture from Germany.