Dutch agriculture through the eyes of a Chinese economist

Dutch agriculture through the
eyes of a Chinese economist
Li Weimin
Final edit: LEI Wageningen UR
Photo's : Shutterstock (cover), Pepijn Smit, Karel Zwaneveld/HH,
Marcel Bekken, Harry Cock/HH, Ton Hoogvliet/HH
2
Dutch agriculture through the eyes of a Chinese economist
Li Weimin
Report 09-035
ISBN/EAN: 9709-8615-350-3
Price € 34,75 (including 6% VAT)
186 p., fig., tab., app.
Professor Li Weimin, the author of this book, is an economist of the Chinese
Academy of Agricultural Sciences (CAAS). He was amazed by the performance of
Dutch agribusiness. How is it possible, he asked himself, that such a small country with a dense and wealthy population attained such a large net export value of
agricultural and food products? In this book he analyses how Dutch agribusiness
realised this prominent role in world agriculture and trade. He looks at Dutch agribusiness from a broad perspective in which the developments in the agricultural
sector are treated as part of the Dutch economy. Also the policy developments in
the Netherlands and the European Union are taken into account. The objective of
the study is to learn lessons which may be useful for other countries.
内容提要
本书作者厉为民是中国农业科学院的农业经济学家、研究员。中文原版的标
题是《荷兰的农业奇迹》。作者在十六年前就发现：荷兰虽然是一个人多地
少的小国，却在国际农产品出口市场上占有显赫的地位。从那时起，作者对
荷兰农业发生了浓厚的兴趣：并且在不断探索荷兰的出口奇迹是怎样创造出
来的？在本书中，他对荷兰农业的生产、加工、销售体系进行了全面的分析
，对荷兰和欧盟的农业政策及有关领域进行了深入的探讨。
Professor Li Weimin, de auteur van dit boek, is als econoom werkzaam aan de
Chinese Academie van Landbouwwetenschappen (CAAS). Hij staat versteld van
de prestaties van de Nederlandse agribusiness. Hoe is het mogelijk, zo vraagt
hij zich af, dat een land dat zo klein, zo dichtbevolkt en zo welvarend is, een
dusdanig grote netto-exportwaarde aan landbouwproducten en levensmiddelen
heeft? In zijn rapport analyseert hij hoe de Nederlandse agribusiness deze prominente rol in de wereldlandbouw en -handel hebben verworven. Hij beziet de
Nederlandse landbouw vanuit een breed perspectief, waarin de ontwikkelingen
van de landbouwsector worden behandeld als onderdeel van de Nederlandse
economie. Ook de beleidsontwikkelingen in Nederland en de Europese Unie
worden in overweging genomen. Het doel van de studie is lessen te trekken die
van nut kunnen zijn voor andere landen.
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Contents
Foreword
Preface
Summary
Samenvatting
7
8
11
18
1
Understanding the Netherlands
1.1 People and country
1.2 Agriculture resources
1.3 Agriculture and the national economy
1.4 The Netherlands in the world
27
27
33
34
36
2
Vitality of farms
2.1 Introduction
2.2 Family farms
2.3 Exit of farms
2.4 Size Expansion
2.5 Strong product specialisation
2.6 Conclusion
42
42
43
45
47
53
57
3
Production structure
3.1 Introduction
3.2 Opening up or 'protection'
3.3 General pattern
3.4 Arable farming
3.5 Horticulture
3.6 Livestock and poultry
3.7 Structure and productivity
3.8 Conclusion
59
59
59
61
63
66
82
95
99
5
4
From field to table
4.1 Introduction
4.2 Input supply
4.3 Agricultural products processing
4.4 Internationalised enterprises
4.5 Distribution system
4.6 Quality first
4.7 Conclusion
101
101
101
106
117
119
125
127
5
Big
5.1
5.2
5.3
5.4
5.5
5.6
129
129
129
131
138
141
143
6
Three pillars of development
6.1 Introduction
6.2 Infrastructure
6.3 Cooperatives, farmers' organisations and commodity boards
6.4 Knowledge innovation system
6.5 Conclusion
145
145
145
150
156
171
7
Institutions, strategy and policy
7.1 Introduction
7.2 Efficiency of institutions
7.3 Choice of strategy
7.4 Government and policies
7.5 Conclusion
172
172
173
176
178
183
Literature
184
6
imports and big exports
Introduction
A trade nation
World champion and silver medal winner
Utilising international resources
Why does this happen only in the Netherlands?
Conclusion
Foreword
The Dutch agribusiness has an outstanding position in world agriculture. That
made it interesting for Chinese economists to know the 'secrets' that can explain this position and to examine what can China learn from the Dutch experience. The results of this exercise were set down in a publication in the Chinese
language and presented in a seminar in Beijing in 2003.
The Dutch agricultural counsellor in China at that time advocated the translation of this publication in English as this Chinese view could also be interesting
for other countries, in particular developing countries. Besides it could be interesting for Dutchmen visiting China. The IAAE-congress of world agricultural
economists in August 2009 in Beijing was a good occasion to carry out this
long-standing wish. This report contains the results of the translation.
Some parts of the Chinese publication are not translated as they seem to be
less important or less relevant for other countries. So the chapter 'What can
China learn from the Netherlands' has been left out as it is more important for
China than for other countries. Each interested country can examine by itself if
something can be learned from the Dutch experience for their own country.
A number of years passed since the publication of this book in Chinese.
Nevertheless, the messages of the book didn't date. The data in the report have
been updated as far as possible.
7
Preface
The Dutch Miracle
The Netherlands is a small European country with 16.5m. people living in
an area of less than 42,000km2. The population is almost the same as that of
Shanghai municipality in China, and the land area is about two-fifths of that of
east China's Jiangsu Province, which neighbours Shanghai. However, in the beginning of the 21st century the Netherlands has been the world's 'gold medal'
winner in the net export value (export minus import) of agricultural products, and
only recently coming behind the land-abundant countries Brazil and Argentina.
The list does not include horticultural products (flowers, decorative plants,
et cetera) and fishery products. The Netherlands has a large net export of these
products. Together with these two product groups, the net export value of the
Netherlands in 2007 increased from USD20.7b. to more than USD28.4b. This
last figure is more than the net export value of Argentina but still less of that of
Brazil. Thus, the Netherlands was actually silver medal winner as regards the
net export of agricultural products and this already for many years. In fact, the
Netherlands has won many 'medals' in global agriculture (not updated):
- world's no. 1 net agricultural exporter:1
- high rate of foreign exchange earnings per capita (the average annual
export value per agricultural worker2 >USD140,600);
- highest rate in export increase (between 1961 and 1999, the Netherlands' net export value increased by nearly 4,500%);
- highest rate of exchange earnings per unit of land (average export value
per m2 of agricultural land = USD1.86);
- the Netherlands' export of seed potatoes represents over 60% of the
world market. In addition, the net export values of eggs (including egg
products), tomatoes, beer and cheese are all ranked number one in the
world, together with the world famous flowers and ornamental plants.
- highest land productivity in the world:
1
8
During the nineties, Brazil surpasses the Netherlands since 2004 among else because of the strong
growing export of soybean.
2
For convenience of international comparison, the FAO definition 'economically active population in
agriculture' is adopted.
-
the Netherlands ranked first in the world for its land productivity (USD2,468
per hectare in 1991).1
advanced agricultural infrastructure:
- very high standard water conservancy and flood prevention system
(flood-control dams in the Netherlands are so efficient that they are expected to fail only once every 1,250 years; some projects have even
higher standards);
- the area of greenhouses in the Netherlands is more than 11,000ha, accounting for about a quarter of the world's total.
Although the agricultural population in the Netherlands is less than 0.02% of
that of the world's agricultural population and the area of its arable land is less
than 0.07%, its exported agricultural products account for 9% of the global figure (flowers excluded).
What is the 'secret' behind such a wide gap? How did the Dutch create these
agricultural miracles? Do they have any 'secrets' for success? These are the
questions the author deals with in this book.
This book is the fruit of the first cooperative research project between China
and the Netherlands in the area of agricultural economics. This project - Importance of Dutch Experiences in Agricultural Development for China - resulted from
an agreement between the Institute of Agricultural Economics, the Chinese
Academy of Agricultural Sciences (IAE-CAAS) and the Agricultural Economics
Research Institute (LEI) of the Netherlands. This book is the 'sister' of Growing
Strong - the development of the Dutch agricultural sector: Background and
prospects (2000), which was written by colleagues at the LEI. These two books
have their own particular emphases and perspectives, and hence are complementary. Together, they will help readers understand Dutch agriculture and the
sector's experiences with agricultural development. The author visited the Netherlands for the first time in 1995 and has done his best to present an objective
view 'through the eyes of a Chinese economist' of Dutch agriculture during this
period.
The author wishes to especially thank Mr P. Gooren, the then Dutch Agricultural Counsellor in China, who expressed his interest in this book when he attended the concluding seminar of the above research project on 9 October
2003 in Beijing. He is the initiator of this shortened English edition. The author
1
See ERS-USDA, World Agriculture: Trends and Indicators (1970-91) (November 1993).
9
also wishes to thank Mr J. Post, who did a lot of work for the revision and the
publication of this book. The author is deeply grateful for his enormous efforts
and generous help.
Finally, the author wants to thank all his colleagues at LEI, at Wageningen
University and at LNV1 who helped him during his stay in the Netherlands.
He benefited greatly from the numerous field trips, seminars and discussions
with them, and from their books, papers and publications, which have greatly
enriched this book.
1
10
In 2003, the Netherlands Ministry of Agriculture, Nature Management and Fisheries was renamed
the Netherlands ministry of Agriculture, Nature and Food Quality, keeping the Dutch abbreviation 'LNV'
intact.
Summary
A 'world champion' and its 'secrets'
The Netherlands is a small and densely populated country. The area of arable
land per capita is a mere 0.052ha, which puts the Netherlands among the countries with the smallest per-capita amount of arable land in the world. Nevertheless it has a huge net export of agricultural products. In recent years this net
export was the biggest of all other countries in the world. In terms of the author,
a Chinese economist, the Netherlands is a 'world champion', a 'gold medal winner'. Only recently, the net export of agricultural products of Brazil, a land abundant country, has become bigger than that of the Netherlands. Also in numerous
other aspects as labour productivity, land productivity, et cetera the Netherlands is a 'winner of medals'. This makes it interesting for Chinese economists
to know the 'secrets' that can explain this position and to examine what can
China learn from the Dutch experience. The author wrote a book in Chinese in
which he tried to discover the 'secrets' of this outstanding position of the Dutch
agribusiness in world agriculture. As this analysis will be of interest for other
countries, in particular developing countries, the most important parts are now
translated in English and updated.
Dutch agriculture in a broader perspective
The first chapter is about the Netherlands and its position in the world. The author sees the old saying 'God created the world, but the Dutch created Holland',
as the most distinctive characteristic of the Dutch and of the spirit of their nation. The Dutch have a long history of struggling against water. As early as in
the 13th century, regional Water Boards were set up by the inhabitants/farmers
to protect land and polders against the continuous risk of flooding. This can be
seen as a foundation for the spirit of solidarity and cooperation that is firmly
rooted in Dutch culture and has developed into a spirit of the whole nation. In
the Netherlands, both employers and employees have their own organisations.
Interest conflicts between the two and with the government can normally be
solved through consultation and dialogue in order to reach mutual understanding and a compromise by consensus. This system is internationally known as
the 'polder model'.
Because the domestic market in the Netherlands is rather limited, it is vital
for the country to create a favourable environment for international trade. For
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several centuries, the Netherlands has been famous as a 'trade nation'. Geographical conditions greatly benefited the development of trade in the Netherlands. The country has excellent facilities for national and international transport
by sea, air and land. Therefore, the Netherlands is worthy of the name 'the distribution centre of Europe', which puts the Netherlands among the strong trade
powers in the world. The surrounding countries are all 'high income countries'
with a population of 300m., which is more than that of the USA.
Agriculture is responsible for quite a low share of the national economy of
the Netherlands, as it does in many other developed countries. The ratio of labour in primary agricultural sector was in 2006 3.1% and the share of agriculture in national income 2.5%. The gross added value of the agribusiness complex (including agriculture, production of inputs for agriculture, processing of
agricultural products and related industries) was €43.9b., accounting for 9.3%
of GDP. At the beginning of the 21st century, the agriculture complex provided
more than 650,000 jobs, representing 9.9% of the total labour force in the
Netherlands.
The vitality of farms
The aim of the second chapter is to discover the reasons of Dutch agricultural
success. The agricultural system is considered as a tree, then farms are its
cells: if thousands of farms in a country are all healthy and energetic, the agricultural sector of this country will be vital and competitive, and vice versa. The
ultimate reason of gaps between different countries in the growth rate and level
of agricultural production lies in the differences between their farms. As Nobel
laureate Theodore W. Schultz pointed out the 'key variable in explaining the differences in agricultural production are the human agent, i.e., the differences in
the level of the acquired capabilities of farm people'.1
In the Netherlands, farms are family-run enterprises or companies and most
of them are highly specialised. The boundary between farms and industrial production is becoming less clear since nowadays farmers also brand their products. Just like the process of metabolism, in a highly competitive market,
relatively poorly managed farms choose to quit agriculture, generation by generation, resulting in a decrease in the number of farms, while the average size
of the remaining farms keeps growing (not only in land area or number of ani-
1
12
Theodore W. Schultz, Transforming Traditional Agriculture (Chicago, The University of Chicago
Press, 1964), p. 17.
mals, but also and mainly in terms of gross margin). Consequently, the countries agricultural system is growing stronger.
Although land area per farm is limited in the Netherlands, the average size of
Dutch farm is quite large when measured in economic terms. Together with agricultural development, the number of farms has been decreasing continuously,
with enlargement of size and further specialisation of the remaining farms. It can
be seen as an example of the mechanism of 'survival of the fittest'. This is an
important factor in explaining why agricultural productivity of the Netherlands is
continuously increasing and by this its international competitiveness.
Several factors determine the efficiency of family farms, institutional as well
as technical ones. Making production decisions independently, farmers need a
comprehensive service system, including an effective system of agricultural
education, research and extension, et cetera. These topics are discussed in
separate chapters.
Production structure
The third chapter discusses the development of the most important production
sectors in the Netherlands. Every farmer has to make decisions: What to produce? How much to produce? How to produce? These decisions are the result of
many personal and external factors. As external factors are mentioned market
demands, technologies, EU-policies, et cetera. All these factors are changing in
the course of time and the farmer has to adapt himself to the changing circumstances in order to survive in a competitive market. The quality of the decisionmaking ability of all farmers is the decisive factor for the competitiveness of agriculture. This chapter deals with the results of these choices and decisions
made by Dutch farmers.
In the Netherlands, an important role is played by horticulture. In 2007, the
output value of field crop farming accounted for only 11% of the total value of
agriculture, while horticulture contributed 44%. Horticulture is very specialised
both in open field and greenhouse - open field horticulture mainly produces
bulbs and open field vegetables (cabbage, cauliflower, broccoli, et cetera), while
greenhouse horticulture is on a steady increase, including vegetables, such as
tomatoes, cucumbers, sweet peppers and eggplants and various cut flowers
(roses, year-round chrysanthemums, gerberas, freesias, et cetera).
Animal husbandry was once the most important production sector in the
Netherlands, with a proportion in total agricultural output value far more than
crop production. However, partly because of the rapid development of horticulture, the animal sector has lost some of its importance in recent decades, al-
13
though in 2007 it still accounted for 44% of the total agricultural output value.
Animal husbandry is divided into two types in the Netherlands: grazing animal
farming and intensive livestock. The former refers mainly to dairy cattle, which
need a large area of grassland. Intensive animal production includes pig and
poultry (for eggs and meat), which are usually kept in buildings and in relatively
high density. Both types of production are now restricted in their growth mainly
for their relatively great impact on the environment.
The decisions taken by the farmers have resulted in a continuous increase in
factor productivity and in particular of labour productivity in Dutch agriculture.
On the one hand Dutch agricultural production increased and on the other hand
input in agriculture rose only slightly. The input of land and in particular of labour
decreased but there was an increase in the use of human capital (referring to
public expenditures on research and development, extension and education).
From Field to Table
14
Chapter 4 deals with the production chain. In traditional agriculture, the distance
between field and table is very short; however, the commercialisation of agricultural products has extended, and is continuing to extend, this distance. The tendency towards economic globalisation means that the table may even be on the
opposite side of the planet from the field. So not only Dutch agriculture has to
be successful but the whole production chain has to be successful well organised and flexible in satisfying consumers demand.
Modern agriculture requires a highly efficient market and diversified services
and processing companies. Different means of agricultural processing can reduce
waste, increase product utility (time, space and consumption utility) and added
value, and generate employment. In the whole supply chain, the processing industry makes a significant contribution to the competitiveness of Dutch exports.
Inputs as seeds, feed, machinery and fertilisers play an important role in
Dutch agriculture. A whole industry is involved in supplying Dutch agriculture
with inputs at low costs and high quality in the right time. Cooperatives play an
important role in the production of these inputs. The feed industry is by far the
most important deliverer of inputs for Dutch agriculture. The raw materials for
the feed industry are to a large extent imported from many parts of the world.
The Dutch food and drink industry is characterised by a large variety of
companies in all sectors. Some of these companies belong to the largest in the
world and are working world-wide. Part of these companies are dependent for
their raw materials from Dutch agriculture, however, many other companies are
dependent for their raw materials from other countries. This holds in particular
for companies processing cocoa, coffee, tobacco, et cetera. Other important
industries are the dairy industry, the meat processing industry, the potato industry, the sugar industry and the beer brewing industry. A number of reasons
stimulate internationalisation of the Dutch food processing industry.
In the distribution phase auctions play an important role for horticultural
products as flowers and vegetables. Dutch auctions are cooperatives of producers. Good logistics are fundamental for the functioning of the production
chain. This becomes most clear for the production of vegetables and flowers
as these products have to be fresh when offered to the consumer. The Netherlands are famous for their good logistics.
Big exports but also big Imports
Recently the Netherlands lost its first position on the list of net exporters of agricultural products to Brazil. However, the exports of the Netherlands are almost
three times the export of Brazil. This can be explained by the huge import of
agricultural products by the Netherlands. Changing a small country with scarce
resources into a big power on agricultural export, the 'secret' behind the Netherlands can be concluded as 'big imports and big exports', that is, to realise bigger exports through big imports. This is the subject of chapter 5.
Many factors lead to big exports from the Netherlands, for example: the entrepreneurship of Dutch farmers makes them good at finding and targeting
markets and at grasping chances; the highly developed agricultural products
processing industry gives a large added value to imported commodities; technique and management innovations continuously occur in processing and marketing, et cetera.
The Netherlands imports land-intensive products as feed raw materials and
products from tropical climate zones to meet the needs of livestock raising and
processing industry. A large part of the final products is exported. An important
factor that contributed to the net export position of the Netherlands is the growing internal market of the EU and the Common Agricultural Policies of the EU.
To keep close contact with the world market trends, timely communication
of information is needed, so that farms and enterprises could adapt or adjust
according to changing situations. What is mentioned particularly is that the
Dutch Agriculture Consulates all over the world have done an excellent job in
this respect.
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Pillars of development
Chapter 6 describes the three pillars that contribute to the Dutch agricultural
success: infrastructure, cooperatives and farmers organisations, and knowledge and innovation system.
For the Netherlands, the most important infrastructures for the development
of agriculture are land and water. They are the foundation on which to make a
life and are adapted to the requirements of modern agriculture. Transportation
facilities - such as harbours, railways and roads - play an important role in the
development of the Netherlands' modern economy. Well developed infrastructures provide a powerful guarantee for the development of the Dutch economy,
especially; it opens the door for Dutch agriculture to enter world markets.
Dutch farmers' organisations and agricultural cooperatives combine the
strength of individual people into a powerful force, which enhances the competitiveness of agricultural sectors. The agricultural cooperatives are founded by
the initiatives in sectors as buying inputs, selling agricultural products and processing agricultural products. Besides, the agricultural cooperative banks contributed to the success of the Dutch agricultural sector.
It is the quality and ability of persons - both producers and managers - that is
the key to increasing productivity. The Dutch triad agricultural research, extension and education contribute, individually and in combination, to the enhancement and strengthening of the human element.
Institutions, strategy and policies
16
Chapter 7 examines the role the Dutch government plays in agricultural development in terms of economic institution, developing strategy and agricultural
policies. A 'capable government' is the key to economic and social development; it can be seen as a scarce resource.
Effective institutions in the Netherlands promote producers' initiatives, improve and optimise the distribution of resources and improve competitiveness.
Efficient government is good at making a series of good policies and mobilising
government and the people to carry out these policies. However, institutions are
not always based on initiatives of the government. The more liberal the government the more institutions are formed on basis of private initiatives, or in other
words by the market. Examples for the Netherlands are farmers' cooperatives
and farmers' organisations.
An efficient government, good policies and good institutions are countries
important and rare resources. In the miracle of Dutch agriculture, the important
influence of these factors is clearly visible. The government plays an important
role in the success of the Dutch agribusiness: the government created a good
environment of institutions, fair competition and encouraged innovation.
Each country must adopt an own development strategy according to its
specific situation. The strategy of Dutch agriculture can be summarised as follows:
- avoiding weak sectors and focusing on strong sectors;
- technological innovation;
- large scale of processing industry;
- internationalisation.
The Dutch Ministry of Agriculture, Nature and Food Quality (LNV) does not
draw up any production plan, this is a matter for the private sector. Generally
speaking, agricultural policies of the Netherlands fall into three parts: investment in knowledge and innovation, structural policy and environmental policy.
The reason why the agricultural productivity rate of the Netherlands is far
ahead of other countries can be attributed to the improvement of production
factors and the quality of labour. For this reason the Dutch government has always highlighted and supported agricultural research, education and extension.
The structural policies of the government encourage productive family-run
farms to maintain or to enlarge to a certain scale in order to guarantee that at
least one family member will work on the farm.
However, the Dutch government has also to take care for the protection of
the environment through legislation, government plans and taxation. The emphasis placed on agriculture is:
- control the use of chemicals (fertilisers, pesticide) to prevent water, air and
soil pollution;
- improve the methods used to dispose manure in order to reduce negative
effects on nature and ground and surface water;
- transform agricultural land into recreation and preservation areas;
- set up of a national ecological network comprising core regions, nature development zones and ecological corridors in order to protect wild live.
Environmental policies of the Netherlands and the EU require a decreasing
degree of concentrated use of land, which poses a challenge to further improving land productivity. Profits in the primary sector tend to decline, while the volume of cattle, pig, and poultry are restricted by policies. Small farms find it
harder and harder to survive. Dutch agricultural structure and scale will face
new challenges.
17
Samenvatting
De Nederlandse landbouw in de ogen van een Chinese
econoom
De 'geheimen' van een 'wereldkampioen'
Nederland is een klein, dichtbevolkt land. De hoeveelheid landbouwgrond per
hoofd van de bevolking bedraagt niet meer dan 0,052 ha. Hierdoor behoort Nederland tot de landen met de kleinste hoeveelheid landbouwgrond per hoofd van
de bevolking. Desalniettemin heeft het land een enorme netto-export aan landbouwproducten en voedingsmiddelen. De afgelopen paar jaren was deze export
de grootste van alle landen ter wereld. De auteur, een Chinees econoom, beschouwt Nederland dan ook als een 'wereldkampioen', een 'goudenmedaillewinnaar'. Pas sinds kort is de netto-export van landbouwproducten en
voedingsmiddelen van Brazilië, een land met een overdaad aan landbouwgrond,
die van Nederland voorbijgegaan. Ook op tal van andere vlakken, zoals arbeidsproductiviteit, grondproductiviteit en dergelijke, behoort Nederland tot de 'medaillewinnaars'. Daarom willen Chinese economen graag doordringen tot de
'geheimen' die deze positie kunnen verklaren, en willen zij graag weten wat China zou kunnen leren van de Nederlandse ervaringen. De auteur heeft in het Chinees een boek geschreven, waarin hij de 'geheimen' van
deze uitzonderlijke positie van de Nederlandse landbouw binnen de wereldlandbouw probeert te verklaren. Omdat dit onderzoek ook van belang is voor overige landen, met name ontwikkelingslanden, zijn de belangrijkste hoofdstukken nu
bijgewerkt en vertaald naar het Engels.
De Nederlandse landbouw in een breed perspectief
Het eerste hoofdstuk gaat over Nederland en zijn positie in de wereld. Volgens
de auteur is het bekende Engelse gezegde 'God schiep de wereld, maar de Hollanders schiepen Holland' zeer kenmerkend voor de Nederlanders en de aard
van het land. De Nederlanders kennen een lange geschiedenis van strijd tegen
het water. Reeds in de 13e eeuw werden er door inwoners en boeren regionale
Waterschappen opgezet die het land en de polders moesten beschermen tegen
het aanhoudende gevaar van overstromingen. Dit kan worden gezien als de basis voor de mentaliteit van solidariteit en samenwerking die zo diep verankerd
ligt in de Nederlandse cultuur en die is uitgegroeid tot de mentaliteit van de gehele natie. In Nederland hebben werkgevers en werknemers beide hun eigen or18
ganisaties. Belangenverschillen tussen de twee en met de regering worden
doorgaans opgelost aan de hand van overleg en dialoog. Zo komt men tot wederzijds begrip en een compromis op basis van consensus. Dit systeem staat
internationaal bekend als het 'poldermodel'.
Omdat de binnenlandse markt in Nederland vrij beperkt is, is het voor het
land van groot belang gunstige omstandigheden voor internationale handel te
creëren. Al eeuwenlang staat Nederland bekend als 'handelsnatie'. De geografische omstandigheden hebben zeer in het voordeel gewerkt van de ontwikkeling
van de handel in Nederland. Het land heeft uitstekende faciliteiten voor nationaal
en internationaal transport over zee, door de lucht en over land. Nederland kan
dan ook met recht het 'distributiecentrum van Europa' worden genoemd. Door
deze positie is het land uitgegroeid tot een van de sterkste handelsmachten ter
wereld. De nabij gelegen landen zijn stuk voor stuk landen met een hoog inkomen. Gezamenlijk tellen deze landen 300 miljoen inwoners, wat meer is dan
de VS.
De landbouw vertegenwoordigt een relatief klein deel van de nationale economie van Nederland, zoals dat ook in veel overige ontwikkelde landen het geval
is. Het percentage van arbeid in de primaire landbouwsector bedroeg in 2006
3,1% en het aandeel van landbouw in het nationale inkomen 2,5%. De bruto
toegevoegde waarde van de agribusiness in ruime zin (met inbegrip van landbouw, productie van grondstoffen voor landbouw, verwerking van landbouwproducten en aanverwante bedrijfstakken) bedroeg € 43,9 miljard, wat
neerkomt op 9,3% van het BNP. Aan het begin van de 21e eeuw was de gehele
sector goed voor 650.000 banen, wat overeenkomt met 9,9% van de totale beroepsbevolking van Nederland.
De vitaliteit van de agrarische bedrijven
Het doel van het tweede hoofdstuk is om de redenen achter het Nederlandse
landbouwsucces bloot te leggen. Als wij het landbouwstelsel beschouwen als
een boom, zijn de agrarische bedrijven de cellen: als de duizenden bedrijven in
een land allemaal gezond en dynamisch zijn, is de landbouwsector van dat land
eveneens vitaal en concurrerend, en omgekeerd. Uiteindelijk is de kloof tussen
de verschillende landen ten aanzien van groeipercentage en de hoogte van de
landbouwproductie te verklaren uit de verschillen tussen de landbouwbedrijven.
Zoals Nobelprijswinnaar Theodore W. Schultz al aangaf, is de belangrijkste vari-
19
abele om de verschillen in landbouwproductie uit te leggen, de menselijke factor, dat wil zeggen de verschillen in het niveau van de verworven vaardigheden
van de mensen die op de landbouwbedrijven werken.1
In Nederland zijn veel agrarische bedrijven familieondernemingen of bedrijven. De meeste daarvan zijn in hoge mate gespecialiseerd. De grens tussen agrarische bedrijven en industriële productie vervaagt steeds meer, aangezien agrarische ondernemers vandaag de dag hun producten ook van een merk
voorzien. De werking van een zeer concurrerende markt is vergelijkbaar met het
stofwisselingsproces. Generatie na generatie wordt er op relatief slecht beheerde bedrijven ervoor gekozen de landbouw vaarwel te zeggen. Hierdoor neemt
het aantal bedrijven af, terwijl de gemiddelde grootte van de resterende landbouwbedrijven toeneemt (niet alleen in de zin van land of aantal dieren, maar
ook in de zin van brutomarge). Bijgevolg wordt de landbouwsector van het land
voortdurend sterker.
Alhoewel het grondoppervlak per landbouwbedrijf in Nederland beperkt is,
is de gemiddelde omvang van een Nederlandse landbouwbedrijf in economische
zin vrij groot. Terwijl de landbouw zich heeft ontwikkeld, is het aantal bedrijven
voortdurend gedaald. Zo is de omvang van de resterende agrarische bedrijven
toegenomen. Tegelijkertijd hebben deze bedrijven zich verder gespecialiseerd.
Dit kan worden gezien als een goed voorbeeld van natuurlijke selectie. Dit mechanisme verklaart in belangrijke mate de voortdurende toename van de landbouwproductiviteit en de internationale concurrentiepositie van Nederland.
Bij de doelmatigheid van familiebedrijven spelen diverse factoren een rol,
zowel institutioneel als technisch. Omdat agrarische ondernemers onafhankelijk
hun productiebeslissingen moeten nemen, hebben ze behoefte aan een uitgebreid dienstenstelsel, met inbegrip van een effectief stelsel voor landbouwonderwijs, -voorlichting en -onderzoek en dergelijke. Deze onderwerpen komen in
de afzonderlijke hoofdstukken aan bod.
Productiestructuur
In het derde hoofdstuk wordt de ontwikkeling van de belangrijkste productiesectoren in Nederland behandeld. Elke ondernemer in de agrarishce sector moet
de volgende afwegingen maken: Wat produceer ik? Hoeveel produceer ik? Hoe
produceer ik dat? De beslissingen hangen af van tal van persoonlijke en externe
1
20
Theodore W. Schultz, Transforming Traditional Agriculture (Chicago, The University of Chicago
Press, 1964), blz. 17.
factoren. Externe factoren zijn onder meer de marktvraag, de ontwikkeling van
technologieën en het EU-beleid. Al deze factoren veranderen met de tijd en de
ondernemer moet zich voortdurend aanpassen aan de gewijzigde omstandigheden, wil hij overleven op een concurrerende markt. De kwaliteit van de besluitvorming van de gezamenlijke ondernemers is een bepalende factor voor de
concurrentiepositie van de landbouw. Dit hoofdstuk gaat over de resultaten van
de keuzen en beslissingen die worden gemaakt en genomen door Nederlandse
ondernemers in de land- en tuinbouw.
De tuinbouw neemt in Nederland een belangrijke plaats in. In 2007 was de
outputwaarde van het verbouwen van akkerbouwgewassen ongeveer 11% van
de totale waarde van de landbouw, terwijl het aandeel van de tuinbouw 44% bedroeg. De tuinbouw is zeer gespecialiseerd, zowel op open grond als in de kas.
De opengrondstuinbouw produceert voornamelijk bollen en opengrondgroenten
(kool, bloemkool, broccoli, enzovoort). De kastuinbouw neemt voortdurend toe
en is gericht op groenten, zoals tomaten, komkommers, paprika's en aubergines, en diverse snijbloemen (rozen, chrysanten het hele jaar door, gerbera's,
fresia's, enzovoort).
Veeteelt was ooit de voornaamste productiesector van Nederland en had
een aandeel in de totale landbouwoutput, dat veel hoger lag dan dat in de gewassenproductie. Mede vanwege de snelle ontwikkeling van de tuinbouw, heeft
de veeteelt de laatste decennia echter een deel van zijn belang verloren. Toch
was de veeteelt in 2007 nog altijd goed voor 44% van de totale waarde van de
landbouwoutput. De veeteelt in Nederland is verdeeld in twee soorten: graasdierveehouderij en intensieve veehouderij. De eerste betreft voornamelijk de
melkveehouderij, waarvoor een grote hoeveelheid weidegrond vereist is. De intensieve veehouderij omvat varkens en pluimvee (voor eieren en vlees), die
doorgaans met een relatief hoge dichtheid in gebouwen worden gehouden. Beide productievormen zijn nu beperkt in hun groei, voornamelijk vanwege hun relatief grote effect op het milieu.
De beslissingen die agrarische ondernemers hebben genomen, hebben geleid tot een voortdurende toename van de factorproductiviteit en met name de
arbeidsproductiviteit van de Nederlandse landbouw. Enerzijds groeide de Nederlandse landbouwproductie en anderzijds steeg de input in de landbouw maar
mondjesmaat. De input van land en in het bijzonder van arbeid nam af, maar er
was een stijging van het gebruik van menselijk kapitaal (in de zin van overheidsuitgaven voor onderzoek en ontwikkeling, voorlichting en onderwijs).
21
Van het land naar de tafel
22
Hoofdstuk 4 gaat over de productieketen. Binnen de traditionele landbouw is de
afstand tussen land en tafel erg klein. Door de vercommercialisering van landbouwproducten is deze afstand echter groter geworden, en zal deze ook verder
toenemen. De ontwikkeling in de richting van economische globalisering betekent dat land en tafel zich zelfs aan verschillende kanten van de aardbol kunnen
bevinden. Dat betekent dat niet alleen de Nederlandse landbouw, maar ook de
hele productieketen goed moet functioneren. Deze laatste moet goed georganiseerd zijn en op flexibele wijze aan de vraag van consumenten voldoen.
Moderne landbouw vraagt om een zeer efficiënte markt en om gespreide
diensten en verwerkingsbedrijven. Nieuwe middelen en technieken kunnen leiden
tot afvalreductie, betere benutting van producten (benutting van tijd, ruimte en
consumptie), meer toegevoegde waarde en creatie van werkgelegenheid. Binnen de gehele productieketen levert de verwerkingsindustrie een aanzienlijke
bijdrage aan de concurrentiepositie van de Nederlandse export.
Input zoals zaden, diervoeder, machines en mest spelen een voorname rol
binnen de Nederlandse landbouw. Er is een hele industrie voor nodig om de Nederlandse landbouw tijdig te voorzien van input van hoge kwaliteit tegen lage
kosten. Landbouwcoöperaties spelen een belangrijke rol bij de productie van
deze input. De voederindustrie is veruit de grootste leverancier van input voor
de Nederlandse landbouw. De grondstoffen voor de voederindustrie worden in
grote mate geïmporteerd uit andere delen van de wereld.
De Nederlandse levensmiddelen- en drankenindustrie laat zich kenmerken
door een grote variëteit aan bedrijven in alle sectoren. Sommige van deze bedrijven behoren tot de grootste ter wereld en opereren ook op wereldschaal.
Een deel van deze bedrijven is voor zijn grondstoffen afhankelijk van de Nederlandse landbouw; veel andere bedrijven betrekken hun grondstoffen echter uit
andere landen. Dit geldt met name voor bedrijven die cacao, koffie, tabak en
dergelijke verwerken. Andere belangrijke bedrijfstakken zijn de zuivelindustrie,
de vleesverwerkingsindustrie, de aardappelindustrie, de suikerindustrie en de
bierbrouwindustrie. De internationalisering van de Nederlandse voedselverwerkende industrie wordt om een aantal redenen aangemoedigd.
Tijdens de distributiefase spelen veilingen voor tuinbouwproducten als
bloemen en groenten een voorname rol. De Nederlandse veilingen zijn coöperaties van producenten. De goederenlogistiek is van cruciaal belang voor het functioneren van de productieketen. Dit is het duidelijkst zichtbaar bij de productie
van groenten en bloemen, aangezien deze producten vers moeten zijn als zij
aan de consument worden aangeboden. Nederland staat bekend om zijn voortreffelijke logistiek.
Grote export, maar ook grote import
Onlangs heeft Nederland zijn eerste plaats op de ranglijst van netto-exporteurs
van landbouwproducten moeten afstaan aan Brazilië. De export van Nederland
is echter nog altijd drie keer zo groot als die van Brazilië. Dit kan worden verklaard door de enorme import van landbouwproducten door Nederland. Hoe kan
een klein landje met schaarse middelen uitgroeien tot grootmacht op het gebied
van de landbouwexport? Het 'geheim' achter Nederland kan mede worden verklaard door een combinatie van grote export en grote import. Anders gezegd,
het land kan meer exporteren doordat het meer importeert. Dit is het onderwerp
van hoofdstuk 5.
Er zijn tal van factoren die bijdragen aan de grote export vanuit Nederland,
om er een paar te noemen: het ondernemerschap van Nederlandse boeren
zorgt ervoor dat ze goed zijn in het vinden en aanboren van nieuwe markten en
het uitbuiten van mogelijkheden; de zeer ontwikkelde verwerkingsindustrie voor
landbouwproducten geeft een grote meerwaarde aan de geïmporteerde grondstoffen; er vinden voortdurend technologische en beheersmatige vernieuwingen
plaats ten aanzien van verwerking en marketing.
Nederland importeert landintensieve producten zoals voedergrondstoffen
en producten uit tropische landen om aan de vraag van de veeteeltsector en de
verwerkingsindustrie te voldoen. Een groot deel van de eindproducten wordt
geëxporteerd. Een belangrijke factor die heeft bijgedragen aan de netto-exportpositie van Nederland, is de groeiende interne markt en het gemeenschappelijk
landbouwbeleid van de EU.
Om goed contact te houden met de trends op de wereldmarkt, is tijdige
uitwisseling van informatie vereist, zodat bedrijven zich kunnen aanpassen aan
of toespitsen op de gewijzigde situatie. Wat met name wordt genoemd, is dat
de Nederlandse landbouwconsulaten wereldwijd in dit opzicht voortreffelijk werk
hebben verricht.
Pijlers van ontwikkeling
In hoofdstuk 6 worden de drie pijlers beschreven waarop het Nederlandse landbouwsucces is gestoeld: infrastructuur, coöperaties en landbouworganisaties,
en kennis en innovatie.
In Nederland zijn land en water de belangrijkste infrastructuren voor de
ontwikkeling van de landbouw. Land en water zijn de fundamenten waarop het
23
leven is vormgegeven, en deze zijn ook aangepast aan de vereisten van de moderne landbouw. De transportfaciliteiten, zoals de havens, het spoor en de wegen, spelen een cruciale rol bij de ontwikkeling van de Nederlandse moderne
economie. Met name deze goed ontwikkelde infrastructuur vormt een krachtige
waarborg voor de ontwikkeling van de Nederlandse economie. Hierdoor worden
voor de Nederlandse landbouw de deuren naar de wereldmarkten geopend.
Nederlandse landbouworganisaties en landbouwcoöperaties bundelen de
sterke punten van individuele ondernemers, die de concurrentiepositie van de
landbouwsector verder verbetert. De landbouwcoöperaties zijn opgericht op initiatief van agrarische ondernemers in sectoren zoals de inkoop van productiemiddelen , de verkoop van landbouwproducten en de verwerking van
landbouwproducten. Daarnaast hebben de coöperatieve banken voor de landbouw bijgedragen aan het succes van de Nederlandse landbouwsector.
Het zijn echter de kwaliteit en de vaardigheden van de mensen - zowel producenten als managers - die centraal staan bij de toenemende productiviteit.
Het Nederlandse OVO-drieluik - onderzoek, voorlichting en onderwijs - draagt
zowel afzonderlijk als in combinatie bij aan verbetering en versterking van het
menselijke element.
Instellingen, strategie en beleid
24
In hoofdstuk 7 wordt ingegaan op de rol die de Nederlandse overheid bij de ontwikkeling van de landbouw speelt in de zin van economische instellingen, het
ontwikkelen van strategie en het landbouwbeleid. Een 'capabele regering' is van
cruciaal belang voor de economische en maatschappelijke ontwikkeling. Dit kan
worden gezien als een schaars hulpmiddel.
Nederland beschikt over effectieve instellingen die de initiatieven van producenten bevorderen, de distributie van producten verbeteren en optimaliseren, en
de concurrentiepositie verbeteren. Een efficiënte regering betekent dat er tal
van goede beleidsmaatregelen worden genomen en dat overheid en bevolking
worden gemobiliseerd om deze beleidsmaatregelen uit te voeren. Instellingen
gaan echter niet altijd uit van de initiatieven van de regering. Hoe liberaler de
regering is, des te meer instellingen worden opgezet op basis van particuliere
initiatieven, met andere woorden door de markt. Voorbeelden in Nederland zijn
de landbouwcoöperaties en landbouworganisaties.
Een doelmatige regering, een goed beleid en goede instellingen zijn belangrijke en schaarse hulpbronnen voor een land. In het wonder van de Nederlandse
landbouw is de grote invloed van deze factoren goed zichtbaar. De regering
heeft een belangrijke rol gespeeld bij het succes van de Nederlandse landbouw:
deze heeft gezorgd voor een gunstige institutionele omgeving en eerlijke concurrentie, en heeft innovatie gestimuleerd.
Elk land moet zijn eigen ontwikkelingsstrategie ontwikkelen, op basis van
zijn eigen specifieke situatie. De strategie van de Nederlandse landbouw kan als
volgt worden samengevat:
- vermijding van de zwakke sectoren en stimulering van de sterke sectoren;
- technologische innovatie;
- een grootschalige verwerkingsindustrie;
- internationalisering.
Het Nederlandse ministerie van Landbouw, Natuur en Voedselkwaliteit (LNV)
stelt geen productieplannen op. Dit wordt volledig overgelaten aan de particuliere sector. Globaal genomen heeft het Nederlandse landbouwbeleid drie peilers:
investeren in kennis en innovatie, structuurbeleid en milieubeleid.
Het feit dat het Nederlandse landbouwproductiviteit zo ver voor ligt op andere landen, kan worden verklaard door de voortdurende verbetering van de
productiefactoren en de kwaliteit van het werk. Het is ook hierom dat de Nederlandse regering altijd aandacht heeft gehad voor en steun heeft gegeven aan
agrarisch onderzoek, onderwijs en voorlichting (zie ook hoofdstuk 6).
Het structuurbeleid van de regering heeft productieve familiebedrijven aangemoedigd om te consolideren of uit te breiden teneinde zodat er altijd minimaal één familielid op het bedrijf werkzaam zou zijn.
Aan de andere kant heeft de Nederlandse regering ook de zorg voor het milieu, dat zij moet beschermen aan de hand van wetgeving, overheidsplannen en
belasting. Daarbij wordt voor de landbouw de nadruk op het volgende gelegd:
- beheersing van het gebruik van chemicaliën (kunstmest, pesticiden) om vervuiling van het water, de lucht en de bodem te voorkomen;
- verbetering van de methoden die worden gehanteerd om mest te verspreiden, zodat de nadelige effecten op de natuur, de bodem, en het grondwater
worden verminderd;
- omzetting van landbouwgrond in gebieden voor recreatie en natuurbehoud;
- ontwikkeling van een nationaal ecologisch netwerk, dat bestaat uit kernregio's, natuurontwikkelingszones en ecologische corridors ten behoeve van
de bescherming van dieren in het wild.
De milieubeleidsmaatregelen van Nederland en de EU vereisen een minder
intensief grondgebruik. De noodzaak tot vergroting van de productiviteit blijft
echter aanwezig. De winsten in de primaire sector lijken af te nemen vanwege
25
het feit dat het volume aan rundvee, varkens en pluimvee door het beleid aan
banden wordt gelegd. Voor kleinere landbouwbedrijven wordt het moeilijker te
overleven. Kortom: de Nederlandse landbouw staat weer voor nieuwe uitdagingen.
26
1
1.1
Understanding the Netherlands
People and country
The Kingdom of the Netherlands is located in Western Europe. It is bordered on
the north and west by the North Sea, and has a coastline of 1,075km. It is a
small country, covering a total area of only 41,528km2 (circa 200km from east
to west, and 300km from north to south). It is about two-fifths the size of
Jiangsu province in China. The land surface of the Netherlands is less than
33,783km2, almost the same as that of Hainan Island. According to the Dutch
Central Bureau of Statistics (CBS), on 1 January 2008 its population was over
16.4m. Its population density of 486 persons per km2 makes it one of the most
densely populated countries in Europe. The population density in 2003 in the
provinces of South Holland and North Holland were the highest (1,221 and
964 persons per km2, respectively), while the least densely populated province
was Drenthe, with just 182 persons per km2.
Amsterdam is the countries capital and has a population of 737,000. The
Hague is the seat of the government, has a population of 464,000, and is home
to many embassies and international bodies. Dutch is the official language in the
Netherlands. However, because in the Netherlands international trade and tourism are highly developed, at least 75% of the Dutch population speaks a foreign
language, while 44% can speak two foreign languages.
There is an old saying that 'God created the world, but the Dutch created
Holland', and this fully embodies the most distinctive characteristic of the Dutch
and of the spirit of their nation - a spirit that makes it possible for such a small
country to play such an important role in the world economy.
The 17th century was the most important period in the history of the Netherlands, and is referred to as the countries 'Golden Age'. Holland established the
first government to comprise a coalition of aristocrats and the bourgeoisie, thus
forming what is considered to have been the earliest republic in world history.
'Interests of commerce dictated and outweighed all else.'1 Because the domestic market in the Netherlands is very limited, it is vital for the country to create
1
F. Braudel, Civilisation and Capitalism 15th-18th Century, Volume III, The Perspective of the World
(translated from the French by Siân Reynolds), p. 205.
27
a favourable environment for international trade. For several centuries, the Netherlands has been famous as a 'trade nation'. In the 17th century, it was the world's
greatest colonial power. Despite having a population of only 2m. people, the
Netherlands had the largest merchant fleet and became the strongest country in
seaborne trade, and therefore earned the nickname 'shipman of the world'.
The Netherlands differed from its neighbouring countries in that it was much
more a trading nation than an industrial one.1 The Dutch government has probably devoted more effort to international trade than has the government of any
other country. Facing unprecedented prosperity in shipping and business, the
Dutch authorities grasped the chance to bring about a commercial revolution by
developing international businesses as a basic national policy. As a result, it accumulated huge wealth. 'It is not the harbour that makes the trade; it is the
trade that makes the harbours.' Such statements appeared in 1701: 'In Amsterdam, the determination to carry out an economic and trade mission is accepted
as a real vocation', 'but the dynamic Amsterdam is ongoing in integrating its
new citizens.'2
The Dutch are sometimes called 'the Chinese of Europe' (de Chinezen van
Europa3), because of their excellent performance in business, and probably also
in intensive and meticulous farming. The high population density (and the consequent large demand for food) encouraged the intensification of agriculture at an
early stage.4
Honesty and credibility are cardinal principles in trade. Frugality is another
trait of the Dutch: they always strictly budget their money. A French man pointed this out in 1697 by saying: 'Of all the nations … the Dutch are the thriftiest
and most sober, indulging in the least luxury or idle expense.'5
1
Leo Douw and Jaap Post (eds.), Growing Strong (LEI, December 2000), p. 25.
A. Peyrefitte, Du 'miracle' en économie: leçons au College de France (Editions Odile Jacob, 1995),
pp. 126, 134 and 127.
3
See Van Dale Groot Woordenboek der Nederlandse Taal, volume 1 (Utrecht and Antwerp, Van Dale
Lexicografie, 1999), p. 600.
4
L. Douw and J. Post, op. cit., p. 26.
5
F. Braudel, op cit., p. 109.
2
28
Box 1.1
The Dutch Model (1)
'[…] its ceaseless battle with water. And that battle turns out to be the key to understanding
the Netherlands' blend of free market and social welfare. The Low Countries never developed
a fully feudal system of aristocratic landowners and serfs. Rather, sailors, merchants and
farmers bought shares in trading ships and in cooperatives to protect the land from the sea,
a development that led to the creation of one of the world's first stock markets and helped
fuel the Dutch golden age. Today the country remains among the most free-market-oriented
in Europe. At the same time, water also played a part in the development of the welfare system […]. The Dutch call their collectivist mentality and way of politics-by-consensus the 'polder model,' after the areas of low land systematically reclaimed from the sea. According to
the Dutch historian Geert Mak: 'People think of the polder model as a romantic idea. But if
you look at records of the Middle Ages, you see it was a real thing.
Everyone had to deal with water. With a polder, the big problem is pumping the water. But in
most cases your land lies in the middle of the country, so where are you going to pump it? To
someone else's land. And then they have to do the same thing, and their neighbour does, too.
So what you see in the records are these extraordinarily complicated deals. All of this had to
be done together.' […]The nation today embodies a centuries-old inclination toward collectivism, which one writer characterised as 'the democracy of dry feet.' 'We are still in the polder,
always searching for agreement among all parties,' Heino van Essen, former chairman of
PGGM, one of the largest Dutch pension funds, told me. 'Even our pension system is collectivist, in which employers, employees and the government collaborate. 'The collaboration goes
all the way to the top, where something called the Social Economic Council - consisting of
trade-union, business and government representatives - advises the government on major issues. […]. There is another historical base to the Dutch social-welfare system […]. It is
rooted in religion. 'These were deeply religious people, who had a real commitment to looking
after the poor,' Mak said of his ancestors. 'They built orphanages and hospitals. The
churches had a system of relief, which eventually was taken over by the state [...]. This system developed not after Karl Marx, but after Martin Luther and Francis of Assisi.'
Extracts from an article by Russell Shorto, 'Going Dutch' (The New York Times, 3 May 2009).
The Dutch have a long history of struggling against water. As early as in the
13th century, the Water Board was set up in some regions, led by people of noble character and high prestige. A group in which people share benefits was
formed in the process of the continuous battle against floods, and laid a foundation for the spirit of solidarity and cooperation that is firmly rooted in Dutch culture and has developed into a spirit of the whole nation. In the Netherlands, both
employer and employee have their own organisations. Interest conflicts between
29
the two can normally be solved through consultation and dialogue in order to
reach a compromise, mutual understanding and consensus. As a result, strikes
seldom take place in the Netherlands. This process of decision-making based
on consultation is called the 'polder model', which has the advantage of avoiding
or reducing decision mistakes. Since people have reached a consensus, there
are almost no barriers to implementation.
Directly after World War II, a tariff alliance with Belgium and Luxembourg became effective. The Netherlands was a founding member of the European Economic Community (EEC, 1957). In 1991, the EEC passed the famous Maastricht
Treaty in the Netherlands, aiming at coordinating the economic policies of its
Member States, ultimately leading to a no-boundary common market and monetary unity (the euro) within Europe. International trade in the Netherlands represents approximately 130% of the countries gross national product (GNP). In
2006, for example, the national income of the Netherlands was €534b., while
imports and exports amounted to €285b. and €319b., respectively.
Box 1.2
The Dutch Model (2)
In June 1997 President Bill Clinton lauded the Dutch model of economic policy as being a
'success story'. The economic editors of most international newspapers have also praised
the economic performance in the polders behind the dykes.
Such favourable comments are a result of the above-average economic growth, the increase in employment, the low rate of inflation and the reduction of the budget deficit. According to foreign commentators, this economic performance stems from a number of
characteristics that are typical of the Dutch economic order. It has even been given a name:
the 'polder model', which is a Dutch particularisation of the Rhineland model. In the Rhineland
model, the participants in the economic process (who are known as 'stakeholders') try to
achieve harmony of interests. In such a stakeholder economy, the primary goal is not the
maximisation of short-term profits for the benefit of the stakeholders, but sustainable, stable
and continuous economic growth.
Should the Netherlands go all the way? Should it change to the type of market economy
that exists in the USA? The Anglo-Saxon model has its own problems. A synthesis of the Anglo-Saxon and Rhineland models ought to be possible. A 'mid-Atlantic' model could unite the
positive elements of both. But that model has not yet been reached in the Netherlands. More
liberalism is required if the Dutch economy is to achieve its potential and raise living standards - and the same applies to the rest of the European Union (EU), and even more so.
Extracts from an article by Frits Bolkestein, 'The Dutch Model: The high road that leads out of the Low Countries'
(The Economist, 22 May 1999).
30
31
Altitudes and main waterways
Motorways and railroads
Geographical conditions greatly benefited the development of trade in the
Netherlands. The country has excellent facilities for national and international
transport by sea, air and land. Therefore, the Netherlands is worthy of the name
'the distribution centre of Europe', which is an important factor that puts the
Netherlands among the strong trade powers in the world. If one draws a circle
with Amsterdam at its centre and a radius of 1,000km, one can see that the
surrounding countries are all 'high income countries'. Between them, these
countries have a population of 300m., which is more than the USA. All of these
provide a favourable and unique market environment for the Netherlands. In
2007, the trade volume of goods in the Netherlands reached USD477.6b., accounting for 3.5% of the world trade volume, and was ranked the Netherlands at
place eight1; service trade amounted to USD80.2b. in 2006, representing 3.1%
of the global value and putting the Netherlands at place nine in the world.
In 2006, the total length of railways in the Netherlands was 2,800km, while
that of motorways was 2,600km. In addition to other paved roads, road density
per km2 of land was as high as 3.5km. Reportedly, the Netherlands constitutes
70% of trucks shuttling in inland Europe.
Rotterdam - the 'Gateway to Europe' - has a population of 600,000. Until recently, the Port of Rotterdam was the largest transfer port in the world, with a
dock length of 40km from east to west. With a handling capacity of 300m. t all
year round, it deals with 30% of all cargo shipped in the EU.
Amsterdam is also one of the most important ports in Europe: its international airport - Schiphol - is only 10km from Amsterdam and has connections to
230 cities throughout the world. It is the fourth largest airport in Europe, and
has been acknowledged as one of the finest airports in Europe for its convenience and efficiency.
The Netherlands is a highly developed industrialised country. In 2001, eight
Dutch enterprises were among the world's top 500. According to the World
Bank, in 2007 the GDP of the Netherlands was USD754b., ranking it 16th in the
world; the gross national income per capita was circa USD45,820, putting it
firmly at 16th in the world. The Netherlands is always among the best nations on
the human development index (HDI) list that is published by the UN.
Before the introduction of the euro (€) in 2001, the national currency of the
Netherlands was the guilder (NLG). The Netherlands is one of the countries that
32
1
In 2008 the Netherlands was even ranked at place 5 on the list of countries in world trade
took the lead in using the euro (the exchange rate was fixed at NLG2.20371
to €1).
1.2
Agriculture resources
'The Netherlands' literally means 'the lowlands', referring to the fact that a quarter of the country lies below sea level. Because of its low lying land with an elevation of only one metre, about a third of the territory is subject to river
overflows and floods caused by the sea. History has witnessed the Dutch continuously battling against sea. Many far-reaching stories told about their struggles to live with great courage and pride. Dutch farmers have been reclaiming
stretches of farmland (polders) in low plains by pumping out the water through
drains since the 13th century. Thousands of windmills throughout the Netherlands testify to people's continuous fight against floods through the centuries.
Land is especially scarce in the Netherlands: in 2005 the area of arable land
and grassland was only 820,000ha and 980,000ha, respectively, while the area
of arable land per capita is a mere 0.052ha, which puts the Netherlands among
the countries with the smallest per-capita amount of arable land in the world.
Almost 70% of the available land (i.e. excluding water) is allotted to agricultural
use, and non-agricultural land accounts for 30% of the total. If one takes agricultural land as 100%, then grassland accounts for 51%, arable crops 43%, and
land for horticulture 6%. As for non-agricultural use, in 2000 10.4% was forest,
9.4% was for residential construction, industry and buildings, 3.9% was natural
area, 2.6% was for leisure and recreation, and 3.3% was occupied by roads and
infrastructure.
It is probable that Dutch farmers are the most efficient land users in the
world because of the scarcity of land, and especially because they have to continuously fight against floods in order to defend their land. The author often
hears that they talk about their crop output and yield in square metres, rather
than in hectares. The crop output rate in the Netherlands is always on the top of
the world rankings if measured by land productivity. Even many East Asian
countries, which have been well known for deep ploughing and intensive cultivation, cannot compare with it.
Annual average precipitation in the Netherlands is circa 834mm It is relatively evenly distributed throughout the year, except for August and September,
which receive a little more rain. In recent years, 1975 was the driest with precipitation of only 671mm; the most rain fell in 1998, some 1,203mm.
33
The Netherlands has a typical temperate marine climate, with cool summers
and mild winters, which is suitable for the growth of most crops. Disadvantages
in agriculture mainly come from the insufficient sunshine and heat. The average
temperature of the whole country fluctuates between 8.5° and 10.9° C. July is
the warmest month (average 16.8° C) while January is the coldest (average
2.2° C). Besides, because of high latitude (the same as that in northernmost
part of Heilongjiang province in China), the Netherlands does not have sufficient
sunshine all the year round (summer is better) - averaging 1,484 hours a year. It
greatly influences the growth of arable crops. According to meteorological records, the least sunshine was recorded in 1985 (1,390 hours), while the sunniest year was 1995 (1,814 hours).
The Netherlands has flat and fertile land everywhere. The major rivers are
the Waal (the Rhine), the Maas (the lower reaches of the Meuse in France) and
the Schelde, together with numerous canals. Other than transportation, the rivers are mainly used not for irrigating land but for draining water.
1.3
Agriculture and the national economy
Agriculture is responsible for quite a low share of the national economy of the
Netherlands, as it does in many other developed countries. The ratio of labour in
primary agricultural sector to total labour decreased from 5.4% in 1985 to
3.6% in 1997 and to 3.1% in 2006, while in the same period the share in national income decreased from 3.5% to 3% and then to 2.5%.
In 2006, for example, the gross added value of the agribusiness complex
(including agriculture, production of inputs for agriculture, processing of agricultural products and related industries) was €43.9b., accounting for 9.3 of GDP.
At the beginning of the 21st century, the agriculture complex provided more
than 650,000 jobs, representing 9.9% of the total number of employees (table
1.1). In the whole chain of the agricultural complex, the number of employed
workers in the supply sector (to agriculture) was 194,000; that of the processing industry of agricultural products was 107,000;1 together with 146,000 in
transportation and marketing, employees in the agriculture-related businesses
1
34
These data include imported products (such as coffee, tea, cacao and tobacco). Anyhow, the quantity of these imported raw materials is large and is processed in the Netherlands. In addition, that
provides considerable job opportunities and creates added value in Dutch agribusiness.
totalled 447,000; while the workforce in primary agriculture itself was circa
207,000. The agribusiness complex is responsible for one fourth of the logistics in the country. Almost one in every three freight trucks is involved in the
transportation of agricultural products. In addition, some 20,000 people work in
the rural tourism sector.
Table 1.1
Agribusiness in the Netherlands: a general view
Gross added value
Employees
(€ billion)
(x 1,000 persons/year)
1990
2006
1990
Supply industries
7.8
13.9
137
2006
194
Primary agriculture
8.9
10.2
256
207
Processing industries
6.4
10.4
181
107
Distribution
4.9
9.4
126
146
Total
28.0
43.9
700
654
% of GDP or total employees
12.8
9.3
13.2
9.9
Sources: LNV, Facts and Figures 2000 (November 2000) and LEI, Het Nederlandse agrocomplex 2008
(February 2009).
This is a typical characteristic of the economic structure in developed countries. It is particularly worth pointing out following three groups of figures.
-
Group A
In 2006, about 3.1% of the total labour force worked in primary agriculture,
which created 2.5% of the added value of the national economy.1 In most
years of recent decades, the average GDP per agricultural labourer was only
slightly lower than that in other sectors; therefore, there was a narrow income gap between urban and rural areas, and between industry and agriculture. It is not strange that weak farmers earn a lower income in a
competitive market, which means that they (or in many cases, their children)
gradually leave agriculture. This allows successful (i.e. more capable) farmers to enlarge the size of their farms. As a result, labour productivity and
competitiveness increase over time.
1
For China in 1997, the rural labour force in farming, forestry, animal husbandry and fishery was
324.3m., or about 50% of the total, contributing about 19% of GDP. While the labour share remains
relatively stable, the share of agriculture in GDP is declining quickly - to 14.6% in 2003. Source: China
Statistical Yearbook, various issues.
35
-
Group B
About 207,000 persons worked in the primary agriculture sector, while
about 447,000 workers were employed in supplying and post-production
sectors. That is, the size of the labour force in the non-agriculture sector
was more than double the size of that in the primary agriculture sector.1
-
Group C
Dutch agribusiness created 9.3% of GDP, very close to its share of employed workers (9.9%). This shows that the labour productivity of the agribusiness complex in the Netherlands matches that of other sectors.
Organisations such as cooperatives enabled farmers to earn a comparable
income as workers in non-agricultural businesses. Therefore, agriculture is
not an inferior industry in the Netherlands.2
1.4
The Netherlands in the world
The Netherlands' capital accumulation in the 17th century and its period of
modern economic growth in the 19th century have given the country an advantageous position in today's industrialised world. According to Simon Kuznets,
the per capita GDP of the Netherlands reached USD492 in as early as 1865,
exceeding that of most European countries. Agricultural labour accounted for
circa 45% of the total labour force in 1849, or most of the agricultural labour
force had shifted to industry and commerce.3
In this section, the Netherlands is compared with some other countries in
order to provide a better understanding of the characteristics of Dutch agriculture and its position in the world.
1
36
In 1997, the workforce employed in food processing and manufacturing, beverages and tobacco
was about 4.6m. in China. See Du Ying, Development and policy option for China's agro-processing
sector, in The Agro-food Processing Sector in China, Developments and Policy Challenges (OECD,
2000), p. 31.
2
The comparable data are not available for China, but agriculture is commonly considered as a 'weak
sector in nature'.
3
See table 2 and table 38 in Simon Kuznets, Economic Growth of Nations (Harvard University Press,
1971). The dollars are in 1965 prices.
1. Comparison with its neighbours - Belgium, France and Germany
Belgium has more than 800,000ha of arable land. With a population of
10.26m., the area of arable land per capita is 0.076ha - slightly larger than that
of the Netherlands. The acreage per agricultural worker is on average 9.57ha,
which is significantly larger than that of the Netherlands. However, the export
value of agricultural products in Belgium is much lower than that of the Netherlands. In recent years, Belgium's annual average net export has been only
USD1.0b.
France - one of Europe's important agricultural nations - has 18.32m. ha of
arable land. With a population of 59m., arable land per capita is 5 times that of
the Netherlands. Moreover, France is one of the main exporters of agricultural
products: its total export value has ranked second in the world for many years.
However, France has a significantly larger amount of imports than the Netherlands. During the period 1995-99, the annual average net export value of agricultural products in France was USD9.5b., at that time ranking fourth in the
world after the Netherlands, the USA and Australia (table 1.2). The annual average net export value of agricultural products in France was less than 60% of
that of the Netherlands (not considering flowers et cetera and fisheries). Since
2005 the exports of the Netherlands were bigger than those of France and
the difference in net export between the two countries became bigger (see table 1.2).
Table 1.2
Net exports of agricultural products a), selected countries
(USD million)
Netherlands
USA
Australia
France
Japan
Brazil
1995-99 average
17,638
14,848
12,498
9,499
- 51,594
8,645
2000-04 average
16,480
- 5,113
13,444
8,125
- 55,556
16,390
2005
22,970
- 19,026
14,874
8,744
- 61,467
29,718
2006
24,972
- 19,126
15,161
9,827
- 60, 737
33,487
2007
28,390
- 4,231
13,739
10,731
- 63,590
39,851
a) Including fishery products, flowers and horticultural products.
Source: FAO Trade Yearbook and Fishery Yearbook, various issues; Flora Culture International, April 2001 and
Comtrade HS Data 2007.
Germany has a population of 82.26m., and its economy ranks third in the
world. It has 11.83m. ha of arable land, and per capita land is 2.5 times that of
the Netherlands. Although Germany's has an important export of agricultural
37
products it is a big net importer. In the period 2005-2007, its net import has
been USD13b.
2. Comparison with Japan
As a highly developed industrial country, Japan's GDP accounts for nearly 15%
of world GDP, ranking second globally. Though the Netherlands cannot match
Japan in this respect, the two countries have many similarities regarding the
scarcity of agricultural resources. Although it has 127m. residents, Japan has
only 4.57m. ha of arable land. The land availability per capita in Japan is one of
the smallest of all countries in the world: only 0.036ha (a third less than the
Netherlands). As far as net imports of agricultural products are concerned, Japan has always been the 'world champion', surpassing Germany and the former
Soviet Union in the 1980s. During the 20-year period from 1980 to 1999, its
accumulated export value of agricultural products was only USD40.9b. - almost
the export value of the Netherlands in just one year (e.g. 1996). In the 5 years
between 1995 and 1999, Japan's import value of agricultural products exceeded USD269b., accounting for 10.6% of that of the world, whereas its population is only 2.2% of the world's population. Japan's annual average trade
deficit in agricultural products reached USD51.6b. in the period 1995-1999 and
increased further to USD55.6b. in the period 2000-2004. All of these figures
are in striking contrast to those of the Netherlands.
3. Comparison with the USA and Brazil
This comparison leads to a result that exceeds expectations. The USA has a
population of 281m. (2000); it has 177m. ha of arable land. Roughly speaking,
the average per capita land area of the Netherlands is only 9% of that of the
USA, and the agricultural population in the Netherlands is 8.3% of that in the
USA. In terms of area of arable land per agricultural worker, the USA is
16 times larger than the Netherlands. The USA - the most developed country in
the world - accounts for 22% of the world's GDP. The US export of some important agricultural products usually accounts for one half to one fifth of the world
total. As for other aspects, the USA has a considerable import of aquatic products, together with an increasing import of horticultural products. If one takes
into account these two groups of products (i.e. floriculture and fishery), the
USA's net export of agricultural products saw a significant decrease in the five
years from 1995 to 1999 (table 1.2), falling sharply in the world list. In the first
years of the 21st century the USA even become a net importer of agricultural
products.
38
There are a variety of reasons behind this large-scale regression of the US
agricultural export. Here, we will not go too deeply into these reasons. Briefly,
as long as aquatic products and especially horticultural products (e.g. flowers)
are generalised and classified as 'agricultural products', the Netherlands is worthy of the title 'world champion' as regards the net export of agricultural products. However, since 2004 the Netherlands lost this title to Brazil. The exports
of this land abundant country rose sharply after the beginning of this century up
to USD46b. in 2007. This is still far below the agricultural exports of the Netherlands, USD72b. in 2007. However, the agricultural imports of Brazil are small
compared to the imports of the Netherlands and that made Brazil the number 1
in net agricultural exports and the Netherlands number 2. The Netherlands is
also number 2 in agricultural exports. All other countries, excluding the USA,
have a smaller export.
The Netherlands is the winner of numerous world 'gold and silver medals' in
agriculture.
A. Largest export ratio of agricultural products in the world
1. Foreign currency earning per capita. In the five years from 1995 to 1999,
the average gross export value of agriculture in the Netherlands reached
USD37.83b. per year. If averaged by 269,000 agricultural workers, per capita annual average export value exceeded USD140,600, keeping the country
ahead in the world. In the beginning of the 21st century the export value of
agricultural products rose further to USD72.28b. in 2007.
2. High value of foreign exchange created by per hectare of land. If one divides
the value of agricultural export by the land area,1 the average export value
per hectare of land in the Netherlands was in the period 1995-1999
USD8,230 (USD0.82 per m2); if one looks at the net export, then the figure
is USD3,219 per hectare. No other country has such a high record. Due to
the further rise in export and net export in the first eight years in the new
century this picture became even more pronounced.
3. Export of selected agricultural products. The most famous are cut flowers,
bulb flowers, potted plants and other ornamental plants, with an annual export value of over USD5b., accounting for more than a half in the world.
1
The FAO definitions as well as FAO data are used for comparison. Please note that total land (rather
than arable land) area is used as the denominator.
39
Meanwhile, the Netherlands is also the world's biggest exporter of seed potatoes, accounting for more than 60% of the international market. In addition, the export value of eggs (including egg products), beer, tomatoes,
cheese, et cetera also ranks first in the world. For more recent data see
chapter 5.
B. Highest land productivity in the world
As stated, calculations by the US Department of Agriculture based on the 'international dollars' of the FAO show that the per hectare crop production in the
Netherlands was 2468 'international dollars' in 1991. Its land productivity (crop
production per hectare) ranks number one in the world, far higher than that of
other countries.1 In terms of labour productivity, the Netherlands was also very
high - 44,339 international dollars per agricultural worker. Although this figure is
below that of the USA (51,560 international dollars), it is higher than Canada's
(42,830 international dollars) and Australia's (43,032 international dollars) and
much higher than Japan's (4,547 international dollars) and that of most EU
Member States.2
C. Agricultural infrastructure
Due to the shortage of land, the Netherlands has invested a large amount of
money in building the world first-rate, infrastructure-based agriculture. 'High input for higher output' is another feature of agriculture in the Netherlands.
The following points typify the infrastructure-based agriculture of the Netherlands.
1. Standard of water conservancy and flood prevention systems is at the top
level in the world. The 32-km-long Afsluitdijk (Zuiderzee dam project) has enclosed the sea into a large freshwater lake (the IJsselmeer) covering 1,650
sq. km. Based on this, circa 165,000ha were reclaimed later as farmland.
The completion of the Delta Project extended the high-standard regulating
dykes and freshwater dams to 2,800km in length. The flood prevention
standard is so high that it exceeds that of other countries in the world: at
most, one hazardous case is permitted during a 1,250-year period, while
1
ERS-USDA, ibid.
According to recent estimates of the World Bank, the agricultural productivity (value added per agricultural worker, 1997-99 average) of selected countries are as follows (USD): Denmark 54,090;
Netherlands 53,819; Canada 36,597; Australia 33,765; Japan 30,086; China 321. Source: World
Development Report 2003: Sustainable Development in a Dynamic World.
2
40
some projects require even higher standards. It is a wonder in the world that
numerous outlet channels drain water and protect arable and grass land,
which allow high yields even in those areas that are 4-6m below sea level.
2. The Netherlands has the largest area of greenhouse in the world: nearly
11,000ha, representing circa 25% of the world total. Especially the Westland region (which is known as the 'glass city') in the western part of the
country has concentrated greenhouses with advance facilities, providing
various flowers and vegetables all the year round.
In all respects, Dutch agriculture is really unique in the world. How the Dutch
achieve their success is worth deliberation and research. Moreover, we should
learn from their successful experiences and reveal the 'secrets' behind such
miracles.
41
2
2.1
Vitality of farms
Introduction
Every country should answer such a basic question as: how many workers are
needed to feed the country? One country that has a strong economic force
needs only a small percentage of labour to provide sufficient food for the people. In fact, one agricultural labourer in developed countries is able to supply
food for dozens of people, even up to a hundred.
It is recommended to investigate a countries agriculture both in macro and
micro terms. In the previous chapter, we discussed the role of agriculture in the
national economy of the Netherlands, and further its position in the world from a
macro perspective.
If we treat the entire agricultural system as a tree, then farms can be considered as its cells. If a tree grows strongly, it is definite that the cells are surely
full of vigour. This holds true also for the agricultural system as a whole: if thousands of farms in a country are all healthy and energetic, the agricultural sector
of this country will be vital and competitive, and vice versa.
Laboratory blood test helps us to examine a person's health; likewise, the
analysis of a typical farm can reveal the development level of agriculture in a
country. It is very meaningful to conduct research into the structure of farms
since the farms (farmers) make all agricultural products. The ultimate reason of
gaps between different countries in the growth rate and level of agricultural
production lies in the differences between their farms. This can be easily proved
if we compare horizontally with some other countries in the world. As Nobel laureate Theodore W. Schultz pointed out the 'key variable in explaining the differences in agricultural production are the human agent, i.e., the differences in the
level of the acquired capabilities of farm people'.1
The aim of this chapter is to discover the reasons of Dutch agricultural success by studying individual farms.
1
42
Theodore W. Schultz, Transforming Traditional Agriculture (Chicago, The University of Chicago
Press, 1964), p. 17.
2.2
Family farms
The economic system of the Netherlands determines the nature of its agricultural enterprises. Dutch agriculture is based on family farms in private ownership. Farms on fully owned land have taken a larger share, while those run
through land leasing account for a relatively small percentage. The further expansion of large farms faces great obstacles because of limited per-capita land
area in the Netherlands and the big demand for agricultural and non-agricultural
purposes. A feasible way is to lease some land from others.
As the number of farms in the Netherlands greatly decreased during the last
three decades (1970-1999) - from about 181 thousand to less than 100 thousand, the number of holdings with full land ownership has followed the same
way: it declined from 68,931 to less than 50,000 in 1999 and 33 thousand in
2005. Their share increased for a period of time, but decreased after 1997 (table 2.1). In the meantime the part-ownership holdings have kept their important
position, or even have seen some gains.
Table 2.1
Type
Full ownership
Agrarian holdings in the Netherlands, by ownership (%) a)
1970
1977
1987
1997
2005
38.1
43.2
47.4
53.8
41.1
80-99% ownership
8.8
9.4
11.2
13.8
11.4
50-79% ownership
14.1
14.7
15.0
12.9
18.8
20-49% ownership
10.4
10.5
9.9
8.0
12.3
<20% ownership
6.0
5.8
5.3
4.0
7.1
Leased land only
22.6
16.4
11.2
7.5
9.3
a) The percentage is calculated by the author according to Land- en tuinbouwcijfers 2008, p. 33.
Source: Agricultural Economics Research Institute, the Netherlands (LEI) and the Dutch Central Bureau of Statistic (CBS).
The growth of family farms cannot be separated from a favourable economic
and institutional environment. The mature system of market economy in the Netherlands guarantees the farmers' decision-making rights for their production activities and their control over resources, by this farmers are encouraged to get the
maximum return from their farm operation. At the same time, farmers must
closely follow the latest advances in technologies in order to use their limited resources (including labour) more efficiently to the full extent. Facing both natural
risks and market risks on agricultural production, the farmers must adapt to the
43
changes of situation and make their decisions to adjust the pattern of production
duly; otherwise, losses or even bankruptcy would be inevitable.
The biggest advantage of household labour is lower cost on supervision.
Many agricultural production activities strongly depend on seasons, not divided evenly between months. Hence, a farm owner would face such problems
as insufficient use of labour force and difficulties in supervising if workers are
hired from outside. No such problems exist in family farms. Like in most countries in Europe, farm labourers in the Netherlands are mainly family members,
with only a small part of hired workers. Prof. G. H. Schmitt mentioned in his
article1 that the proportion of hired labour in agriculture was only 7.4% in the
EC countries in 1985, among which most of the countries were lower than
9%, except for Denmark and France (both nearly 19%) and the UK (50.3%).
The share of hired workers in Dutch farms is not big either: the ratio of family
workers to employed labourers was 1 to 0.44. Of course, the share of hired
workers varied sharply from different types of farms. For example, greenhouse horticulture usually needs a clear labour specialisation and the supervision costs are lower in this field. Typically, we see a much higher percentage
of hired workers in the Westland (in the province South-Holland), where greenhouse horticulture is concentrated.
If comparing the agricultural structure (or farm structure) of different countries
historically, we might notice that small farms were dominant in all today's developed countries. They were also typical in having low labour productivity and pursuing self-sufficiency. With increased productivity over time brought by technological
progress, social specialisation, growth of cities, improvement of transportation,
uprising of the commodity economy and capital accumulation, the small farms
gradually grew to small commodity producers and further developed to specialised commodity producers. Finally they have grown into large, profit-pursuing
modern farms, often forming an agro-complex or agribusiness with other partner
enterprises. It is this agro-complex made up by many strong family farms that
forms a base for the competitiveness of Dutch agriculture in the world.
44
1
Günter H. Schmitt, Warum ist landwirtschaft eigentlich überwiegend «Bäuerliche Familien Wirtschaft?» Berichte für Landwirtschaft 67 (1989), p. 174.
2.3
Exit of farms
Just like the metabolism in a living creature, the exit (withdrawal) mechanism of
farms plays an important 'filtrating' role. Such a mechanism is vital to improve
the overall productivity and the competitiveness of farms. Poorly managed
farms, not being able to sustain in competition, are annexed by stronger ones
and their workers leave the agricultural sector. Competitive farms expand continuously and increase their economic power. On the other hand, society keeps
absorbing out-flowing labourers from the agricultural sector, so that they can
create more wealth in their new jobs (after re-training). This mechanism makes
the Dutch agricultural sector a dynamic system full of vitality and efficiency.
The development of the Dutch economy pulls agricultural labourers to shift
to other sectors, resulting in a continuous decrease in the total number of
farms. An important reason for such a decreased to decrease was change of
generations: old farmers having no successors. In the early 1950's, there were
about 400,000 farms in the country. After that, the number of farms has always
been decreasing, consequently leading to a substantial decrease in the number
of agricultural labourers. The number of farms in the Netherlands decreased by
almost 65% in the period of 1950-1980, then dropping from 145,000 in 1980
to 125,000 in 1990, and down to less than 100,000 in 2000 for the first time
(table 2.2). Within a half century, the number of remaining farms was only one
forth of the original total number in the Netherlands. After 2000 the number of
farms decreased further.
Changes in the number of farms in recent two decades have following three
characteristics:
Table 2.2
Changes in the number of holding by main types
Types
1980
1990
2000
2007
Arable crops
16,387
16,265
13,749
11,366
Horticulture
20,311
17,965
13,281
9,035
6,058
5,762
5,146
4,452
Perennial crops
Dairy cow and cattle
71,474
58,326
47,075
39,128
Pigs and poultry
12,327
11,807
8,382
5,771
Mixed farms
18,437
14,778
9,850
6,971
144,994
124,903
97,483
76,741
Total
Source: LEI, Landbouwcijfers 1990 and Land- en tuinbouwcijfers 2008, p. 23.
45
First of all, there seems to be a tendency of accelerating decrease in the
number of farms. If observing the reduction speed every five years, we find that
on average, the number dropped by 2,200 annually in the period of 1985-1990;
this figure was 2,340 and 2,914 in the period of 1990-95 and 1995-2000, respectively. The decrease had a record at almost 3,000 a year in the period of
2000-07.
Secondly, the number of mixed farms decreased fastest. The so-called
mixed farms in the Netherlands refer to those farms with low specialisation,
some concentrate on crop production; some on animals; some engage in both
or other industries. Usually farms are unstable, as they are not large. Compared
with 1990, the number of the mixed farms decreased by 7,800 (i.e. by more
than 50%, while the number of mixed livestock farms decreased even more.
Thirdly, land property influences the farmers' decision to quit agriculture. The
farms that are more highly dependent on land show a relatively slow decrease in
their number. Farms specialised in perennial crops reduced the least in number,
dropping by 23% from 1990 to 2007. Although the Netherlands has not a comparative advantage in arable farming, the number of farms in this category does
not decrease very fast, reducing just by 30% in the last 17 years (see table
2.2). As the output increase for dairy farms is confined by quota enforced by
the EU Common Agricultural Policy (CAP) in EU; these farms had a decrease of
almost a third in number (still small if comparing with that of other types of
farms). The main reason for the relative stability of these three kinds of farms is
their dependence on land. In contrast, horticulture and intensive animal husbandry (pig and poultry) are not so reliant on land, their number reduced by 50%
(table 2.2). All they need is just a place for production, even if it is a piece of infertile sandy land impossible to cultivate at all.
As the number of farms decreases remarkably in the Netherlands, agricultural labour forces are flowing out constantly.
From 1955 to 1960, the share of Dutch agriculture in GDP dropped from
12% to 11%; the share of agricultural workers in total labour forces decreased
from 13.5% to 12%. Since then, agricultural labour forces continue to flow out:
the annual reduction was 2.6% and 1.7% in the periods 1968-73 and 1973-78,
respectively.1 From 1980 to 1995, the number of workers employed in the agricultural and fishery sectors decreased from 273,000 to 251,000; at the same
46
1
Michael Tracy, Agriculture in Western Europe. Challenge and Response 1880-1980. Second edition.
(Granada, London, 1982), pp. 236, 326-327.
time, the number of farms reduced from 145,000 to 113,200, down by 8% and
22%, respectively.1
The number of agricultural workers decreased from 282,000 in 1994 to
268,000 in 2001, with an annual reduction rate of 0.65%. The decrease continued after 2001. In 2007 the number of agricultural workers was 143,000. The
number of family workers decreased from 221,000 in 1994 to 1555,000 in
2007; that of non-family workers (hired workers) increased slightly, from
61,000 to 68,000. If averaging on the basis of 76,741 farms in 2007, every
farm had 2.9 labourers, i.e. 2 family members plus 0.9 hired workers.
As discussed before, an important characteristic of the agricultural structure
in the Netherlands is that the percentage of farm workers within the total labour
market is very close to the share of the agricultural sector in the GDP. One of
the key points here is that farm workers, having left the agricultural sector, can
be assimilated into other sectors, especially service industry. We should keep in
mind that in the long run, the figures for both of them almost decreased at the
similar speed. That allows Dutch farmers' income keep growing (table 2.3) and
the total income of agricultural population is comparable to that of non-agricultural people. This is the fundamental reason why no significant gap exists between industry and agriculture; neither between urban and rural areas.
2.4
Size expansion
Another distinguishing feature of Dutch farms lies in their continuous expansion
in scale, which is partly an inevitable result of the reduction of farms in quantity,
and one of the basic conditions to raise further labour productivity in Dutch agriculture.
There are obvious differences in defining the size of Dutch farms. The size
of farms can be expressed in two ways: one is the acreage or the number of
animals per farms (e.g. tables 2.4 to 2.6); the other is on basis of gross margin. The so-called Dutch Size Units (DSU) are based on the latter approach (see
box 2.1). The calculation method of DSU is adapted from the European Size
Unit (ESU).
1
LNV: Facts and Figures, 1996/97, 1997/98.
47
Table 2.3
Average income of holdings in different types (x €1,000)
Type of farm
2001
2003
2005
2007 a)
47.0
41.5
31,1
58,5
Vegetables in the open
129.5
27.7
38,8
70.0
Vegetables under glass
67.3
126.5
31.5
28.2
Arable
Cut flowers under glass
62.2
39.3
45.9
60.8
Ornamental plants and pot flowers
87.2
79.8
87.2
64.6
Flower bulbs
114.3
18.8
28.9
73.0
Mushrooms
84.5
51.6
24.3
50.0
Fruit
41.7
49.5
21.9
65.0
Nursery
56.5
69.3
67.6
70.0
Dairy
51.3
34.8
61.9
84.2
Pigs
6.4
-/- 7.5
80.3
-/- 49.0
Laying hens
33.6
136.0
-/- 8.9
17.0
Chickens
54.1
-/- 7.0
96.7
68.0
Total
42.8
38.6
47.5
51.0
a) Estimate. Source: LEI and CBS, Landbouwcijfers 2008.
Box 2.1
Dutch Size Unit (DSU)
Based on standard gross margin (SGM), Dutch size unit (DSU, or nge in Dutch) is the gross
profit (comparable to added value) after specific costs are deducted from total revenue of
crop per unit of land or animal per unit. It is expressed in terms of euro (current price).
To compare the scale of agricultural production within an industry, it is relatively clear and
convenient by using traditional methods, but this does not fit the comparison between different crops or different industries. The scale division provided by DSU makes it easy to compare profits of diversely oriented farms, therefore it is more scientific and in line with real
situation. Just like evaluating the size and power of an industrial enterprise by its turnovers
and profits instead of the number of its workers or the 'factory area'.
In order to reflect the changes in the average level of the added value of Dutch farms, the
specific number of DSU per crop and per animal are adjusted periodically.
DSU in 2000 equalled a SGM of about €1,375. Some examples on the basis of the DSU
2000: a hectare of winter wheat equalled to 0.81 DSU, a hectare of sugar beet 1.72 DSU,
one dairy cow was 1,270 DSU, a sow 0.247 DSU, 1ha round tomatoes under glass equalled
to 146.9 DSU and 1ha roses under glass was 245.9 DSU.
Therefore, in 2000, a ha of round tomatoes and roses cultivated under glass was
181 times respectively 304 times larger than one hectare of winter wheat in terms of DSU.
48
In terms of size on basis of DSU, large-sized farms (>150 DSU) in 2007 accounted for 14% of the total, which mostly consisted of horticultural farms,
in particular in greenhouse gardening and dairy farms; medium-sized ones accounted for 47%, almost 55% of which were dairy cattle farms; the remaining
39% were small-sized farms (<40 DSU). Large-sized farms accounted in 2004
for almost half of the economic size of agriculture measured in DSU. There exists a clear relation between the size of farms and economic results: on average
the results on the bigger farms are better than on the smaller ones. In the period 2001-2003 the bigger farms almost all costs (included calculated costs for
all family labour and family capital) could be covered by the revenues, for the
group of smallest farms only 75% of the costs were covered by the revenues.
From 1997 to 1999, the total earnings of big family farms were on average
about €70,000 per year, with 90% of income from agriculture (or agribusiness).
The income of small- and medium-sized farms was only half or less of that of big
farms; furthermore, a considerable part of their earnings came from activities
outside of agriculture. This explains the existence of a strong incentive to increase the size of farms.
Take dairy sector for example, the total number of farms with dairy cows
decreased by 73% from 1975 to the early 21st century, among which only 7%
of farms with 1-30 cows 'survived' in dairy (including mixed farms with dairy
cows) and their share dived from 69% to less than 20% (table 2.4). In the period
of 1985-2002, the share of small farms with less than 30 cows lost 21% points,
while that of big farms with more than 50 cows gained by 22% points - they became the majority of dairy farmers (almost 60%), especially the share of large
farms with more than 100 cows has surged from 1% to 15% in 2007. It is difficult to run a large farm totally depending on family workers. Since hired workers
mean more labour costs, an alternative solution can be adopted, that is, the use
of new technology, for example, milking robots. It is reported that the Netherlands was ahead in the introduction of these robots compared to other countries and the proportion of its robots in use keeps ahead in the world.
49
Table 2.4
Holdings by number of dairy cows
Number of cows
1975
1985
1995
2000
2005
2007
1-30
63,330
23,642
11,355
6,855
4,031
3,103
30-50
19,376
14,890
11,269
8,572
5,384
4,347
50-100
8,218
17,119
13,172
12,208
11,457
10,700
636
2,344
1,669
1,832
2,655
3,165
91,560
57,995
37,465
29,467
23,527
21,313
>100
Total
Source: LEI (2008), p. 94.
Table 2.5
Holdings by number of breeding sows
Number of sows
1975
1-50
1985
1995
2000
2005
2007
26,985
9,626
2,274
880
375
309
50-100
3,862
3,841
1,633
821
379
314
100-250
1,075
4,356
4,192
2,653
1,594
1,332
191
781
1,524
1,746
1,639
1,658
32,113
18,604
9,623
6,100
3,987
3,613
>250
Total
Source: LEI (2008), p. 103.
Table 2.6
Holdings by number of laying hens
Number of hens
1980
1990
1995
2000
2005
2007
<3,000
3,927
1,894
1,236
870
514
382
3,000-10,000
895
627
510
442
289
277
10,000-50,000
710
779
616
590
560
562
66
131
126
174
168
176
5,598
3,431
2,488
2,076
1,531
1,357
>50,000
Total
Source: LEI (2008), p. 107.
Tables 2.5 and 2.6 reflect the changes of specialised farms in breeding
sows and laying hens. The expansion tendency is significant: the number of
small farms decreases rapidly, at the same time, the share of large and super
farms increases step by step.
The farms with potatoes can be used as an example of arable farms. From
1975 to 2007, the share of comparatively big potato farms (larger than 10ha
potatoes) grew from 11% to 50%, whereas that of farms with land less than 1ha
dropped from 54% to 6% (table 2.7). The similar trend can be observed in
farms with cereals: during the period 1975-2005, the number of farms of less
50
than 10ha cereals decreased from 32,751 (83% of the total) to 9,577 (59% of
the total), or a reduction in share by 24 percentage points. At the same time,
the number of farms with more than 30ha cereals increased from 786 to
1,125, and its proportion in total rose from 2% to 7.5%. In a country that is
badly short of land, such a growth rate is not slow for farmers who depend on
land to make a living.
Table 2.7
Holdings with potatoes by size of area with potatoes
Ha/farm
1975
1985
1995
2000
2005
2007
<1
23,805
9,246
2,530
1,469
729
647
1-10
15,234
12,406
9,057
7,728
4,860
4,295
10-30
4,490
5,445
5,194
4,888
3,572
3,426
>30
347
584
1,041
1,189
1,300
1,406
Total
43,876
27,681
17,822
15,274
10,461
9,774
Sources: LEI (2008), p. 64.
In the Netherlands, people pay increasing attention to environmental protection, which affects the development of animal husbandry. In addition, because of
the EU quota system in the dairy sector, cow keepers face 'double limits': if a
farmer wants to expand the size of production, he has to buy quota - the 'right
to produce' ('licence') - from other farmers, which in the Netherlands is very expensive. One way to enhance the profitability is to increase the yield per cow, at
the same time cutting down the number of cows. To expand poultry or pig production is relatively easier - what the farmers must do is to meet the environmental requirements, as well as to follow the advancement of technology. In
other words, to attain an optimal size for animal farms, one should take into account not only the number of animals or layers and the market situation, but
also many other factors, for example, the cost-benefit ratio in treatment of the
waste produced by the livestock and poultry, and recently, conditions of animal
welfare.
Under pressure from at least three aspects, arable farms (and other farms
that depend on land) face more difficulties in expanding their production scale.
The first aspect is the environment requirement of society. People are living in
increasingly crowded cities and enjoying more an more income and free time,
and they demand more space for leisure and recreation, fresh air, quiet and
pretty sceneries, protection of landscape, nature reserves, increase of forest
area, more ground for wild animals, et cetera. This is 'green' use of land. Re51
52
cently, the concern about the environment and the quality of the products has
led to the rise of organic (or ecological) agriculture. 'Green farming' has gained
momentum: green farmland increased from about 800ha in 1985 to 47,000ha
in 2005.
The second aspect comes from so-called 'red' claims of land, which means
land for non-agricultural purposes, housing, factories, infrastructure (roads, airports and so on).
The third aspect refers to internal factors which make it difficult for arable
farmers and other land-dependent farmers to increase their size in hectares.
This is due to the huge competition for land between farmers and the limited
area that becomes available for enlarging of farms because, for example, farmers who give up farming have mostly a limited size in hectares.
These external and internal reasons show that it is not easy for arable and
other land-dependent farmers to expand their scale of business.
Farmers in the Netherlands have two ways to expand their size in hectares,
namely to purchase or rent additional land (investment abroad is not discussed
here). The most important source for acquiring additional hectares are the
farmers themselves, as most agricultural land is owned by farmers (in 2005,
more than 55%). The second source is buying or renting land from private persons, institutional investors or the state. The period of rent can be very long.
Farms that drop out (or bankrupt) are usually not large-scale ones.
There are no essential differences between the bankruptcy of a farm and
that of a factory in industry; the only difference is that farms are managed
mainly by family members, or with a few hired labourers. Farm workers, who
leave the agricultural sector (especially their children after their education), expecting higher income, usually go to towns to seek for a non-agricultural job,
especially in various service industries. The farmers who are winners through
market competition have, on average, higher skills, higher labour productivity
and stronger international competitiveness. Those out-flowing workers increase
the labour supply to other sectors, contributing to an increasingly advanced
economic structure of the country.
A great deal of statistical data in the above tables display a picture of dynamic changes of the agricultural structure of the Netherlands: the total number
of farms is declining, with a tendency for small farms to rapidly disappear (most
are not specialised) and for larger farms to grow step by step. Compared with
other EU countries, what is the position of Dutch farms in terms of size?
Table 2.8 shows the average farm size in hectare and in ESU (Economic
Size Unit) in the EU. In the Netherlands the average size of farms in hectares
had exceeded the EU average already in 1997, owing to continuous exit of a
part of farms, although on a per-capita basis the land availability for the Dutch
farms has been very limited. More importantly, it was almost 7 times that of the
EU if measured by ESU (one unit of ESU equalling to €1,200, equivalent to
'gross margin'), far larger than many EU countries with much more land resources. In this sense, the Dutch farms have become on average even larger
than Danish farms, which are well known for their high labour productivity. That
can explain partly why the Netherlands could be so powerful in international
competition.
Table 2.8
Size of agrarian holdings: selected EU countries
Countries
Ha per holding in 2005
Average size, ESU
1995 2005 ratio to EU-15 in 2005
Netherlands
24.4
78.9 102.6
6.8
Denmark
54.1
51.7
4.8
72.9
UK
64.0
42.6
36.7
2.4
Belgium
27.4
42.6
64.4
4.3
France
49.1
31.3
50.4
3.3
Germany
43.8
27.9
49.7
3.3
7.4
7.5
12.8
0.8
16.39
14.9
15.1
1.00
Italy
Average of EU-15/25
Source: Eurostat; see LEI (2004), p. 224 and LEI (2008), p. 208.
2.5
Strong product specialisation
Specialisation is an important characteristic of Dutch farms. As discussed
above, it is very hard for both planting and livestock farms to simply take over
more acreage to enlarge production scale (in a general sense). They must find
new channels and alternative approaches to enhance the productivity and to
grow further. The Dutch experience shows the essentiality of specialisation.
The Netherlands has a long history of specialised agriculture: there were
specialised farms early in the 19th century, especially in western provinces.
Nowadays, most farms are specialised in the production of a certain kind of
products. Mixed farms are considered as non-specialised ones. From table 2.2
we can find that the proportion of mixed farms in the total number declined from
13% in 1980 to 9% in 2007. The overall decrease in absolute number was over
53
11.500. Of the mixed farms, those with livestock reduced even significantly
more, reflecting their relatively poor performance. In 2007, the proportion of
specialised farms in the Netherlands exceeded 90%, which was unusual in world
terms. A high percentage of specialised farms is an important reason why Dutch
agriculture is more highly productive and strongly competitive than agriculture in
other countries.
There has been a philosophy in Dutch people for long that specialisation is
conducive to higher efficiency. There will not be a victory in the market competition without higher efficiency. Market position depends partly on the quality of
goods, which is determined by the knowledge and skills of every operator. Expertise can only be improved and upgraded constantly under the condition of
reasonable division of labour. Moreover, specialisation is also beneficial for
mechanisation and computerisation, and leads to lower production cost. Specialised growers of specific products become experts in that field; marketing
persons are sensitive to any changes in the market; transport companies should
do their best in arranging traffic lines to minimise unnecessary costs, et cetera.
Agricultural statistics in the Netherlands gives a very detailed classification
of farms and their production activities, reflecting their in-depth division of labour. Horticulture distinguishes itself from others owing to its importance in the
country: firstly it is divided to greenhouse horticulture and open-ground horticulture, with sub-groups of flowers, vegetables, potted plants and nursery plants,
et cetera. Floriculture farms are further classified as cut flowers farms under
glass, open-air cut flowers farms, flower bulb farms, breeders of young plants,
potted plant farms, and so on. Many flower growers are specialised in the production of one or two kinds of flowers only, or even one or two varieties of one
flower. Some farms are specialised in the production of seeds of flowers or
seedlings and provide related services. The same applies to vegetable production. The specialisation of growers and traders also facilitate the amelioration of
infrastructure, for example auctions as an efficient marketing system and the
other way around.
Field crop farms are relatively diversified because land rotation is necessary.
In general, land-intensive crops, such as cereals (e.g. wheat, barley) are considered as necessary crops for rotation in the Netherlands due to a lack of comparative advantage. Even so, these farms are still clearly specialised. Some
farms specially produce ware potatoes for consumption, others specially produce seed potatoes (which require more complex technologies and therefore
sell at higher price) and yet others specially produce starch potatoes.
54
It is interesting to notice as an example of specialisation the development of
the poultry industry in the Netherlands in recent decades. The development of
the poultry industry promoted the booming of many related suppliers, who in
turn are highly specialised. The poultry industry in the Netherlands can be subdivided into meat sector (broilers) and laying sector (eggs), and into turkeys,
ducks and ostriches as well. In 1999, as reported, there were 2,191 farms that
kept 31.4m. laying hens in the Netherlands, with an output of 9.7b. eggs for
consumption, of which 6.6b. were exported. In the supplying sector for egg
production, there were 3 pedigree breeding establishments, 55 hatchery supply
farms (providing 104m. breeding eggs), 5 hatcheries (88m. hatched eggs), 417
rearing enterprises (28m. rearing stock); in the post-production stage, there
were 29 egg collectors, 235 packing stations, 116 wholesalers, 22 egg product manufacturers and 21 dealers in egg products. Moreover, there were 1,225
poultry farms with 53m. broilers with an output of more than 663,000t of
chicken meat (dead weight), and many that provided these broiler growers with
services.
From above figures of Dutch poultry industry, we can see that in total, for
those 3,416 poultry farms, there were 2,128 related enterprises providing services. Although the latter did not contribute to the production directly, they were
absolutely necessary since those 9.7b. eggs and 663,000t of broiler meat
could not be produced without them, let alone be sold worldwide. Although, the
number of enterprises changed in the course of time the general picture
sketched above is still valid.
It can be concluded, despite the absence of exact statistical figures, that
with the declining number of poultry farms, some of the original chicken-raising
farmers who shifted to other professions became service providers in this industry. In that case, as the agricultural population decreases, more and more
people shift to industry, especially to services in various types, which leads to a
steady upwards proportion of service industry in total labour force.
From the production chain of the Dutch poultry industry, we can summarise
the following:
- specialised production implies that farmers do not need to participate in
sales directly, but can concentrate on production. A variety of service organisations (especially co-operatives) will help them to promote their products;
- rational and deep division of labour brought by specialisation result in the
appearance of suppliers and dealers, in other words, in enterprises who are
also highly specialised;
55
-
56
the supplying firms and post-production services not only help poultry farms
to raise their productivity, but also generate thousands of job opportunities,
which results in a change in the employment structure of the society and an
increase in the national wealth.
In addition, a detail should be stressed here: in the four years from 1992 to
2005, the proportion of full-time farms in total farms increased from 80.1% to
87.2% (the proportion of full-time horticulture farms was already in 1996 as high
as 92.8%), an increase of 7 percentage points; the share of specialised farms
grew from 88.2% in 1990 to 90.9% in 2007. These full-time and specialised
farms make up another main feature of Dutch agriculture, from which we can
have a better and deeper understanding of high labour productivity of Dutch agriculture.
Full-time farms, especially highly specialised ones, depend on the farm operation for all of their household earnings. They must devote all their hearts and
souls to the farm: they must do their best to become excellent experts in their
business activities.
The proportion of full-time and specialised farms in the Netherlands is related to how intensive their operation is: the higher the intensification, the more
necessary it is to devote their efforts and time to their business, since idle machinery and other unused resources drive up production costs.
High-level specialisation is, of course a two-edge sword. On the one hand,
many advantages are linked with specialisation: concentrating on one field helps
to enhance personnel's expertise and to promote technological progress, to
raise crop yields and product quality; better production management and marketing by means of standardisation and mechanisation, reducing of post-harvest
losses, classification, packaging and preservation, et cetera, facilitate the reduction of costs and improvement of competitiveness in the market. On the
other hand, a narrower area of production often means increased market risks to put all eggs into one basket.
Finally, what should be pointed out is that, the highly specialised production
has also increased the market risk of the operators. This is why mixed farms
and part-time farms still exist. Specialised production requires advanced technology, as well as fine institutions: special organisations are necessary to provide thorough and highly efficient services in good time for every step in
production chains. In that case, farmers have access to market information,
technology consultation, timely financial support and legal protection, et cetera,
up to the services needed in international marketing. A variety of co-operatives
play an important role in this aspect. In fact, co-operatives themselves in the
Netherlands are also specialised, which will be discussed in later chapters.
2.6
Conclusion
This chapter presented an elaborate description of Dutch farms - their current
condition and direction of development by providing a large amount of data.
The reasons why the Netherlands has developed such efficient agriculture were
disclosed from a micro perspective. More specifically, this chapter explained
such matters as, who are engaged in agricultural production, how many farmers
there are in agricultural production and what kind of people they are.
If agriculture were an organism, farms would be cells in this organism. In
western literature on agricultural economics, 'agricultural structure' refers virtually to farm structure,1 and not production structure. This is to highlight the primary role of farms (farmers in fact) in the agricultural system.
In the Netherlands, farms are family-run enterprises or companies and most
of them are highly specialised. The boundary between farms and industrial factories is becoming less clear since nowadays farmers also brand their products.
Just like the process of metabolism, in a highly competitive market, relatively
poorly managed farms choose to quit agriculture, generation by generation, resulting in a decrease in the number of farms, while the average size of the remaining farms keeps growing (not only in land area or number of animals, but
also and mainly in terms of gross margin). Consequently, the countries agricultural system is growing stronger.
In the end, following points should be given special attention:
Farms are the foundation of an agricultural system. The macro competitiveness of Dutch agriculture is rooted in the vitality of farms at micro level. Like
plant 'cells' full of vitality, dynamic family farms are the main body in Dutch agriculture.
Although land area per farm is limited in the Netherlands, the average size of
Dutch farm is quite large when measured with economic criteria. Together with
agricultural development, the number of farms has been decreasing continu-
1
See Willard W. Cochrane, The Development of American Agriculture. A Historical Analysis, p. 6
(Minneapolis, University of Minnesota Press, 1979); Ronald D. Knutson et al., Agricultural and Food
Policy, 3rd edition (Prentice-Hall, Inc. 1995), p. 341.
57
ously, with enlargement of size and further specialisation of the remaining
farms. It can be seen as an example of the mechanism of 'survival of the fittest'.
This is an important factor in explaining why agricultural productivity of the
Netherlands is continuously increasing and by this its international competitiveness.
Several factors determine the efficiency of family farms, institutional as well
as technical ones. Making production decisions independently, farmers need a
comprehensive service system, including an effective system of agricultural
education, research and extension, et cetera. These topics will be discussed in
the following chapters.
58
3
3.1
Production structure
Introduction
While devoting a great deal of effort to studying the number and the size of
farms, changes in the agricultural labour force and the specialisation trend of
different types of farm, Dutch scholars also attach importance to describing the
changes in the agricultural production structure.1 This probably originated from
the countries historical experiences. Facing challenges in international markets
in the late 19th century, Dutch farmers adroitly adapted to new circumstances
according to these challenges - they looked for new ways to avoid their weaknesses by developing their own strong points. Recognising their own comparative advantages in doing business, they began to explore the ways to utilise
overseas resources and to expand their share in global markets. This fundamental transformation of agricultural development strategy greatly improved the
Dutch production structure. Dutch agriculture thus successfully embarked on
the road towards high efficiency.
By examining Dutch agriculture from the perspective of changes in production structure, we get a profound understanding of the fact that natural resource
endowments are not the ultimate determinant factor (although, of course, one is
fortunate if one is rich in them). As it does not have a favourable situation as regards natural resources, the Netherlands remoulded its production structure
and reinforced its international competitiveness in agriculture based on comparative advantage. The experience of the Netherlands is instructive and deserves the attention of the Chinese people.
3.2
Opening up or 'protection'
In the late 19th century, Europe underwent a serious agricultural crisis caused
mainly by imports of cheap grain from North America and Russia. That was a
result of a considerable decline in transport costs brought about by the extensive use of steam vessels in international trade, which led to the plummeting of
1
See, for example, LEI, Growing Strong, pp. 13-14.
59
world market prices of cereals and threatened farmers all over Europe. Many
countries (e.g. Germany, France and Italy) chose to impose import tariffs as one
measure of protection.
In those days, the Netherlands was an exporting country, with Great Britain
as its most important market. For a country that was (and still is) heavily involved in international trade in all kinds of agricultural and non-agricultural products, protectionism could have very negative consequences, particularly for a
net-exporting country. The Dutch farmers' organisations were aware of the risks
of protectionism. The Dutch government - convinced by leaders of the farmers'
movement - decided to help by promoting education, research and advisory
services. Key words at that time were specialisation and export promotion with
help of new methods and research. This strategy succeeded and was maintained until the Great Depression of the 1930s.1
As a Chinese saying goes, 'What was lost in the morning can be gained in
the evening'. An important trend in the Netherlands was the fast growth of livestock production based on imported cereals, while cereal production at home
declined dramatically. Dutch farmers took the opportunity to develop animal
husbandry vigorously. As F. Braudel noted, 'Everything was grist to the Dutch
mill'.2
At the same time, Germany restricted the import of cheap grains by imposing high tariffs, and sustained a comparatively high price of grains domestically,
whereas it did not set strict limits on imported pork, eggs or other products.
Very apt at doing business, Dutch farmers developed their livestock production
and exported livestock products to its neighbouring big cities in Germany (especially to the rapid developing Ruhr industrial area) and thus gained advantages in
competition. Furthermore, industrialisation in Germany, France, Belgium and
other neighbouring countries increased people's incomes, which further stimulated the development of horticulture and the processing industry for livestock
products in the Netherlands. This gave a strong impetus to the growth of agricultural exports.
1
W. Huizinga and D. Strijker, Two Lectures on the Historical Development of Dutch Agriculture,
1960-1985 (LEI), pp. 21 and 15.
60
2
F. Braudel, op cit., p. 220.
3.3
General pattern
Dutch agriculture has an important position in the world. Its horticulture, as represented by flowers and bulbs, is well known worldwide; in addition, the countries livestock products - especially those of the dairy industry - enjoy great
prestige everywhere. The aim of examining the production structure of Dutch
agriculture is to find out how Dutch farmers adapted to changing needs and
made the right production decisions, and how they strengthened their leading
role in the international market by taking their comparative advantage.
Resource endowments in the Netherlands are more or less similar to those
of the eastern coastal plains in China, especially in the Yangtze Delta. However,
there are sharp differences in the agricultural production mix between the Netherlands and the Yangtze Delta. This, of course, is to a certain extent related to
differences between these two countries in climate and natural resources, agricultural traditions and consumption habits, et cetera. However, it is also related
to the high commercialisation of Dutch agriculture, including the export-orientated tradition. Another factor is the purpose of production - for own consumption or for export, especially when China suffered from food shortages a few
decades ago. In short, Dutch farmers produce what sells well on domestic and
foreign markets.
From the perspective of changing production patterns in the Netherlands, it
is evident that the natural resources alone do not determine the sector's performance and competitiveness in the international market. With limited natural
resources, Dutch farmers are quick to respond to changes (as changes in the
world market, EU policies, et cetera), to make the right decisions and to adjust
themselves according to the new market setting. The changed Dutch agricultural production patterns are based on the countries comparative advantage,
and helped the sector to sharpen its competitive edge.
Land is scarce in the Netherlands. The total area of agricultural land in the
Netherlands is circa 23,260km2 (2,326,000ha), representing 70% of the countries land surface (2000).1 The agricultural land is made up of: 810,000ha
(41.3%) of arable land, 1,010,000ha (51.4%) of grassland and 110,000ha
(5.9%) of horticultural land. Greenhouses cover 11,000ha. The ratio of arable
land to grassland is circa 1 to 1.25, which would confuse most Chinese - a larger proportion of flat land is used for grazing instead of for intensive crop pro-
1
LEI: Land- en tuinbouwcijfers 2004, p. 14 and 15.
61
duction (even two crops a year in China)! In fact, the prosperous dairy industry in
the Netherlands and the large exports of dairy products would have no foundation if there were no high-yielding grasslands (by the way, part of the land, especially peat soils, can only be used as grassland in a profitable way. It is this
special production pattern that plays an important role in the 'miracle' of Dutch
agriculture.
In the nineties of last century crop farming became gradually more important
than livestock in the Netherlands. In 2006, the total output value of Dutch agriculture amounted to circa €19.8b. and its value added €8.1b. (table 3.1) this is
2.0% of GNP. Of the output €11.2b. came from products of crops (horticulture
included) and €8.7b. from animal husbandry, which represents a ratio of 56 to
44.1
Horticulture is far more important in value added than field crops in the
Dutch planting industry (table 3.1), in sharp contrast with its neighbouring countries. As early as a few centuries ago, the Dutch knew how to make use of the
countries comparative advantages - at the same time importing almost half of
its cereals. As Peyrefitte said, the Netherlands 'concentrate on the products the
most productive and profitable: flax, cole-seed, hop, et cetera'2 and exported
horticultural products.
Table 3.1
Value added of Dutch agriculture, by sector (X € million and
share in %)
2001
million €
2006
%
million €
Arable farming
1,006
13.2
1,180
14.6
Greenhouse horticulture
2,694
35.3
3,210
39.8
Open ground horticulture
1,134
14.8
1,050
13.0
Grassland-based livestock
1,596
20.9
1,575
19.5
Intensive livestock
1,204
15.8
1,055
13.1
Total
7,634
100.0
8,070
100.0
Source: Het Nederlandse agrocomplex 2008 (The Dutch agricultural complex 2008), LEI (2009).
1
62
2
%
A. Peyrefitte, op cit., p. 217.
A. Peyrefitte, op cit., p. 82.
In the Netherlands, much importance is attached to horticulture. In 2007,
the output value of field crop farming accounted for only 11% of the total value
of agriculture, while horticulture contributed 44%. As mentioned, horticulture is
very specialised both in open field and greenhouse - open field horticulture
mainly produces bulbs and open field vegetables (cabbage, cauliflower, broccoli, et cetera), while greenhouse horticulture is on a steady increase, including
various cut flowers (roses, year-round chrysanthemums, gerberas, freesias, et
cetera) and vegetables, such as tomatoes, cucumbers, sweet peppers and aubergines.
Animal husbandry was once the most important production sector in the
Netherlands, with a proportion in total agricultural output value far more than
crop production. However, because of the rapid development of horticulture,
the animal sector has lost a lot of its importance in recent decades, although in
2007 it still accounted for 44% of the total agricultural output value.
Animal husbandry is divided into two types in the Netherlands: grazing animal farming and intensive livestock. The former refers mainly to dairy cattle and
sheep (sheep are less important), which need a large area of artificial grassland.
Intensive animal production includes pig and poultry (for eggs and meat), which
are usually kept in buildings and in relatively high density. Both types of production are now restricted in their growth mainly for their relatively great impact on
the environment.
Forestry and fishery do not occupy noticeable positions in the whole agricultural sector in the Netherlands. According to historians, the name 'Holland'
originally meant 'country of wood'. The forestry coverage in the Netherlands
now, however, is at a comparatively low level by European standards. Since the
Netherlands is a net exporter of aquatic products, the contribution of fisheries
to the Dutch economy cannot be ignored.
3.4
Arable farming
Compared with Chinese family farms, most arable farms in the Netherlands
have a large area of land, are highly mechanised and their yields often rank top
in Europe or even in the world (table 3.2). However, unlike in China, arable farming has a secondary position in Dutch agriculture. Its output value represents
only a small part of the countries total agricultural production, and has tended
to decline over time. This is related to the specific resource endowment of the
Netherlands.
63
Table 3.2
Yields of major arable crops in the Netherlands, 2003
Unit: t/ha
wheat
maize for silage
potato
sugar beet
Netherlands
9.10
46.47
45.73
64.20
Belgium
8.51
46.95
42.75
70.88
France
6.23
35.02
42.98
72.73
Germany
6.50
44.54
34.48
60.21
Denmark
7.06
30.68
41.28
67.70
UK
7.79
3.91
47.07
57.23
Source: LEI (2004) (yields calculated according to the tables on p. 220).
The area of arable land is limited in the Netherlands. Land is scarce. The
countries high latitude means that it has climate conditions that are different
from those of China, such as low accumulative temperature and insufficient
sunshine in winter, which sometimes influences the quality of products. For example, Dutch wheat is not used for making bread; instead, high quality wheat is
imported. One of the reasons for growing cereals is for crop rotation purposes
and to produce animal feed.
Despite the fact that the land area per Dutch arable farm is much larger than
that in China, they are still small compared to the EU standard. Therefore, the
Dutch reduce land-intensive crops (e.g. cereals) as much as possible and intensify in root crops, such as potatoes (seed potatoes and potatoes for consumption (ware potatoes) and for starch), sugar beet and onions, which results in a
higher income per hectare. Furthermore, as the EU guaranteed prices for cereals, sugar and potato starch are gradually being scrapped, the production of
arable crops in the Netherlands is undergoing big changes: some farmers are
turning to horticulture or intensive livestock production (e.g. pig and poultry),
others survive by expanding the size of their holdings, and yet others engage in
non-agricultural industries (agricultural tourism, et cetera) or join activities to
protect nature and the landscape, or transform themselves into organic producers (they give up or reduce their use of fertilisers and other chemicals), in
order to maintain their existence in agriculture. Some, however, have to abandon farming or treat it as a sideline.
During the period 1985-2005, the number of arable farms fell from 17,560
to 12,358, with an average annual reduction of 1,295, 1,605, 913 and 1,391
farms per 5-year period, respectively (cf. table 2.2). There is a general trend of
declining in the number of farms, particularly in the number of arable farms.
64
On the other hand, land area used for arable crops in the Netherlands increased from 675,000ha to 824,000ha between 1975 and 2005. In 1990,
there were 4209 small arable farms (<10ha), representing 26% of the total
number, and only 493 large farms (>100ha). The picture, though, has changed
greatly: there are now (2005) only 2883 small farms, while large farms make up
7% of the total. In 2007, the average size of an arable farm was 41ha. They are
mostly concentrated in the new polders in Flevoland and in the northern part of
the country. According to the author' observation, the size of viable arable farming is mostly over 50ha, and many are larger than 100ha. The proportion of
these big farms (over 50ha) increased to 29% in 2007.
The major arable crops in the Netherlands are (according to sown area,
2005): maize for silage 235,100ha, potatoes 155,800ha, wheat 136,700ha,
sugar beet 91,300ha, barley 50,600ha and maize for grain 20,700ha. Root
crops (potatoes and sugar beet) are maximised in the cropping plan, while the
importance of cereal crops is not a priority. There seems to be a trend towards
increasing the area of maize for silage in the Netherlands, although it is mostly
produced on animal farms. Moreover, some vegetables (see later) and flax,
rapeseed, beans, grass-seed crops and crops for green manure, et cetera, are
also on the list of arable crops.
Most arable farms carry out large-scale planting. They are highly mechanised. Despite the unfavourable climate, their unit output level is leading in
Europe (see table 3.2). General speaking countries with a small land area per
capita lack a comparative advantage in growing land-intensive crops. The Dutch
arable farmers who have increased ratio of high-value added root crops have, to
some extent, changed that situation.
Cereals produced by the Netherlands mainly include wheat and barley, with a
total output fluctuating slightly between 1.0 and 1.3m. t. The sown area of winter wheat dropped from 128,100ha in 1980 to circa 116,000ha in 2005. The
import value of cereals peaked at USD663m. in 1990, after a continuous increase from USD53m. in 1967; on the whole, it maintained a level of USD400600m. (for circa 3.47m. t) in the first years of the 21st century. The selfsufficiency rate of cereals in the Netherlands is very low (23% in 2001/02).1 On
average, 3m. t of wheat are imported per year.
The production of maize for silage has undergone significant growth since
the 1970s. The sown area grew from 77,300ha in 1975 to circa 235,100ha in
1
Eurostat, see LEI (2004), p. 224.
65
2005,1 and has always been more than 200,000ha for years now. In recent
years, due to the emergence of green, environment-friendly and ecological agriculture, 'green' or 'organic' crops have developed fast in the Netherlands, that
is, from only 800ha in 1985 to 51,000ha in 2007.
Potatoes in the Netherlands are subdivided into three categories: consumption potatoes (ware potatoes), seed potatoes and starch potatoes. The output
value shows big fluctuations, e.g. €645m. in 2000 and €1,311m. in 2007.
Two main reasons contributed to the development of potato production: the existence of a well-developed potato processing industry (starch or crisps and
French fries) - as value added in processing makes potato production profitable
- and the opportunities to develop seed potato production, which requires a
higher level of skill and technology but yields higher profits. The area under
seed potatoes has increased from 21,000ha to 39,000ha. The Netherlands is
the biggest exporter of fine seed potatoes: it accounts for 60-70% of the world
total. Also a considerable quantity of consumption potatoes is exported.
Onions. Unlike the classification used in many countries, in the Netherlands
onions planted in the spring are treated as a field crop. Dutch onions are of high
quality, and similar to potatoes in the production scale. They are also suitable
for processing by large machines and are easy to store. Onion is a sort of crop
that is relatively competitive in the Netherlands. Other vegetables that also fall
under 'field crops' include carrot, lettuce, pea, allium sorrum, Belgian chicory,
edible sugar beet and salsify.
Sugar beet is one of the Netherlands' most important field crops. Since the
market of sugar and vegetable oil falls under the EU's CAP and sugar beet can
be considered as a more labour-intensive crop than cereals, it has an important
place in the cropping plan in the Netherlands.
3.5
Horticulture
The Netherlands is famous throughout the world as 'the garden of Europe' and
'the kingdom of flowers'. Dutch horticulture includes flowers, vegetables, mushrooms, fruits and a variety of decorative plants, garden plants, et cetera. The
fact that horticulture and agriculture usually stand side by side in Dutch documents is enough to show the weight of horticulture in the Netherlands.
66
1
See LEI (2004), p. 63.
In the period 1985-2005, the number of horticulture farms in the Netherlands decreased from circa 25,000 to circa 15,000 (table 3.3). In the meantime, specialised farms were up to 93%. Greenhouse flowers and vegetables,
together with open field production, as pillars of Dutch horticulture, use only
5.7% of the total area of agricultural land.
Horticulture production occupies an important position in Dutch agriculture.
This sector includes flowers, flower bulbs, foliage plants, ornamental plants,
vegetables, nursery plants and so on. Moreover, fruits, mushrooms and a variety of nursery stock are also included (tables 3.3 and 3.4). The greenhouse horticulture sector achieves a production value of €4.5b. on 11,000ha,
representing almost a quarter of the production value of the entire agriculture
sector. The Dutch exports of flowers and vegetables took the lead in the world
for many years. In 2007, the Netherlands led the world in exports of fresh flowers and vegetables.
Table 3.3
Changes in the number of horticulture holdings
Type of farm
1985
1990
1995
2000
2005
2007
Greenhouse flowers
5,408
6,026
5,760
5,264
4,123
3,553
Open field flowers/bulbs
2,780
2,546
2,352
2,274
1,905
1,736
Greenhouse vegetables
4,863
4,222
3,612
2,644
1,958
1,708
Open field vegetables
2,812
2,503
2,006
1,459
1,081
1,053
Fruits
3,078
2,814
2,753
2,211
1,809
1,794
Nursery
2,402
2,639
2,512
2,429
2,210
2,249
Mixed horticulture
2,453
1,923
1,668
1,630
1,358
1,169
767
788
670
516
315
243
25,201
24,196
22,053
18,787
15,029
13,746
Mushrooms
Total
Source: LEI (2008), p. 23.
67
Table 3.4
Output value of Dutch horticulture (x NLG million)
Flowers and decorative plants
Flower bulbs
Vegetables
1980
1990
1996
2008 a)
2,431
5,281
7,054
4,110
544
712
974
610
2,050
2,271
3,997
3,792
Fruits
386
699
466
370
Nursery stock
323
686
251
610
Seeds and others
225
453
545
n/a
a) Million € (€1 = NLG2.20371).
Source: LNV for 1980-1996 and Commodity Board for Horticulture for 2008 (preliminary).
3.5.1 Floriculture
The floriculture sector is gaining in importance throughout the world, and the
Netherlands is the leading player in this sector, both in production and distribution. Cut-flower turnover at Dutch auctions grew to €2.5b. in 2007, while that of
potted plants grew to €1.3b. In addition, bulbs and propagating materials had
turnovers of circa €610m. (in 2007) and €200m. (in 2003), respectively.1
Dutch flowers are well known throughout the world. The production of flowers has a long history in Holland. The experience and techniques of flower
growers have been passed down through the generations. Small growers expanded and became real farms, which earned a good income as the beautiful
flowers met the demand of wealthy urban families. The latter fostered the flower
market, while smart Dutch businessmen created auctions to sell these delicate
and easily damaged products to neighbouring regions and countries. Thus, floriculture - a new industry - as well as modern transport systems has brought the
colourful flowers to many countries and continents. Many important events
around the world are given colour with flowers from the Netherlands, which has
resulted in international acclaim for the Dutch floricultural sector.
The main centres of production are situated in the west of the Netherlands,
in the area around Schiphol airport and in the Westland region. Stretches of
greenhouses have created a spectacular sight - the Westland is even called
'glass city'. It is an exciting experience to get a bird's-eye view of this unique
'city'. The Westland region has everything flower growers need - auctions,
1
68
Jaap Kras, The importance of Dutch breeding and propagation, FloraCulture International,
July 2004.
transportation and communication facilities, clusters of supplying companies
and a galaxy of talents.
A high degree of specialisation is typical of Dutch floriculture; especially the
greenhouse floriculture is extremely capital and labour intensive. Many growers
produce only one crop, or sometimes even just one cultivar. Such extreme specialisation is limited to products for which demand is both high and constant.
Mixed production reduces the grower's risk with limited demand products.
However, the efficient system of distribution through the auctions provides
growers with maximum opportunity for specialisation.
According to Commodity Board for Horticulture, the Netherlands had over
8,700 flower growers (under glass: 6,781; open ground: 2,492), directly providing employment for 37,000 people in production. The indirect employment
(auction, delivery firms, wholesalers, exporters and retailers) came to 49,000;
in total, they provided 86,000 jobs for the country in 1999. The output value of
flowers increased from €1.36b. in 1980 to €8.2b. in 2001. The Netherlands
exports more than €3b. worth of fresh cut flowers and ornamental plants each
year. Dutch flowers had a world market share of 58% and that of pot plants
53%.
Greenhouse flowers
Greenhouse horticulture is one of the industries in the Netherlands with distinguishing features. As Holland is situated at higher latitude, most flowers and
vegetables are grown in greenhouses, due to the restrictions imposed by temperature, sunlight and soil quality. At the end of the 19th century, Dutch farmers
began to plant flowers and vegetables in glass sheds, which were known as the
initial greenhouses and were very rough. As a result of continuous improvements over a century, Dutch greenhouse technology has become the world's
leader. For example, researchers and experimental greenhouses are studying
ways to increase the transparency of roofs, to reduce the weight of greenhouse
building materials, and to increase the ability of greenhouses to withstand
strong winds and the pressure of snow. The energy consumption of greenhouses was reduced by nearly 50% over a period of a dozen years.
During the period 1995-2005, the number of greenhouse flower holdings in
the Netherlands decreased by circa 25% (table 3.5); at the same time, the area
of greenhouse increased from 5,518ha to 5,616ha (= 2% increase), which
means that the average area of greenhouse farms increased from 7,458m2 to
11,074m2, that is, larger than 1ha. Many big farms have 2 or even 3ha. Meanwhile, the proportion of small farms (<0.5ha) decreased from 47% to 39%, but
69
that of large farms (>2ha) increased from 6.5% to 16.3%. A 10-year period is
not long, but it witnessed dynamic changes in greenhouse floriculture in the
Netherlands.
Table 3.5
Holdings with floricultural crops under glass by size of area
Ha/farm
1975
1985
1995
2000
2005
2007
0.01-0.50
6,059
4,372
3,457
2,772
1,998
1,642
0.50-1
1,750
2,082
2,014
1,659
1,139
923
1-2
471
993
1,450
1,432
1,104
937
>2
72
254
478
712
825
814
8,352
7,701
7,399
6,575
5,071
4,316
Total
Sources: LEI (2008), p. 91.
The benefit of a greenhouse horticultural area depends largely on the climatic conditions. Temperature, humidity and sunlight are decisive factors for
the yield of greenhouses per m2. The most important advantage of greenhouse
horticulture is that it creates an ideal micro-environment for flowers to grow.
Greenhouses enable growers to make a profit through shorter production cycles et cetera despite the higher production costs per m2.
Greenhouses are mostly seen in the Westland region because good infrastructure (market, traffic and telecom facilities) are provided in this area, where
there are also numerous raw horticultural suppliers and talented persons. Numerous greenhouses are connected in the Westland region, making it look like a
unique glass city. From the sky, it is very spectacular.
The production of cut flowers under glass is the largest sector in floriculture
with an output value over €2b. and covering an area of 3,770ha (2002). The
most important greenhouse cut flowers in 2007 were: roses (652ha), chrysanthemums (566ha), lilies (220ha), gerberas (206ha), orchids (240ha), freesias
(155ha), alstroemerias (93ha), anthuriums (120ha) and carnations (32ha). The
Netherlands today supplies more than 5500 kinds of cut flowers all the year
round, over 2000 kinds of potted plants (flowering plants and foliage plants) and
over 2200 kinds of courtyard plants. In addition, various potted decorative
plants are grown in the Netherlands. Each day, the country exports 17m. cut
flowers and 1.7m. pot flowers to places throughout the world.
Roses are the most important flowers in the cut-flower range, in terms of
both exports and the cultivated land area. At the auctions, 1,400m. sprays of
roses were sold in 2007, ranking third in volume among all kinds of flowers af70
ter chrysanthemums and tulips. Because of the heavy demands placed on the
soil by rose crops, cut roses are largely grown on rock wool mats through
which the dosing of water and fertilisers can be fully controlled.
Gerberas are the main Dutch export crop in cut flowers, after roses and tulips. Growing in open ground has given way to growing on rock wool mats in
greenhouses. Gerberas are harvested by detaching the flower stems from the
plants. After sorting, the flower stems are suspended in cardboard racks in a
water container to take up as much water as possible before being packed in
boxes for transportation to the auction.
Chrysanthemums can be grown all year round in the Netherlands thanks to
protective installations and lighting systems. The entire stem of the chrysanthemum is harvested, after which the plants are sorted, cut to length and
wrapped either in the greenhouse or in the processing room. According to statistics, 1,500m. chrysanthemums were sold at the auctions in 2007 - making
them number one in volume.
Freesias are only grown in the Netherlands for export. This bulbous plant is
grown year round in beds. Uniquely, the plants are grown in slightly heated
greenhouses, while the soil is cooled to promote optimum flower development.
Pot-flowering plants are usually herbaceous plants and do not grow as tall as
woody foliage plants. In addition to gerberas and roses grown in pots, the most
important are kalanchoes, phalaenopses, dendranthemas, spatyphillums, begonias, cyclamens, Saint Paulias, primulas and hortensias.1
Dutch greenhouses are highly specialised. Many flower growers specialise in
only one sort of flower, or even in one variety of it. In their opinion, they can
produce unique products and remain competitive on the market only by continually improving their products. Specialised production allows for the continuous
improvement of facilities, lower production costs and higher product quality,
which leads to scale gains. Specialised enterprises usually have staying power
and take larger market share.
1
The above information is based on LNV: The Dutch Floriculture Sector, October 2000.
71
Box 3.1
Technologies in greenhouses
The design and construction of greenhouses must take account of the climate and the quantity of light. There are two major types of greenhouse in the Netherlands: the Venlo and the
wide-span greenhouse. The cultivation method largely determines which type of greenhouse
is more suitable. Growers of breeding material and pot plants opt for the wide-span, while
flower and vegetable growers prefer the Venlo type. Both include heating and cooling systems, watering systems and climate control systems, so that the climate inside the greenhouse can be almost completely controlled.
Robots are used to reduce the amount of manual labour required for flower growing, although it remains a labour-intensive business. Specialisation of the Dutch floriculture sector
has ensured that companies can mechanise a large part of the growing process. The internal
transportation and processing of cut flowers are to a large extent computer-controlled and
performed by robots. Dutch equipment - such as horticulture computer system, potting machines, planting robots, mobile growing tables, sorting and bunching machines - is sold
throughout the world.
Specialised companies produce potting compost. These companies buy large quantities
of river clay, peat, turf, sphagnum peat and natural fibres. Much of it is imported from northern and eastern Europe, and even from subtropical or tropical countries (rice hulls, coir).
These raw materials can be used to make up the ideal compost mixture for different crops.
The quality of compost is monitored by a special organisation. The products must meet the
highest chemical and physical requirements, and are free of weeds and diseases.
Hot water boilers are the most common method of heating greenhouses. The capacity of
the boiler required depends on, among other things, the amount of heat needed to achieve
the desired maximum greenhouse temperature. The heat is distributed to all parts of the
greenhouse via a network of heating pipes or hoses. The heat emission of the boiler is regulated by a computerised climate control system, which ensures that energy is used only when
the crop needs it.
Combined heat and power plant. Nurseries that require a lot of electricity for assimilation
lighting during the winter months use combined heat and power plants. The cooling water
from the generator is used to heat the greenhouse, while the cooling water is stored in a wellinsulated heat storage tank to be used whenever heat is required. This water storage tank offers a solution to the different amounts of heat required at different times.
CO2 administration. In order to grow, plants need CO2 and water, which are turned by
sunlight into carbohydrates and oxygen. To raise the CO2 level in the greenhouse, the grower
can administer CO2 from the purified combustion gases from the boiler or combined heat and
power plant. As the crop needs less heating during the day, surplus heat is stored in the heat
storage tank and used to heat the greenhouse at night.
The above is based on The Dutch Floriculture Sector, LNV, October 2000.
72
There is a strict need for technology and management skill in flower production in greenhouses because any mistake would cause heavy losses. The growers account their output value or profit on a per-m2 basis. Take the production
of chrysanthemum, for example. All activities (from preparing the soil for cultivation and fumigation, through the harvest and packaging of flowers, the supplying
of seedlings in different types and colours, to the transportation of cut flowers
to auctions) should be linked closely and be carried out in an orderly way - no
delay or disarrangement can be admitted in any link of the production-market
chain. Hence, a highly efficient service system is indispensable.
Open-field flowers, flower bulbs and ornamental foliage plants
Open-field flowers mainly consist of corm flowers (table 3.6), which are divided
into two sorts: bulbous plants (e.g. tulips, asphodels, fleur-de-lis, hyacinths and
lilies) and corm plants (e.g. dahlias). It are not so much the flowers but the
bulbs/corms of these flowers which are grown in large quantities. In addition,
there are also bulbs/corms of snowdrops, musk orchids, begonias, cannas, tiger flowers, oxalis and fritillaries.
In recent decades, there has been a considerable expansion in the area
used for the production of bulbs in the Netherlands (table 3.6). While in 1960
there was a total of 10,000ha, by 2005 the figure had increased to circa
23,000ha. On the other hand, there has been a drastic reduction in the number
of bulb growers - from circa 13,000 to circa 2,200 during this period. A total of
some 9b. bulbs were produced by the end of last century. Bulb growing accounted for circa 2% of total agricultural production in the country. Three quarters of the total output is destined for export to more than 100 countries.
Table 3.6
Area of flower bulbs by crop (ha)
Tulips
Lilies
1975
1985
1995
2000
2005
2007
5,766
6,588
8,031
9,705
10,551
10,740
590
1,533
3,298
5,069
4,321
5,009
Narcissi
1,708
1,588
1,405
1,843
1,763
1,773
Gladioli
2,006
1,937
1,846
1,643
1,377
1,387
859
954
980
1,130
1,260
1,329
Irises
No data
1,027
720
675
540
392
Total a)
13,010
15,055
18,086
22,543
22,987
23,655
Hyacinths
a) Including other bulbs.
Source: LEI (2008), p. 76.
73
Cut flowers grown in the open ground are mainly summer flowers, which are
a typical seasonal product. This group includes helianthus, delphinium, gladiolus, anemone, antirrhinum, lysianthus, carthamus, matricaria and trachelium.1
Often these are grown in the open grown. However, summer flowers are also
grown in polytunnels to extend the growing season at either end. The cultivation
of some of these flowers has been moved to the greenhouse so that the flowers
can be produced over a much longer period. As a result, much of the summer
flower production can scarcely be distinguished from 'normal' cut flower production.
Box 3.2
Flower bulbs or corms?
In the Netherlands, bulb production refers to the production of both bulbs and corms. The difference between the two is that, in bulbs, the plant's food reserves are stored in the fleshy
scales of the bulb, whereas corms store their food in the fleshy stem or root system. The
bulb family includes tulips, narcissi, hyacinths, lilies and irises. The most common corm
plants are the gladiolus and crocus.
From Bulb growing in the Netherlands, LNV, April 1997.
According to recent statistics, circa 2,000 companies in the Netherlands
were engaged in the production of bulbous flowers in 2007. The number of bulb
growers with an area of less than 3ha decreased drastically from circa 3,500 in
1980 to circa 700 in 2007, and its share dropped from 71% to 33%, while the
number of big farms larger than 10ha in area increased from 6% to 33% during
this period.
The tulip is the national flower of the Netherlands. Today, the area of openground flowers exceeds 22,000ha. Tulips belong to the top four best sellers at
the Aalsmeer auctions (1,463m. flowers sold in 2007). Every spring, the fields
(especially those near the small town of Lisse) become a fairyland covered with
the colourful blossoms of tulips, hyacinths and other flowers, like magnificent
carpets stretching to the horizon. Such beautiful scenery can be imagined only
in fairy tales.
The tulip is the most important flower bulb for export. A total of almost
1,200 farms (2007) grow tulips - the most in number and the largest in growing
area (see table 3.6). They supply more than 200 varieties of tulip bulbs to auction firms, and produce 3b. bulbs each year. The output value of flower bulbs
74
1
See LNV (October 2000), The Dutch Floriculture sector.
and corms represents circa 3.5% of the total agricultural output value of the
Netherlands. In addition, the output of lily, calamus and asphodel is also very
considerable, totalling 6b. The Netherlands exports 7b. bulbs and corms each
year, valuing at USD750m. The number of registered tulips is over 3,000, but
the most important basic commercial assortment consists of no more than one
hundred. Year round production of tulip flowers has become possible.
The lily has made considerable advances in recent decades, and it is now
number two on the list of favourite bulbs and corms. With a total area of only
110ha in 1960, it had increased to more than 5,000ha in 2,000. Afterwards it
decreased to 4,300 in 2005 but recovered to more than 5,000ha in 2007. The
number of new seedlings has also increased remarkably.
The area devoted to the narcissus is circa 1,800ha and comes third on the
list of all flower bulbs grown in the Netherlands. Real advances in the breeding
of narcissi started only more than a decade ago. Altogether there are circa
2000 varieties in cultivation; of these, some 80 are commercially important.
Gladioli come fourth on the list of favourite bulbs and corms. About 150 varieties are grown in the Netherlands. In addition to saleable corms, a large number of seed corms are exported.
Over 25 commercial varieties of hyacinths are produced exclusively in the
Netherlands. Approximately 25 different varieties of irises are offered. The most
widely cultivated are the blue ones, although other colours such as white, yellow
and bicolours are available. The crocus is a much-loved bulb for planting both in
gardens and parks. There are circa 50 varieties of large-flowering and species
types on the market. In colour and shape, flowers of dahlia extremely varied;
there are circa 300 varieties.
Many special bulbs are also grown in the Netherlands. They include snowdrop, chionodoxa, puschkinia, muscari, fritillaria, scilla, allium, anemone, begonia, canna, tigridia and oxalis.1
The Netherlands also produces a wide variety of arboricultural crops and
perennial plants, part of them derive ornamental value from their green or colourful foliage. The planting area in the open air has become increasingly bigger,
going from 5,089ha in 1975 to 16,185ha in 2007. The area of bed plants and
pot plants in greenhouses was up from 452ha to 1,883ha in this period. The
most important of these plants is the phalaenopsis, with an auction turnover of
€220m. (2007), accounting for circa 17% of the total pot plants supplied to the
1
LNV (April 1997), Bulb growing in the Netherlands.
75
auction. Other important pot plants in the Netherlands are kalanchoë, flamingoplant, dracaena and ficus.
Box 3.3
Keukenhof in Lisse
Every spring, the Keukenhof is a spectacular feast for the eyes for people of all ages. Millions
of tulips and other bulb flowers are then in bloom. It is wonderful to experience and to capture on film. A unique and magnificent display of colour against a sumptuous backdrop of traditional and modern landscape gardening.
Carolus Clusius - the famous biologist who worked at Leiden's Hortus Botanicus - is generally credited as the man who introduced the tulip into Holland in 1593. He would not have
been able to do so had he not been a good friend of the Fleming, De Busbecq. It was he who,
as ambassador to Constantinople, fell under the spell of a beautiful flower in the palace gardens: the tulip. He sent a few bulbs to Clusius who cultivated them in the garden in Leiden.
Stories about this special flower spread rapidly. Enchanted by its beauty, the rich Dutch
were prepared to spend vast sums of money for a tulip bulb. That the Dutch have always
been astute businessmen was apparent even then, because before long, foreign buyers also
appeared on the market. The tulip was 'hot' and a sort of gold-fever developed. Of course,
this came to an inevitable and bitter end. In 1637, there was a Tulip 'crash' and tulip mania
was over: the tulip was no longer sufficiently rare to justify such high prices. Over-supply led
to lower prices and many dealers went bankrupt.
In 1840, the celebrated garden and landscape architects Zocher & Son were commissioned to develop the Keukenhof park. The majestic trees and the pond date back to that
time. In subsequent years, the Keukenhof Estate was further developed into the present 32ha park.
Every year it exhibits the best and most beautiful flowers in the Netherlands. The focus is
not only on the familiar bulbs, but also on less familiar flowers such as orchids, anthuriums,
azaleas, hippeastrums, lilacs, viburnums, prunus, forsythias, chrysanthemums, alstroemerias,
lisianthus, limonium, carnations, asters, bouvardia, kalanchoes, zantedeschia, gypsophylla
and African violets. The Keukenhof is now one of the best known attractions in the country
and one of the most photographed sights in the world.
The above is based on information obtained at www.Keukenhof.com.
3.5.2 Vegetable production
The production of vegetables in the Netherlands is largely for the international
market. Because of the internationalisation of production and distribution, the
production of vegetables is concentrated in regions that have a good transportation infrastructure and are close to markets. Greenhouse technologies are important for most growers in the Netherlands. Soil-less (mineral wool) culture,
76
hydroponics and energy-saving thermal screens are widely adopted. Together
with highly efficient systems of distribution and exportation networks, Dutch
vegetables have shown strong competitiveness in the international market.
Dutch trade in fresh vegetables within the EU amounts to as much as 40%. It is
reported that the export of fresh vegetables from the Netherlands accounts for
circirca 22% of the world total.
The most important centres of production are located in the west of the
country, in the Westland region (between The Hague and Rotterdam) and in the
region north of Rotterdam. There are also large production areas in the east
and south-east, mostly in the provinces of Drenthe and Limburg. In 2005, vegetables grown in greenhouses in the Netherlands came to an area of 4,445 ha;
the average size per farm reached 1.75ha and tended increase further. In
2005, there were 699 farms with 2ha of greenhouses, an increase of
100 compared to five years previously (table 3.7).
Table 3.7
Holdings with vegetables under glass by size
Ha/farm
1975
1985
1995
2000
2005
0.01-0.5
5,906
3,306
1,661
1,098
735
613
0.5-1
2,840
2,192
1,310
822
501
407
922
1,238
1,273
914
612
498
1-2
>2
Total
2007
101
238
442
599
699
691
9,769
6,974
4,686
3,433
2,547
2,209
Source: LEI (2008), p. 87.
A number of vegetables are grown both in greenhouses and outdoors, such
as lettuce, spinach, beans and Chinese cabbage. In the summer, these are
grown out of doors, but when weather conditions no longer permit it, they are
grown in greenhouses. Crops that originated from tropical or subtropical regions are grown exclusively under glass.
The Netherlands has a rather long history of growing vegetables in greenhouses, initially as very simple sheds with several pieces of glass. Vegetable
growers often lived in the villages not far from the market. As time passed, the
experience and skills inherited from past generations could not beat off the numerous strong competitors. Facilitated by the three-in-one system (research, extension and education, i.e. 'OVO triad';1 see chapter 6), vegetable production
1
See also Leo Douw and Jaap Post (eds.), ibid. pp. 69-70.
77
and marketing in the Netherlands is becoming more and more advanced, as
evidenced not only by the improvement of greenhouse technology, but also and more importantly - by the enhancement of the skills of growers. Dutch vegetable farmers always seek the best seeds and technologies. In addition, they
pursue highly efficient management and quality control at every link in the production chain. All these factors guarantee the quality of the final products and
thus improve their competitiveness.
The most important greenhouse vegetables in the Netherlands are tomatoes, sweet peppers and cucumbers (table 3.8) planted without soil. In addition,
a whole range of other vegetables are produced, such as radishes, aubergines,
courgettes, lettuces, chicory, cauliflowers, young cabbages, Chinese white
cabbages, peas, white celery, fennel, gherkins, spinach and kidney beans.
Strawberries are also grown.
In greenhouses, most of the products are grown on a round-the-year basis.
In such a system, the grower plant out the seedlings in late November or early
December, raise and take care of them and ultimately harvest the products. By
the following October, the annual plants are exhausted, and so they are cleared.
The greenhouses undergo an intensive clean-up, and the next year's crop is
planted out. Greenhouse vegetables are normally produced on family farms,
which are typically specialised in one or two kinds of vegetables. Some companies are specially engaged in growing vegetable seedlings for greenhouses,
with an area of 190 to 220ha of seedlings per year.
Table 3.8
Holdings with vegetables under glass by size of area and crop,
2005
Round tomatoes
No. of
Area
No. of
farms
(ha)
farms
193
413
Aubergines
Area
(ha)
64
96
491
Other tomatoes
275
1,132
Other vegetables
656
Sweet peppers
399
1,187
Seeds
197
149
Cucumbers
346
617
Vegetable seedlings
117
220
Strawberries
480
265
Total a)
2,727 a)
4,559
a) The total number of farms is not accurate because some farms grow more than one kind of vegetable.
Source: LEI (2008), p. 86.
Dutch growers produce different varieties of tomatoes to respond to the
wishes of consumers. In addition to round tomatoes, also cherry tomatoes, beef
78
tomatoes and vine tomatoes are supplied to the market. One m2 can accommodate 2.5 tomato plants. Each plant is provided with its own dripper. This system is used to supply water and nutrients from a central unit to all the plants
individually. A yield of 50-60kg of tomatoes per m2 per season (NovemberSeptember) is not exceptional. There is an increasing tendency to exert more
precise control on the growth process of vegetables. Modern holdings are
equipped with computer-controlled trickle irrigation systems and climate control.
Based on the daily measured solar radiation level, a grower is able to calculate
the amount of water that his crop will have lost through evaporation, and adjusts
the water dosage appropriately. He can use that same irrigation system to supply plant nutrients. These computers monitor the temperature and relative humidity day and night. In other words, they control the growing conditions round
the clock.
Box 3.4
Substrate: the modern substitute for soil
Nowadays, virtually all greenhouses in the Netherlands grow products on substrate, the most
common of which is mineral wool. Mineral wool is made by melting a volcanic rock known as
diabase and then casting it by a special process into mineral wool mats. These mats have
been in use for over 20 year, for a number of reasons:
1. it is no longer necessary to decontaminate the soil after a cropping cycle. This means a
lighter burden on the environment and speeds up the crop alternation;
2. mineral wool mats are sterile, which means that plants are unable via their roots to contract diseases from the soil or to pass them on;
3. research has identified precisely what substances a plant needs in order to grow and
flourish. The plants are dosed exactly what they need;
4. mineral wool mats can be recycled.
Based on The Dutch greenhouse fruit and vegetable production sector, LNV, Agri-Holland, 1-1995.
The Netherlands cultivates the square type of sweet pepper with thick flesh not only red and green, but also yellow and orange. The area devoted to sweet
peppers has grown enormously in the past decade: the pepper has almost overtaken the tomato as the most important vegetable crop, however, in the last
few years the area of peppers decreased somewhat. The third most important
greenhouse vegetable in terms of turnover is the cucumber. Cucumbers, as well
as tomatoes and peppers, are grown all year round, mostly on rock wool mats.
The varieties of cucumbers grown in the Netherlands are highly diseaseresistant and free of bitter taste. Cabbage lettuce is produced all year round in
79
soil on the greenhouse floor and remains the most important leaf vegetable
crop. However, new varieties continue to be added to the range of lettuces, for
example, iceberg lettuce, curly-leafed endive, Lollo Rossa, Lollo Bionda and oakleaf lettuce. Aubergine is a warmth-loving crop. By changing from soil to rock
wool and improving growing techniques, the production of this crop has increased enormously in the Netherlands.
Some 80-90% of greenhouse vegetables are exported. Most go to Germany,
England, Scandinavia or France. The USA is a big buyer of vine tomatoes.
In addition to potato, onion, carrot and other 'field crops' (see the foregoing), cabbage, broccoli, cauliflower, spinach, pea and so on are widely planted
in open fields in the Netherlands. These vegetables are sold directly on the market, or exported, and are also supplied to frozen food and canned food manufacturers.
Box 3.5
Environment-friendly crop production
The Dutch government pursues a tough policy to minimise the damage caused to the environment by agricultural production. Irrigation water not taken up by plants may not be discharged into the surface water; farmers must implement a closed system to collect this
irrigation water and reuse it. This also provides for the efficient use of fertilisers with no
losses. Greenhouse vegetable growers signed an agreement to voluntarily reduce the use of
chemicals by 60% by the year 2000, compared with average use in the period 1984-1988.
To meet the demand of both consumer and government, the standard use of chemical
crop protection in the Netherlands has given way to integrated cultivation with biological crop
protection. This involves the introduction of insects, such as predatory mites and ladybirds.
Plant breeders supply special breeds that are less susceptible to infestation. In practice,
chemicals are used as little as possible, because they can disturb the biological balance between useful and harmful insects and other organisms. By the late 1990s. biological crop
protection was applied to over 90% of Dutch tomato and pepper crops. Products grown in an
ecologically responsible way may be eligible for ECO labelling.
From: Greenhouse vegetable growing in the Netherlands, LNV, May 1999.
Other horticultural crops
Fungi and especially mushrooms are an important horticultural product in the
Netherlands. The larger-scale production of mushrooms started in the 1950s,
and recent decades saw its rapid development. Mushrooms are mainly produced in three south-east provinces: North Brabant, Limburg and Gelderland.
The area in the country increased from 70ha in 1975 to 109ha in 1995, but
80
decreased to 77ha in 2005. The above-mentioned three provinces accounted
for 60% of the total in terms of area. There were 330 fungi farms of which 299
mushroom farms in 2005; 60% of the mushroom farms were in the above three
provinces, each with an average production size of 2,570m2. The production of
mushrooms is concentrated and highly specialised; about half of the mushrooms are specially produced for the canneries industry.
Part of modern system for regulation of temperature in greenhouse.
Mushrooms can be grown all year round. The production cycle is normally
three weeks; in each cycle, 25-30kg mushrooms can be yielded on each m2.
Mushrooms for retail are picked carefully by hand. Only mushrooms with a
closed pileus are suitable for the consumer market; those with open pileus are
used in the canned food processing industry. About half of the Dutch growers
produce specially for the preserving industry. An even growth to maturity means
that the mushrooms can be harvested in one operation by a cutting machine,
which rides over the growing bed. The annual output of mushrooms in the Netherlands is circa 240,000t, giving it one of the highest places in the world and
leading to a large amount of export.
81
Comparatively, fruits have a humble position in Dutch horticulture. They are
only a few varieties, such as apples and pears. The cultivation area decreased
from 31,892ha in 1975 to 17,650ha in 2007. Gelderland is the largest fruitproducing region (its area accounts for almost one third of the countries production), followed by Zeeland, Limburg and Utrecht. Fruit growers have widely
adopted a low-trunk breed: fruit trees are only 2.5m high. After being grafted
onto the trunk, the tree will begin to bear fruit the next year. Some 4,000 fruit
trees can be planted per hectare, with an average output of more than 30t per
hectare. The total output of fruits was 675,500t in the Netherlands in 2000,
down from 713,000t in 1995. The output of apples was 391,000t in 2007
(down from 560,000t in 1995); that of pears was 260,000t. Only circa 64% of
fruits can be self-supplied in the Netherlands.
Robot for milking dairy cows.
3.6
Livestock and poultry
Livestock and poultry production in the Netherlands can be divided into the following two groups.
82
Grazing livestock, namely cattle (including cows), sheep, goats and horses,
that is, animals that graze on grassland. A large size of meadow is necessary.
The Netherlands is famous for its highly productive cattle, especially dairy production. Cattle production can be subdivided into fattening cattle and veal calf
production.
Intensive livestock, namely especially the production of pig and poultry (for
eggs and for meat). Sometimes, veal calves are also included. In addition, there
are turkey, duck, rabbit, ostrich and fur animals, which just have a small share.
In general, intensive livestock farmers keep animals in buildings as places for
productive activities. Since intensive livestock requires only limited space, without large quantities of crude forage, it fits well the natural endowments of the
Netherlands as a country with scarce land resources. Intensive animal husbandry is associated with rigorous management. Farmers must not only know
how to treat and use their advanced 'hard' technology, but also make full use of
that technology by using 'soft' technology (i.e. management and organisation).
Livestock, especially cattle and pigs, but also poultry may have negative impacts on the environment. Even though the ammonia and phosphate in animal
excrement can be used as manure, too much of these substances will harm the
environment. The Netherlands has taken the following steps to deal with these
problems: 1) liquid excrement is pumped into large, closed containers for disinfecting treatment, while the methane is used for heating; 2) slurry is introduced
directly into the soil by injectors; 3) poultry dung contains less water, so it can
be dried and granulated as organic manure. It can also be enriched with some
micro elements - Zn, Mo, Mn, et cetera - and turned into very exclusive fertiliser
according to the clients' demand.
For about a decade, the dairy cattle industry has been subject to production
quotas imposed by the EU. Although there is no specific restriction on other
animals, the impacts on the environment brought about by intensive livestock
production and the high density of animals cannot be ignored. To lower emissions, a general trend is to reduce the livestock number and raise productivity
per animal. Besides, high-density production has also drawn people's attention
to the animals' welfare. Therefore, since the 1990s, the growth of dairy cattle
industry has been influenced to different degrees (table 3.9).
83
Table 3.9
Product value of livestock products (NLG million; 1995 and
2005 in € million)
Milk
1960
1970
1980
1990
1995
1995 (€)
2005 (€)
1,478
3,103
7,222
7,959
7,757
3,710
3,625
Beef and veal
705
1,565
2,682
3,517
3,416
1,638
1,435
Pig meat
747
2,024
3,696
6,321
5,451
2,806
2,229
Poultry meat
169
571
912
1,419
1,335
644
559
Eggs
574
394
1,192
1,092
808
360
253
Source: LNV, Facts and Figures, various issues.
3.6.1 Dairy farming
The Netherlands is one of the world's largest producers of milk and dairy products. The Dutch dairy sector, which is rooted in centuries-old tradition, has
taken on a new image in recent decades. The changes in the European agricultural policy have had a major impact on this export-oriented industry. Scale
enlargement, product innovation, quality control, internationalisation, and nature
and the environment have been the key concepts since the 1990s.
During the period 1970-1995, the output value of Dutch dairy sector increased from NLG3.1b. to NLG7.76b. (= 150% increase), while the total output
value of beef increased from NLG1.57b. to NLG3.42b. (= less than a 120% increase). This shows that milk production is more important than beef production
for Dutch producers and the market. Between 1995 and 2005 the product
value decreased somewhat, especially that of beef.
In 1967, the output of milk in the Netherlands was 7.52m. t, an average of
597kg per capita; it peaked at 13.23m. t in 1983 (= 923kg of milk per capita).
After 1984, production was limited by the milk quota imposed by the EC. Since
then, the output has gradually decreased. In 2002, the annual production of milk
was 10.7m. t, a per capita average of circa 670kg of milk1, and in 2006 it was
with 11.0m. t a few percent higher.
In 1985, the total number of cattle in the Netherlands reached 5.2m., but
dropped to less than 3.8m. in 2007, or down by circa 28%. Meanwhile, the
number of dairy cattle decreased from 2.4m. in 1985 to 1.4m. in 2007, down
by 40%. The average size of Dutch dairy farms has been expanding continu-
84
1
It is reported that in 1999, each dairy farm in the Netherlands had a quota of 350 tons.
ously; particularly the number of dairy cattle farms with fewer than 30 heads of
dairy cattle dropped sharply (table 2.4). At the same time, the per-cow milk output rose from 4,625kg in 1975 to 7,744kg in 2006.
The manner in which dairy cattle are bred has changed greatly in the Netherlands. In the period 1960-2000, the ratio of hay to silage changed from 9:1 to
5:95, of which grazing and silage maize accounted for 60% and 35% respectively, leading to an increase in digestible organic elements from 60% to 75%.
Between 2000 and 2006 the changes were limited. The cattle are grazing on
grassland day and night for half the year; in sheds, they are fed with silage and
hay (circa 75% of the total). The output of dry matter from Dutch grassland or
silage maize can reach 12-15t per hectare. This forms the basis of Dutch dairy
farming sector. The protein content of milk is high. The output of butter and
cheese are three and five times, respectively, as much as the domestic consumption.
Box 3.6
Outdoor grazing
Outdoor grazing is an issue in the Netherlands. There are many regions where cows do not
graze outdoors because, for example, there are few, if any, practical possibilities for this.
With regard to the situation in the Netherlands, Campina - a cooperative company that initiates discussions about important environmental and animal welfare themes currently facing
the dairy industry - is in favour of outdoor grazing. In order to preserve a good image of dairy
farming and the dairy industry, it is important that cows continue to graze in the Dutch meadows. The vast majority of Campina's Dutch suppliers prefer outdoor grazing. An estimated
90% of dairy farmers keep their cows outdoors, weather permitting. Naturally, the cows are
kept in stalls when it is too cold in the winter.
Recent studies show that the vast majority of Dutch dairy cows forage outdoors. This
means that in the future, too, Dutch dairy products will be produced mainly from cows that
graze outside. Dutch consumers who opt for organic dairy products want an assurance that
their dairy products come entirely from cows that forage outdoors.
Increasingly, the relevant animal welfare requirements are incorporated into quality care
systems that are compulsory for all Campina's dairy farmers. Campina therefore accepts its
responsibilities with regard to outdoor grazing. It points out to its dairy farmers the positive
social impact of allowing cows to graze out of doors. However, the company cannot, and
does not wish to intervene in the business decisions of individual dairy farmers.
Based on information obtained at http://www.campina.com.nl.
85
The Netherlands is one of the world's largest producers of milk and dairy
products. Nearly half of its milk is made into cheese (the Netherlands is the
world's fifth largest cheese producer); the remainder is used for the production
of butter, milk powder, condensed milk, industrial ingredients and other dairy
products. A great number of dairy products are exported from the Netherlands,
with an annual export value of €2.5b. The export value of some important dairy
products accounts for circa 17% of the world total.
The introduction of the milk quota system in the EU was mandated by the
necessity to control agricultural surpluses. It is a kind of production license (the
right to produce). Farmers can buy a quota from others if economic capacity
permits, but it is not easy to obtain a quota at a reasonable price. There are two
reasons that, the price of a quota in the Netherlands is higher than it is in
neighbouring countries. Both the climate and environment in the Netherlands are
optimal for raising cows and, with pasture as their holdings, farmers are reluctant to give up dairy farming. At the same time, the appeals for environmental
protection and nature preservation are becoming much louder in Europe, and
especially in such a small country as the Netherlands. Moreover, people are becoming increasingly critical about the waste treatment issues in livestock farms.
To increase the cow population implies an increase in environmental costs. It is
therefore wiser to raise yields per cow and to limit the number of cows.
Technological progress in the Dutch dairy cattle industry
86
Because of the land shortage and the importance of dairy farming, together with
the EU's quota system, technological progress in the dairy industry has been
very rapid in the Netherlands. The chronological table below shows the technical
innovation in the dairy cattle industry.
It can be seen from the table that the development of production or social
needs acted as a stimulus for the innovation of technology, while both agricultural development and the increase in farm size (both in the grassland area and
the number of cows on each farm) called for new technologies. The value of
new technologies needs to be tested in actual production. There is a clearer effect in regions of the country that have many specialised dairy farms. The same
applies to the diffusion of new technologies. As a rule, strong farms have led
the way in the adoption of new technologies, as a small technological step forward can lead to considerable benefits. The most important technologies in this
industry are summarised in table 3.10.
Continuity in production is an important characteristic of dairy farms. Many
things have to be done in addition to milking twice a day. Nowadays, a cow farm
needs not only labour (for feeding, milking, cleaning, et cetera) but also advanced
management. The two workers on a family farm cannot cope with more cows.
Therefore, they have two options if they want to expand production further: one is
to hire workers, but labour costs in the Netherlands are very high, and extra
wages must be paid for work at weekends and on other statutory days off. The
other option is to use milking robots. The Netherlands was one of the earliest
countries to use robots. Although the initial investment is high, milking robots can
work day and night (three or four times a day, rather than the traditional twice a
day) and thus increase the yields per cow efficiently. Moreover, thanks to robots,
farmers may have more spare time to participate in various socio-economic activities such as learning and training, or even to go on holiday.
Table 3.10
Period
Development in dairy farming in the Netherlands
Size of
Yield
No. of
farms
per cow
cows per
(ha)
(kg)
farm
New technology input
1961-1965
14
4,120
18 Wide-scale introduction of milking machines;
1966-1970
16
4,350
22 Higher fertiliser use on grassland; specialisa-
artificial insemination
tion in dairy
1971-1975
20
4,875
34 Milk cooling tank; from hay to grass silage;
1976-1980
22
5,340
48 Maize feeding; higher concentrate feeding
1981-1985
25
5,700
54 Cow identification for individual feeding; wide-
1986-1990
29
6,575
49 Embryo transplantation
1991-1995
31
6,975
51 Environmental protection (e.g. manure injection)
1996-2000
35
7,525
55 Introduction of milking robot
loose housing system with cubicles
scale use of US Holstein-Friesian blood
Source: Peter van Horne & Henri Prins, Development of dairy farming in the Netherlands in the period 1960-2000,
LEI (2002).
87
Box 3.7
Milking robot in practice
In automatic systems, cows are not milked in a conventional milking parlour, but in milking
boxes. One type has a robot arm, which can handle one to three boxes. In milking boxes the
cows can feed on concentrates, and the cows visit the milking box if they wish to be milked,
and the robot decides whether they should be milked or not. The robot arm attaches the teat
cups one by one from the side. The distances between the cow's teats are stored in the
computer. Per milking box, circa 35-50 cows can be milked daily.
In principle, the milking robot can be used nearly 24 hours a day. In this way the milking
frequency can be increased from 2 to 3 times, resulting in an increased milk production of
10-15%. A milking frequency of three times in relation to udder health might be optimal.
Computer calculations have been used to estimate the economic consequences. The
most important factors influencing the profitability of the milking robot are a) an increase of
the milk yield, b) a change in grassland management and feeding strategy, and c) investment
in a conventional milking parlour as an alternative to the milking robot.
A farmer who favours a highly automated milking process will be more prepared to invest
in a milking robot. A self-controlled robot can do the milking without the farmer's regular
presence, and labour can be saved. If the price of automatic milking systems decrease in the
future, which may be expected, and the labour saving potential is achieved, the profitability of
the milking robot can be increased significantly.
Adapted from Dr. A. Kuipers: The Milking Robot, LNV, Agri-Holland, 1-1996.
3.6.2 Pigs
88
The Dutch pig production is very important in terms of world trade. The countries export of pig meat once took the first place in the world, although the
Netherlands had only 1.5% of the world's pigs. However, the number of pigs has
been decreasing step by step under environmental pressure, resulting in a decrease in pork exports - which is now second to Denmark's. The export value of
pork usually accounts for 12-16% of the world's total.
In the last three decades, the total number of pig farms has decreased by two
thirds; at the same time, the average size has been continuously increasing.
During this period, the number of small farms (<100 animals) plummeted by almost 90%, while that of big farms (>1000 pigs) increased by circa 800%,
namely from 198 to 1660 in 2007 (table 3.10), accounting for 22% of the total.
Under the circumstance of a drastic decrease in the total number of farms, the
number of pigs fed peaked in 1997 at 7.43m., and then began to drop year after year.
The regions in which pig farms are concentrated are North Brabant and
Gelderland, which account for 29% and 28%, respectively, of the countries total
number of pig farms, and for 44% and 20%, respectively, of the total number of
pigs. The number of pigs slaughtered in 1999 exceeded 18.5m., down to
14.2m. in 2007. The 'super' pork (class S, with a lean meat ratio of above 60%)
plus 'excellent' pork (class E, meat ratio 55-59%) accounted for circa 83% in
2006, or 10 percentage points higher than in 2001. The pig sector's overall
export volume increased until the nineties but remained more or less stable afterwards. In 2007 the export volume amounted 1.29m. t.
Table 3.11
Holdings by number of store pigs by size
Number/farm
1975
1985
1995
2000
2007
<100
21,123
11,847
6,265
2,965
1,329
100-500
11,041
11,070
8,869
5,704
2,937
1029
2678
2,979
2,479
1,650
198
948
1,514
1,747
1,660
33,389
26,543
19,627
12,895
7,576
500-1000
>1000
Total
Source: LEI, 2008, p. 104.
The size of farms with sows also increased rapidly (table 2.5). During the
period 1985-2006, the number of small farms (<100 sows) decreased from
13,467 to 671, a drop of 95%, while that of big farms (>250 sows) increased
from 781 (4% of total) to 1639 (43%).
Although no limit is imposed on pig production by the EU, the Dutch government has established strict standards to prevent any possible environmental
pollution caused by pig production. The number of pigs increased from 7,279m.
in 1975 to 15.189m. in 1997, but has since dropped each year, to reach only
11,356m. in 2006. The output of pork in the Netherlands was 1.675m. t in
1998, but only 1.270m. t in 2006.
89
Box 3.8
Tackling surplus minerals and ammonia
The Dutch environment is under considerable pressure from the high intensity of agricultural
production. Too much fertiliser - or more precisely, too many minerals and too much ammonia - is being deposited into the environment. The Dutch government combats environmental
pollution caused by manures and fertilisers through a policy for environmental targets.
The minerals accounting system (MINAS) forms the core of the Dutch minerals policy. This
unique system imposes high levies on phosphate and nitrogen surpluses above a certain
maximum allowed quantity for nitrogen and phosphate per hectare, effectively forcing farmers to take measures to minimise mineral losses to the environment. The system was introduced for intensive livestock farms in 1998, but became compulsory for all farms in 2001.
Then the government decided to progressively reduce the maximum allowable standards to
reach their final level in 2003.
MINAS is essentially a registration system whereby farmers keep a detailed record of nitrogen and phosphate inputs and outputs on their farm. The difference between inputs and
outputs reflects the farm's mineral surplus. Farmers are required by law to complete an annual minerals return form. Some mineral losses are allowed; these 'loss standards' are expressed in kilograms of mineral per hectare. A levy is charged for losses that exceed the loss
standards. The levies are very high in order to persuade farmers to take measures to reduce
their losses. The loss standards were progressively lowered until 2003 to comply with the
environmental objective for mineral losses, including those of the EU Nitrate Directive.
Based on LNV: Manure and the environment (2000).
3.6.3 Beef cattle, sheep, goats and horses
The Netherlands is also famous for producing beef cattle. For several years,
especially after the outbreak of BSE (mad cow disease), beef consumption was
stagnant and the output of beef dropped considerably after breaking the record
in the mid 1990s. Beef output rose from 287,000t in 1975 to 387,000t in
1995, but dropped to 272,000t in 2000, and then to 179,000t in 2006. Efforts
in the cattle sector are now focusing on the Integrated Quality System (IKB) in a
more general respect, the aim being to ensure beef of perfect quality, healthy
and safe. The IKB cattle scheme complies with the EU regulation for selfadministered inspections. This means that no cattle or beef may be sold without
the guarantee that it contains no banned substances such as growth hormones
or residues.
The Dutch veal sector originated as a spin-off of the dairy cattle industry
many years ago. It has now evolved into an independent sector operating in its
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own right. This sector produces pink veal and white veal. In 2000, there were
637,000 white veal calves and 146,000 pink veal calves. In 2006, the number
of veal calves amounted to 844,000. Typically, the price of veal drops in the
spring, hits bottom in June-July, rises in November, and reaches the top near
the New Year. The output of veal has been continuously increasing, from
105,000t in 1975 to 205,000t in 2006. Pink veal is a recent development in
this sector; it is becoming increasingly popular, particularly on international
markets. Pink veal is a typically Dutch product. Pink-veal calves are slaughtered
at a greater weight and yield darker meat. Many beef bull farmers are switching
to the production of pink-veal calves. Veal is accounting for 53% of the total national output of veal and beef. Gelderland is the largest veal producer in the
Netherlands, followed by North Brabant and Overijssel, with output shares of
21% and 11%, respectively.
The number of sheep in the Netherlands increased from 750,000 in 1975 to
1.77m. in 1994, but later gradually decreased: there were only 1.2m. animals
in 2002, with wool output of circa 1550t. After 2002 the number of sheep increased again to almost 1.4m. The province of Friesland is the largest wool
producer, accounting for 28% of the countries wool production. The total output
of Dutch mutton is circa 16,000t. Nevertheless, that of goats has shown a continuing upward tendency, increasing from 12,000 in 1985 to 310,000 in 2006;
of these, more than a half were milk goats. Because of its high yield of milk,
which has a very good fat and protein content, the Dutch white goat is the most
popular breed in Holland. This breed is also characterised by the quality of its
udders and legs, which are important for a high lifetime production.
It is interesting to note that horse breeding in the Netherlands has not declined, but has maintained its original level or even increased. Sports (i.e. horse
race) and recreation give impetus to the development of horse breeding. The
number of horse farms remains stable: there were roughly 19,200 such farms
in the period 1985-2001, although the number dropped afterwards to 16,900 in
2006. However, the number of horses has increased continuously: the number
of horses <3 years old doubled from 13,000 to 26,000, while the number of
horses >3 years old rose from 28,300 to 57,300. The number of ponies more
than doubled, from 20,800 in 1985 to 42,400 in 2006.
There are circa 140 farms engaged in production of rabbits and circa 170
in the production of fur. In the past few years, the fur-farming sector has made
substantial investments in modern production methods. The sector seems to be
flourishing despite of social pressure.
91
3.6.4 Poultry
Specialised poultry farming started in the 1950s in the Netherlands, and developed rapidly during the 1960s and 1970s, owing to advances in technologies
and increased demand in Europe. In 2006, circa 90.400m. chickens were fed
throughout the country, of which almost half were layers and more than half
were broilers. The introductions of new hybrids, improved management techniques, mechanisation and computerisation have increased the efficiency of
poultry holding. The majority of these holdings are specialised in either egg or
broiler production.
With circa 1,400 farms with layers and almost 700 broiler farms in 2006
(tables 2.6 and 3.12), Dutch poultry has become another important sector of
the countries intensive farming industry with an impressive productivity. In
2006, the production of poultry meat reached 731,000t, while in 1980 it was
less than 429,000t. There were 30.8m. layers in 2006, whereas in 1990 the
number was 33.2m.; on the other hand, the number of broilers rose from
41.2m. in 1990 to almost 54.7m. in 2002 but decreased afterwards to 41.9m.
Table 3.12
Holdings by number of broilers
Broilers/farm
1975
1985
1995
2000
2007
<25,000
1,886
903
629
318
172
420
524
581
606
392
23
50
91
170
184
2,329
1,477
1,301
1,094
748
25,000-75,000
>75,000
Total
Source: LEI, 2008, p. 110.
Production facilities are concentrated in certain regions. North Brabant,
Gelderland and Limburg are the most important poultry provinces. In terms of
broilers, these three provinces account for 31%, 12% and 9%, respectively, of
the national total, while in terms of layers, they account for 28%, 27% and 23%,
respectively.
Poultry in the Netherlands are given compound feed that contains all the nutrients the animals need and in their correct proportions. The sophisticated
technology used by the foodstuffs industry was developed by Dutch scientists.
Raw materials and ingredients are imported from all over the world. Some of the
ingredients are dry by-products of the food industry. Amino acids, vitamins, and
92
macro and micro elements are added to reach the optimal proportions of all nutrients.
Broilers
It is not difficult to obtain an idea about specialisation in the Netherlands through
its broiler sector and the linkages between all parts of the broiler chain (figure 3.1).
In line with standards, a broiler should reach 1.7kg within 44 days. The
number of henneries each raising more than 50,000 hens represents 36% over
of the total number. In 2006, 731,000t (live weight) of broilers were produced.
Broiler farmers obtain their chicks from independent hatcheries. Their eggs
originate in parent stock farms, where the hens and cocks are usually kept in
deep-litter systems (straw or litter on a solid floor). The parent stock farms have
the hens and cocks reared by specialised independent farms until they reach
the age of circa 18 weeks. These farms receive the birds as day-old chicks
from a breeding hatchery, which is owned by, or works exclusively with, the
breeding organisation. These eggs come from grandparent stock farms, which
raise their own hens and cocks in deep-litter systems. They too receive the
birds as day-old chicks from a breeding hatchery. These eggs come from
breeding establishments, and are laid by the breeding stocks directly descended from the breeding establishments where the pure lines are improved
and reproduced.1
Virtually all broilers in the Netherlands are raised in deep-litter systems. The
stalls are ventilated mechanically. The Netherlands has introduced 'free-range'
poultry system, so that the birds have more space in which to move around.
European standards for poultry meat include requirements related to the various
free-range poultry systems, such as age of slaughter, feeding, and maximum
capacity per stall. The Netherlands has some extra standards of its own; for example, the birds must have access to the outdoors and be provided with grain
and straw.
1
LNV, December 2000, The Dutch Poultry Sector.
93
Figure 3.1
Broiler Production Chain (1999)
5 pedigree breeding
establishments
1,225 broiler farms with:
53 million broilers
200 raring establishments
46 slaughterhouses
663 million kg dead weight
538 hatchery supply farms
6.3 million parent stock
700 million hatchery eggs
28 hatcheries
582 million hatched eggs
287 special cutting plants 46
combination cutting plants or
slaughterhouses
121 wholesalers
Source: LNV, December 2000, The Dutch Poultry Sector.
Egg production
The production of eggs in the Netherlands holds a predominant position in the
world. Around 10m. eggs (circa 611,000 tons) were produced in 2006. On average, in 1960 a layer laid 210 eggs, but in 2000 laid 306.
The evolution in poultry housing systems from outdoor farmyard holdings
into highly automated poultry houses has been most evident in the laying sector.
Since the early 1990s, the majority of layer flocks have been kept in multi-tier
battery cage systems. Mechanisation and computerisation are important not
only in reducing the cost of the product, but also in increasing capacity per m2.
Water is provided by nipple drinkers, which prevent contamination and spillage.
Feeding is highly automated: automatic feed trolleys or automatic chain feeders
run on timers. The manure on belts beneath the cages is air-dried to reduce
both transport costs and the emission of ammonia. The air used in the drying
operation also improves the micro climate inside the cages. Battery cages facilitate further automation of the production process. Egg counters per tier, water
consumption measurement and other devices comprise an automatic monitoring system of the layers' condition, health and production capacity.
However, consumers are making ever-stricter demands as to animal welfare,
and poultry farmers are paying more attention to this issue. In response to market demands, more and more laying hens have access to the outdoors. An alternative way has been to develop 'free-range eggs'. These eggs are laid by
94
hens that are allowed to roam and scratch around on the floor of large deeplitter houses. Grain is frequently strewn on the floor so that the birds can peck
for food as they do by nature. A part of the floor is occupied by a 'manure box':
perches and troughs for food and water are set over a grating. The manure
produced by the chickens while over the grating falls into a container, keeping
the litter cleaner. Regulations control the number of birds per m2 and the
amount of light and ventilation of the house. By late 2000, over 44% of Dutch
household eggs were free-range eggs.1
In order to make the living conditions of egg chickens more 'humane', the
egg chicken industry has been researching how to make henhouses - including
henhouses for loose breeding and perched henhouses - more suitable for the living habits of hen groups. This trend is propelling the modification of intensive
henhouses. By 1998, henhouses accommodating 23.3% of the total number of
layers had been redesigned.
Furthermore, there are more than 75 farms raising turkeys (1.200m. turkeys on
hand) and nearly 60 raising ostriches (circa 1,830 ostriches).
In order to improve the quality and safety of poultry products, the Dutch
government has introduced the 'integrated quality system' (IKB) and set a goal
to increase the market share of organic products to 20% in 2010.
3.7
Structure and productivity
The historical changes in the Dutch agricultural sectors described above have
revealed certain regularity: a substantial reduction in the number of farms engaged in primary production, and the gradual decrease of the amount of agricultural land area due to expansion of urban areas and infrastructure. Although
the output of some kinds of products has decreased, the supplies of most farm
products have grown remarkably. Such tangible changes are also linked to
growing exports of some agricultural products from the Netherlands. All this
implies a significant increase of productivity in Dutch agriculture during this restructuring process.
To summarise the Dutch experience with the enormous restructuring of their
agriculture over time, it is wise to answer the two following major questions.
1
See LNV, December 2000, The Dutch Poultry Sector.
95
Box 3.9
Quality Assurance System
The aim of the integrated quality system (IKB) is to guarantee that all the important activities
in production chains are under control. The system is briefly illustrated here by using the
poultry industry as an example.
The IKB requires all sectors that are involved in the production of poultry meat and eggs,
processing and sales (including feed farms, suppliers of breeding materials, vets and products processing manufactures) must guarantee their operation. Each link in the various production chains must conform to the IKB regulations.
As the IKB is intended to ensure consumer safety, the information exchanges are at the
core of the whole production chain. All details related to IKB poultry must be recorded in writing, and these records must accompany the poultry and the poultry products to retail shops.
This means that every piece of chicken and every egg can be traced back to its origins.
Thus, retailers know exactly what they are selling and consumers can identify whether products in shops are in accordance with the IKB standards.
The IKB regulations are enacted by the Dutch poultry and eggs commodities council
(PPE), with the help of the poultry industry. There is a self-governed organisation to ensure
that every sector obeys them.
Based on brochures published by LNV.
1. What guides the structural changes in Dutch agricultural production?
Dutch farms are self-managed enterprises: all of the production decisions are
made by the farmers themselves - whether to expand land area (buy or rent?),
whether to increase the number of animals, what to grow (e.g. vegetables or
flowers? layer hens or broilers?) and what kinds of techniques to adopt. None of
this is detailed in government plans, or even promoted by the LNV. The EU quotas serve as production limits, rather than as obligatory tasks. Moreover, quotas can be bought or rented from other farmers. Therefore, farmers are always
the decision makers for the production on their own farms.
The decision-making is based on the domestic and foreign markets. Put
simply, the question is: 'What sells best (the most profitably)?' More than a century ago, when the open market policy led to the steady flood of overseas cereals into Holland, many farms turned to raising stock with cheap imported grains.
A hundred years later, the EU quota system greatly affected the production
structure of Dutch agriculture, especially of dairy farming. A dairy farmer, for instance, could choose to reduce his production costs (e.g. to enhance milk yield
per cow, thus reducing the number of cows he had to keep) or to employ alternative techniques (e.g. to improve the daily ration for animals, to use milking ro96
bots), to buy quotas from other farmers or to change his production activities
(shift to beef cattle, poultry, et cetera). The growth caused by changing the
production composition (e.g. to grow vegetables or potatoes instead of wheat),
in order to achieve higher profitability by making better use of own comparative
advantages, is a growth induced by a shift of the structure, or 'shift growth'.1
In fact, every critical turn afforded farmers new chances - and presented
them with new risks. When a farmer runs a larger farm, he has to put up a larger amount of capital, implying greater risks - large losses or even bankruptcy if
he judges the market wrong. Only those apt at making correct judgements
about market trends can avoid the various risks and distinguish themselves
from the competition.
Aggregation of the micro decisions of every farm comprises the macrostructure of agriculture in a country. The right decisions at the micro level
(farms) lay the foundations of the countries macro strength and competitiveness
in the international arena. In the long run and nationwide, the productivity of the
surviving farmers must be augmented, as thousands of weak, poorly managed
farms close down.
2. What drives up agricultural productivity in the Netherlands?
The Dutch scholar H. Rutten disclosed the fundamental reasons for the increase
in productivity of Dutch agriculture2 by analysing the relationships between input
and output in the period 1949-1988 (table 3.14). He pointed out that in this period, the number of farms larger than 1ha decreased from 250,000 to
115,000; the agricultural labour force shrank from 530,000 to 230,000 fulltime labour units, and the agricultural land area also underwent a significant reduction. On the other hand, the development of the productive capacity of agriculture was even more marked. Total input increased slightly, while total
production increased rapidly. The average annual growth rate of total production and gross value added was 3% or more. In the eighties the growth in productivity slowed down. In the period 1990-2005 the increase in labour
productivity was between 3-3, 5% per year (figure 3.2). These effects show that
factor substitution and technical change have produced an important effect. Of
1
This concept was first raised by American Economist H. Perloff and others. See Regions,
Resources, and Economic Growth, 1960.
2
H. Rutten, Productivity Growth of Dutch Agriculture, 1949-1989. LEI, October 1992.
97
all factors, however, the investment in human capital is the key to the productivity growth.
Table 3.14
Growth rates (%) in the volume of input and output a)
1950-60
Total input
1960-70
1970-80
1980-88
1950-88
1.42
- 0.09
1.07
- 0.47
0.58
Labour force
- 2.48
- 4.79
- 2.96
- 1.32
- 2.98
Land
- 0.04
- 0.42
- 0.51
- 0.34
- 0.33
Capital
Human capital b)
Total output
0.40
2.12
3.32
1.03
1.75
11.47
6.39
0.31
0.75
4.84
3.61
3.79
4.39
2.42
3.61
a) 1950 = 1949-51, et cetera; b) Refers to the public expenditure on research and development, extension and
education.
Source: H. Rutten, pp. 10, 13.
Rutten suggested that a particular feature of productivity growth in the
Netherlands was that it came about through a very high growth of output, combined with a rather large use of inputs. This at least became apparent when
comparing Dutch agricultural productivity performance with that of other Western countries. In other countries, productivity resulted foremost from a relatively
modest growth of inputs. However, in the eighties and afterwards the difference
in productivity growth with other Western countries decreased together with a
decrease in the growth of output.
We may extend Rutten's conclusion further; that is, different from material
investment, human capital is mobile, learning, self-steeling in production and
market competition: it is 'self-improving capital'. The benefits of education and
training can act in a long period of time. In addition, the farm exit (elimination)
mechanism makes it possible to examine the farmers' ability in learning and selfimprovement, so that the farmers who are comparatively poor at managing
leave farming year after year. In such a process, the winners take an increasingly larger share in human capital in agriculture. As the overall quality of the labour force in agriculture continues to improve, the growth of productivity has a
solid foundation.
This once again supports the wisdom of T. Schultz, namely that human capital is the key variable in explaining the differences in agricultural production.
98
Figure 3.2
Labour productivity in agriculture,1950-2005 (% per year)
10
8
6
%
4
2
0
'50-'60
A
'60-'70
'70-'80
'80-'90
'90-'00
'00-'05
B
A = volume gross production per unit of labour; B = volume gross added value per unit of labour.
Source: Bruchem, C van and H. Silvis (eds.) (2008).
3.8
Conclusion
What to produce? How much to produce? Why produce? For whom to produce?
All of these are basic questions in economics. Here, every link requires that a
farmer must make a choice and a decision. As land, capital and labour are
scarce, the farmer must sacrifice an amount of one thing to get another good
or service, so that all available resources in their combination generate maximum benefits. The market demand as well as technologies are changing constantly, and the highest possible profitability with given resources is changing,
too. The farmer probably never achieves the maximal point of profitability, but
he must do his utmost to use the scarce resources as profitably as possible.
The higher the efficiency of resource allocation, the greater possibility for the
farmer to win in a competitive market.
Chapter 2 has shown that these choices and decisions are made independently by the farm owners. This chapter discusses the results of these choices
and decisions made by Dutch farmers - what is produced, how many are produced, how they are produced, et cetera. Some products showed dramatic increases, some the opposite. There are many specific economic and noneconomic reasons behind this phenomenon.
99
The structure of agricultural production must adapt itself to a new market
and social environment at home and abroad. In a market economy, a 'rational'
farmer would arrange production according to the rule of profit maximisation as
long as he has the decision-making right in production. The farmer would do
everything possible to adapt himself to changing market and consumer's demand by changing his production activities. Therefore, the quantity and the variety of products supplied by individual farms always change over time. The
national statistics are only an aggregation at the macro level, reflecting the dynamics of farm activities at the micro level.
The historical development of Dutch agriculture tells us vividly that, ceteris
paribus, it is the decision-making ability of a farmer that determines his prosperity or decline, survival or demise. We can infer thereby that the average decision-making ability of all farmers in a country is the decisive factor for the
general situation of agriculture and the competitiveness of the country. Since it
is difficult to quantify the decision-making ability of farmers in a country, it can
be deducted inversely: the competitiveness of the countries agriculture reflects
the decision-making ability, and the level of that ability, of thousands or millions
of farmers, ceteris paribus.
The ability of Dutch farmers (or rather, of part of Dutch farmers) to adapt
themselves to changing demands of markets both at home and abroad enables
them to increase their international competitiveness, which brings them enormous profits. Just as streams flow into and strengthen rivers, the tens of thousands of farms drive the agricultural sectors ahead. This is the clue to
understanding the changes in the structure of Dutch agricultural production.
100
4
4.1
From field to table
Introduction
The fundamental aim of production is to satisfy consumer demand. No production can continue unless attention is paid to selling - otherwise no value can be
achieved. Some areas in our country (China) introduced advanced greenhouse
facilities imported from the Netherlands and produced some fine products, but
there were also many losses, mainly attributable to wrong decisions about to
whom to sell the products. Problems also exist in the management of supply
chains.
If the aim of production is not for self-consumption but to make a profit, we
must establish where the market is before producing: is the market in villages,
or in counties or in the whole country? It is for the nation's large cities - or for
export? If it is for export, which countries are targeted? Do the consumers there
have some special requirements? And so on. Moreover, we must bear in mind
that some products have particular consumption peaks; if we do not, production
will be pointless and the result a disaster. Thus, producing for market should be
a principle for farmers.
Producing sectors, input supply, processing and distribution should integrate
into a system - an 'agricultural complex'. Here, a simplified version of its very
complicated structure is presented in a chart (see figure 4.1).
Agricultural production sector must be closely linked with both preproduction and post-production steps in order to harmonise the production
chain and to ensure the highly efficient running of agricultural complex. Whether
this chain can operate efficiently will also determine the efficiency of the whole
agricultural production sector. Both the institution and the management level
play a role in it.
4.2
Input supply
The agricultural production structure determines investment types, and vice
versa: the availability of high quality inputs at low prices determines the agricultural production structure. In the Netherlands, the most important inputs are
forage and seeds, along with fertilisers, pesticides, agricultural machinery, et
101
cetera. Special facilities and all kinds of suppliers of breeding materials are
needed in the greenhouse horticulture sector. Here I use investment supply in
the Netherlands, taking feed and seeds as examples.
Supply and
service
A gricultural
production
Dutch agricultural complex
Seed, place construction, greenhouse building, facility
installation, imports, other services
Arable crops, greenhouse horticulture, perennial crops,
production of livestock and poultry
M aterials
Figure 4.1
Forage
Distribution, export
A gricultural
products
processing
Products of agriculture and livestock farming processing
Productsdistribution (auction, wholesale, retail)
Export
Consumer(family, dining industry, school,
etcetera)
4.2.1 Feed
Quality and price are the factors that determine the competitiveness of livestock
farming. In this respect, the Netherlands strengthened its advantages and improved the competitiveness of its stock raising by making the right decisions.
First, where to purchase raw materials for factory production must be decided. As discussed above, in the later part of the 19th century, the Netherlands
adopted an open policy when a large amount of American grains flowed into
Europe. Making full use of Rotterdam and Amsterdam seaports, the Dutch set
up many feed processing factories situated along canals in the country for the
supply of raw materials at low transport costs, and transported after processing
the feed products to livestock farms, greatly reducing the costs of feedstuff. It
is on this basis that modern Dutch livestock farming developed.
102
After World War II, Dutch compound forage saw rapid development: scientific recipes increased the utilisation rate of forage. Later, the EU practised protectionism by imposing levies on imported grains. In order to keep the cost of
livestock breeding low, the Netherlands lost no time in importing cereal substitutes (mainly tapioca and beans) from Africa, Thailand, Latin America, et cetera,
while other European countries continued to use nationally produced grains to
feed livestock and poultry. After researching the nutritional value of tapioca and
other substitutes, the Dutch upgraded the recipe of forage and started providing special feedstuff for livestock and poultry. This not only reinforced their position of strength in competition, but also stimulated the development of the
chicken industry. At the time, many big feed enterprises (Cebeco, Cehave,
Hendrix, et cetera) also started breeding livestock and poultry and cooperating
with slaughterhouses and selling sectors. This realised the integration of supply
of forage, production, processing and distribution, and improved the efficiency
of forage enterprises.
As time passed, Dutch feed processing enterprises saw a gradual decrease
in their number, an increase in scale and the tendency to concentrate production areas, which creates a certain size effect (table 4.1). Significant tendency
of specialisation also shows in compound feed factories. For example, Sloten
- a compound feed factory - produces only for young livestock (cattle, pig and
sheep) of different ages (months). The number of Dutch compound feed factories dropped from 390 in 1990 to 250 in 1996 and to 139 in 2003; on average, each factory has more than 100 workers.
Table 4.1
Production of compound feed in the Netherlands
Number of enterprises in different scales
<10,000 tons 10,000-
Total number
Total
of enterprises
output
>25,000 tons entries
x 10,000
25,000 tons
tons
1986
309
39
0
348
1,581.3
1990
340
51
0
391
1,557.1
1994
279
21
12
312
1,602.3
1998
202
21
12
235
1,504.1
2003
115
15
9
139
12,156
103
Dutch feed manufacturers usually cooperate with retailers and slaughterhouses to provide services for farmers. An integrated supply-distribution chain
comes into being in this case. It is introduced in the following sections.
Box 4.1
'Baby food' for animals
Technological innovation is key to improving agricultural productivity. The more efficient use
of resources leads to lower production costs. This is important to a country like the Netherlands, where natural resources are very limited on a per-capita basis.
In the Dutch city of Deventer, there is a company called Sloten that specialises in producing baby food for young animals. It is interesting to know how it has succeeded in exporting
85% of its products to more than 50 countries.
Some 40 years ago, Sloten began to develop milk replacers for young animals. The milk
products are based on a unique formula and are extensively tested both on experimental
farms and in practical situations. The goal is to attune perfectly to the needs of young animals (calves, piglets, lambs, et cetera).
The quality of the products is a direct result of the computer-controlled spray-drying
process Sloten has developed. The products are mixed, pasteurised and homogenised in liquid form, and then dried using spray towers, during which the fat is entirely encapsulated in
protein. The result is a product with ideal fat distribution as well as excellent solubility and digestibility. The quality of the production process at plants is guaranteed by GMP and
ISO 9001 certification.
Based on Sloten. Healthy animals. Healthy for you.
4.2.2 Seed industry
Fine seeds are an important guarantee for the quality of agricultural products.
Early in the 19th century, Dutch merchants knew to make money by selling
seeds (mainly vegetable and flower seeds). It was so profitable that they set up
seed companies doing import-export trade.
The Dutch seed industry is prominent in the world. The three most important
types of seed produced are seed potatoes, flower seeds and arable crop
seeds. The Netherlands' export of seed potatoes is number one in the world,
and that of seed for horticulture is number two in Europe.
A significant characteristic of the Dutch seed industry is the close cooperation between public and private sectors: each specialises in a certain task and
has a strict division of labour. In 1898, the Netherlands built the national seed
research station to study seed breeding and to decide whether to apply re104
search result in the real world though comparison experiments involving different types. In the 1910s, some private enterprises were given the right to organise quality control and authorisation. Private seed enterprises now play a key
role because they contract directly with farmers (they are not only seed producers, but also seed purchasers), experts on seed breeding, and seed merchants.
Public sectors are responsible for research, education and promotion, as well
as quality control, field experiments and the protection of intellectual property
rights.
The Netherlands is strong on the production of seed potatoes: the annual
output is about 1.3m. t, of which more than 50% is exported. Its main trading
partners are Italy, France, Germany, Belgium, Switzerland and North America.
It usually takes 10-12 years to culture a new breed of potato, and the process requires cooperation between seed breeding companies (also trading companies) and farmers. During the period of breeding seed, what farmers do most
is to choose seeds, while specialised companies are the core: in addition to doing research, primary cross-breeding, testing new breeds and applying for registration, they take charge of distribution. Once a new breed is registered, the
seed cultivar is granted 30 years of proprietary trade rights. In 1999, there
were 10 companies for seed breeding of potatoes in the Netherlands, of which
the biggest are Agrico and Hettema ZPC: between them they account for 80%
of the national market. Agrico is a farmers' cooperative, while Hettema ZPC is a
big company made up of a private company and a cooperative (1999).
As for seed breeding of arable crops, there are private companies with long
histories, such as Vander Have and Barenbrug, which were established in 1879
and 1904, respectively. The latter is specialised in the production of grazing
seed; now besides the seed for silage, the seeds for lawns and soccer fields
are also produced. The former has comparatively rich experiences: it started by
breeding of sugar beet seeds, was purchased by a company and incorporated
into Advanta together with many other companies, and then a joint venture was
set up with the company Cosun (50/50 stock share), mainly managing the culturing of fine seeds of sugar beet, corn, grazing, et cetera. It is now the sixth
biggest seed-producing company in the world. Cebeco Seeds (est. 1938) was a
subsidiary of Cebeco (a cooperative), and produces such seeds as beans, grazing, flax, corn and cereal. In 2003 the seeds branch was sold to a Danish company.
The changes of these companies show that it is a natural process for the
combination of weak and big companies in the Netherlands. In highly competi105
tive economy, only continuous improvement can help enterprises stand firmly in
the market.
4.3
Agricultural products processing
The Dutch agricultural miracle can be attributed to a large extent to the countries strong food processing industry. The Dutch food and drink industry can be
traced back to 1850. In the half a century from 1850 to 1900, the main products included starch, sugar, butter, cheese, et cetera. This industry has developed very rapidly since the 1950s, and related technologies have been
continuously improving. In the Dutch agricultural products processing industry
there are more complete categories: the raw materials comprise both domestic
and imported products. This industry embraces the processing of dairy products, meat, fish, shellfish, eggs, potatoes, vegetables, fruits, oils, cereals, candies, cakes, brewing, beverages, baked foods, seasonings, food ingredients,
sport foods, fast foods, snacks, et cetera.
As an important linkage in the supply chain of agricultural products, the
Dutch food and drink industry is one of the countries vital industrial sectors. In
2005, the output value of agriculture and livestock breeding was €18.52b. and
its net added value €5.12b., while that of processed agricultural products was
€49.22b. and €12.01b. respectively. The production value and the value
added of the Dutch food and drink industry accounted for about 21% and 19%
respectively of that of the whole industrial sector in the country. Unilever, Heineken, Philips, et cetera are all world famous big multinationals.
Agricultural processing creates not only a large amount of added value, but
also a large number of jobs. In 2004, the number of employees amounted to
89,700, occupying 19.7% of that of manufacturing (table 4.2). On average, each
enterprise in 2004 provided about 400 jobs. The sectors with the largest labour
forces were the sugar industry, the beverage industry and the dairy industry, while
fish processing enterprises, for example, employed on average only a small number of persons. Although the bread processing industry takes the most quantity,
on average the employment per enterprise is relatively limited.
106
Table 4.2
Type of industry
General situation of the Dutch food and drink industry
Number of companies
Number of employees
(x 1,000)
1992 a)
1997 a)
2004 b)
1992
1997
2004
Bread and biscuits
293
274
40
20.0
18.9
10.8
Meat processing
194
206
55
23.5
21.2
16.9
Dairy processing
38
38
10
16.9
11.8
n/a
Fish processing
50
41
5
3.2
2.6
n/a
Vegetable and fruits
55
55
25
8.1
7.4
9.1
2.2
processing
Oil pressing
13
19
5
3.8
3.0
Sugar and starch
8
12
n/a
5.8
4.7
n/a
Cocoa, chocolate
39
43
10
6.2
5.9
5.0
Beverage industry
34
33
10
11.4
11.3
8.0
Tobacco processing
15
11
10
5.9
5.4
n/a
Animal feed industry
82
76
15
9.8
8.1
5.1
Other food
78
74
35
12.4
11.7
n/a
and candies
Total
899
882
220
127.0
112.0
89.7
% of domestic
13.6
13.9
16,5
16.6
16.8
19.7
manufacturing
a) Only enterprises with more than 20 workers are included in the number of enterprises; b) Only enterprises with
more than 100 workers are included in the number of enterprises.
Source: LNV (2000) and for 2004 CBS Statline.
Between 1960 and 1991, the total output of the Dutch food and drink industry increased by 150%, which represents an average annual increase of 3%. The
turnover of the food and drink industry grew, as said above, to €49,220m. in
2005, representing 21% of the turnover of all Dutch industry. Many factors have
contributed to the rapid development of the Dutch food industry: a growing
population, higher incomes, changes in living and eating habits (the last mentioned is a result of increasingly frequent international communication, and more
and more colourful demands stimulate the development of the food industry).
Powerful enterprises are the pillar of the Dutch food industry: they have all kinds
of consultancy institutes and often have close contacts with the financial world
(i.e. Rabobank), and the countries highly efficient transportation infrastructure al107
lows the products to be transported to anywhere in the Netherlands, or even to
the Europe and other countries throughout the world.
The Dutch food and beverage industry has changed greatly in the last few
decades (see table 4.3). Entrepreneurs must pay attention to technological advancement, explore new products, realise production automation and improve
labour productivity if they want to enhance their competitiveness. This period
saw many new factories and the endless emergence of new techniques, together with new products, such as Potato chips, mashed potatoes, meat-taste
snacks, instant vegetables (sanitised, dry and deep frozen) and various sauces.
Table 4.3
The turnover of Dutch food processing industry (X NLG100m.)
Food category
1980
1990
1995
1998
2004 a)
107.30
130.31
134.12
139.63
n/a
78.50
123.81
136.70
151.35
5.161
...
12.26
20.08
24.08
n/a
Vegetables, fruits
17.50
26.18
21.87
23.04
2.782
Chocolates, candies
26.50
33.24
59.54
58.34
2.981
Beer
20.70
34.29
41.75
44.93
3.744
9.50
14.69
17.91
17.71
33.80
56.01
70.45
88.64
Dairy products
Meat
Potato products
Fruit juices, soft drinks
Tobacco
n/a
a) In € million.
Source: Landbouw-Economisch bericht 2007 (Agricultural economic report 2007).
The development of the processing industry created a higher share of processed products in the total export (see chapter 5). Recently, the Netherlands
has been the biggest exporter of barley beer, cocoa products and many kinds
of dairy products. Sensible to opportunities, Dutch entrepreneurs are skilful in
product promotion. The main trades with continuously increasing processed
products are dairy products, meat, artificial butter, fats and cocoa products.
The exports of these items account for nearly 55% of the total food export in
the Netherlands.
The Dutch processing industry of agricultural products benefits from the close
cooperation between farmers (producers of raw materials) and manufactures.
Joint enterprises have appeared in many sectors, especially in dairy products,
sugar, potatoes, starch, et cetera. Vegetable processing produces mainly for
contractors: it is also a common joint venture. It guarantees raw materials supply
from producers, as well as the highly efficient running of production.
108
Box 4.2
Firm
List of biggest agribusiness firms in the Netherlands (2006)
Legal
Main activities
structure
Unilever
PLC a)
Food, home and per-
Heineken
PLC
Drinks
Sovion
Cooperative
Meat and meat
Friesland
Cooperative
Total sales
Sales in
worldwide
Netherlands of em-
(€ million)
(€ million)
39,642
Number
1,135
ployees
179,000
sonal care products
11,829
n/a
65,648
7,413
1.024
13,957
4,675
1,378
15,312
products
Dairy
foods
Campina
Cooperative
Dairy
3,624
1,122
6,302
Nutreco
PLC
Animal feed, meat
3,009
535
7,919
Numico
PLC
Baby food and clinic
2,623
n/a
12,888
CSM
PLC
Sugar, bakery ingredi-
2,421
124
8,090
food
ents and lactic acid
Provimi
PLC
Wessanen PLC
Animal feed
1,823
n/a
9,000
Natural health food
1,590
136
5,380
1,469
561
4,210
and snacks
Cosun
Cooperative
Food and ingredients
a) Public limited company; n/a = not available; a) 2004.
Source: S. van Berkum (2002) and Landbouw-Economisch Bericht (2007) (Agricultural Economic Report 2007).
4.3.1 Dairy Industry
The Netherlands is one of the world's most important exporters of dairy products: more than 50% of the countries outputs are sold abroad. In particular,
cheese, butter, condensed milk and milk powder are exports of consequence.
Of these, exports of cheese stand head and shoulders above the others: the net
export value of the Netherlands is number one in the world (80% is distributed
within the EU; the rest is sold to more than 100 countries throughout the world).
Some 90% of Dutch dairy enterprises are cooperatives. In the middle of the
19th century, there were many processing workshops. The first normative dairy
products cooperative was established in a small town named Warga in Friesland
in 1886. It was initiated by 23 cow breeders who wanted to prevent the processing companies from depressing prices. Until the end of the 19th century, the
109
number of dairy products processing factories amounted to more than 900.
Since the 20th century, there has been a tendency to merge in order to enlarge
sizes in the dairy industry: in 1950, only 500 factories were left; by 2005, there
were only 15 companies, together with 51 affiliated factories of which 5 cooperatives with 37 factories. This resulted in a large increase in the size of processing factories: the average annual processed milk of a factory rose from
120,000t in 1960 to 205,000t in 2005. The fundamental reasons for this are
the advancement of technologies (i.e. refrigerated milk cars and milk tanks on
farms), improved transportation and extended major roads, which prolong the
radius within which milk can be collected.
In the Netherlands, more than 50% of all fresh milk is used for producing
cheese (more than 60 types - and new types are continuously emerging). The
Netherlands sets strict standards on ingredients, size, weight, fat content and
packaging. Region specification is very significant in dairy products processing.
Factories originally focused on producing liquid milk for daily drinking, since the
western part of the country is densely populated; more drinkable types and deserts were introduced later. In the north-east Netherlands - which is less densely
populated - milk powder and condensed milk with long shelf-lives are very important. Cheese production is spread all over the country; among the most famous
are Gouda and Edam. These characteristics are also embodied on the specialisation of enterprises. For example, in the south-west, Campina Melkunie uses
more than 50% of its milk to produce drinkable liquid milk, yogurt and milk deserts; in the north, Friesland Dairy Foods mainly produces condensed milk,
cheese and milk powder (accounting for 75% of total output); and in the east,
Coberco uses 50% of its milk to produce preservable cheese and milk powder.
Friesland Dairy Foods and Coberco are cooperatives; they merged in 1998 to
become Friesland Coberco Dairy Foods. It is now the biggest dairy enterprise in
the Netherlands: it ranks fifth in Europe and processes about 50% of all the milk
produced in the Netherlands. Recently Friesland Coberco Dairy Foods merged
with Campina Melkunie.
4.3.2 Meat processing
110
Meat processing is one of the most important sectors in the Netherlands. Pork
products are the most important, followed by chicken meat and beef. Meat
product sub-sectors include slaughterhouses, meat products processing,
canned meats, bacon and sausage, et cetera. What the meat processing sector
attaches importance to is improving the quality of products and supplying a
wider range of other goods by improving production technologies and adopting
automatic production, and thus strengthening its competitiveness in the international market.
Modern equipment for slaughtering poultry.
This sector relies heavily on exports: sales abroad accounts for nearly 60%
of the total. Some strong powers in EU are important trading partners of the
Netherlands; for example, more than 50% of the imported pork in Italy and
France comes from the Netherlands.
In the 19th century, the Netherlands mainly exported live livestock, and imported animal feed and fertilisers. It was merchants and big slaughterhouses
who did this business. Unsatisfied with the low prices they were receiving, farmers set up cooperatives, but could not compete with private companies. The
condition of processing cooperatives improved only after World War II, but they
were not as prosperous as the cooperatives in other sectors.
In the Netherlands, slaughterhouses and suppliers of feedstuff usually play a
leading role in farm production. Animal feed factories and slaughterhouses both
rely on one another and compete. Close cooperation between every part is
needed to run the supply-distribution chain. Farmers produce according to contracts, and animal feed manufacturers and slaughterhouses are responsible for
111
the other things, forming an integrative production chain. Other than animal
feed, feedstuff factories also supply young pigs to farmers (to ensure the same
breed); it is also in charge of distribution of hogs. This kind of contract guarantees a stable market for animal feed factories and also provides farmers with a
sure market, so as to avoid the risk of great fluctuation of price; as for slaughterhouses, they get reliable hogs of the same standard. Generally speaking, the
benefits compensate for the disadvantages, since it reduces risks, although to
produce according to contracts limits the production of farms. According to
surveys, in 1994, the production of the pig breeding industry was as follows:
animal feed factories 46%, slaughterhouses 35%, and other producers 19%.
A tendency to integrate is shown in the chicken breeding industry more
clearly. In 1990, 77% of meat chicken production realised integrated contract
production. Not only are advanced facilities needed in meat chicken processing
factories, but so too is careful planning. Usually a factory has to process more
than 100,000 chickens every day. In order to ensure the stable supply of
chicken, scientific arrangement must be made on breeder chicken, incubation,
feedstuff, disease protection, transportation, distribution, how to deal with byproducts, et cetera. Because compound feed accounts for about 60% of
chicken breeding costs, feed factories are keen to integrate: to build breeding
institutes, to sign contracts with hatcheries, henneries and slaughterhouses, and
some have already integrated with slaughterhouses (i.e. they now fall under the
same company). In the Netherlands, poultry products are mostly processed into
parts (only a few keep the whole) and are launched to market packed in different
sizes.
4.3.3 Potato processing
112
The consumption potato processing industry developed in the Netherlands only
in recent decades. In 1961, the first potato processing factory - Aviko - was set
up in response to the great potato surplus in the Netherlands and to blocked
exports. At the time, IBVL experts in Wageningen were invited to carry out investigations in the USA. They studied the processing technology of potato chips
and made an analysis of the future market. Since then, the potato processing
industry in the Netherlands has been booming.
From the beginning, this industry has set a clear target. The increasing fast
rhythm of work stimulated the development of the fast-food industry; consumers
are pursuing convenient and diversified products. In recent decades, the quantity of potatoes processed has increased by times, up from 0.5m. t in 1975 to
2.5m. t in 1995, leaping to the first in Europe. This is to a large extent stimulated by the increase in exports: more than 80% of the products are exported,
of which semi-manufactured goods account for about 90% of the total output
and export. Only one breed is produced by the Dutch potato processing industry - the Bintje, which is very suitable for processing into potato chips.
Delivery and storage of potatoes before processing.
Over 70% of the output from this sector comes from several big companies,
including Aviko and Farm Frites, Both are sole ownership companies; the former
is a joint stock company belonging to two cooperatives (Cebeco and Cosun),
while the latter is a private enterprise. Two big foreign enterprises have also
joined the potato processing industry: one of them is the biggest potato processing company in the world - McCain (Canada) - and the other is LambWeston/Meijer, a US/Netherlands joint venture. Moreover, there are some comparatively small companies, mainly producing some particular products.
The stable quality and modern production facilities of the Dutch potato industry are the basis to reduce waste and to improve the quality of products.
Similarly, it is also important to organise logistics rationally. For example, processing enterprises can do the processing within 24 hours after harvesting potatoes. This undoubtedly helps to improve the quality of final products.
113
In order to guarantee the great prestige of processed potatoes in the world,
big enterprises not only invest a lot in production facilities and inspection systems, et cetera, but also keep close contact with research institutes like IBVL as
regards developing new products and applying the results of research.
Much older than the processing of consumption potatoes is the production
of starch from starch potatoes. This industry is also very important. Two subdivisions in this sector are starch products and products derived from starch. As
an example of innovation can be mentioned that the starch company Avebe cooperating with a research institute made use of potato starch to produce biologic plastic, without complex polymers or additives, that can be fully
degenerated and assimilated. It has been used in the packaging of meat products. These products of the starch industry are all products of consequence for
the production of food additives; they are also indispensable materials for industries such as food, beverage, medicine, paper making, spinning and adhesives.
The Netherlands also enjoys great prestige worldwide in the area of developing
macromolecule starch ramification. All of this gives the Netherlands a leading
status in the world and strengthens its international competitiveness.
4.3.4 Sugar industry
114
The sugar industry in the Netherlands has a comparatively long history. In 1910,
there were 36 sugar mills (8 confectionery sugar factories), most of which were
built in the south-western part of the country where much sugar beet is grown.
Because of the new reclaimed land in the former Zuiderzee and the improvement of motorways and transportation, the production area of sugar beets expanded. Starting in the 1960s, the sugar industry underwent rapid development
as a result of the growth of the population and incomes. The policies of the EU
were also favourable to the Netherlands for reducing market risks and stimulating production investments by farmers and sugar factories. Every sugar beet
farm signs a production contract with a sugar factory; in other words, the sugar
factories take charge of sugar production quotas in the whole country and reallocate them to farms.
In a highly competitive market, in order to pursue scale economy, Dutch
sugar factories saw several takeovers, leading to a large drop in numbers. By
1999, there were only five sugar factories in the country - three in the southwest, and two in the north. They belong to two companies: one is Cosun, a cooperative of farmers, which took over four sugar cooperatives and owns nowadays three factories, taking a 63% market share in the whole country; the other
is an old enterprise, CSM, which was established in 1919. It incorporated two
non-cooperative enterprises and compasses two factories now, accounting for
37% of the national market. These two companies have built sugar beet research institutes, and purchased stations, in order to provide fine breeds and
consultancy to farmers.
These two enterprises have also moved into the production of various types
of food. Certain divisions of labour were gradually formed. Firstly, it is expressed in the use of sugar: in 1960, about 65% of the nation's sugar was for
family consumption and the food industry accounted for only 35%; in 1985, family consumption of sugar dropped to 25% of the total output, and most was
used by the food industry. Furthermore, these two sugar companies evolved
step by step: as a cooperative, Cosun focuses on offering good service to
farmers, at the same time providing all kinds of materials for the sugar beet
processing and the food industry. The staff specialising in seed breeding in its
affiliated company, Advanta, provides fine breeds to farmers. CSM makes efforts to extend production chains. Treating the sugar industry as a part of the
food industry, it produces a variety of candies, canned fruits, cakes, breakfast
foods, et cetera.
4.3.5 Other food processing
Bread, cakes and biscuits
Medium- and small-scale enterprises are the main body of this sector. Other
than highly mechanised companies, many small producers still exist. Raw materials such as cocoa products, raisins, nuts, et cetera are used a lot, as are
powders, sugar and fats. Efforts have been made to develop new types of
products, including a variety of pastries, crisps, biscuits, cakes, et cetera. As a
typical Dutch breakfast food, Dutch rusk is now also exported a lot to Belgium
and the UK. The pastry industry produces many types of biscuits, layer cakes,
cream cakes, et cetera. Frozen foods have recently seen more and more profitable sales. Some are exported to other countries, especially France, Germany
and Belgium, thanks to the developed transportation.
Cocoa and chocolate products
In the 'golden age' of the 17th century, Dutch merchants controlled the raw materials trade of the whole world, including cacao. The Dutch has rich experiences in cacao processing. In the 19th century, C. van Houten invented a way
to extract cocoa oil from cocoa beans and the residuals can be ground into co-
115
coa powder. This method is still called 'Dutching'. These inventions initiated a
new era of cocoa processing and laid the foundations for the modern cocoa and
chocolate industry.
Dutch cocoa and chocolate products enjoy great international standing: the
Netherlands is the biggest exporter of cocoa fat, powder and chocolate products in the world. Amsterdam is the biggest cocoa transportation port, with annual trade amounting to 350,000 tons; 20% of the world's cocoa products are
traded there. Some of the big manufacturers own advanced production facilities, and also invest a great deal of capital in R&D and carry out strict quality
management, so that the Netherlands enjoys great prestige both at home and
abroad. The important products in the cocoa and chocolate production industry
include cocoa oil, cocoa powder, layer chocolate, chocolate silk and slices,
icing and sugar.
Vegetable and fruits
116
The vegetable processing industry has also seen rapid development. Canned
vegetables and deep-frozen vegetables are the most important products. Many
canned factories are concentrated in South Holland near to the production areas, thus leading to comparatively low costs. In addition, the companies have
advanced production technologies and a great variety of types. Dutch canned
factories therefore have a strong international competitiveness. The Netherlands
is the world's second biggest canned vegetable producer. The output in 1990
was 419m. litres, of which more than 50% was exported to other countries. In
2007 the output of canned vegetables was 396m. litres. The production of frozen vegetables increased from 110m. kg to 132m. kg in 2007.
In the past 20 years, the rocketing increase in national consumption stimulated the rapid development of juice production in the Netherlands. In international trade, juice takes only a small share; as for semi-manufactured goods
(concentrated juices), the ports - Rotterdam and Amsterdam - distribute these
products to everywhere in Europe. The Netherlands imports a large amount of
raw materials from Italy, Spain and other fruit production areas, and then exports juice and jam overseas. A stable supply of materials and modernised production technologies has allowed the Netherlands to become strong in juice
exports. As a result of increased labour productivity, this trade has also experienced integration many times. Other than to improve production technologies,
the investment in the technologies of quality control is given much attention too,
together with pursuing of new packing methods, so as to enlarge the market
share further.
Beer brewing industry
The Dutch beer industry has a long history: it can be traced back to the 17th
century. At that time, most beer producers were family concerns, and some still
are. The characteristics of the beer brewing industry are as follows: concentrated production, extension of scale and diversified management. This enables
the industry to be in a position of strength in both national and foreign markets.
There are more than ten breweries in the Netherlands, of which four (one is
the famous, large transnational enterprise, Heineken) - account for 80% of the
market. The Dutch beer industry produces high-quality beer on the basis of
comparatively low costs, thanks to the adoption of advanced production facilities and techniques. During the period 1974-1991, the export of Dutch beer increased by 34%, to 7m. hectolitres. It has been on a continuous upward
tendency: beer exports increased from 8.1m. hectolitres in 1997 to 12.7m.
hectolitres in 1999, accounting for 19% of that of the world; the export value
reached USD10.9b., accounting for 22.9% of that of the world. Both indexes export in hectolitres and in value - are number one in the world. In 2005, exports reached 13.7m. hectolitres.
4.4
Internationalised enterprises
In the early half of the 20th century, the Netherlands completed the modernisation of its agriculture; the period from 1950 to the 1970s saw the rapid development of agricultural products processing. During the period, the sector
acquired three significant characteristics, that is, its focus on consumers, vertical integration and internationalisation.
Although the agricultural productivity of the Netherlands is high, all enterprises are strongly inclined to explore international markets as their national
market is small. Internationalisation provides solutions for such problems as
how to enlarge development space, gain scale economy, disperse running risks,
et cetera. There are five main modes in the internationalisation of the Dutch agricultural complex:
117
1.
2.
3.
4.
5.
118
international trade in order to enter foreign markets directly;
indirect exportation;
permitted surrogate;
joint-venture enterprise;
foreign direct investment (FDI). FDI and direct exportation have a fine supplementary effect.
The following is how Dutch agricultural processing enterprises realised internationalised managing, and what the result is.
First of all, internationalising solved the shortage of national resources. This
is particularly expressed in land-intensive products and tropical products. Unilever set up tea, tropical fruit and oil crop plantations abroad. Avebe extended the
processing scale in Germany (potatoes), Thailand and Brazil (cassava) and the
USA (maize). To process directly in foreign countries not only overcomes the
problem of the lack of raw materials, but also saves transportation costs.
Second, it is convenient for distribution. In the past, if it was obstructed by
trade barriers, the Netherlands would face great troubles since it depended on
exportation. Some consumers prefer food that is grown in their own country.
Furthermore, not being familiar with imported brands, local consumers prefer
famous brands of their own country. Local products also have a superior position in circulation networks. In this respect, Campina Melkunie took over a few
dairy enterprises in Germany and developed its business there. Heineken also
applies this strategy to enlarge distribution, selling local beers, as well as increasing the export of Heineken beer through its selling networks.
The third is the increase of scale economy. Large investments in R&D, market investigation and study, advertising, et cetera are needed in order to develop a famous brand. It is difficult for the Netherlands as such a small country
to recoup the costs. The unification of the Europe market made it easy for famous Dutch brands to enter neighbouring countries. The scale profits are of
course better to realise now that the borders are open. Unilever and Heineken
have greatly benefited from internationalised operations in Europe and other regions in the world.
Fourth, the accumulation of knowledge. Many Dutch enterprises have foreign
cooperating partners or take over foreign enterprises or even establish R&D
centres abroad, for example, Campina Melkunie, Avebe, CSM, Unilever, Wessanen and Numico set up their own R&D centres in the USA. The biggest benefit
is to improve one's own management level by assimilating the knowledge and
experiences of foreign partners.
4.5
Distribution system
4.5.1 Logistics
Logistics refers to the substantial flowing process of objects from supply regions to receivers. Enterprises should integrate the basic functions such as
transportation, storage, loading and unloading, conveying, packing, circulation,
processing, delivering, information processing, et cetera, according to realistic
needs. Advanced logistics management is able to attain the service level consumers want at the lowest logistics costs. Therefore, it is necessary to make
plans, organise, balance and control logistics activities.
Items such as seeds, fertilisers, animal feed, et cetera only flow between
manufacturers and farmers when they are provided to farms. In the process of
farm production, inputs and outputs flow within farms; agricultural pre-cuts are
exchanged between suppliers and demanders when farms, auction houses and
retail enterprises sell goods. All in all, in the modern agricultural complex, the
whole chain is made up of a set of substantial flowing process of objects, such
as supply logistics, production logistics, selling logistics, recycling logistics, et
cetera. People especially attach importance to reducing possible environmental
pollution caused by logistics, in order to protect environment, they also pay attention to purify logistics environment, so as to make full use of logistic resources.
The complication, specialisation and internationalisation of economic activities generate third-party logistics. It is a model in which logistic services are
provided not by suppliers and demanders, but by a third party, who provides all
or a part of the needed logistic services. The profits of third-party logistic enterprises come from the new value brought by modern logistic management science, instead of direct income from transportation and storage fees.
Scientifically organised modern logistics has been considered as the third profit
source for enterprises.
119
Box 4.3
Agro-logistics in the Netherlands
The Netherlands is at the very heart of Europe's logistical infrastructure, and an ideal base for
supplying the huge European food market effectively and efficiently. No wonder the Netherlands is known as the 'gateway to Europe'. Two of the most important pillars of this gateway
are the port of Rotterdam and Amsterdam Airport Schiphol.
Rotterdam is particularly important when it comes to the transport of fish, meat, fodder
crops and fruit. The port is situated near important vegetable and fruit growing regions, and
is fairly close to Barendrecht - the location of the import centre for fruit from EU countries.
The port of Rotterdam has a separate fruit port, and Europe's only citrus fruit auction. Other
important logistical centres for agricultural products are the ports of Amsterdam (cocoa),
Flushing (fruit), Eemshaven (meat, fish) and IJmuiden (fish). More than 58% of the agro-food
products entering north-western Europe's seaports pass through Rotterdam or Amsterdam.
Schiphol Airport is another important logistical hub, located in the vicinity of Aalsmeer, an
important area for flower auction and ornamental plants. The flowers auctioned in Aalsmeer
come not only from the Netherlands but also from Africa, South America and Asia. Well over
65% of the world flower trade is channelled through the Netherlands.
Today, most agricultural and food products are transported within Europe by road, accounting for a major share of international road haulage. One in three lorries on Dutch roads
carries agricultural products. The distribution of perishable goods in the Netherlands requires
sufficient chilling and freezing capacity during storage and trans-shipment. In no other country
in the world is the per capita capacity greater than in the Netherlands.
Based on P. Jonkers and P. Peeters. Holland Economic Tribune, Vol. 3, No. 1 (2001).
The Netherlands has an efficient transportation network of shipping, road
and aviation traffic, each of which predominates in a certain area. Although it
takes time, waterage has the advantage of large conveying capacity and low
costs. It suits the transportation of a bulk of preservable agricultural products in
large size very well (especially for those cereals and raw materials of animal
feed, et cetera, that the Netherlands cannot self-support). Schiphol airport is
near to the flower auction houses and is able to distribute flowers worldwide at
the fastest speed. Between these two, there are 2800km of railway lines in the
Netherlands; they both connect important ports and radiate to neighbouring
countries. A cobweb of motorways and other high-quality roads facilitate doorto-door service. Most vegetables, mushrooms, et cetera in Europe are transported by rail or truck. These trucks are climate-controlled, ensuring the optimal
quality of products. Because of the diversified demands of consumers, 25% of
120
greenhouse vegetables are now transported directly from vegetable farmers to
retail markets.
4.5.2 Auctions
The total of cut flowers and potted plants supplies was 12.4b. stems of cut
flowers and potted and garden plants. The flowers and plants were marketed
through mediation (FloraHolland Connect) and the clocks installed at the in total
six locations (Aalsmeer, Naaldwijk, Rijnsburg, Venlo, Bleiswijk and Eelde). Sales
through the in total 40 clocks decreased with 2% to €2.6b. Sales through mediation were up 4% to €1.4. Nevertheless, the 65% market share makes the
auction clock far and away the most important sales mechanism.
Flower auction of farmers cooperative.
Flower and vegetable auctions in the Netherlands originated at the end of
the 19th century. Basically, as members of certain auction houses, flower and
vegetable growers have all their products auctioned, instead of selling them by
themselves. Most of the flowers and vegetables are sold by auction in the Netherlands. Fast logistics facilitated the realisation of production value for agricultural enterprises. The two trade parties in an auction provide bargaining places
121
in order to settle quickly and give producers the feedback of product sales.
Auctions drive not only the development of Dutch horticulture, but also the export of Dutch horticulture products, making the Netherlands the world's biggest
exporter of flowers.
Dutch auctions can be seen as the earliest type of third-party logistics. Auction houses themselves do not own the goods they auction: they only provide
sellers and buyers with an efficient place to do business. These two parties both
can find suitable trade partners through auction. It would not be possible for
thousands of Dutch market gardeners to distribute their flowers worldwide in
just one day without the auctions, nor would it be possible for retailers and
wholesalers in other countries to buy quality flowers and ornamental plants at
reasonable prices from thousands of Dutch flower growers without auction
houses. Time is money in this sector. Speed is the key: the faster flowers are
sold, the shorter plants are preserved, the fresher they are and, thus, the higher
the price - and vice versa.
More than the convenient and highly efficient sales, the advantages of Dutch
auction are that an auction house itself is a cooperative of flower and vegetable
growers. This reduces internal competition. So flower and vegetable growers
can concentrate on production, so as to improve the level of specialisation and
intensification.
There are seven flower auction markets in the Netherlands. Aalsmeer is the
biggest one, with sales representing 43% of the total. It has five auction rooms
and thirteen electronic auction clocks. Four of the auction rooms are for flowers, the other for potted plants. The second largest auction is the Dutch Flower
Auction in Naaldwijk.
Flower auctions are open from 06.30 five days a week. The flowers must arrive early in the morning or the night before the auction. Flower growers can
transport flowers by themselves, but most are transported by professional
transportation companies. After they reach the auction, the flowers are put in
huge cold stores by means of conveyor belts. Test sections for product quality
are set in iceboxes and cold stores. Here, the quality controllers test the quality
of every group of flowers and plants, and write the results on invoices.
122
Box 4.4
The biggest flower auction in the world
Verenigde Bloemenveilingen Aalsmeer (VBA) has a history of nearly 90 years. The new main
building was finished in 1972. After many expansions, the building area has reached 7.15m.
square metres, which is nearly as big as 110 football fields. It is the largest flower auction
market in the world, and one of the largest commercial buildings globally.
On average, 15m. cut-flowers and 1.5m. pot plants are sold at this auction each day, that
is, 3.5 billion-cut flowers and 370m. pots of plants per year. On important festivals, the volume reaches 90m. per day. The total export value of flowers and plants is as much as
€2.5b. There are 1,800 employees at the auction centre, and the number in the building is
more than ten thousand if one counts exporters and hired people in other enterprises. The
parking capacity is 3,500 and the area for cold storage is 3,000 square metres. After being
packed according to the requirement of consumers, the auctioned goods are transported to
the distribution centre where a complete system - such as plant quarantine stations and customs - exists. They are then transported at great speed to everywhere in the world through
nearby Schiphol airport. There are 2,000 containers every day on average.
This auction is a cooperative of flower growers: nearly 5,000 members own it together.
As members, their flowers, plants and nursery products must be auctioned through this auction and a certain proportion of profits (generally speaking, it is 5-6%, decided by all members every year) is given to the auction centre to pay for the operating expenses. The flowers
that are not sold in one day are destroyed; producers receive 80-90% of the original price as
compensation for their destroyed flowers.
Based on news from China Floriculture (Newspaper).
The auction is called a 'Dutch auction', that is, the auction price begins at
€100 and drops cent by cent until it reaches 0. The auction clock has a huge
face, displaying such information as:
1. the name of producers;
2. product: name, test number, place code, location in the icebox (row and
column), the number of products (how many carts), the number of carts held
in a container;
3. price unit (unit price): euro, cent;
4. sale condition: producer code, lowest quota, number of producers, quantities sold, cart code on auction, et cetera.
The auction clock shows all kinds of information in red after the auction begins. Carts depart from cold storage one by one, pass through the auction
123
rooms on rails and are seen by the buyers. When the auctioneer presses the
button on the auction clock, the hand turns anticlockwise around the clock face.
If a purchaser wants to buy the goods, he presses a button as soon as the hand
turns to the price he is willing to pay. Once the auction clock stops, the transaction is done and the purchaser's code is shown on the auction clock. The buyer
can tell the auctioneer the amount he wants to buy through a microphone on the
table. If he buys only a part of the lot, the rest will go on being auctioned. The
materials and data of every business is input into computers and invoices are
printed for purchasers and planters, so as to produce statistics.
It is the purchasers who decide the price in this kind of auction. Pressing the
button too early leads to a high price on the clock face, then the purchaser will
be at a disadvantage; however, others will buy if he presses too late. It is said
that 1500 transactions can be done per hour on one auction clock. Money must
be paid as soon as flowers and plants are sold. Many banks have a branch in
the auction buildings so that purchasers can transfer money easily.
After buying flowers, purchasers pack them according to the requirement of
consumers. Put in paper or plastic boxes, they are carried to the auction's distribution centre. Customs and plant quarantine stations are set there. Containers full of flowers are transported to Schiphol airport or to European countries
by trucks at the fastest speed. All of these activities are for one aim, that is, the
flowers and plants auctioned in the morning must be on display in flower shops
throughout Europe, the Americas, Japan, et cetera that night or early the next
day.
The latter half of the 20th century saw some bigger auction houses come
into existence as a result of takeovers that were carried out in order to deal with
increasing competition, resulting in a drop in the number of auctions. That number of purchasers (mainly vegetable purchasers) is also decreasing and becoming more concentrated because of the appearance of big retailing enterprises. It
seems a little outdated to follow the traditional method of auction completely.
The proportion of vegetable selling that is not dependent on the auction clock is
continuously increasing: some do business through an electronic price system
or long- or short-term contracts. This holds also for flowers and plants. At this
moment half of the flowers and plants at FloraHolland are already being traded
digitally (and invisibly). This happens primarily through Remote Buying (Kopen Op
Afstand - KOA), the electronic purchasing service that makes online purchasing
at the auction clocks possible from anywhere in the world.
124
4.6
Quality first
The rapid development of technologies in the 20th century benefits people
greatly, but also creates anxiety. The overuse of pesticides and fertilisers
causes many environmental problems. The safety of transferred gene products
is still in doubt.
The EU sets very high technology standards not only for agricultural products, but also for production processes and the environment. Take meat products, for example: not only is the amount of pesticide residual controlled, but so
too are the hygiene conditions of exporter factories. The EU has imposed strict
regulations regarding temperature in workshops, ingredients, packaging, containers, et cetera. Food health and quality standards in the Netherlands are in
accordance with EU regulations.
Recently, frequent occurrence of BSE and pollution in Europe urged people
to pay attention to food safety and quality standards. In 2001, the EU established self-governed food management organisations by law. The new food
safety law attaches more importance to the quality of agricultural and livestock
products; transferred gene products must practice a labelling system.
In the Netherlands, information is collected and analysed by all kinds of production associations. This strengthens food safety control and prevention, including the analysis and inspection of agricultural products (especially livestock
products). Enterprises are required by law to have an HACCP (hazard analysis
and critical control point) system to monitor and control the whole production
process.
The Netherlands adopted such a 'chain control system' to ensure the monitoring of production in stock raising and to have in-depth quality control over all
producers and retail channels. Take meat products, for example: harmful residuals can be traced back from retail shops to production farms, if needed. It
is the quality sense of Dutch industries and regulations of quality control made
by the government that make it possible for the Netherlands to provide outstanding products with uniform quality.
The aim of these quality regulations is to prevent sicknesses and to reduce
threats to human health. The Netherlands carries out a lot of research aimed at
improving food quality. The participants in such research are not only scientists
but also trades and goods associations. Many quality standards and test criteria
are made through internal consultations, including goods statutes, pesticide
statutes, meat inspection laws and quality laws for agricultural production, et
cetera. All the standards measure up to the requirements of the EU.
125
Box 4.5
Milk quality supervision
Guaranteeing the quality of agricultural products requires many different activities. In the cow
industry, for example, there is identification registration, the development of green pastures,
the use of GMP ('good manufacturing practice') animal feed, product quality supervision, license systems, et cetera. Due to limited space, only some of the activities are dealt with
here.
-
GMP animal feed. Material suppliers and producers must comply with GMP and legal
standards in order to guarantee the safety of products. GMP animal feed staff should be
in accordance with ISO-9001 standard of quality certification and HACCP. As a process,
HACCP elaborates on production techniques throughout the process, shows every key
step in the process and makes management measures accordingly. GMP animal feed
producers can assure and control all factors that influence human beings, livestock and
the environment. These tests are paid for by the government.
-
KKM (milk quality guarantee programme). Established by dairy sectors and processing
industries, KKM was introduced to satisfy the increasingly higher requirements of consumers and wholesalers as regards food quality and safety. The KKM standard relates to
the use of drugs in animals, animal health, animal welfare, milking procedures, feedstuff,
water, hygiene, sanitisation process, residuals, the environment, et cetera. Cattle farms
that join this programming use only GMP animal feed. Vets working on cattle farms
should work according to GVP ('good veterinary practice') and make careful records of
purchasing and the use of drugs on cattle farms.
-
IKB (beef quality guarantee programme). This programme involves diversified standards
of beef production sectors. It is a supplement to the compulsory standards for all beef
producers (KCR). According to KCR, meat producers, merchants and slaughterhouses
must be tested for the non-legal use of growth hormones. IKB standards concern the
whole beef production chain, from pasture to consumer.
-
KB (farmhouse dairy products license). The KB system prescribes hygiene and transportation criteria for every step in the cheese making process (extrusion, salt soaking, maturing, et cetera). All cheese producers and wholesalers that are in accordance with KB
standards can apply for a special production license. The national institute of dairy quality
guarantee deals with applications for licenses.
-
Milk quality supervision. On cattle farms, milk is usually stored in milk jars. Truck drivers
are responsible for sampling the milk they collect; sample analysis is done at milk supervision stations. These are independent laboratories financed by cattle farms and dairy industries, under the administration of COKZ.
Source: Material obtained from LNV, the Netherlands.
126
The Netherlands also pays much attention to the development of organic
food. In 1991, the EU formally enacted organic agriculture regulations, and
these standards have been continuously amended, supplemented and improved.
In 1999, the EU Commission passed the label for organic products. Organic agricultural standards in the EU are a result of increasing concern about the rural
environment. The number of organic farms in the Netherlands increased from
399 in 1990 to 786 in 1999; in the same period, the area of organic farmland
increased from 7469ha to 21,511ha.
The cooperation between Dutch government and enterprises lays a solid
foundation for successful food and beverage industries. The common goal is to
provide high-quality products at reasonable prices. The global market demands
for Dutch products shows that the quality of Dutch products has achieved a high
level and that consumers in various countries realise this. The Dutch government is always encouraging enterprises to do their best to innovate and improve the products of the food and beverage industry, in order to sustain this
position.
4.7
Conclusion
In traditional agriculture, the distance between field and table is very short;
however, the commercialisation of agricultural products has extended, and is
continuing to extend, this distance. The tendency towards economic globalisation means that the table may even be on the opposite side of the planet from
the field. Fresh, delicate commodities such as flowers can be delivered to consumers thousands of kilometres away in just one day, or even less. This was
impossible in the 19th century.
Modern agriculture requires a highly efficient market and diversified service
and processing cooperatives. Different means of agricultural processing can
reduce waste, increase product utility (time, space and consumption utility) and
added value, and generate a large amount of employment. In the whole supply
chain, the processing industry makes a significant contribution to the competitiveness of Dutch exports.
In order to maximise their profits, all kinds of Dutch enterprises while developing agricultural production and agricultural products processing, have not
only enlarged their market share both at home and abroad by producing highquality products, but they also made sure that their names are known far away
by means of the auctions.
127
Although the agricultural products market is becoming more and more international, in most cases the sales of an agricultural product (or processed agricultural product) at a certain location do not grow with increasing supply.
Consumers have to make more choices in the face of increasingly diversified
commodities. Only high-quality products supplied at reasonable prices will win
the consumer's loyalty.
128
5
5.1
Big imports and big exports
Introduction
Changing a small country with scarce resources into a big power on agricultural
export, the secret behind the Netherlands can be concluded as 'big imports and
big exports', that is, to realise bigger exports through big imports.
Land is a typical non-tradable production factor. The purpose of numerous
wars in the world was to rob land and wealth of other countries. The Netherlands also has a history of colonisation. Trade helped the Netherlands reach resources everywhere in the world, and thus not limited by its narrow territory.
The Dutch are smart to change land as a non-tradable goods into tradable ones
and extend the range of useful resources from their own country to the globe,
thereby eliminating the rigid limits of nature resources.
The Netherlands imports land-intensive products, mainly not for own direct consumption (except wheat for bread, et cetera), but to meet the needs of livestock
raising and processing industry. After diversified raw materials are processed
many times in the Netherlands (poultry and livestock raising can be treated as
the first processing for crop products), their added value increases by a large
margin, bringing the Netherlands massive wealth.
Although not hard to understand, it is not easy to do so in practice. Each
country has its own resource endowment, economic system and development
strategy. Some are forced to import food, while others are not at an advantaged position on agricultural products processing. It is difficult for them to
convert imports into goods demanded in the world market at reasonable prices
with required quality, and at last, they always remain net import countries.
5.2
A trade nation
The Netherlands has been a 'trade nation' for centuries. With its narrow territory
and low and flat topography, the country has been under threat of frequent
storms and floods, from both sea and rivers. Agricultural production faces with
unfavourable conditions. It was alleged that the Dutch 'agricultural production
can't feed its one-tenth population'. However, the Dutch people find another
way: to build an intensive market economy, and conduct trade, innovation and
129
development. 'This is the principle for this country to exist'. Trade is of critical
importance for breaking through the natural bottleneck and agricultural development.
The Netherlands has always been one of the most important trade nations in
Europe. In the works of European historians, Dutchmen's ability of doing business has been complimented repeatedly. Dutch sinologist Leonard Blussé once
said that the Dutch were proud being praised as 'the Chinese of Europe'. 'Only
Chinese traders are comparable with them in respect of their courage and resource of doing business and initiatives'. For the Dutch people, 'A trader is a
king. Commercial interest is the principle to create the nation'. They advocate
'absolutely free trade … and the profit principle as the basic code of conduct'.
In fact, as Defoe wrote in 1728, the Dutch really were 'the Carriers of the World,
the intermediator of Trade, the Brokers of Europe'.1
The Dutch played a key role in promoting international trade in Europe in the
16th century. In the middle of the 16th century, Amsterdam sprung up to become the biggest terminal port of wheat and Holland was 'the Corn bin of
Europe', which 'almost always had a positive balance of payments'. In 1560,
Holland was able to attract 70% of deadweight transportation in Baltic Sea. An
Italian diplomat wrote in 1781: 'It is extraordinary that 'the quantity of payments
made in this country [Holland] both from Germany and France. Over a million
gold sovereigns have been sent from Germany.'2
Michael Tracy wrote: 'The agricultural scene was transformed from the
1870s onwards by the immense increase in imports of cheap grain coming
from North America and also to some extent from Russia.' At the same time
there was rapid progress in shipping, and this made possible a great increase in
their size and carrying capacity. During the 1870s and 1880s, the cost of
transporting wheat by steamer from New York to Liverpool was cut by about
half.3 In 1896, livestock prices were about three-quarters of their pre-depression
level when crop prices were little more than a half. This aroused an extensive
appeal to 'protect agriculture' in Western Europe. Many countries, such as Germany, France, Switzerland, Italy and Austria-Hungary, adopted protective measures.
1
Quoted by F. Braudel, op cit., p. 239.
P. Braudel, op cit., pp. 207, 244.
3
Michael Tracy, Ibid. p. 20.
2
130
The difference in the trend of prices as between crop and livestock products
is of considerable significance to the Netherlands. Arable farmers suffered directly from the reduced value of their produce, but eventually, livestock producers benefited from the much greater fall in the price of feed grains. Dutch
government considered that the fundamental way to solve agricultural crisis at
home was to improve the production structure of agriculture, to reduce costs
by reforming the agricultural system, and more importantly, to reinforce production factors, instead of limiting imports, so as to improve the quality of products
and enhance the international competitiveness of agriculture.
Once some people believed that 'agricultural production was only sufficient
to nourish one tenth of the population…'1. However, 'The Dutch people developed a different solution for economic recovery: a strong market oriented
economy, trade, new initiatives and development' 'Such is the foundation of this
country.'2
5.3
World Champion and silver medal winner
At the beginning of this book, a set of magical numbers has been numerated:
During the period of 1961-1999, the net export volume of agricultural products in the Netherlands increased 45 times.
During the five years from 1995 to 1999, the net export value of agricultural
products (fishery and horticultural products included) in the Netherlands exceeded 17.6b. dollars annually on average, 19% higher than that of the US
(14.8b. dollars). On the arena of international trade of agricultural products, the
Netherlands won the gold medal and ranked number one.
Compared with big countries that have extensive territory and are rich in agricultural resources, the Netherlands was undoubtedly the first globally in the
last years of the 20th century (see the foregoing table 1.2)3, even if only in
terms of the net export volume of its traditional agricultural products (excluding
flowers, et cetera). The export of the Netherlands grows not only at a fast
speed, but also at a steady pace.
1
A. Peyrefitte, op cit., p. 84-85.
A. Peyrefitte, op cit., p. 83.
3
Sharp decline of net export from the US in these years related to the generally sluggish world corn
market. For example, in 1997~1999, the export volume of US wheat and maize increased by 12.6%
and 24.4% respectively, but the export value dropped by 13.3% and 5.4% respectively.
2
131
Also during the five years from 2000 to 2004, the Dutch net export of the
above mentioned products was on average higher than that of all other countries. However, during the first part of the 21st century the export of Brazil increased very fast and since 2004 the net export of Brazil surpassed the net
export of the Netherlands.
To enhance international competitiveness
'Big import and big exports' in the Netherlands is on the basis of taking its own
comparative advantages and strengthening its international competitiveness.
Otherwise, there is no way to earn the substantive surplus in the foreign trade of
agricultural products.
Table 5.1
World's leading cut flowers and pot plants importers and
exporters in 2007 (million €)
Cut flowers
Pot plants
Total
Total in % of world
Germany
784
699
1,483
14.4
United Kingdom
777
275
1,052
10.2
United States
608
285
893
8.7
Netherlands
526
337
863
8.4
Major importers
France
Total in the world
415
384
730
7.1
6,000
4,300
10,300
100.0
Major exporters
Netherlands
2,697
1,705
4,402
40.4
Columbia
813
0
813
7.5
Kenya
459
40
499
4.6
China
274
192
466
4.3
59
239
298
2.7
6,300
4,600
10,900
100.0
Belgium/Luxembourg
Total in the world
Source: International Statistics Flowers and Plants 2008, AIPH (2008).
The Netherlands is strong in many agricultural products and processing food
in international markets. Other than world famous cut flowers (table 5.1) and
flower bulbs, the Netherlands also exports a large amount of nursery seedlings,
flower seeds, et cetera. In 2007, the export value of only horticultural seeds
reached 532m. dollars (table 5.3). That of seed potatoes, tomatoes, eggs,
cheese, beer, et cetera all ranked number one in the world during the period
132
1997-'99, however, for some products the ranking was a bit lower in the period
2005-'07 (table 5.2). The Netherlands is also the champion in the export of
flower bulbs and in the export of fresh mushrooms in the world market (no data
available). For the Netherlands as such a small country, the world market share
of some products is better marked not with percents, but rather with tenths. It
holds the balance on the world market.
The data provided in the foregoing chapters show that, the admiring
achievements of the Netherlands are related to its unique agricultural production
structure. If one does not include beverage, tobacco, fish, etc, the most important exported agricultural products can be divided into three categories: horticultural products, meat products and eggs and dairy products (table 5.3); some
land intensive products are in situation of net import (see following parts). Such
trade structure fits the situation of dense population and limited land in the
Netherlands.
Table 5.2
Share of Dutch agricultural products on the world market
1997-'99, average per year
2005-'07, average per year
export
% of
rank in
export
% of
rank in
value,
the world
the world
value,
the world
the world
million $
million $
Cut flowers
2,127
48
1
6,300
42
1
Pot plants
1,091
33
1
4,600
36
1
Tomatoes
677
23
1
1,355
24
1
Potatoes
346
22
1
557
21
1
Onions
455
15
1
399
12
2
Eggs
320
29
1
594
25
1
Cheese
Condensed milk
Pork
1,717
6
1
2,663
14
3
n/a
n/a
n/a
394
23
1
1,117
12
2
2,346
9
4
Barley beer
898
19
1
1,765
19
1
Cocoa
747
37
1
1,699
20
2
Chocolate
Tobacco
487
7
2
1,054
16
3
2,819
17
2
4,141
16
1
Sources: Flowers and Pot plants, years 2000 and 2007 in million €, AIPH Union Fleurs: International Statistics,
Flowers and Plants, 2002 and 2008. Other items for 1997-'99 are calculated according to the data from Trade
Yearbook of FAO. The items for 2005-'07 are based on Comtrade HS Data.
133
Table 5.3
Net export value of the Netherlands (million €)
2000
2005
2007 a)
Cattle and meat
3,915
3,690
3,935
Dairy products and eggs
2,334
2,204
2,420
Fishery products
Cereals, seeds, legumes, potatoes
Oilseeds
Feed (excl. cereals)
Cereal preparations, starch
Sugar
579
855
681
- 644
- 695
-1,213
- 1,121
- 746
-1,130
739
1,151
1,172
1,194
1,274
1,263
333
335
418
Fruits (inclusive nuts and spices) and vegetables
1,420
1,984
2,436
Flowers and ornamental plants
5,287
6,113
6,418
Horticultural seeds
217
376
532
Preparations potatoes, vegetables, fruit
741
1,159
1,770
3,377
4,054
4,501
18,381
21,754
23,203
Other
Total net export value
a) Provisional.
Sources: LEI (2008).
On the world market, the Netherlands is one of the most competitive countries in the export of agricultural products. The characteristics are as follows:
1. capital- and technology-intensive products are very important, among which
flowers and ornamental plants are the most typical. They are highly capitaland technology-intensive. An extremely efficient distribution system is necessary to deliver them to foreign markets duly. Potatoes are another example. In Europe, potatoes have always been a 'popular food', not at a high
price; while the Netherlands developed potatoes of fine breed, of even size
and with a relatively smooth appearance. Potatoes have a stable sale market
as a 'second food'; while the rapid development of fast food also provides
new chances;
2. the changing of production methods, so as to strengthen the competitiveness of arable products and livestock products. The Dutch experience
shows that capital and technologies are effective substitutes for the scarcity
of land. Greenhouses make the production of tomatoes, cucumbers, sweet
peppers (pimientos), et cetera possible all the year round, saving land on
one side and at the same time, enhancing the productivity of land by a large
margin. The production mode of eggs and pork has also been improved:
134
very high productivity is maintained while meeting the environmental protection, animal welfare and international quality standards;
3. to add value through processing. For centuries, the Netherlands has been
continuously improving its traditional processing techniques of diversified
dairy products, such as cheese, butter, et cetera. These products enjoy high
reputation in many countries. The processing techniques of cocoa, coffee
and so on, formed in colonial times, together with beer brewing, also occupy
important positions in Dutch food industry. Many raw materials are not domestic produced or in great demand, and must be imported in large quantities. The fine or intricate processing is realised in the Netherlands, far from
their origins, enabling the Netherlands to be leading on the world market.
To Produce for Export
The agricultural complex is one of the main pillars of the Dutch economy; together with a long history of trade tradition in Holland, agriculture has been
highly dependent on exports (table 5.4). Dutch agriculture is really an 'exportoriented' industry. Dutch farmers know which country their products will be exported, therefore, they are able to produce according to the demands of foreign
consumers from the very beginning.
A high reliance on exports means vulnerability to fluctuate with the international market, especially for such a small country as the Netherlands. To avoid
such risks, it is necessary for the government and all kinds of enterprises, producer associations, et cetera to keep close contact with the world market
trends, communicate information timely, so that farms and enterprises could
adapt or adjust according to changing situations. What should be mentioned
particularly is that, the Dutch Agriculture Consulates all over the world have
done excellent job in this respect. Cautious and conscientious, they provide
timely valuable commercial messages for domestic farms and enterprises. They
are masters of market research for agricultural products. Dutch agricultural, industrial and commercial enterprises are also enthusiastic to participate in all
kinds of international agricultural exhibitions and expositions - everywhere in the
world. Diversified promotional product shows can always be seen in their display areas. In addition, due to very short production cycle, Dutch greenhouse
horticulture is easier to adjust and to adapt to market changes.
Maybe all of these can partially explain why the Netherlands has a more stable growth of exports than many big countries, despite its high reliance on exports.
135
Table 5.4
Export dependency and self sufficiency of some Dutch products
(2003-05 average)
Potato
Sugar
Output,
Export,
Export a)
kilotons
kilotons
of output, %
6,911
Self sufficiency,
% 2004
4,870
70
175 b)
790
827
105
171 b)
9,229 c)
8,406 c)
91
193
Poultry
590
755
126
161
Beef and veal
385
425
110
114
1,604
1,241
77
227
Eggs
Pork
Cheese
668
497
74
208
Condens
283
195
69
231
3,907 d)
5,247 d)
134
n/a
588 d)
648 d)
110
n/a
2,003 d)
3,760 d) e)
188
n/a
Floriculture
Flower bulbs
Vegetables
a) Including re-export; b) 2006/'07; c) Number in millions 2005-2007, average per year; d) Value in million €
2005-2007, average per year; e) Included processed vegetables.
Source: LEI, Product Board for Horticulture and Product Board for Cattle, Meat and Eggs.
Open agriculture in the Netherlands produces a great driving effect.
Firstly, the Netherlands brings into play its comparative advantages better.
Driven by comparative profits, there is significant gap in the self-sufficiency rate
of Dutch agricultural products, either too low (i.e. foodstuff, 25%), or too high
(i.e. pork 227%, chicken 161%, eggs 193%, cheese 208%, potatoes 175%,
sugar 171%). Massive surpluses must be exported to release the pressure. As
long as profits are made abroad, it will impel the development of domestic production.
Secondly, technical innovations. Consumer demands on international market
are more complex than that in a country (especially the Netherlands as such a
small country). Diversified demands on international markets impel manufacturers to develop new products continuously and to add new utilities to products
(convenience, taste, et cetera); salesmen everywhere in the world may always
grasp more chances; smart people can even learn new technologies (including
'soft technology' such as management). After fed back to production enterprises at home, the information will enlighten more entrepreneurs as well as
R&D personnel to make more innovations.
136
Box 5.1
Looking at global market
Dutch agricultural products are mainly exported to other EU members, but the Netherlands
aims at markets all over the world. Clear evidence can be seen from the extensive distribution of Dutch agricultural consulates in all continents.
According to the list of LNV (February, 2001), the Netherlands has consulates in:
Europe: Athens (Greece and Israel), Berlin (Germany, a bureau also in Bonn), Brussels
(Belgium and Luxemburg, also EU affairs), Bucharest (Romania and Bulgaria), Budapest (Hungary and some countries of former Yugoslavia, a bureau in Zagreb for Croatia), Geneva
(WTO affairs), Kiev (Ukraine, Armenia, Georgia and Moldova), London (UK, Ireland and Iceland), Madrid (Spain, a bureau in Lisbon for Portugal), Moscow (Russia, Azerbaijan and some
countries in Central Asia), Paris (France, also OECD affairs), Prague (Czech and Slovak),
Rome (Italy, also FAO affairs), Stockholm (Sweden, Finland, Norway, a bureau in Copenhagen
for Denmark), Vienna (Austria, Switzerland and Slovenia) and Warsaw (Poland, Belarus and
some Baltic countries).
Asia: Bangkok (Thailand, Malaysia, the Philippines, Vietnam, a bureau in Manila, and
ESCAP), Beijing (China, also bureaus in Shanghai, Hong Kong, Taipei), Jakarta (Indonesia, also
ASEAN affairs; a bureau in Singapore), New Delhi (India, Bangladesh and Sri Lanka), Seoul
(Korea) and Tokyo (Japan).
Middle East: Ankara (Turkey), Cairo (Egypt, Jordan, Lebanon, Libya, a bureau in Damascus
for Syria), Riyadh (Saudi Arabia, Yemen, Kuwait, Oman, UAE, et cetera) and Teheran (Iran).
Africa: Nairobi (Kenya, Ethiopia, Eritrea, Mauritius, Uganda, Tanzania, and UNEP affairs),
Pretoria (South Africa and Zimbabwe).
Americas: Buenos Aires (Argentina), Caracas (Venezuela and Colombia), Mexico (also
Cuba and many Central-American countries), San Paulo (Brazil, Argentina and Chile) and
Washington (USA).
Source: LNV (2001).
At last, what should be highlighted is that, the open economy helps to develop and solidify the friendship with neighbouring countries. People cannot do
business with a person who is his enemy, so it is true between the countries.
From advocating the building of the EEC to supporting the eastern extension of
the EU, the Netherlands always aimed to enlarge its market and to gain more
profits by trade. International trade should be equal and reciprocal; it is normal
to see a partial favourable trade balance or a partial trade deficit. Under the
condition of free trade, it is determined by the comparative advantages of a
country. Whether to seek for stable import sources, or to ensure reliable export
targets, friendship, understanding and cooperation are all needed.
137
The Netherlands uses its limited land for natural protection, grazing, growing
flowers et cetera, so as to provide a better living environment for people and to
create products of higher value - are these possible without a favourable international environment? In the Netherlands, the self-sufficiency rate of food grain
is so low that the wheat for its bread, et cetera relies to a large extent on imports. From a traditional point of view, can people be at ease about this fact? A
professor from Bonn University in Germany expressed his opinion during a talk
with the author: it is better to invest in friendship than in weapon production. A
good neighbour is better than an arsenal. The philosophy contained herein deserves our deep thinking.
5.4
Utilising International Resources
Importance of import
According to modern economic growth theory, the contribution of foreign trade
in a country to its economic growth can be analyzed from both long-term and
short-term point of views:
In the short term, the economic growth of a country mainly depends upon
three factors: investment, consumption and export. The more net export (i.e.
favourable trade balance), the stronger driving forces to GDP brought by foreign
trade.
However, if to analyze in the long run, economic growth mainly comes from
the increase of factor supply and improvement of total factor productivity. The
former includes increase of capital (e.g. to introduce foreign capital) and labour
force supply, etc; the latter mainly relies on the optimisation of industrial structure, specialisation of farms and agricultural system, scale economy, institutional innovation, technological advancement, the breakthrough of maximum
limiting factor, and so on.
The economic meaning of large imports of many agricultural products or agricultural materials in the Netherlands is to break through the restriction of key
limiting factor (too small per capita average land area). Definitely, the Netherlands imports in order to utilise the international resources; and exports to offer
more jobs and increase the wealth of the country.
International trade has always been bi-directional. No country in the world
can only export, but not import; otherwise, what to do with the foreign currency
earned from export? Peter Lindert put a formula: 'Cutting imports = Cutting ex138
ports'1. The key problem is: what to import? How to utilise the imported commodities?
In a word, massive exports of Dutch agricultural products largely benefit
from massive imports. There would be no 'big exports' without 'big imports'. On
this respect, the Dutch experience deserves our deep thinking.
What to import?
With its small land area, the Netherlands does not enjoy comparative advantages for its high altitude, low accumulated temperature and frequent rainfalls.
Domestic wheat per capita is only 60kg and the quality is not high, not fit for
baking bread. Therefore, the Netherlands need to import 3-4m. t of wheat every
year. Only around 20% of grain is self-supported in the Netherlands. Moreover,
domestic cereals are mainly produced for crop rotation and used as feedstuff.
On average, the Netherlands produced grains around 1.7m. t by itself during
the period of 2005-'07 while the net import of grains (including in products)
6.8m. t amounted.
Imported agricultural products of the Netherlands fall into three types:
-
type one
These products are mainly land-intensive products, including cereals, beans,
oil seeds, etc, especially large amounts of raw materials for feedstuff
needed for the development of livestock farming. The Netherlands imports a
wide range of raw materials for feedstuff. In 19 years from 1980 to 1998,
the import value of feedstuff in the Netherlands totalled 6.84b. dollars.
These imported feedstuffs strongly support the development of Dutch livestock farming; as a result, the volume of per capita livestock products is
very impressive. During the period of 1997-1999, per capita meat in all
kinds was 538kg, milk, 705kg, cheese, 124kg, and eggs 118kg, etc, far
exceeding domestic demands. Therefore, the exports to international market take a very big share (table 5.4). It is unimaginable for the Netherlands
to export large quantities of livestock products without massive quantities of
imported feedstuff;
-
type two
Products of this type cannot be produced at home (or only in small quantities), including cocoa, coffee, tea, tropical fruits, tobacco, hop, cassava, et
cetera. To develop the value of these goods could be labelled as 'zero-
1
Peter H. Lindert, International Economics, 9th ed. (Boston, Irwin, 1991), p. 85.
139
resource economy'. A large part of these imports is exported after processing, creating abundant foreign currency for the country (table 5.2). Take
beer for example, raw materials are mainly dependent on imports: average
annual imports of barley is about 1m. t (domestic barley is produced mainly
for crop rotation, annual output is only 260,000 to 270,000 tons), of malt
about 200,000t, while the country is completely dependent on imports for
its hops. From 1997 to 1999, on average, the export of beer in the Netherlands was 923,000t annually. The export value between 2005 and 2007
reached on average 1.7b. dollars, accounting for 19% of the world total,
ranking first globally. The biggest distribution centre for cocoa is not located
in Africa or South America, but in Amsterdam as the second biggest port in
the Netherlands. Every year the amount of cocoa beans bargained here accounts for one fifth of the world total; that of cocoa products ranks first in
the world as 37%; that of chocolate products ranks number two in the world.
An obvious benefit from exporting finished products after processing raw
materials is their considerably increased value added. More than that, one
point behind it, which cannot be ignored, is that processing industry creates
many job opportunities for the country;
-
type three
This type includes raw materials, which cannot fully satisfy processing demands because of a variety of limits, including milk, meats, etc, despite of
large domestic production. Take milk as an example, per capita output has
exceeded 700 kg, while consumption at home is less than one third of that
amount. However, because of EU agricultural policy and other factors, the
Netherlands is experiencing more and more demand for environmental protection. As a consequence, the country has little room to increase the production of milk, pork and so on.1 However, the country has a large dairy
processing capacity and it makes economic sense to import a large amount
of milk (especially from Germany). Annual imports during the period of 199799 averaged 663,000t (domestic output was 11,287,000 t), aiming to satisfy the demands of dairy processing and to enlarge exports. During this period, the price of imported milk in the Netherlands was 329 dollars per ton,
while the export was 236,000t at an average price of 786 dollars per ton.
This can show how shrewd the Dutch businessmen are. However, this is only
a minor part of the story. The major benefit results from the export of other
140
1
About milk quota in the EU, see chapter 3.
processed products with a high added value: the countries average net export value of cheese alone exceeded more than one billion dollars in recent
years. The total export value of milk products perennially accounts for about
one fifth of the world total.
As mentioned above, many jobs are created in the Netherlands through imports and its related processing industry. Such jobs can be divided into two
groups: jobs in the processing industry itself (in 1999, 113,500 people were
employed in the food, beverage and tobacco sectors) and new jobs created by
the processing industry, for example such labour-intensive services as transportation and packing. In order to extend its business, the Dutch flower industry
also employs an internationalisation strategy, to make use of foreign resources
of strength. For example, in 2002 the flower auction Flora Holland set up a new
flower purchasing centre in Chipiona in the south of Spain, with the aim to distribute local flowers directly to the Netherlands for auction. The company had
already established similar organisations in Kenya and Zimbabwe. Other than
services such as transportation for local flower growers and logistics, etc, this
auction firm also provides technical instruction for them. Flora Holland also
sends coordinators to Israel, France and Ecuador, et cetera, building a good
cooperative relationship with local flower growers and enterprises.
5.5
Why does this happen only in the Netherlands?
As mentioned before, in 19 years (from 1980 to 1998), the Dutch import value
of feedstuff totalled 6.84b. dollars, or 360m. dollars annually. Although this may
seem like a huge figure, it is not so large in view of the billions of dollars of net
export of livestock products.
'Big imports and big exports' itself is not a secret. Why are other countries
not able to understand it, or to do in the same way?
Big imports and big exports is a good summary of a superficial phenomenon, but we should further unveil the essence of this issue: to answer the question 'why does this only happen in the Netherlands?' Here I will discuss it from
four aspects.
First, we should know that it is not the Dutch government that does business, but Dutch agricultural entrepreneurs engage in import or export for their
own benefits. The Dutch have always held free trade in esteem and a galaxy of
outstanding businessmen have emerged. According to the principle of compara-
141
tive benefits, they must buy needed commodities and sell profitable ones. The
Jews have devised their own formulae for getting rich, so have the Dutch. The
only difference is that the former specialise in, for example jeweller business,
while the latter devote themselves fully to agriculture, industry and commerce.
Second, the Netherlands has built a unique agricultural production structure.
As a small country, the Netherlands uses a large share of its land to grow profitable flowers and vegetables, et cetera, instead of grain crops. Furthermore,
more than half the land is used as grassland for dairy cow breeding. The most
profitable goods are sold in exchange for low-price high-quality grains. The
Dutch government insists on having an open market and encourages farmers to
develop livestock raising industry with imported grains, while the countries
neighbours imposed high tariff on them. When milk production was limited by
the EU quota system, the smart Dutch could not bear to losing chances: they
turned into pig and chicken raising or other trades.
It is true that 'Chance favours the prepared man'. 'The productive performance of the Dutch is in core commercial; …They are, and that is the main thing,
always looking for new markets by directing themselves to the local needs, they
have built a new commercial system.'1
Third, most Dutch farms are highly specialised and have efficient and specialised cooperatives. As mentioned before, such a high proportion of specialised farms in the Netherlands is rarely seen elsewhere in the world. Highly
specialised farms benefit from specialised cooperatives and diversified commodity associations; the latter provide all kinds of information and highly efficient services, such as processing, selling, et cetera. To add value through
processing is needed in order to gain a higher profitability. This depends on
processing technologies, the quality of products, the variety of designs and colours, et cetera. Consequently, these factors drive innovations and inventions
and facilitate technique advancement. All in all, it further strengthens the international competitiveness of Dutch agriculture.
Finally, the unique historical, cultural and social background of the Netherlands should be mentioned. The 'polder model' is an outstanding example. In
this model, all stakeholders (government, employers or their organisations, employees or their organisations) have equal rights to participate in decisionmaking and to solve problems through dialogues and consultancy, instead of
conflicts. This is a time-consuming process of prudent decision making from
142
1
A. Peyrefitte, op cit., p. 117-118.
bottom to top. Thus, violent conflicts are avoided, and fewer wrong decisions
are made. As Kasper said: 'Knowledge can only be exploited and multiplied
when people with special knowledge can cooperate. A better division of labour which in fact is a better decomposition and coordination of knowledge - is thus
the real source of economic progress.'1
Amsterdam was the earliest international metropolis in the Europe (although
its population here is no longer large). 'Holland is a refuge for spiritual tolerance
and the blooming of activities .… A refuge for workers from all kind of countries
molest in their own country in their knowhow and their spiritual freedom'.2
This relates to a key issue - the so-called 'institution problem'. It will be discussed separately in chapter 7.
Thus, many factors contribute to the success of the Netherlands. The country not only enjoys a geographical advantage and a favourable international environment (e.g. EU export market is big and without barriers), but it is also unique
in ways that other countries cannot copy. This is the author's answer to the
question 'Why does this only happen in the Netherlands?'
5.6
Conclusion
The Netherlands could not have become a big power in agricultural products in
the world in one day. It is a result of its open policy that allowed entrepreneurs
to play their own comparative advantages and to implement 'big imports and big
exports'. By relying on imports, the Netherlands has overcome its resource restriction, developed a 'zero-resource economy' and created a more glorious export performance than original production regions.
The relationship between import and export varies sharply from country to
country: some countries (e.g. Japan) import a lot, but do not export in a great
deal. Many factors lead to big exports from the Netherlands, for example: the
entrepreneurship of Dutch farmers makes them good at finding and targeting
markets and at grasping chances; the highly developed agricultural products
processing industry gives a large added value to imported commodities; tech-
1
Wolfgang Kasper and Manfred E. Streit, Institutional Economics. Social Order and Public Policy.
(Cheltenham, Edward Elgar, 1999), p. 17.
2
A. Peyrefitte, op cit., p. 117 and 118.
143
nique and management innovations continuously occur in processing and marketing, et cetera.
Although 'big exports' results from massive production surplus, if a country
does not take into account the capacity of export markets it may end merely extending production aimlessly. The vicissitude of Japanese silk industry is a good
example. For market capacity always exists for both agricultural products with
low consumption elasticity (such as wheat, potatoes) and those with a high elasticity (such as meat, flowers). Take food for example. In the late 20th century
the USA saw a stagnant export growth of agricultural products because of the
weakness of the global grain market due to a lack of efficient demands for
grains in the world. Global flower market is also a big piece of cake. Supposing
that farmers of a country develop flower production unlimitedly, it would find
that the world market does not expand in accordance with increased flower
supply. If a country is not at the same level with countries such as the Netherlands, it will find that it is not only very hard to share this sweet cake, but it also
will suffer greatly from its decision mistakes.
144
6
6.1
Three pillars of development
Introduction
A good many of the 'miracles' that have happened in the Netherlands were in
fact performed by the Dutch themselves. The Dutch agricultural miracle did not
happen accidentally. Their glorious achievements are based on solid foundations, not chance. Other than social, cultural and historical reasons, et cetera,
many other conditions are required. This chapter further unveils the secret
behind the Dutch agricultural success by introducing three pillars in the development of Dutch agriculture: infrastructure, cooperatives and farmers' organisations, and the OVO triad (research, extension and education or in Dutch:
'(O)nderzoek, (V)oorlichting en (O)nderzoek'.
Infrastructure is the substantial foundation on which the Dutch create 'agricultural miracles'; cooperatives and farmers' organisations are a kind of system
innovation, while the OVO triad guarantees unceasing improvement of labour
quality, et cetera. To add them would not closely follow mathematical formulas.
In the real world, the sum will not always equal three. It may be either more or
fewer than three. There may be some secrets here, waiting to be unveiled.
6.2
Infrastructure
For the Netherlands, the most important infrastructures for the development of
agriculture are land and water. They are the foundation on which to make a life.
Transportation facilities - such as harbours, railways and roads - play an important role in the development of the Netherlands' modern economy. Well developed infrastructures provide a powerful guarantee for the development of the
Dutch economy, especially; it opens the door for Dutch agriculture to enter
world markets.
6.2.1 Water control projects
'God created the mother earth', but God did not show the Dutch much mercy.
The North Sea is a source of storms. Every century, one or two super-storms
attack the Netherlands, leading to serious disasters; in addition, rivers such as
145
146
the Waal (also the Rhine) and the Maas often overflow. Flooding is always a serious concern for the Dutch.
The Netherlands has a long history of fighting against floods. Already in the
4th century AD, artificial sea walls were built in this area. Building dykes in order
to reclaim land has become prevalent since the 10th century. At first, natural
draining was practiced in polders, and later (in around 1400) windmills were
used; at the same time, the sea has been relentlessly devouring the land. For
example, the Zuiderzee is derived from a large pack of bottomland that was
flooded by the rising sea level; originally, it was the habitation area for north
Frieslanders. In 1287, an arm of North Sea (covering an area of 3388 sq. km)
entered Dutch territory after the North Sea had destroyed coastal sand dunes
and submerged this area of bottomland. South Zeeland also lost a great deal of
land to the sea. According to Dutch literature, the area of land devoured by the
sea was larger than that reclaimed from the sea in the past few centuries. In
1667, Hendrick Stevin planned to drain the Zuiderzee, but his dream was not
realised until two and a half centuries later.
In 1916, a storm raged across the North Sea, bringing a disaster to a large
area of land to the north of Amsterdam. This led the Dutch parliament to pass
the 'Zuiderzee Act' (in 1918) and adopt the inning plan designed by an engineer
named C. Lely many decades ago, which finally led to the construction of the
world famous sea-retarding dams, together with drainage gates and ship locks,
et cetera.
If one looks at a map of the Netherlands, one sees a straight sea dam in the
north-west. It has not only withstood attacks by furious waves and storms, but
has also turned the Zuiderzee into broad fertile land (polder) and a big freshwater lake (the IJsselmeer). It also greatly facilitates the people's mobility. This
magnificent project has become a famous sightseeing spot.
The most disastrous flood in the 20th century occurred on 1 February
1953. There was a spring tide on that day, and it happened at midnight. The
seawater submerged more than 200,000ha (5.7% of the countries total land
area) of land at one blow, and 1835 people were drowned and 47,000 houses
destroyed. This led the Dutch parliament to pass a bill (in 1958) to implement
the 'delta project'.
The delta project is an enormous flood control scheme: sea walls are connected to islands to prevent the ingress of water, remove salt and store fresh
water by a system of banks and dams, and further to create land by inning in
order to increase the land area. Only Rotterdam port and west Scheldt channels
were left open to the sea in the whole delta region. After the flooding of the
Rhine in 1995, the Dutch government decided to start a 'control project of major rivers', which will be completed in 2015 and cost an estimated €500m.
As a low-lying country, the Netherlands sets high flood prevention standards
that are rarely seen elsewhere in the world. The sea dam in the southwest of the
country is designed to withstand flood peaks that are likely to happen only once
every 10,000 years, while river dams are designed to withstand flood peaks
that are likely to happen only once every 1250 years. Up until 1997, a total of
15 flood control projects - including dams and flood control barriers - had been
completed, at a cost of more than NLG15b. (equivalent to approximately
USD9b. at that time). The scale was so grand that people from all over the
world come to admire it.
The Netherlands controls water by laws. Relevant organisations are responsible for their own business, and administrative departments handle affairs rigidly. The Water Law formally enacted in 1996 not only sets out the basic
principles for investment and construction of sea walls and riverbanks, but also
defines what to manage and maintain. According to the provisions of law, the
first-level government of the country is responsible for carrying out a thorough
technical test of all large dams every five years, including the ageing degree,
the adaptability of original design to current changes of the dams, et cetera.
The Dutch governmental departments and their consulting agencies also publish
various handbooks; they have built the computer-based water condition analysis
model system to control the national water condition as a whole. In planning the
urban construction, provincial and local governments should fully consider the
reasonable allocation of canals and lakes to ensure certain water storing and
draining capacity.
Paying much attention to land improvement, the Dutch government invests
about €140m. in land improvement and exploitation each year, representing
70% of total investment in land exploitation projects. The annual investment is
enough for some 36,000ha, with a per-hectare investment of about €4,000.
The country also facilitates farmers by economic means to clean up land so as
to join relatively small plots together; and change the direction of canals for
easy cultivation with large agricultural machines and higher labour productivity.
147
Box 6.1
Afsluitdijk and polders
Hendrik Stevin was the first to draw up a plan to drain the Zuiderzee in 1667. The floods
that had occurred in 1916 and the food shortages arising during the First World War had
convinced the Dutch government of the need to take action. Civil engineer Cornelis Lely
(1854-1929) was the minister responsible for public works and water management when
the decision was taken to carry out the project. In 1918 the Zuiderzee Law was passed by
parliament.
The first polder - the Wieringermeer - was drained in 1930 and the 30km long barrage
(the Afsluitdijk or 'sea retarding dam') was completed on 28 May 1932. The Afsluitdijk is
90 meters in width, 12 meters in height, and has a total length of 32.5km. It connects the
provinces North Holland and Friesland (the A7 motorway runs across it). Since then, the
coastline of the Netherlands has decreased by about 300km.
After the Afsluitdijk was built, the water behind the dyke turned into a freshwater lake,
covering an area of 1200 sq.km and the name was changed to the 'IJsselmeer' after the
IJssel, the main river that discharges into the lake. Four polders were constructed one by
one, totalling 165,000ha in area. A fifth polder - the Marken polder - was scheduled but, for
a number of reasons, has not been constructed so far. In 1986, Flevoland was instituted as
a province, with its capital named Lelystad ('Lely City') in memory of this engineer who did
not live to see the dam completed.
Based on IDG: Compact Geography of the Netherlands (1994) and F. Wiedijk and Blokzijl: Holland, country of
water, dikes and dunes, Bear Publishing (2000).
6.2.2 Economic arteries
The Netherlands also spares no efforts to improve its national traffic facilities:
all rivers are connected to canals, expressways and railways are connected into
networks, and paved roads reach as far as every farmhouse throughout the
country. According to 1990 statistics, of all the different transport means in the
Netherlands, the motorway is the most important. If calculated by person/tonkm, passenger transport and cargo transport represent 74%; the shares of
freshwater shipping and railway are 22% and 3%, respectively. But if calculated
by the number of passengers, railway transport still takes a share of 7%. As a
148
flat, low-lying country, the Netherlands is densely covered with rivers and canals
that are open to navigation, with a total length of more than 5000km: there are
800km of rivers, 3750km of canals and 470km shipping channels through the
IJsselmeer. Thousand-ton ships can travel along more than 2500km of waterways; these watercourses are over 100 meters wide and 6 meters deep. They
can reach the most important cities in the Netherlands (with the exception of the
capital of Drenthe, Assen). Nearly one fifth of ton-km is fulfilled by shipping in
inland transportation within the Netherlands, exceeding the volume of transport
by railway. This is rare (even) in the world.
Rotterdam has been the biggest port in the world for decades. The dock extends east to west to the Hoek van Holland ('Corner of Holland'), a distance of
nearly 40km. Motorways and railways cross each other on both sides of the watercourse. The cargo throughput is about 300m. t each year and 30% of all EU
cargos are shipped here. More than a half of the freight transports of Kommunalverband Ruhrgebiet pass in and out through Rotterdam. Every year, more
than 1400m. t of cereals, feedstuff and other raw materials imported from different countries into the Netherlands pass through this harbour; Amsterdam the second biggest port - can handle 7.6m. t of grain each year.
Railroad construction reached its zenith in the period 1840-1890. Dense watercourses caused many problems for the railroad builders, Nowadays, the total
length of national railway is 2800km, of which 1870km (1900km is double line)
are electrified; in addition, a part is used specially for goods transport. The
Dutch railway system is highly internationalised and connects to major cities in
neighbouring countries (Brussels, Paris, London, Köln and Berlin). Passenger
trains set off from Amsterdam to these famous cities every hour from 05.00 to
23.00 hrs.
The road system is 135,000km long; a great variety of roads connects
every country and reaches far scattered farmers. Now, in the early 21st century, there are 2600km of national motorways, giving the Netherlands a higher
density of such roads than any other European country. It is reported that at the
beginning of the 1990s, the Netherlands takes a share of almost 28% of all
European transport of goods by road.
The Dutch company KLM ranks 9th in aviation globally. KLM merged recently
with Air France, and the new company is now the biggest in the world. Schiphol
airport - which is close to Amsterdam - is the forth biggest aviation hub in
Europe, with a passenger throughput of about 44m. (2005). Altogether
80 airlines from different countries do business here, and there are 230 skyways to almost everywhere in the world. Thanks to the convenient aviation ser-
149
vice, Dutch cut-flowers can be distributed throughout the world in time: they appear on supermarket shelves in big cities such as New York, Los Angeles, Tokyo, Singapore and Sydney within 48 hours.
A dynamic organism needs a healthy traffic circulation system. These traffic
facilities can be considered as the artery of the Dutch economy, and contribute
a lot to the countries highly efficient and export-oriented agricultural sector.
6.3
Cooperatives, farmers' organisations and Commodity Boards
Farmers' cooperatives and various associations play a key role in the development of Dutch agriculture. Family farms are the basic unit for the production of
Dutch agriculture. However, such high efficiency and strong competitiveness
would be impossible if farmers were in a state of disunity, isolated from each
other with regard to obtaining market information, technical support, financial
support and legal protection; in addition, they would be exploited by middlemen
in every step from producing to selling.
Influenced by the tradition of European cooperatives, and especially edified
by the polder model, Dutch farmers know that no matter how large the operating scale may be of a single farm, it is too small for the market (especially the
international market) to realise scale benefit. By relying on cooperatives, dispersed family farms become stronger. An important feature is that they regard
solidarity and credit standing as important, trust each other and have a sense of
cooperation. Having such a good relationship sharply reduces transaction costs
and improves the efficiency of the whole economic system. H. Silvis considered
that solidarity and consultation are 'pillars of the Dutch economic order'.1
The aim of cooperatives is to strengthen the market force of producers.
They are mainly cooperatives that purchase inputs, cooperatives that distribute
products, processing cooperatives, credit cooperatives (i.e. the Netherlands
cooperative bank: Rabobank) and other service cooperatives (such as storage,
relief, quality control and remedial instruction for agricultural management). The
market share of these cooperatives varies from period to period (see table 6.1).
Present on the market as large suppliers, cooperatives help farmers strengthen
their negotiation ability in the market (exporters, retailers, processing plants, et
cetera) and to break the monopoly of buyers or sellers over the market. Thanks
150
1
See LEI: Growing Strong, chapter 5.
to these cooperatives, farmers can produce in a specialised and intensive way,
and expand their market share, reduce their market risks and sharpen their
competitive edge.
Table 6.1
Market share of cooperatives in the Netherlands (%)
1990
1995
2000
2002
90
87
87 b)
.
Among which: complex animal feed a)
52
52
53
54
Cultivation base for mushrooms
80
55
50
45
Credit
Input supplying
Processing
Among which: dairy products
84
83
83
85
Sugar products from sugar beets
63
63
63
63
100
100
100
100
95
95
95
95
Potato starch
Distribution
Among which: flower
a)
Bulbs
a)
50
50
48
51
Vegetables and fruits
a)
70~77
73~76
57
60
60
60
75
75
47~60
45~55
43~63
.
Wool
Other services
a) Estimations; b) 1999.
Source: LEI (2002), p. 237 and LEI 2004, p. 231.
Farmers associations can be seen as horizontal organisations. The farmers
associations unite farmers in order to strengthen their political and social
status, and to protect their own benefits. Farmers' associations are organisations of farmers in a specific region or product sector. The associations cooperate on the national level. The farmers' organisations represent the farmers in
the Commodity Boards and in the SER (see below). The membership of a
farmer's organisation is voluntary.
Commodity associations or commodity boards are vertical organisations
that include each segment of the production chain. Commodity Boards can be
seen as interest groups directed among else on the strengthening of the competitiveness of the whole chain. Represented in the Board are organisations of
suppliers of raw materials, of farms, of processing farm products, of wholesale,
of retail trade of final products; examples are the Commodity Board for dairy
products, the Commodity Board for cattle, meat and eggs and the Commodity
151
152
Board for horticulture. The trade unions represent the workforce. The Boards
have regulatory powers. The Boards are also accredited by the Ministry of Agriculture, nature and Food Quality (LNV) as delegated bodies of the national paying agency, responsible for the implementation of the majority of EU market
regulations.
At the national level, both farmers (employers) and laborers (employees)
have associations representing their interests. In the social-economic council for
the government (SER), representatives of employers' organisations (farmers)
and labour organisations and independent representatives from the government
work together to advise the government on important social-economic issues. In
the event of a crisis that threatens their common interest, these organisations
usually settle the conflicts through negotiation. Farmers' organisations also play
a role in information communication, education, research and promotion by setting up various technical organisations.
The Netherlands has a matured law directed on cooperatives. Cooperatives
must develop their articles of association according to the law and define their
behaviour criteria and responsibilities-rights relationship. Articles of association
of a cooperative must include the name and objective of the cooperative,
source of members of the cooperative, duties of the members' meetings or
congress of the cooperative, board of directors, board of supervisors and their
duties; the business of the cooperative, such as rights and obligations in commodity bargaining, financial audit, profit retention, supervision and arbitration, et
cetera. Cooperatives are completely separate from the government, which does
not interfere with them. Farmers may join a cooperative voluntarily. Leaders of
various agricultural cooperatives are elected democratically by all members.
They represent the farmers' interests, make resolutions internally and speak in
one voice externally.
Dutch farmers' cooperatives have the following main features.
1. Coherent interest. The interest of farmers is closely linked to that of cooperatives. The various cooperatives know their duties and provide farmers
with appropriate services. Most Dutch farmers join three or four cooperatives and build a relationship with them through paying membership dues
and receive various sorts of help and services from them. There is usually a
high level of trust between Dutch farmers and the cooperatives. Take selling
cooperatives, for example, whereby farmers and cooperatives are liable for
selling or buying a certain proportion of products. Internally, cooperatives do
not aim to make a profit. On the market, however, they do seek to maximise
profits in order to create as much interest as possible for their members. In
this respect, they are not different from general private enterprises. After
deducting various but reasonable expenses, cooperatives distribute the
profit to their members according to the percentage of their transaction
amount of product sales. Flower auction houses also adopt basically the
same system. Thus, it can be seen that cooperatives and farmers have
completely coherent interests.
2. Specialisation. This is another important feature of Dutch agricultural cooperatives. In addition to the cooperative that specialises in providing financial
services (Rabobank), there are also processing cooperatives for different
agricultural products and supply cooperatives that purchase seeds, feedstuff, fertilisers, pesticides, machines, et cetera; auction houses that sell
horticultural products are also cooperatives. Cooperatives are different from
private companies in operating mode and ownership, which further determines the decision-making mode. Therefore, in terms of their economic nature, Dutch farmers' cooperatives are specialised enterprises that seek to
make a profit on behalf of their members (farmers). Generally speaking, in
order to enhance market competitiveness, cooperatives are tending towards
mergers, fewer numbers and an expanded operating scale.
3. Lower running costs compared with other European countries. This is due to
two reasons: firstly, members of Dutch cooperatives are usually concentrated. They are culturally identical. Members and management personnel
are familiar with each other, which helps the members to supervise affairs
and to improve the running and management of the cooperative. Second,
the specialisation of a cooperative means that it has a clear operating goal
(such as auctioning flowers, supplying feedstuff, processing of sugar beets,
et cetera); in other European countries, the business scope of a cooperative
is usually very wide, from supply of inputs, to processing and sale of various
agricultural products. In that case, it is easy to cause conflicts of interest
among members, which lead to lower efficiency.
Dutch horticulture. Its activities are financed by the membership dues paid
by farms and companies: farms and companies can only benefit from its activities by paying membership. PT is administrated by the horticulture circle itself.
National regulations and systems formulated by PT are applicable to all horticultural companies across the country.
The contributions that the Dutch agricultural cooperatives have made to the
development of agriculture are mainly shown in two points: the first is to unite to
sell and process agricultural products and purchase inputs for agricultural pro-
153
duction. This can be usually seen in other countries. The second is the farmers'
cooperative bank - Rabobank. Some experts consider Rabobank as an important
'secret' or ingredient for the agricultural success of the Netherlands.
Box 6.2
Campina
The Campina cooperative is made up of nearly 9000 farmers. They provide nearly 3b. kg of
milk every year, averaging 320,000kg per family. Every 100kg is worth NLG75.93 (NLG1 is
equivalent to about USD0.50). If calculated as such, average gross annual income per family
is NLG240,000. After subtracting reinvestment, income tax and welfare insurance, et cetera,
in general the average per family net income annually is NLG40,000-50,000, and this is only
income from milk.
With six processing enterprises, Campina produces a great variety of dairy products, including cheese, cream, yogurt, milk powder, animal feed additive, sports food, ingredients
for medicines, et cetera. Its products are sold in more than 130 countries and regions.
To increase the added value of agricultural products requires the taking of many indispensable steps, such as improving the production equipment, raising processing efficiency, cutting costs, increasing the investment in research and market exploitation, and promoting
consumer trust - as consumers attach the highest importance to the quality of products. The
word most frequently heard during our interview at Campina was 'quality': 'We will lose our
market share if we do not maintain high quality. Therefore, quality is our all.' At present, all
enterprises affiliated with Campina have adopted the most advanced international quality control standards and made strict test ordinances for each work procedure.
Developing countries can enhance the added value of their agricultural products processing only by attaching importance to quality control right from the beginning. 'Although
Campina owns factories with high-class equipment, it is those cows that are the most important 'factories' for the cooperative.'
From report by Ding Gang, People Daily (18 September 1997).
In following sections, I use two examples to explain the role of cooperatives
and Commodity Boards. The Royal Dutch Cattle Syndicate (NRS; Veeteelthuis) is
a cooperative research institute on sire cattle improvement, which farmers can
join voluntarily. It puts great effort into agricultural research: with finely equipped
labs, an enormous database and a computer network, it serves cattle breeding
farmers throughout the country; even LNV and the national information system
consult with it.
The Commodity Board for Horticultural (PT) is a legal industrial organisation,
an umbrella ('package') organisation that links all the steps in the horticultural
154
production chain. It represents the interest of planters, seed breeding enterprises, importers and exporters, auction houses, horticulture experts, retailers,
wholesalers, together with their employees. It represents the interest of the
whole industry, with the aim of enhancing the international competitiveness of
6.3.1 Farmers' own bank
Amsterdam was once the financial centre of Europe. It is 'the vitality of the
bank'1 that stands behind 'the vitality of trade' in the Netherlands. The Netherlands founded banks in the form of limited companies in 1609. But it was not
easy for farmers to borrow money. In the 19th century, if was hard for Dutch
farmers to get a loan if they wanted to buy a calf or a small piece of land. They
had to pay the high interest rate charged by businessmen. In 1886, the Netherlands founded the initial credit cooperative, which later became Rabobank.
Rabobank is a cooperative bank founded through fund raising by farmers
themselves. It has been committed to agricultural financing service for more
than 110 years, helping farmers to invest in agriculture in order to expand and
modernise production. It provides capital for the international trade in such agricultural products as dairy products, meat, fruits, cereals and cotton; it also provides various financial services for food clients or the agribusiness, including
some special services, for example investment consultation. In addition to performing other operations, staff in local banks work as links to a certain number
of farmers, to be informed of their needs. Farmers treat this bank as their own
bank and their friend. For more than a century, rooted in agriculture and food
sectors, this bank has been the biggest lender for the Dutch agriculture complex and provides about 90% of agricultural loans for national farmers and 40%
of the capital for middle and small enterprises countrywide.
Because of the countries highly export-oriented agriculture sector, many big
enterprises in the Netherlands take an active part in global operations. In 1981,
Rabobank opened an office in New York in order to explore and develop international business. By 1998, it had established 112 banking departments or representative offices in 35 countries (including one in Pudong, Shanghai); half of
their operations are related to agriculture and food. In addition, it owns a number of agricultural banks in other countries (e.g. in California). It has developed
a close relationship with big food and agricultural enterprises in many countries
1
A. Peyrefitte, op cit., p. 108.
155
throughout the world, and has established a special research department for
food and agriculture, industry and commerce, a structural trade financing department for bulk agricultural products, and a financing department for food,
agriculture, industry and commerce projects (project financing with limited or no
resources). Rabobank is receiving recognition from many food and agricultural
enterprises for its great achievements in financing and consultation services for
agricultural products processing, storage, transportation and trade.
In 2001, Rabobank Group was one of the world's top 30 banks, with total
assets amounting to NLG282b. (equivalent to about USD140 billion). Calculated
by assets, it ranks second among Dutch banks; measured by market share, it is
number one at home. Rabobank enjoys the most extensive bank network in the
Netherlands (1900 branches). It has expanded its operations into other fields: in
addition to about 550 independent local Rabobanks, it has also several special
financial branches (that do such business as house management and ship mortgage, consignment for collection of credit, and leasing) and cooperative insurance companies (Interpolis).
6.4
Knowledge innovation system
Dutch agriculture technology is at a world leading level. Remarkable achievements have been made especially in seed breeding and horticultural techniques.
Farmers widely adopt capital-intensive and knowledge-intensive methods of production. An important feature of Dutch agriculture is high inputs and high outputs, which allows the reaping of large profits.
6.4.1 Investment in human resources
T. Schultz emphasised that 'new farm skills and new knowledge about agriculture can be a major source of agricultural growth'.1 Of all the production factors, the most important is the high quality of human resources. Another
important secret behind the 'Dutch miracle' is strengthening production factors
by increasing the investment in human resources.
The Netherlands has being paying attention to technology for a very long
time, and this is the most cherished characteristic of the Dutch people. This was
156
1
T.W. Schultz, Ibid., p. 189.
observed by, among others, Peyrefittein: '…patent letters for inventions issued
by the Dutch authorities as well to people belonging to their territorial jurisdiction as to foreigners who establish on their territory' 'Patents stimulate inventions and valorise research in all kind of domains, from food industry to
shipbuilding industry' '…, i.e. industrial activities; but especially smart industries,
inventiveness, ingenuity, creative power.' 'Amsterdam becomes the centre of
Europe: not as a place of power but as a market place for goods and currency,
and of course also- in this place resides innovation - as a place of exchange of
information and of knowledge.'1
The strong competitiveness of Dutch agribusiness in world markets can be
explained by M. Porter's judgment: 'Technological change is one of the principal
drivers of competition. It plays a major role in industry structural change, as well
as in creating new industries. … Of all the things that can change the rules of
competition, technological change is among the most prominent.'2
During the agricultural crisis in the late 19th century, the Dutch government
took an active part in its capacity building in order to promote agriculture to a
new level, instead of adopting protectionism passively. One of the major measures was to build a national agriculture school in Wageningen in 1876, which
later became a national science centre for agriculture. In 1999, it became
Wageningen University and Research Centre (Wageningen UR).
The agricultural knowledge innovation system in the Netherlands during the
twentieth century is called the 'OVO triad'. Dutch agriculture is based on the
combined research (onderzoek), extension (voorlichting) and education (onderwijs), together with their relationship with farmers. This system gives Dutch agriculture an extremely profound influence, which is the key to the unfaltering
development of Dutch agriculture over the last century.
1
A. Peyrefitte, op cit., p. 80.
Michael E. Porter, Competitive advantage: creating and sustaining superior performance, (New
York, Free Press, 1985), p. 164.
2
157
Box 6.3
Starts in Sciences
How the Netherlands applies itself investing human resources is shown by the emergence of
a large number of outstanding scientists. According to incomplete statistics, 14 Dutchmen
have won the Nobel Prize (two of them won it after collaborating in other countries). They are:
Chemistry (3). Jacobus H. van't Hoff (1852-1911) in 1901; Peter J. W. Debye (18841966) in 1936; and Paul Crutzen (1933- ) in 1995.
Physics (8). Hendrik Antoon Lorentz (1853-1928) and Pieter Zeeman (1865-1943) in
1902; J. van der Waals (1837-1923) in 1910; H. Kamerlingh Onnes (1853-1926) in 1913;
Frits Zernike (1888-1966) in 1953; Simon van der Meer (1925- ) in 1984; Gerardus 't Hooft
and Martinus Veltman in 1999.
Physiology or Medicine (2): Willem Einthoven (1860-1927) in 1924; Christiaan Eijkman
(1858-1930) in 1929.
Economics (1): Jan Tinbergen (1903-1994) in 1969, winning the first economics prize
with a Norwegian scientist in 1969.
In addition, Nikolaas Tinbergen (1907-1988) in 1973, and Nicolaas Bloembergen (1920- )
in 1981. Later, they took UK and US nationalities, respectively.
Based on Concise Encyclopædia Britannica.
-
-
-
-
158
Four characteristics are included in this OVO triad:
definite target: from the beginning, this system connected the research, extension and education; practical application was highlighted, and had an aim
of serving farmers, that is, the final users;
top-bottom interaction: the system has both top-down knowledge transmission and bottom-up problem feedback. Communicated supply and demand
of technological information bring more energy to the entire system;
extensive participation: the system is not only greatly supported by the government, but also proactively participated in by agricultural enterprises and
farmers' organisations. Among the leaders of all agricultural research institutes, together with administrative departments of secondary agricultural
schools and universities, are representatives from farms and enterprises, all
of whom have decision-making rights;
under the responsibility of the Ministry of Agriculture: LNV was fully responsible for all scientific research, extension and education related to agriculture and still has a major responsibility. With an important duty to 'create and
spread knowledge', LNV invests a large sum of money in scientific research,
extension and education.
6.4.2 Scientific research
Dutch agriculture research can be subdivided into: fundamental research, strategy & policy research, applied research, and developing research. Although related to each other, each has a particular emphasis as well as different
research topics and financing sources (figure 6.1).
Figure 6.1
Main fields of Dutch agricultural research institutes
Fundamental
research
Applied research
Strategy & policy research
Development
research
Universities
Research institutes
Research institutes for applied
technologies/experimental stations
Compagnies/experimental
stations
Although the Dutch government attaches great importance to knowledge innovation, it does not control everything, but exerts the function of market and
encourages the users' investment in scientific research. During the period
1970-1978, the funds dedicated by LNV to public research rose from over
NLG250m. to NLG450m. Since then, it has not increased but dropped slightly:
until the 1990s, the figure was roughly NLG400m. (see also table 7.1). However, the investment by enterprises and various associations in scientific research increased from less than NLG100m. in 1970 to nearly NLG400m. in
1995, almost equal to the national investment.
The tables 6.2a and 6.2b present an overview of the themes of research
and innovation in 2000 and 2009.
159
Table 6.2a
Public expenditure on agricultural research by LNV (2000)
%
%
Environment, woodland and natural landscape
27
Plant protection
6
The quality of products and production chain
16
Technologies
4
Animal health & welfare
12
Fishery
3
Rural energy and harmonised development
11
International problems
2
Sustainability of production
9
Labour
1
Social-economic development of agriculture
8
Leisure and entertainment
1
Source: LNV, Facts and Figures (2000), p. 54.
Table 6.2b
Public expenditure on agricultural research and innovation by
LNV (2009)
%
Nature
Landscape and rural area
Sustainable production and transition
Minerals and environment
17
7
18
%
Organic agriculture
7
Plant health
10
Animal health
11
4
Knowledge
2
Promising agro-chains
6
Food quality
12
International
6
Source: LNV, Budget 2009.
160
Against this background, since 1996 the Netherlands has greatly reformed
the agricultural knowledge innovation system, in order to adapt itself better to
the market and globalisation requirements, and to strengthen the sustainable
development capacity and competitive power of agricultural sectors. The fully
appropriated government research agency 'DLO' (under the Department of Science and Knowledge Dissemination, LNV) was gradually transformed into a
company (a 'B.V.') that manages its own revenues and expenditures. As for research institutes responsible for public services, the government is still a major
client, with a market share of roughly 70%. Around the new millennium the research organisation 'DLO' was merged with Wageningen Agricultural University
into Wageningen University and Research Centre (Wageningen UR).
Wageningen UR is now the core of the Dutch agricultural knowledge and innovation system. Wageningen UR is a leading international knowledge institute in
the fields of nutrition and health, sustainable agricultural systems, environmental
quality and processes of social change. Path-breaking research and innovative
education form a vital contribution to the quality of life. Wageningen UR is known
for its critical, enterprising and internationally oriented researchers and students. They are capable of bringing together knowledge from a wide variety of
disciplines in order to develop a comprehensive view of public issues and to understand the implications of these for human life, animal life, plant life and the
environment.
Wageningen UR has more than 5,400 employees (full time equivalents) as
well in research as in education. Most of them are working in five fields: plant
science (1,280 employees), animal science (590 employees), environmental
science (910 employees), agricultural technology and food technology (850
employees) and social science (670 employees).
This knowledge centre (Wageningen UR) consists of Wageningen University,
research institutes, and a training and advisory centre (see figure 6.2). In January 2004, the Van Hall Larenstein University of Applied Sciences became part of
Wageningen UR. Wageningen UR had in 2007 5,400 employees (full time
equivalents) and almost 10,000 students (university 5,600, students, van Hall
Larenstein 4,000 students). The research institutes carry out strategic, applied
and practical research for businesses, governments and stakeholder groups.
The university's strength lies in its fundamental and strategic research. It also
produces graduates that are employable in a broad range of fields.
The research institutes and the university work together closely in five areas
of expertise: agro technology & food, animal sciences, environmental sciences,
plant sciences, and social sciences. Current important research themes include
food safety and the green environment.
-
Agricultural Economics Research Institute (LEI)
LEI is part of the Social Sciences Group of Wageningen UR and the leading
institute in the Netherlands for social and economic research on agriculture,
horticulture, fisheries, forestry and rural areas. LEI focus at both the national
and the international level on the increasing integration of agriculture and agribusiness with the social environment. LEI aims to take a leading national
and international role in the field of information services by gathering and
analyzing data and carrying out independent scientific research.
-
Agro-technology & Food Innovations
In 2003 Agro technology & Food Innovations was created by the merger between ATO (Agro-technological Research Institute) and IMAG (Institute of Agricultural and Environmental Engineering). With this combined expertise,
Agro-technology & Food Innovations carries out applied and strategic research in the fields of technology, processes and chains. Four key activities
161
-
-
-
-
-
162
are: quality in chains; bio-based products food quality; agro-systems; and the
environment. Agro-technology & Food Innovations is part of the Agrotechnology & Food Sciences Group of Wageningen UR.
Alterra - Research Institute for the Green World (Alterra) is the main Dutch
centre of expertise on rural areas and part of the Environmental Sciences
Group of Wageningen UR. Alterra now combines a huge range of expertise
on rural areas and their sustainable use, including such aspects as water,
wildlife, forests, the environment, soils, landscape, climate and recreation,
as well as various other aspects relevant to the development and management of the environment we live in.
The International Institute for Land Reclamation and Improvement (ILRI) is an
internationally orientated centre for the collection and dissemination of
knowledge for a better, and sustainable, use of land and water resources,
especially in developing countries. ILRI's core activity is undertaking applied
research on the sustainable development of irrigated agriculture. The Institute joined forces with Wageningen UR, under which it is now a business unit
of Alterra.
On 1 June 2003, the Animal Sciences Group became the organisation in the
Netherlands with the expertise on animals, the entire animal product chain
and the scrupulous use of animals. The new Animals Sciences Group is
comprised of three organisations: Department of Animal Sciences of Wageningen University; The Institute for Fisheries Research (IMARES) in IJmuiden;
and the Research Institute for Animal Husbandry in Lelystad.
The Central Veterinary Institute (CVI-Lelystad) is an independent veterinary
research institute, acting for the Dutch government. CIDC-Lelystad is responsible for the surveillance of notifiable infectious animal diseases of
farmed livestock. CIDC-Lelystad performs diagnostic tests related to export
certification, and evaluates veterinary medicinal products and feed additives
on behalf of the Dutch government.
Plant Research International (PRI), Applied Plant Research (PPO) and Wageningen UR Greenhouse Horticulture are all three part of the Plant Sciences
Group of Wageningen UR. Plant Research International has a reputation in
plant genetics, plant reproduction, crop physiology, agro-systems, soil fertility, and the optimisation of plant health and plant product quality.
Applied Plant Research (PPO) was formed by a merger of the experimental
stations for crop research and regional research centers in the Netherlands.
PPO integrates knowledge into directly applicable solutions for production
chains. Research focuses on sustainable operating systems, quality man-
-
-
-
agement in the chain, crop control, plant health, the efficient utilisation of resources and the multifunctional development of green areas.
Wageningen UR Greenhouse Horticulture has as task to develop new concepts and components for greenhouse production systems. Current projects
include air conditioned cultivation, energy-producing greenhouses and fully
automated production systems.
RIKILT - Institute of Food Safety conducts research related to the safety,
health and quality of agricultural and horticultural products, both primary agricultural products and foods. An important aspect of RIKILT research concerns statutory tasks in the area of food safety. Research on genetically
modified (GM) food crops plays an important role within RIKILT.
Wageningen Business School is the part of Wageningen UR that offers postgraduate continuing education and courses, seminars and training for professionals.
Wageningen International is the front office for the international activities of
Wageningen UR. It offers easy access to all international products and services of Wageningen UR, covering education, research, capacity development and consultancy services. Wageningen International has the specific
mandate to mobilise the resources of Wageningen UR for the design and
implementation of comprehensive programs for capacity development focused on individuals, organisations and institutions.
Agricultural research in the Netherlands is mostly conducted in Wageningen,
while Utrecht University is famous for veterinary science. Most research institutes are based in Wageningen, while others are located in The Hague (economic research), Lelystad (animal science research) and IJmuiden (fishery
research).
The Dutch Agricultural Economic Research Institute (LEI Wageningen UR) is a
powerful institute with more than 300 employees. LEI ranks second in size
(measured by number of employees) among the institutes that are engaged in
research into agricultural economy, behind the Economic Research Bureau of
the US Agricultural Department (ERS). In consideration of the area of Dutch territory, agricultural population, et cetera. LEI is extraordinary both in size and the
role it plays. The system reconstruction a few years ago released it from LNV
and since then it has been operating as an enterprise.
163
Figure 6.2
Wageningen UR and its affiliated research organisations
Wageningen
Research
Applied Research
PRI
PPO, Greenhouse
University
Plant Sciences
Department of Plant
Group
Sciences
Animal Sciences
Department of Ani-
ID-Lelystad
Group
mal Sciences
IMARES
Agro-technology
Department of Agro-
Agrotechnology
& Food Sciences
technology & Food
& Food Innovations
Group
Sciences
Environmental
Department of Envi-
Sciences Group
ronmental Sciences
Social Sciences
Department of Social
Group
Sciences
Organisation for
-
Statutory Research
horticulture
PV
Alterra
LEI
CVI
RIKILT and others
Tasks
Post-academic edu-
Wageningen International, Wageningen Business School
cation and international consultancy
Notes: Alterra mainly engages in strategy and applied research on rural development, natural planning, the environment and sustainable development; Agro-technology & Food Innovations is for the research of material processing techniques of food and non food; besides it makes research on engine manufacture for agriculture and
horticulture, greenhouse, artificial climate and environment projects; ID is for animal science, including diagnose
and bacteria preparation, et cetera.; IMARES is for fishery and aquatic ecosystem; LEI is agricultural economic
institute; RIKILT does research to provide basis for the laws of food quality and safety standard; Plant Research
International makes research on plant heredity, physiology, agricultural system, soil fertility, crops protection,
crop zoology and its influence on the environment, together with the relationship with human beings, et cetera.
Source: Wageningen UR, different years.
While conducting research into basic and public-good economic problems
(policies, markets, information processing, international trade, et cetera), LEI
has been targeting all clients both at home and abroad all along. In the past, LEI
was largely dependent on government appropriation for research programs, but
now it invites public bidding for projects. When LEI gets a project through bidding, it will be financed by the government concerned or a production board or
a company, et cetera, who will be its client. LNV is still a main client of LEI:
about 70% of its total revenues come from LNV. A large amount of money for
164
research come from enterprises in agribusiness, production boards, et cetera
and such international bodies as World Bank, FAO, EU Commission, et cetera.
Applied research is mainly aimed at solving such practical problems as plant
disease and insect pests, soil, animal husbandry, farming engineering, agricultural processing and distribution, et cetera. This research is carried out in about
ten experimental stations and dozens of experimental enterprises by nearly 750
researchers. In the Netherlands, there are also nine research stations and thirtyfour local research centers, which are mainly responsible for applying research
and test results to production and solving practical problems in diversified
trades. There are local research centers in various regions, with nearly equal
outlays from LNV, enterprises and farmers' organisations.
Most research institutes pay more attention to developing applications,
which is an efficient way to guarantee the conversion of scientific results to productivity. Generally, this is conducted by experiment stations and experimental
farms. For example, Westland seed experiment station is specially engaged in
the prevention and cure of diseases of such vegetables as tomatoes and pimientos. It carries out full-course experiments with and research on soil, seedling planting, cultivation, to fruits. Westland disseminates its findings to the
public as results of official experiments.
Various companies, private enterprises and cooperatives are also engaged
in research. NIZO (Netherlands Dairy Products Research Institute), TNO (Netherlands Practical Techniques Research Institute), IRS (Sugar Beet Research Institute), NMI (Netherlands Fertiliser Research Institute), et cetera are all very
influential special research organisations.
6.4.3 Extension and knowledge exchange
Research institutes have a duty to generate new knowledge (including knowledge obtained from foreign countries). Final research outcomes (especially from
applied research and developing research) are intended to serve the farmers by
providing them with practical technology and information, and by enhancing
their productivity and competitiveness. The organic combination of research institutes, experiment stations and extension departments form a highly efficient
agricultural knowledge network. With this network, the latest knowledge and
technical outcomes of agricultural research are transmitted to every farmer and
beyond.
165
Box 6.4
Farm Accountancy Data Netwerk (FADN)
Decision-making in agriculture needs reliable data. Agricultural statistics in the Netherlands
are managed jointly by Statistics Netherlands (CBS) and the Agricultural Economics Research
Institute (LEI). LEI has an efficient farm accountancy data network (FADN) to cover all subsectors in agriculture. Most data are gathered on a continuous annual basis. The agricultural
statistics provide reliable data and very exact figures for decision-makers as well as for LEI
research work.
About 60 persons work in this department. Farms between 16 and 800 DSU are in the
field of observation for the FADN on agriculture. This implies that 6% of the production is not
represented. 1500 farms for the FADN sample are selected at random from the annual census (the Farm Structure Survey). Farms stay in the stratified sample for about 5 years, which
implies that there is a 20% rotation every year. Farmers take part in the sample on a voluntary basis, and are rewarded with feedback in the form of detailed reports on their own farms
and a comparison with other individual farms (benchmarking). Such samples also exist for
125 fishing vessels and 145 forestry holdings. The accounting exercise is carried out by LEI
staff located in regional offices. This makes possible a high level of standardisation and innovation. To keep costs down, the accounting process draws heavily on information technology.
The accountants use personal computers and most farmers authorise LEI to get an electronic
copy of their bank payments. Electronic data interchange (EDI) is also used for data transmission with auction houses, the national herd book, et cetera. EDI enables the automatic
coding of transactions in the accounts.
The collected data are stored in a large database and are coupled with the farm's results
of previous years. Data from the annual census and from other European regions are also
available. The database is a rich source for statistical reports, annual policy reports and a lot
of research reports. Some of these reports are specifically designed to play a monitoring role
in agricultural policy. They inform the policy makers and all interested stakeholders in an authoritative and independent way about the actual situation in agriculture.
Based on LEI (2001): Farm accountancy data network.
Agricultural extension in the Netherlands has a long history. The government
set up the agricultural extension station (DLV) in 1890 and employed specialists
to provide a travelling consultancy service for farmers. It later developed into a
very large institute with branches in every area, where many specialists gathered. They often got together to exchange experiences and information. In addition, they maintained good relations with farmers' associations. Therefore,
problems they found could be sent to research institutes, and the latter tested
the new research results in actual production.
166
The Netherlands enjoyed complete organisation structures related to agricultural extension, which in many areas were interactive (figure 6.3). Extension
was mainly carried out by various governmental and civil technical consulting
service organisations (it has been privatised since 1999, see the following
pages). Extension to farmers included not only top-down technology extension,
social & economic knowledge extension, management and consulting services,
but also bottom-up information feedback, receiving various requests for technology and information from the farmers. This is communication of knowledge
and experience. In the past, these were fully financed by LNV: agricultural extension expenses of the government reached NLG28.5m. in 1997.
Figure 6.3
Knowledge & information in the Agricultural Expertise Network Joint research projects & exchange of research results
Strategic basic research
Joint research projects & exchange of research
results
Applied research
Short-cuts in the systems
Joint research projects & exchange of research
results
Practical research
Exchange of research projects & information
about developments in the sector
Second-line extension
Exchange of information about research &
practical information
First-line extension & education
Advice to farmers & growers and discussion of
Farmers & growers
experiences & research requests
Source: LNV, An introduction to the flow of information in Dutch agriculture (1992).
Recently, Dutch agricultural extension and consulting has been privatised.
Farmers now have to pay for the consulting service. The general idea behind
this development is that the modernisation and knowledge of farmers has
reached such a level that many farmers can pay for the specific information
they need. Because of the social progress and easy access, it is much easier
and there are far more channels nowadays for farmers to get information. They
can obtain useful information from various cooperatives, farmers' organisations,
167
firms, seed breeding companies, veterinary stations and various media (newspaper, magazines, TV, radio). The development of the Internet allows farmers to
access both foreign and domestic information. However, DLV experts still offer
advantages. First, they continue to maintain close relationships with all the
stakeholders (farmers' associations, research institutes, universities, offices,
enterprises for agricultural products processing, et cetera); second, they suggest pertinent solutions to the problems of specific farmers, that is, clients can
put forward concrete 'order forms', not only to solve technological problems,
but also to consider questions from an economic perspective and that of longrun development, since the world is changing so rapidly. Therefore, DLV is still
extensively supported by all kinds of organisations in the country.
6.4.4 Agricultural education
The Dutch education system comprises public schools (25% of the total) and
private schools (75%). The government pays subsidies to schools. Private
schools can also be granted subsidies to the same level as public schools as
long as they meet the standards stated by law. Education expenditure in the
Netherlands accounts for about 5% of GDP.
Compulsory education started in 1901 in the Netherlands. It enables the
children of all farmers (including employees) to go to school for free. The Child
Protection Law, which dates from 1874, expressly prohibits employing child labour. At the same time, pilot areas were selected to spread new technology to
farmers. Rural teachers were often invited to offer various short-term training
courses, training courses and winter seminars. Thanks to such a close relationship between agricultural education and rural communities, Dutch agricultural
education has been always the responsibility of LNV (other schools are under
the responsibility of the Ministry of Education).
The Netherlands has set a target for agricultural education: the aim is to enhance the quality of the rural population so that they can understand and apply
all kinds of scientific knowledge, and therefore maximise the benefits of advanced technologies. Although the proportion of agriculture in the national
economy shows a downwards tendency, agricultural education is undergoing
favourable development (table 6.2).
Agricultural education in the Netherlands can be divided into different types
and levels.
168
Basic education
Dutch children must attend compulsory education from the age of four to the
age of sixteen. This education is totally free. The basic education consists of
primary education during eight years and secondary education.
Green secondary education
Agricultural education centers (AOC's) offer green pre-vocational secondary
education and training as well as senior green secondary full-time vocational
education. The senior secondary education consists of a broad range of
courses. There are 13 AOC's operating at some 100 locations throughout the
Netherlands. In addition, green pre-vocational secondary education is also provided by a number (33) of comprehensive schools in a green department. The
senior course includes areas of study such as food technology, landscape management, horse management, flowers and design, animal care, sport and recreation, care and the environment and agricultural technology. Green training is
increasingly being combined with non-green sectors, e.g. for jobs on 'community care' farms or in green retail. Senior secondary green full-time education
prepares students for four levels of achievement, based on the length of the
course, from one to four years. AOC's also provide course and contract education for professionals. So the scope of the AOC's is much broader than the former agricultural schools which were more directed to agriculture itself. All green
training involves a lot of practical work in cooperation with the green businesses
in the area. The Dutch Ministry of Agriculture, Nature and Food Quality is responsible for determining the content of green education.
Table 6.2
Students in Dutch green education system
1995/'96
2000/'01
2005/'06
2006/'07
Higher Agricultural College
10,610
8,490
8,310
7,690
Senior vocational education
25,010
24,160
25,070
26,180
Part-time Higher Agricultural College
550
590
1,130
1,110
Part-time senior vocational education
100
0
400
180
Secondary pre-vocational education
n/a
33,600 a)
34,820
34,590
a) 2003/'04.
Source: LEI (2008), p. 237 and AOC-Raad.
169
Higher vocational education
There are nine agricultural colleges in the Netherlands that train future farmers,
food industry managers, and staff from research institutes and public or private
organisations that are related to agriculture (i.e. agricultural advisory specialists). The length of schooling is usually four or five years. Courses cover all crucial areas in agricultural sectors and rural development. The Dutch Ministry of
Agriculture, Nature and Food Quality is responsible for determining the content
of the education. Students can choose key courses according to their planned
future career. Most students begin to work as soon as they graduate, but some
prefer to continue their study, for example, to attend a one-year teacher training
course or undergo senior economic management training; others go on to
Wageningen University or the veterinary academy at Utrecht University.
University education
There are 12 universities in the Netherlands. Wageningen University has 5,600
students; many students come from all over in the world to study there. The
University focuses on the development of agricultural science, and extends the
research of the whole industrial chain 'from field to table' to the nature and environment, relating to natural science, social science and latest technological science. It tries hard to combine these sciences and technologies, highlighting
research of the environment and sustainable development - one of the University's unique features.
Particular importance is attached to practical application in Dutch agricultural education, in order to train the students to solve problems by themselves;
therefore, diversified training courses and facilities are provided. Students are
also trained how to make use of available knowledge. Students in secondary
green schools, agricultural colleges and agricultural universities receive practical training lasting two to six weeks in different training centers. This is part of
the teaching plan. Students not only revise what they learn from books in a systematic and comprehensive way, but also develop an idea of lifetime learning.
Once they are employed, they will be competent to perform such jobs as teachers, extension and consulting specialists, farmers or company managers. Only
a limited part of the graduates will become a farmer, most of them will be employed elsewhere in the agribusiness or in related sectors.
Each year the Dutch government invests more than €750m. in developing
green education; more than 40% of this is used for green pre-vocational secondary education and training and almost 20% of this is used for green secondary
170
senior vocational education and training, almost 10% is for higher green education and more than 20% for the scientific education of Wageningen university.
To improve the farmer's ability to accept new technologies is a distinguished
characteristic of agricultural education in the Netherlands. Meanwhile, it is the
basis for the extensive application of high and new technologies. High-level education not only produces excellent agricultural researchers, but also helps
farmers to accept new knowledge and techniques, so that they can express
their needs more clearly. Most of the farmers enjoyed at least secondary agricultural education and growing number farmers, nowadays some ten percent,
are graduates of higher colleges or universities.
Practically experienced and agriculturally skilled farmers who are diligent in
study and good at operation are a countries precious wealth. The greater the
proportion of such farmers, the stronger the countries agricultural competitiveness. They represent the direction of agricultural development. It is because of
this galaxy of farmers as a main force in agriculture that Dutch agriculture wins
so many 'gold medals'.
6.5
Conclusion
Although the three pillars of Dutch agricultural success discussed in this chapter, infrastructure, cooperatives and farmers organisations, and knowledge and
innovation system, do not appear to be related to each other, they all pertain to
an essential ingredient of that success.
Water and soil are the foundation for human existence. Such infrastructure
as bridges and arteries link agriculture and other industrial sectors. However, it
is the quality and ability of persons - both producers and managers - that is the
key to increasing productivity. Agricultural research, extension and education
contribute, individually and in combination, to the enhancement and strengthening of the human element. With strengthened ability, a person will not only meet
the need of agricultural sectors, but will also be competent to perform other
jobs. Cooperatives combine the strength of individual people into a powerful
force, which enhances the competitiveness of agricultural sectors that are
seemingly otherwise in an inferior position.
171
7
7.1
Institutions, strategy and policy
Introduction
The healthy development of any economy cannot be achieved without a 'good
government'. 'Development - economic, social, and sustainable - without an effective government is impossible ….. Good government is not a luxury - it is a
vital necessity for development.'1 A 'capable government' is the key to economic and social development.
Not all countries have a capable and efficient government. Hence, from an
economic perspective, a capable government can be seen as a scarce resource. Unlike common production factors, it yields:
-
institutions
'Effective institutions are those that are incentive compatible.'2 Effective institutions promote producers' initiatives, improve and optimise the distribution of resources and improve competitiveness;
-
development strategy
Each country must adopt an own development strategy according to its individual situation. For example, whether to be open to the outside world or
not; how a small country can win by relying on comparative advantage in international competition, et cetera;
-
policy
Efficient institutions are conducive to forming right decision-making mechanism and achieving goals initially set. Efficient government is good at making
a series of good policies and mobilising government and the people to carry
out these policies;
-
services
An efficient government is able to provide various services and public goods
(e.g. peaceful internal and international environment) which is something that
markets cannot do.
1
172
2
World Bank, World Development Report 1997. p. 18 and p. 15.
World Bank, World Development Report 2002. p. 6.
This chapter examines the role the Dutch government or state plays in agricultural development in terms of economic institution, developing strategy and
agricultural policies.
However, institutions are not always based on initiatives of the government.
For example: cooperatives are primarily an initiative of the agricultural sector.
Farmers associations are another example. The more liberal the government the
more institutions formed on basis of private initiatives, or in other words by the
market.
7.2
Efficiency of Institutions
The efficiency of a government (or institution) lies in its capacity to take collective action at the smallest social cost. Here 'collective action' means harmonious and unanimous activities that create wealth. These collective activities must
be subject to various rules, including policies, laws, and regulations. These rules
should represent the fundamental interests of the majority of the people to the
full extent. 'The wrong kind of rules can actively discourage the creation of
wealth'1; and visa versa, i.e., good rules can encourage people to create as
much wealth as possible by given resources. For instance, as mentioned in
Chapter 6, several centuries ago, the Dutch government understood the importance of protecting intellectual property by issuing patent rights to inventors in
order to attract talented people from abroad, which brought prosperity to Amsterdam.
Informal institutions, which often operating outside the formal legal system,
reflect unwritten codes of social conduct. According to the World Bank, 'Ideally,
informal and formal institutions should complement each other. Together, they
can reduce transaction costs more than either can alone.'2 The World Bank believes that it is an ideal condition in which informal and formal institutions are
complemented. These complementarities save more trade costs than any other
institution. In my opinion, the 'polder model' of the Netherlands is a kind of informal institution that complements formal institutions in that it reduces trade
costs and improves the efficiency of the whole social system. A Japanese
scholar regarded the model of a co-operative relationship between the govern-
1
2
World Bank, World Development Report 1997. p. 31.
World Bank, World Development Report 2002. p. 6 and p. 7.
173
ment, employers and employees as a 'new model' that brought about the 'Dutch
miracle'.
Unified decision-making system for agriculture
Agricultural development potentials and real situation are subject to a series of
variables, like political institution, social norms and values.
Agricultural decision-making body in the Netherlands is the Ministry of Agriculture, Nature and Food Quality (LNV), whose responsibilities cover everything
'from field to table': the agricultural, agro-industrial and commercial chain and
rural affairs (at the state level, there are 10 policy departments, i.e. Agriculture,
Industry and Trade, Nature, Fisheries, International Affairs, Legal Affairs, Rural
Affairs, Regional Affairs, Food Quality and Animal Health, and Knowledge. Besides, LNV has 6 semi-independent organisations, including General Inspection
Service, National Agency for the Implementation of Regulations, Government
Service for Land and Water Use, et cetera. Officials believe that the focus of
LNV is leaning towards nature management and environmental protection.
This system highlights the rights of stakeholders (e.g., government and parliament, employers' organisations, employees' organisations, retailers, exporters and processors). Before decisions are made, each party states its own
requirements and opinions clearly and the interests of all parties are weighed
carefully until as much of a consensus is reached. In practice this 'polder model'
takes more time. However, once a plan or policy is passed, it can be carried out
smoothly because it will be given green lights.
The agribusiness obviously benefits from its uniform management by a department. This helps to achieve the final aim of agricultural production. While
meeting the demand of consumers both at home and abroad, improving the
competitiveness of Dutch agriculture and promoting exports, it leads to a coordinative development of the economy, society and environment. The inevitable
time difference between production and consumption and changes in the market cause the so-called 'asymmetry of information'. However, in the complex,
with the close links between production and consumption and the communication of information, the periodic fluctuation between production and consumption is flattened, resulting in fewer wasted resources and improved social
welfare. Considering the fact that LNV integrates production sector, nature
management and environment, balancing relation between these factors, 'sustainable development' is not a concept but a reality in the Netherlands.
174
Agrarian system
A good agrarian system is conducive to the effective use of land: rich land is
easily transferred to farms with good performance, while land that is unsuitable
for arable farming is used for non-agricultural purposes, e.g. for forests and
recreation.
Dutch farms are mostly located on self-owned land. Only a small proportion
of farms completely rely on rented land. An aspirant farmer who wanted to rent
state-owned land in the new polders had to do so through public bidding and to
meet four conditions, namely: being younger and having an agricultural vocational education, experience in agricultural work and a certain sum of money. In
order to help young farmers obtain enough money, they are allowed to rent for
12 years, and afterwards the tenancy may be extended by 6 years. The country
provides houses and production buildings at a preferential rate. A long-term tenancy may last 40 years, in which case the farmer must build his house, warehouses and sheds using money that he himself has raised.
Despite of scarce land resources, the average farm size in the Netherlands
expanded quite rapidly (see table 2.2 and 2.8). In this process, the country enacted several important laws such as Land Consolidation Act (1924, and subsequently revised) and the Agricultural Holdings Act (1933). These not only
regulated land transactions, but also provided legal and institutional frameworks
for various infrastructure projects. This promotes land improvement and rearrangement (levelling, and drainage of flooded fields), as well as water resource
management.
The government offers certain amount of subsidies for small farms withdrawing from the agricultural operation, provided that they must sell their own land
either to other farms or to a state-owned intermediate agency. Such an institutional arrangement promotes the improvement of agricultural production and
the enlargement of agricultural holdings. (The government also attaches great
importance to the inspection of land quality, which effectively stops the deterioration of land quality and the division of land that is likely to be caused by land
trade.)
In this aspect, organisational institutions made great contributions to agricultural development in the Netherlands. Producers and processors formed associations and cooperatives to assume many of the responsibilities that are
usually fulfilled by the government (e.g. development and supervision of quality
standards). The government is mainly responsible for providing these organisations with services and guidance. Being closely correlative, these organisations
175
eliminated the separation between agricultural production departments and
processing/distributing departments, which led to higher efficiency.
Institutional factors played an important role in the history of agricultural cooperatives. In the late 19th century, laws on agricultural cooperatives were
made, which offered tax reduction to encourage farmers to organise agricultural
cooperatives. Furthermore, farmers set up association at the national, regional
and grass-root level. These pyramidal agricultural organisations played a positive role in the social and economic development of the Netherlands, spreading
knowledge of law and science, making the society more cohesive.
The internal institutional arrangement of a Dutch agricultural cooperative enables its members and the cooperative to form an economic interest community. For example, sales cooperatives want members' products to fetch a good
price, while stock cooperatives try to provide cheap input products. An agricultural cooperative pay farmers dividends in the form of a certain proportion from
the cooperative's income of the cooperative. Common interests also lie in democratic decision-making and management. Similarities between members of
the same type of cooperative effectively cut the managerial and decision making costs.
7.3
Choice of Strategy
The ancient Chinese story 'Tian Ji and Horse Racing' is about a noble man Tian Ji - who wins a race not because he has a good horse (in fact he has poor
horses) but because he applies his wisdom to the contest. The story teaches
people a lesson that a weak party can win by applying an excellent strategy.
Likewise, a small country can also beat bigger ones by using its wisdom and innovation. It is worth noting that the Netherlands, a small country, turned itself
into an agricultural power. Several strategies are worth to be mentioned and
examination:
-
avoiding weak sectors and focusing on strong sectors
The Netherlands gave up several economic sectors in which it did not have
comparative advantage and focused its efforts on sectors in which it has
absolute advantage. For example, since it does not focus on land intensive
crops such as cereals, the Netherlands has to import food and feed in large
quantities, but it saves land for (seed) potatoes and beats other countries to
win the 'gold medal' in this field (see table 5.2);
176
-
technology innovation
Relying on its outstanding technology, highly efficient bidding system and
perfect infrastructure, Holland markets its flowers and vegetables, which are
highly perishables products to all over the world. Other countries cannot follow its example simply because they do not possess the technology and infrastructure;
-
large scale of processing industry
The Dutch processing industry is world class, thanks to government policies
that encourage innovation and entrepreneurship. The Netherlands believes
that the bigger role of market forces will help to create an agri-food complex
that is able to produce in a more profitable and sustainable way.
Since the 17th century, the Netherlands had successfully applied comparative advantage in commerce. And there is more to it. Any country involved in
trade with other countries will trade its own advantageous products with other
countries. 'National differences in the opportunity cost of resources determine
comparative advantages and the patterns of trade.'1
As economic ties between countries become closer, new theories are developed on the basis of the theory of comparative advantage (David Ricardo)
and factor endowment theory (Heckscher and Ohlin). Factors like economy of
scale, fine tech resulting from professionalised production, preference difference will possibly promote trade and change the style of trade. People attached
importance to the quality of production factors.
The Dutch government played a significant role in improving quality of production factors, which is actually a strategy of innovation. The decisive factor
lies in government investment in research and education to educate highly qualified workers and to improve technology and the management of the production
and market system. New technologies and an improvement of production and
market system will provide core competence. Hence, the principle of agricultural technological development has undergone a change from the 'labour replacing land' model in 19th century to the 'capital replacing land' and the 'funds
replacing labour' model. The development of greenhouse technology and the
enlargement of the glass horticulture area is a good example of this. Agriculture
has become a capital and technology intensive sector. Capital-technology inten-
1
John B. Penson et al., Introduction to Agricultural Economics, 3rd ed. (New Jersey, Prentice Hall,
2002), p. 516.
177
sive agricultural products play a dominant role previously played by labourintensive products, hence achieving new comparative advantage.
Strategy of internationalisation
This is one of the most important strategies of the Netherlands. The Dutch were
one of the founders of the EEC (later the EU). The recent EU eastward expansion offers new opportunities for the Netherlands to explore markets. A borderless 'common market' plays a crucial role in the agricultural development of the
Netherlands. Dutch entrepreneurs are good at grasping opportunities in world
markets, adapting itself to changes and adjusting its market structure.
A fundamental reason for this strategy is domestic market saturation,
because the Netherlands is a small country with limited scope for increasing
markets. Facing the ever-growing fierce competition in EU market, Dutch enterprises have to reduce their costs by increasing production scale. Restricted by
a limited home market and by anti-trust laws, certain industries have to develop
themselves abroad. The food industry in the Netherlands has long been internationalised in that it goes all out to promote its products abroad and to familiarise foreign customers with Dutch brands; it also invests directly abroad (Foreign
Direct Investments (FDI)), and this is becoming the trend. The popularity of FDI
can be attributed to several factors: the chances of expanding domestically are
slim, it is relatively easy to expand in foreign market, and FDI improves benefits
of scale production including R&D and marketing.
In accordance with the policy of 'structure subject to strategy', it can be
predicted that with the acceleration of globalisation, Dutch agriculture will become more internationalised. In line with this, the countries agricultural structure
will undergo major changes.
7.4
178
Government and Policies
The government plays an important role in the success of agriculture in the
Netherlands. The government has created a good environment of institutions,
fair competition and innovation promotion.
Since the 1980's, the LNV has been a ministry of 'general affairs', not limited to the agriculture field alone. It has wider functions. The changed Common
Agricultural Policies (CAP) of the European Union requires the government of
each member state to pay attention not only to food supply and security, and
the organic relation between nature, environment and agriculture, but also to
'rural development' in a wider sense. The LNV defined its role and responsibility
as providing public goods, for example knowledge, infrastructure, landscape,
development and maintenance of standards meeting the food safety requirements.
Figure 7.1
Organisational Chart of LNV (2008)
Minister
Executive Board
Foo d and Consumer Produ ct
Safety Authority
a)
Financial &
Economic Affairs
Minister’s Office
Personnel and Organisation
Department
Audit Branch
Commu nications
Policy departments
Dept. of Information
M anagement,
Facilities & Serv ices
Implementing bodies
General In spection
Service
Agriculture
Nature
T rade & Indu stry
Fisheries
In ternational Affairs
Legal affairs
Government Service
for Land and Water
Management
Rural Affairs
Food quality and
animal health
Plant Protection
Service
Knowledg e
National service
for th e
Implemen tation
of Regulation s
Food and nonfoo d agency
ICT
Services
Regional affairs
a) Falls under responsibility of both the Ministry of Health, Welfare and Sport and the Ministry of Agriculture, Nature
and Food Quality.
Source: LNV.
Like other countries with a market economy, LNV does not draw up any production plan (which is a matter for the farmer himself). Generally speaking the
country does not even have a policy regulating (or intervening in) agricultural
production, unless a certain production activity is likely to affect the countries
environmental and nature protection plan. Agricultural production has to take
into account production conditions imposed by environmental laws, spatial planning laws, et cetera. Increasing the food supply has never been a duty of LNV,
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since other sectors may, more or less, affects the input and output of agriculture.
The primary objective of Dutch agricultural policy is to build sustainable and
internationally competitive agriculture in which man and nature can develop in a
harmonious way, and to develop measures and further policies to further this
objective. Generally speaking, agricultural policies of the Netherlands fall into
three parts: investment in knowledge and innovation, structural policy and environmental policy.
Knowledge and innovation policies of the Dutch government
The government not only invests in agricultural education, research and extension, but also encourages associations from various sectors and private enterprises to get involved. More importantly, the government set up a
communication, consultation and cooperation mechanism by which various parties can support each other. The government has a good cooperative relation
with private sectors and semi-public (public/private) bodies and authorises them
to take responsibility even in areas such as establishing product quality standards and quarantine standards. The reason why the agricultural productivity
rate of the Netherlands is far ahead of other countries can be attributed to the
improvement of production factors and the quality of labour. The Netherlands
did not become an outstanding performer in the international agriculture market
in just one day.
Table 7.1
LNV, Budgeted expenditures for investment in knowledge and
innovation (in million €)
Research a)
Extension b)
Education
Total g)
SGE d)
HGE e)
UE f)
2006
193
6
386
54
141
890
2012
159
10 c)
396
59
149
893
a) Research carried out by research institutes of Wageningen University and Research Centre; b) The amounts allocated to extension are relatively low as much of the industry is nowadays in private hands; c) Is 2010; d) Secondary green education; e) Higher green education; f) University education; g) Including other budgeted expenditures
for knowledge and innovation.
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The Dutch government has always highlighted and supported agricultural research, education and extension (see table 7.1). In its opinion, scientific research and technology may serve as a key to the enhanced production factors,
and a connecting point for policies, management and knowledge. What impressed me the most is that, in 1996, the country appropriated NLG3.31b. to
LNV, and LNV invested NLG1.3b. in 'science and knowledge spreading', which
represented 41.5% of the total appropriation! For 2008, this figure was 39,6
per cent.
Structural policy
The structure of farms as described in chapter 2 can be seen as a concrete example of a result of structural policy. As a country with scarce land resources,
the government always focuses on the improvement of land productivity, farm
scale and structure. In fact, structural policy, land policy and regional policy are
closely linked.
It is an important government principle to guarantee that farmers can obtain
land at a reasonable price. This principle is in favour of tenants and helps to
prevent tenants having to pay too high rents to their landlords, since unfair rents
have an adverse effect on agricultural development. The enlargement of scale
of farms leads to a reduction in the number of agricultural farms, which is an
unavoidable trend. Hence, the government encourages family-run farms to maintain or to enlarge to a certain scale in order to guarantee that at least one family member will work on the farm. This accounts for the high proportion of
professional farms in the Netherlands. On the other hand, badly performing
farms are encouraged to give up farming. Outgoing farmers can receive a subsidy. Since industries and commerce are highly developed, the problem of labour oversupply does not play an important role (if it exists at all). Outgoing
farms can transfer their land to promising farmers so that the latter can expand
and thus increase the efficiency of the agricultural system.
Environmental policy
In the last part of 20th century, with the changes in the Common Agriculture Policy of the EU, environmental policies grew in importance and increasingly affect
agriculture. More and more people are becoming concerned about nature, the
environment and food safety. In accordance with EU environmental directives,
the Dutch government strengthened its control over the amount of manure that
farmers produce. In 1989, the LNV and four other ministries, constituted a National Environmental Policies Plan to prevent damage to the environment in such
fields as structural rearrangement, overall volume control and appropriate disposal of manure. In order to ensure the implementation of this plan, the government raised funds and introduced two new types of tax.
The Dutch government strengthens its protection of environment through legislation, government plans and taxation. The emphasis placed on agriculture is:
181
-
control the use of chemicals (fertilisers, pesticide) to prevent water, air and
soil pollution;
improve the methods used to dispose manure in order to reduce negative
effects on nature and ground and surface water;
transform agricultural land into recreation and preservation areas;
set up of a national ecological network comprising core regions, nature development zones and ecological corridors in order to protect wild live.
The Dutch government introduced corresponding tax and fiscal policies. For
example, policies to encourage enterprises of the future and introduction of environment-related taxes, such as fuel tax and manure surplus tax. Meanwhile,
sustainable development, animal welfare and green agricultural activities are
encouraged. Since environmental policies have become a standard for agricultural production, producers and merchants will have their products certified as
environment-friendly in order to gain market share and increase prices.
Problems and challenges
182
As the economy grows and the living standard improves, people increasingly
demand more land for housing, infrastructure, nature protection, recreation and
landscape. However, with 70 percent of land in the Netherlands used by agriculture, land is a scarce resource. Hence, it is generally believed that enterprises
should be responsible for environmental protection and maintaining biodiversity:
this is called the 'social responsibility of farms or agribusiness'. How to optimise
the use of the limited available land, poses a big problem to the Netherlands
faces in the 21st century.
Environmental policies require a decreasing degree of concentrated use of
land, which poses a challenge to further improving land productivity. Profits in
the primary sector tend to decline, while the volume of cattle, pig, and poultry
are restricted by policies. Small farms find it harder and harder to survive.
Dutch agricultural structure and scale will face new challenges.
Besides, against the background of economic globalisation, the EU's protective agricultural policies need to be reformed. More and more agro-food enterprises in the Netherlands need to expand their business to the world.
Globalisation is a double-edged sword. In a frequently changing world, and as
the competition in international markets of agricultural products is more violent,
can Dutch agriculture - which is highly dependent on the outside world - exert its
own advantages, avoid the shock of suddenly occurring events, and continue to
maintain and win more 'gold medals'? People are awaiting the answer.
7.5
Conclusion
There will be no best practice without rules. In any society, good rules encourage the population to create wealth.
Institutions, as well as development strategies, policies, laws and rules developed by the government produce a significant effect on the competitive
power of that country. In the miracle of Dutch agriculture, we can see the important influence of the institutional factor.
An efficient government, good policies and good institutions are a countries
important and rare resources. Without good institutions and good government,
there will be no efficient agriculture, no international competitive power of agriculture, and no sustainable development of agriculture.
The government plays an important role in the success of the Dutch agribusiness. The government created a good environment of institutions, fair competition and encouraged innovation.
183
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