1. The Choice for Agriculture A vision on the future of Dutch agriculture Gerrit Meester Ministry of Agriculture, Nature and Food Quality Utrecht, 24 February 2006

2. Economic significance of the Dutch agricultural cluster

3. Gross value added agro complex 2003

4. Agricultural land use 2002 (1000 ha)

5. Future position Dutch agro complex Strengths Good climate and soils Close to consumer markets Network of up- and downstream sectors High knowledge level; Ability and willingness to adjust Weaknesses Land and labour expensive Environmental pressure Scaling up relatively slow Traffic congestion Cooperation in chains

6. Expectations sub-complexes 2003 and 2015 Value addedEmployment 2003 20152003 2015 (bln euro) 2003=100(1000) 2003=100 Arable farming 4,7 109 75,7 87 Open field horticulture 2,3 121 41,8 97 Glasshouse horticulture 4,8 122 66,8 95 Cattle farming 6,7 106133,3 84 Intensive livestock farming 5,2 114 79,3 87 Total23,7 114396,9 87

7. Number of farms 1990 - 2015

8. Common agricultural policy (CAP) Historical developments: Agriculture part of the common market (1950 ’s) Price policy (1960 ’s) Surpluses, budget expenditures, trade conflicts (1970’s, 1980 ‘s) Quota (sugar 1968, milk 1984) Direct payments (1992, 1999) Current issues: Midterm Review Doha Development Agenda

9. Midterm Review 2003 Decoupled income payments: Single farm payment independent of production Based on payments reference period 2000-2002 Payment linked to conditions: Environment, food safety, animal and plant health, animal welfare standards Keeping agricultural land in good condition Financial discipline: 1 % nominal increase CAP budget 2006-2013 Price decrease and single farm payment milk Strengthened rural development policy

10. Sugar reform 2005 Reduction support price 36 % in 4 years Decoupled payment for sugar beet farmers 64 % compensation income losses Reduction of EU production quota Buying up scheme paid by the sugar industry Abolishment public intervention

11. Expectations WTO and CAP reform WTO: Elimination export subsidies Green box income support Lower import protection CAP reform Further price decrease Partial compensation by direct payments Decoupling of income payments Maximum ceiling CAP expenditures Future: “Flat rate” or more targeted direct payments Elimination dairy quota system Reduction CAP budget after 2013

12. EU Farm Support: History and Future (Source: Prof Tangermann, OECD, 2005) History Future?

13. Effects of trade liberalisation: general aspects Market performance more important than protection Liberalisation is a world wide process Higher equilibrium prices on world markets Differences in effects per sub-sector Alternative land use opportunities not available Decreases in land and quota values

14. Results dairy sector The dairy sector is full competitive, even without any support However maybe in a form less desired by society Large scale farms Disappearance of grazing This form might develop autonomously Are policy makers able to conduct this process in a more desired direction?

15. Results other sectors Sugar might remain competitive within arable farming However arable farming looses from dairy farming and horticulture Starch potato production disappears Beef and sheep production are not competitive Intensive livestock sectors might depend more on environmental conditions than on trade liberalisation

16. Additional studies Confirmation results dairy sector: Increase of production after abolishing quota Also in other parts of North-West Europe Intensive livestock sectors: Poultry sector largely under pressure when import levies decrease Pig sector also protected by import levies; competitiveness more depending on environmental constraints Horticultural sector strongly competitive: Phytosanitary measures third countries main bottle-neck

17. Are the results valid only for The Netherlands or EU wide ? Case studies dairy sector Competitiveness of cereals in several parts of Europe Close to 450 million relatively rich consumers Good technical and knowledge infrastructures Favourable weather conditions; fertile soils Figures from a LEI-study on the impact of the Doha-round