Agriculture, Analytics, EU – Baltic States, Modern EU

Although all countries in the world explore to some extent the agro-production sector, the highly developed states in Northern Europe are specific: e.g. in Denmark, about 35 thousand land owners possesses about two-thirds of the country’s land area, i.e. 0,6 % of population owns 62% of the country’s precious asset. However, the role of agro-sector in these states in the national GDP is constantly reducing: e.g. in 1980 its share in the national wealth product was about 5%, presently it is about 1,2%, or about EUR 13 bn. In Holland, with smaller land area than in Denmark, the agro-sector’s share in GDP is about 7,5 times higher and managed to feed about 17 mln people compared to 5,7 million Danes!

The role of agro-sector: new challenges

In some Scandinavian states (as well as in certain others), importing agro-produce is becoming somehow cheaper than home-based production: e.g. first and cheaper vegetables in Latvia are coming from a neighboring Poland. Besides, numerous gastronomic “valuables” are coming into Scandinavia from Belgium, France, Spain, even Brazil (meat) and China.

Some examples are really astonishing: Denmark being the EU’s leader in pork is still importing yearly about 23 thousand tons of pork from Poland; even famous Danish bacon is presently produced in Germany. The answer is simple: differences in prices for agro-sector’s ingredients make import cheaper (!); just an example: prices in Denmark, on average, are about 40% higher than in other EU states, while about only 20% higher in such states as Sweden, Finland, Ireland, etc. Besides, agro-sector prices in Poland are generally about 40 % lower than in other EU states.     

It seems that the main reason behind states’ holding to the agro-sector’s development is to secure employment: otherwise global market prices could ruin any high-level economies due to the fact that agro-sector is heavily subsidized around the world and in the EU, in particular.

Let’s take e.g. corn production: in Denmark this sector’s share is about half of the total agro-market and it covers 2/3 of the productive land, which provides for about 9-10 mln tons and sufficient for all national needs (though mainly used for the quality-pork production). Another share of pork composition is soya and the country’s imports yearly is about 1,6-1,9 mln tons. However, taking into consideration the global corn growing potentials of 2, 6 mln tons, the Danish share is about 0,38% of the world production. 

Another important agro-sector is milk production: e.g. in Denmark the sector provides for about 10 thousand liters per day (seven years ago it was 7 thousand with the same number of cows), which makes about 5,5 mln liters per year. Some of it is manufactured into powder milk and is heavily exported worldwide. On the EU level, the yearly milk production is at the level of 155 mln t. (or more than 30 liters per head), while global milk production stays at 674 mln tons.

Chicken production is another favorite in Scandinavia: about 15,2 mln t yearly in the EU and 148 thousand tons in Denmark (about 25 kg. chicken-meat per head a year). Some of it is exported as Danish chicken is famous for its salmonella-free meat. 

But most favorable in Denmark is pig-breeding for pork: there are twice as many pigs in the country than the citizens –about 12-13 mln. Among the EU pig-breeding countries, Denmark is behind only Germany, France, Spain and Poland; Danish production is at 6,5 percent of the EU level and the country exports yearly about 1,5 mln tons pork.

Some specifics

Every EU state has its specific sphere in agro-business to rely on: e.g. quite a specific facet in Danish agro-sector is mink-production; in 2014, the turnover has been at the level of EUR 2 billion (!) exceeding the country’s total export to China. Presently, the sector’s importance reduced to about EUR 800 mln due to massive global productions and animal protection movements; however, Denmark is still regarded in this sector as a global leader with 27 % of the total 60 mln “skins” on the market.    

Some states forbid mink-skin production: e.g. Norway introduced a complete closer in January 2018, being once the world’s grater producer. Such protective measures are already introduced in 11 European states. 

Among specific factors eco-agro-products shall be mentioned as a fast-growing and very attractive alternative to traditional sector’s share. That kind of production is not an easy option for farmers: several requirements shall be fulfilled concerning the restrictive use of pesticide and fertilizers, breeding areas, etc. But in several EU states the trend is visible: e.g. in Denmark the share of eco-goods was over 13% in 2017, which is the greatest in the world; Sweden and Switzerland are quite behind with about 9%.

Export of eco-goods in Denmark is at the level of about EUR400 mln with an increase by over 20% during a year (!) and the country’s eco-export almost doubled during last four years. About 10% of Danish farmers (or about 38,6 thousand) are certified as eco-farmers. However, other countries in the world are even in better off: eco-land share in national production is higher in Lichtenstein and Samoa with about 40%, Austria with 24% and Sweden with 14%.       

Negative effect on nature and climate

The general message is clear: for the global population to have quality food without damaging climate conditions and environment, the agro-sector has to change drastically its “modus vivendi” and peoples’ consumption patterns to be controlled. 

That was the conclusion of the healthy diet commission in January 2019, stating that in order to fed “about 10 billion people globally by 2050 with healthy and sustainable diet” will need improved food production, changing eating habits and reducing food waste. The “ideal plate” consists mainly of “vegetables, fruits, whole grains, legumes, nuts, and unsaturated oils”, including a moderate amount of seafood and poultry, as well as “no or a low quantity of red meat, processed meat, added sugar, refined grains, and starchy vegetables”. 

Source: https://foodinsight.org/eat-lancet-commission-study-diet-sustainable-red-meat/ 

Each year, one-third of all food produced in the world for human consumption never reached the consumer’s table; e.g. an average American family tosses out about 0,45 kg of food per year, which amounts to millions of tons of wasted food.

Modern agriculture may not be perfect, but current agricultural technologies do have many positive attributes that can help to abate potential adverse environmental impacts from food production. From an overall perspective it is encouraging to see that global experts agree on the need for dietary guidance to be flexible and tailored to different preferences, cultures and food availabilities.

Reference to: https://eatforum.org/eat-lancet-commission/

According to UN FAO, it is potentially more sustainable to reduce food waste than to increase production (!); food waste in industrialized states is about 40 % and is equal to the size of food losses in developing countries. However, food waste in the former is generally in retail shops while in the latter it is in manufacturing sector due to the lack of adequate infrastructures.  Thus, in Denmark about 260 thousand tons of food (which could be otherwise still consumed or effectively used) is wasted yearly only in households.

Generally, food waste volumes of about 700 thousand tons are divided in Denmark (as an example of a highly developed EU state) between a primary production sector (about 100 thousand tons) and food processing sector (about 130 thousand tons); the rest is wasted in numerous service sectors, including restaurants and hotels.

From an economic point of view, food waste in Denmark “costs” about EUR 2 bn/year, including taxes and VAT, which is a great resource for an additional budget allocation if wastes are properly used.    

Agro-sector in the EU states is quite ineffective and slowly reducing its potentials: no wonder, a great deal of the EU budget (or about EUR40 bn yearly) is directed to various forms of support for agriculture. Without these huge “injections” the sector wouldn’t survive in modern globalisation and free-trade structures. Politicians in the member state and in the Baltic countries are facing with tough decisions on the perspective role of agro-sector in national growth patterns, employment and quality of life.