Although, in these modern times, the farmer still wears clogs, this does not necessarily mean that his progress has remained behind. A few years ago, there was an advertisement on Dutch TV for a lottery. The camera zoomed in on the weathered face of a somewhat elderly dairy farmer who was milking his cows. With an easy movement, he swung the milk churn onto a trailer, and then - with a satisfied smile - tipped his muddy boots against the wheel of the car which was pulling the trailer: a brand new Ferrari. He waved happily to his neighbor, who had chosen a Porsche.
This advertisement is the cause of much hilarity in rural parts. They know there that the Dutch dairy farmer does not need to win the lottery to become a millionaire. This has already been arranged for them by Brussels. A more than generous subsidizing policy and strong protective measures against competition from outside Europe ensure that the majority of European farmers are not commercially threatened in any way whatsoever.
In spite of this, farmers don’t have it easy, which is why they complain so much. You could also say: farmers complain a lot, which is why they don’t have it easy. As is so often the case, the truth lies somewhere in the middle. As entrepreneur, the farmer is not to be envied; whilst he calls himself an entrepreneur, he is not really one. All risks connected to normal entrepreneurship have been eliminated in the case of the farmer. There are no market risks because the minimum price for agricultural products has been set by the General Agricultural Policy, which is lucrative. Unexpected problems, caused by the weather, for example, have been covered. When the potato crop seems threatened by a little too much rain, the farmer simply needs to whine a little and millions of Euros come rolling from The Hague to the farmsteads. When a worrying disease threatens his livestock, financial compensation is readily available from Brussels and The Hague.
Farmers, themselves, do not need to take any action. Organisations are in place, which have been looking after agricultural interests perfectly well up to now. These organisations are manned by professionals who have turned complaining into an extremely lucrative business. As professional complainers, they fully avail of the lack of knowledge of modern agriculture among the general populace and politicians.
At the end of October, beginning of November 1998, a little more rain than usual fell in The Netherlands. Very soon, pictures started appearing on Dutch TV of flooded fields in the province of Groningen, where farmers watched in despair as their harvest drowned. Within a few days, the Minister of Agriculture and the Prime Minister were flown into the disaster area to personally wade through the mud, wearing rubber boots. Politicians and viewers surveyed this natural disaster with horror. What they were actually witnessing was a clever piece of acting behind which a failed financial gamble was concealed.
The Dutch climate is not totally suited to agriculture. Summers are relatively short and this means that harvests should be indoors mostly around the end of September. The fact that the potatoes were a month longer in the ground in 1998 had little to do with the lovely Autumn weather, but had more to do with rising prices on futures markets. This is why the farmers left their potatoes in the ground, in the hope of better prices later in the season.
That dream was unpleasantly interrupted when the rain came. The impact was felt most in Groningen. The land there is mainly heavy sea clay, very slick soil which is, in fact, totally unsuited to the type of fruit that ripens under the ground.
Wheat, grain, cauliflower, corn, even sunflowers can still be grown there, because the part to be harvested grows above ground. But carrots and onions should not be grown in this type of soil and certainly not potatoes! This is asking for trouble, even in normal weather conditions.
The wet Autumn of 1998 followed, and the bill was presented to the tax payer in the form of financial compensations which rose to almost 300 million Euros for farmers and market gardeners. A large portion went to the potato growers in the slick soil of Groningen. In itself, payment of financial compensation is a dubious matter. What was depicted as a natural disaster was, if you look closely, down to a question of “it’s your own fault, solve it yourself”. On top of this, failed harvests are part of normal entrepreneurial risks. Neither Heineken nor Unilever are paid damages after a wet, cold Summer because the sale of beer and ice cream was disappointing.
But Agricultural leaders consider this compensation the most normal thing in the world, and so do we, the general public. Without a murmur, we accept that money is available for disappointments in the agricultural sector.
The amount paid in compensation is also disputable. The amount of compensation is calculated as follows. The basis is normally the market value at the time of harvesting. The price of potatoes on the futures market was higher than normal in the Autumn of 1998. The surplus of water caused the prices to shoot up further because market speculators expected a shortage of potatoes due to the failed harvests. The higher the prices, the higher the compensation paid.
Something similar occurred during the outbreak of Swine Flu. To prevent the disease spreading, millions of pigs and piglets had to be slaughtered. This large-scaled slaughter led to an alarming shortage of piglets, which caused the price to soar. And with it, the compensations for pig farmers who were forced to get rid of their herds, because in pig farming, also, the amount of damages paid is based on the current market prices.
The new manure law forms a threat mainly to pig and poultry farmers. Again they demand – and receive – compensation. Some 700 million Euros has been reserved for them. But the agricultural leaders find this a pittance; the nerve of them! Since 1984, efforts have been made to make farmers see that overproduction of manure and the damaging effects of it for the environment should be curtailed. But the farmers just carried on regardless.
Now they have been forced to see the facts, the sector not only acts the innocent, but also shouts from the rooftops and demands full compensation from the courts, mostly with success. However, this must go wrong somehow, somewhere, at some stage further in the procedure.
The reasoning of agricultural leaders is comparable to a car driver who is confronted for the first time with new speed limits. This is as follows: he goes to court demanding compensation based on the argument that before the speed limits were introduced, he could decide himself how fast he could drive. That right is now unilaterally being denied to him via measures enforced by the Authorities. This is in conflict with human rights and he suffers damages because now he can no longer drive as fast as he used to. So he is entitled to financial compensation.
The billions of Euros which are paid out every now and then to farmers as compensation for “disasters” fade in comparison with the amounts which have been structurally flowing to the farming community during the last decennia in the form of price support. In addition, there are environmental costs, which are paid by non-farmers, even though they have been caused by the agricultural sector. These costs are concealed, for example, in the price of drinking water that first needs to be cleansed before it can enter the tap. Research has shown that these hidden production costs amount to 2,1 billion Euros annually in The Netherlands.
According to research at the University of Groningen, the Dutch farmer receives around 45,000 Euros per year in direct and indirect subsidies. Without these subsidies, a large portion of the Dutch agricultural sector simply has no chance of survival, from a purely economic viewpoint. Put more strongly: the Dutch farmer is not an entrepreneur, but a welfare recipient, whose right to welfare benefit has never been questioned. And furthermore, that right is neverending.
The principle of a free market has made an appearance everywhere in society. It is not completely evident why the agricultural sector should be an exception to this. The fact that a Grandfather started a farm and that it would be a shame if his grandson would have to discontinue it, is a very poor argument. Much larger Dutch companies such as Philips, Hoogovens and Fokker have carried out stringent cutbacks over the last years. The shipbuilding and textile industries have as good as disappeared because they could not compete with others. That led to tens of thousands of dismissals, which everyone deplored, but it happened.
A nation needs to eat and it is useful if production of the necessary food takes place nearby. It is especially good when the natural resources required for this purpose were able to produce more than was required for the home consumption. That surplus production could be sold to neighbouring countries and with the money earned from this, items could be purchased that you could not or would not produce yourself.
80% to 90% of Dutch agricultural produce is destined for export. On the global list of agricultural exporters, The Netherlands takes third place, after the US and France. This gives the impression that we have an enormous source of help for agricultural produce, which is in fact correct.
But that source of help is not a natural one! The artificial buoy on which Dutch agriculture floats is known as subsidy. On the face of it, we make buckets of money this way. Our trading balance is positive because we export more than we import and agriculture contributes importantly to this. Agricultural leaders even attribute the total trading surplus to their sector, but that is seriously exaggerated.
One could even wonder if that contribution is actually positive in terms of money. In the calculations by which the sector tries to prove its contribution to the national economy, two factors are always omitted: environmental costs and subsidies. More and more question marks are being placed, in steadily growing circles, by this creative form of bookkeeping.
This is why farmers don’t have it easy and why they complain so much in advance.