Over the past two decades the number of farmers has steadily decreased by about two percent per year. This percentage has increased over the past five years. On the one hand, more farmers than ever before decided to emigrate, on the other hand more farmers took early retirement.
The remaining farmers are not to be envied and find themselves faced with an impossible choice. Roughly speaking, the Dutch agricultural sector can be divided into three categories. Looking at the status ladder within the sector, we see the ‘large’ farmers on the top rungs. These are the farmers who keep around a hundred and fifty or more cows. After this, there is a huge gap and then come the ‘small farmers’. These are dairy farmers who have around thirty cows and who also have another job besides. These part-time farmers are regarded with a great deal of pity within the sector as they do not really count.
Then there are farmers who try to return to the original way of farming. They carry out their profession as it was meant to be: in an integrated way. This means a combination of cattle and crop farming, whereby one branch fits seamlessly with the other one. They are regarded as losers within the sector, as this method is neither one thing nor the other.
The Dutch agricultural sector is preparing for a new round of discussions about the future of farming. The European Agricultural Policy is badly in need of reform, even if it was only to keep it affordable in the future. A new round of negotiations is imminent about further flexibility of world trade. In order to accommodate real flexibility, further decrease of the price support for European farmers is inevitable.
The admittance of a number of Central and East European countries to the European Union also plays a role here. If the farmers from those countries were to be treated in line with the current subsidy system, European financial reserves would be emptied in one go and would stay that way for many years. So farmers from the new member states will receive considerably less financial support than their colleagues in the ‘old’ Europe. The argument used to defend this discrimination between groups of nations is as follows: they received no support before they joined, so why should we give it to them now?
The agricultural sector presently costs the European taxpayer 45 billion Euros a year. Interesting to note is that when the Dutch national pride, the airplane manufacturer Fokker was teetering on the brink of disaster, the company received estate credit of 7 million Euros a day. The minister of Economy at the time considered – in the light of the perspective for the company – one month’s credit more than enough. In that year, the Dutch dairy farming industry received 800 million Euros in the form of export subsidies. That is more than 2 million Euros per day. This stream of subsidies has been flowing for decades and still continues, albeit it in slightly moderated form.
And so, after a heavy meal the Chairman of the Board of Fokker dreamt of airplanes that yielded milk, whilst the farmers considered themselves lucky that cows couldn’t fly.
Fact is that the Dutch dairy farming industry has embarked on a glider flight which will undoubtedly end in an extremely hard landing. The subsidies, which enable the milk prices for European farmers to remain artificially high need to be decreased to a level whereby the European price and global market prices have been brought into line. This new balance in prices appears to be well under the current Dutch cost price.
Just as formerly in the case of the grain farmers, income subsidies will have to be introduced as compensation for the disappearing price subsidies. At least, that is what the farmers think. Dutch dairy farmers will not be helped much by this, however, because these subsidies are hectare-related. The more land a farmer has, the higher the income subsidy. This system is disadvantageous to the Dutch dairy farmer who has relatively many cows on few hectares. This is why the sector pleads for a link to the amount of milk produced, or, if necessary to the number of cows. This plea is in vain; because this sort of system is a covered form of price support, which is exactly what people want to do away with.
In order to qualify for an income subsidy, farmers will need to reciprocate in the form of landscape management and nature conservation. This is also not to the advantage of the Dutch dairy farmers. The extremely expensive land consolidation which was implemented to increase production per hectare as much as possible has transfigured large portions of the countryside into large scaled monotonous grass factories. Winding ditches, with their rows of willow trees were considered a hindrance to progress at the time and had to disappear. They now seem to be worth their weight in gold.  
The possibilities of compensating imminent price drops via increase in productivity are as good as non-existent for the Dutch dairy farming industry. European dairy farmers are now subject to production limitations (quotas). This has nothing to do with matching supply and demand; it is mainly intended to control the costs of compensation of the price difference between the European milk price and the global market price.  As these two prices come more into line, quotas will have much less significance. The inevitable abolishment of quotas, however, will be of little help to Dutch dairy farmers.
It is the easiest thing in the world to keep a hundred cows on one hectare of land. After all, cattle fodder can be bought anywhere. But besides milk, a cow also produces manure and it is impossible to get rid of the manure produced by a hundred cows on one hectare within the norms of the new manure policy. Considering the European norms applying to the environment, The Netherlands is, quite simply too small for large increase in production.
This environmental hurdle could be taken by introduction of hormones into cattle fodder. The BST hormone yields an increased productivity of about 15% without an equal increase in manure production. But this idea is also not realistic: use of BST is prohibited in Europe. And even if it was permitted, it would not help much. Although progress is slow, a growing group of consumers wants nothing to do with this sort of ‘assistance’ in food production.
The sector feels it can counter these limitations with further scale increase as a means to cost reduction. Some leaders fear that in that process, of the 35,000 dairy farmers, less than 50% will survive. That is, assuming the process can even get off to a start. Further scale increase, whereby with the help of milking robots and a computerized feeding system, about 300 cows can be kept by a farmer, is technically possible. But it also entails a further mutilation of the countryside: endless tundra of grass, with to the right and left of the horizon a farm surrounded by a nest of unsightly windmills. After all one can live from the wind nowadays!
It would seem a logical scenario for an effective approach to the problems, but in fact it is not. The various subdivisions in the primary agricultural sector will be weakened rather than strengthened in the envisaged restructuring and clean-up operations. The future lies not with the hypermodern mammoth industries, but rather with the smaller farms people want to do away with.
Up to recently farmers in the affected subdivisions – pig farmers and market gardeners – were not unduly worried by a crisis. Nobody knows better than they the rhythm of the pig cycle and the rhythm of the tomato tango. High prices for a certain product have an irresistible attraction for colleagues who also want to try it. The result is overproduction paired with inevitable price drops. In the past, these low prices led to a natural selection. The better farmers and market gardeners switched over to a higher productivity increase and the lesser brothers – wherever in the world – competed at market costs.  Balance was restored, prices rose again, and during the process another number of competitors was forced out of the market. This was an iron rule which up to now not only enabled the agricultural sector to resist any crisis, but also to emerge the stronger from it.
The sector wishes to reintroduce this tried and trusted method but differently this time. Clean-up operations which formerly formed part of a natural process would need a helping hand, as speed is of the essence. In factory farming – pigs, poultry – a similar action will also need to be taken. Only there, the plans for manure are being used to modernize the sector. The more than 700 million Euros which have been reserved for execution of the manure policy will be used mainly for further scale increase. The reasoning behind this is that the manure surplus on larger farms, which are technically better equipped, will be much lower than on the smaller, older farms. If the more antiquated farms are removed from the market and the larger ones are enlarged and strengthened, the manure problem will resolve itself. Furthermore an approach like this will have the added effect that the remaining farms will have a stronger basis in the already overcrowded market. But the old tried and trusted remedy will no longer be effective.
The Dutch agricultural and market gardening industry thanked its extremely strong position (up to recently) to the combination of know-how and inset of personal labor and capital. The know-how was used to reduce the costs per product unit through specialization. Compensation for personal labor formed the variable closing entry by which the profit and loss account could be closed positively even in bad years. If a year was somewhat less profitable, the farmer or market gardener made do with less income and made good the difference via his own capital.
Further cost advantages can be reached through scale increase, but the same scale increase renders the agro businesses extremely vulnerable. The larger farms require relatively large amounts of external capital and workforce. In this way a strategic, expendable variable debit entry becomes a static permanent one. An employee who is paid less than the originally agreed salary will protest and leave. Financiers who cannot collect interest and repayments on their loans will withdraw their services after a while.  This development is already obvious from the ‘for sale’ notices in trade journals for pig farms and market gardening companies. Whereas, in the past, mainly smaller industries were concerned here, increasingly modern, large scaled companies are now being advertised by the agricultural auctioneering business.
There is another reason why a further scale increase of the primary agricultural industries will affect the sector like a boomerang. Scale increase leads to more production of the same product for less cost. The European consumer has however become very spoiled and is no longer interested in ‘more of the same’. Variety is what he wants, not volume. An additional demand is that the package being offered has been produced as biologically as possible. Even at this point in time, the Dutch agricultural sector is incapable of meeting this newest and increasingly important demand by the consumers. As a result of earlier productivity improvements the sector produces in a way that appears to be industrial. Further scale increase will worsen this and the sector will not earn its way into, but straight out of the market. Besides, with the formation of mega industries, the countryside - of which precious little remains - is being stripped of its last bit of variety.  
It is the so called marginal industries who have a future. Unhindered by sky high fixed financial and personnel costs, they struggle through each crisis in the market. The small farmer keeps his pigs in draughty pens without concrete floors and other conveniences that are specially designed to please the farmer. A pig actually LIKES to shiver in mud: mud that contains potato peels and moldy bread with soup and porridge remains for dessert.  
Hear their grunts of content!
An amateur market gardener wants nothing to do with such modernities as computerized cultivation on beds of fiberglass wool, whereby plants have been attached to an infusion. The amateur market gardener’s fingernails, in contrast to those of his progressive colleague, are still black rimmed. That is the mark of his trade, come about by digging a hole in the soil with his fingers in which to sow his plants.
Taste the difference!
The fact that the amateur market gardener still grows his products in the soil is the very reason he needs to vary. When the same crops have been grown on the same piece of land for too long, nature will retaliate in the form of all sorts of soil diseases which will have a negative influence on production and the quality of the crops. Up to recently, this was controlled by a large range of pesticides. The majority of these have by now been prohibited or they are no longer effective. And so the wheel has turned full circle: crop rotation is the only way, just as market gardening was done in the not so distant past. To avoid price risks, a little bit of everything: a little patch of lettuce, cauliflower, spinach and endive. For certainty’s sake two greenhouses are kept for grapes and to cover that risk, also some plums and peaches.  
Now we’re talking about workmanship and knowledge of one’s trade!
Paradoxically enough, the old fashioned market gardener or pig farmer is probably marginally, but actually more modern than his large scaled, extremely specialized, high tech-aided colleague. His method of production is in complete accordance with the idealistic ideas a growing number of consumers uphold about responsible agricultural production. Furthermore, this group is prepared to pay for it. But the lesser brothers are being forced to disappear and make way for progress.

And in this way the agricultural sector is reorganizing itself out of business and out of a future.