Dutch agriculture: increase in scale and lower incomes

26/10/2010 15:00

The number of farms and horticultural businesses in the Netherlands decreased substantially in the period 1995-2009. Labour volume in this sector and agricultural income also fell. In spite of this, production rose as a result of advantages of scale and new agricultural technology.

Developments in agriculture and horticulture

Developments in agriculture and horticulture

Fewer businesses, higher production

The number of farms and horticulture businesses fell by 36 percent between 1995 and 2009, to 73 thousand. This was accompanied by a 20 percent decrease in labour volume in this sector. In spite of this, the production volume rose by 15 percent as a result of advantages of scale and new farming technology.

Farms and businesses in this sector have increased in size. An average business had 50 percent more land in 2009 than in 1995. In spite of the increase in production, total agricultural income in the Netherlands fell by 27 percent as a result of unfavourable developments in the prices of agricultural and horticultural products.

Production in agriculture and horticulture

Production in agriculture and horticulture

Higher production, lower income

Dutch agricultural production was worth 18.8 billion euro in 1995. In 2009 this was 19 percent higher, at 22.5 billion euro. Total agricultural income amounted to around 6.5 billion euro in 1995, and 4.7 billion euro in 2009: a reduction of 27 percent. It should be noted that the Dutch economy was in recession in 2009.

The income per working year in agriculture and horticulture is subject to significant fluctuations. Sharp falls alternate with years in which farm incomes rise substantially. On average, agricultural income has decreased by 0.1 percent per working year in the last 15 years, while for people employed in other sectors of the economy wages have risen in the same period.

Higher costs and only small price increases

One of the reasons for the low agricultural income is the unfavourable price developments of agricultural products as a result of the increasing supply on global markets. In addition, agriculture and horticulture also suffered from the increase in the value of the euro against the dollar, and the economic recession which started in 2008. Higher costs of animal feed and natural gas, in combination with only small increases in market prices for their products have put additional extra pressure on farmers’ incomes.

Income per working year and share of agriculture in GDP

Income per working year and share of agriculture in GDP

Smaller share for agriculture in the economy

Partly because of the fall in agricultural income, the significance of agriculture and horticulture in the Dutch economy has decreased. In 1995 agriculture and horticulture still  accounted for 3.2 percent of the gross domestic product (GDP); in 2009 this had dropped to 1.4 percent of GDP.

Ron van der Wal and Wim de Rooij