Advisory report
RLG 04/4a: More Value
Advisory report on agriculture and rural areas in a European perspective - November 2004
Context and summary of the advice
Rationale for the advice
The common European market has been of great and positive importance to the agricultural sector in the Netherlands. After World War II, food production and improvement of the income situation of Dutch farmers had been the main objective of the Netherlands and the EU. With the help of the European Community CAP, agriculture developed into an efficient and present-day production branch whereby indicators were increased in scale and specialisation. This fitted in with the general trend within the economy.
The success of these developments also had drawbacks that have increasingly been seen as a problem since the 1980's. Modern and efficient agriculture practices proved to have negative impacts on nature and the environment, and also on water, landscape and animal welfare. The agricultural sector became more and more detached from the area where it operated. For many others, the rural area had more value than mere food production. This gave tensions. Management of the values of the rural area had lost its obviousness. This caused the Council great concern.
This was also the reason that, in 2003, the Council for the Rural Area gave advice on its own initiative on the latest reform proposals put forward by the CAP (RLG 03/4). This advice also held out the prospect that the Council would advise on the future European Agricultural and Rural Policies in a later stage. With this advice, the Council gives substance to this vision.
The Council formulated the following questions to define the problem:
What role can the Dutch Government play in motivating and supporting the stakeholders to offer a durable perspective to the rural area by their own force? How can liberalisation and fiercer competition together keep pace with sustainable development on the regional and local level? How do these developments relate to the (future) European agricultural and rural policies?
This advice is not concentrated on the current policy memorandums and proposals for regulations that are now published, but on the long term. The advice is broadly based and strategic, and offers concepts that put a different complexion on issues about agriculture and the rural area. The Council for the Rural Area and the Advisory Council of the Ministry of Housing, Spatial Planning and the Environment independently prepared an advice on their own initiative on agriculture and the rural area. The Advisory Council takes a spatial perspective as its point of departure; the Council for the Rural Area works from a European perspective. With these different scopes, both Councils came to a comparable advice: it is paramount to pay renewed attention to the relation between agriculture and the rural area. Reinforcing this relation will give added value.
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Analysis
The negative effects caused by the developments after World War II urgently call for a solution. Despite significant progress in the field of the environment, a further shift to sustainable agriculture is required. In addition, agriculture has become very expensive. Subsidized agriculture in the EU caused trade and political problems with other important actors on the world market. The role of the developing countries has grown since the last WTO round. It is expected that agricultural subsidies will dwindle and probably drastically be reorganised. Markets are opening up. The pressure for income in the primary sector will increase. The agricultural sector will be orientated more on the market than to date, and will be trying to get a market advantage by making the production sustainable. On the European level, this has resulted in reforming the Common Agricultural Policy (CAP) and in putting more emphasis on policies on the rural area. These reforms fit in with a general vitalisation and sustainability of the European economy, as was indicated in the Lisbon and Gothenburg targets. In 2003, it was decided to continue to reform the CAP: production-related support is changed into decoupled support based on what has been recently produced. The policy that had been developed for the rural area as a whole will play a more important part in CAP. Work is already in progress to prepare for the 2007-2013 European rural policy. The financial perspective for this period is already known. In that period, emphasis will be placed on sustainable growth and protection, and the management of natural resources. The trimmed-down agricultural subsidies fall in the latter category.
In the Netherlands, concentration and expansion continue at several levels within the chain. A diversity of developments is taking place in the markets for agricultural products and food. Many companies are opting for extension combined with specialisation. Other primary producers are decreasing their agro-activities or having a try at broadening their activities. These developments in agro production are insufficiently brought in line with the demands of the surroundings and with other developments in the rural area.
Solution
The Council for the Rural Area sees a solution in a better adjustment between agriculture and the rural area, and the prospects for this are shown in this advice. Better adjustment has two important effects: Dutch agriculture can contribute towards achieving European aims for agriculture, the environment and for regional policy, and can manage and better develop the wide range of cultural, economic and ecologic capital that the rural area has. Moreover, a better harmonisation could firmly establish the justification of agriculture; it would make the social costs and the added value more visible. This is necessary to compensate the decreasing government subsidies. It is therefore paramount that Dutch agriculture orientates on the demand for high-quality forms of production that are produced sustainable. This implies that certification, guarantees and differentiation at the chain level must be points of special agro-political interest. Because of the managerial function of agriculture, non-trade concerns and the protection of land-related production must be the basis of this.
In the long term, Dutch agriculture will base its rationale also on the necessity to stabilise the world's food production, on an increased regionalisation of the chain, and on interrelation and synergy of the primary sector with other economic and societal activities at the regional level.
The Council believes that the basis for these solutions is the restoration of the connections: between agriculture and society, between the rural and the urban areas, and between the producer and the consumer. The Council calls the economic aspiration that goes with it:: economy of care.
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In the advice, the Council outlined ten movements from practice that are grafted onto a careful handling of the wide range of ecologic, social, economic and cultural capital. These positive developments indicate separately but especially collectively that utilization and further development of this multi-purpose capital is rooted in societal movements, and is reflected in the values and worries that are so broadly shared.
The positive developments outlined in the advice are faced with impediments by government policies. Other ways of approach will be required to counter the current friction between policy and practice. There are initiatives enough, rural projects are being developed, but they do not get sufficiently off the ground. The knowledge institutions are not able to reach compatible insights and facts to support new developments. Dutch agricultural and rural policies do not offer enough direction, framework or elbowroom (for experiments). Coordination with the European policy is inadequate. This makes that agriculture is insufficiently adapted to the demands of the surroundings, and that an integral rural policy in the Rural Development Plan (POP) comes off the ground insufficiently. Hence the Council believes that there must be more room for the positive developments created by the regions and for individual entrepreneurship. This requires better directing by the European Union and the government, and better harmonisation between both policy levels.
Perspective on agricultural and rural policy
On the basis of the analysis in this advisory report the council draws a perspective of what is needed on the European and national level:
European level
Sustainability and economic vitalisation must be encouraged in various ways. Sustainability and economic vitalisation must therefore be a part of the European rural policy. Thereby integrating the Lisbon and Gothenburg agendas. To achieve this, Europe needs a rural agenda to encourage knowledge and innovation, into which sustainability is wholly integrated. This rural agenda must contain options for rural areas that have different pressures of urbanization. The basis of this rural agenda must be formed by events that take place in practice. The items of the agenda must therefore give ample room for local collaborations (intermediary structures). This is because it is in practice that social, economic and ecologic aspects of the rural area are connected in a unique and specific way. The regional differences in agricultural systems and in the types of nature and landscapes must form the basis for taking and implementing measures. Non-trade concerns , protection of land-related agriculture and the rural agenda must be the foundation of the global attitude.
National level
The Netherlands will attune its rural policy to the European rural agenda and to measures in other very urbanized rural areas in Europe. The Dutch government will proactively prepare new European regulations, and adopt a reactive attitude when implementing them.
The European Union and the Dutch government will offer the provincial government clear starting-points, directives and frameworks. The provincial government will be the contact for the region. In the field of the civil service and directing the knowledge institutes, the Government will also see to it that the European policy can be implemented resolutely. As to the regulations, the Government will allow room for economic revitalisation and preservation of the rural area. Stable room will be given to local initiatives and collaborations (intermediary structures) and to (new) economic activities that supplement the existing (agricultural) industriousness. Irrespective of the selected scale and specialisation, the agricultural sector will be orientated towards the wishes and demands coming from society, and also those that come from the region. The government will offer frameworks as well as room for experiments for a broadened agriculture, especially in areas where extension is less obvious. The government will take care of monitoring the effects of the selected implementation of European policy, and will swiftly and adequately act on any unintended and negative effects. The government will also create elbowroom for entrepreneurship and differentiation in ways of management, on the basis of "freedom in restraint'. The agricultural sector will concentrate on the new situation and try to find its place in the chain, the region and society. Due to dwindling government subsidies, incomes from agriculture will be generated from the market, and also more and more from delivering products and societal service to the regional market.
Priorities and results in the future
Until 2007, the Government will work on the implementation of the recent CAP reforms by further preservation of agriculture and adaptations of the first Rural Development Plan (POP 1).
Until 2007, the following points will require special attention:
• EU, government and provincial governments together with society are to develop a coherent, innovative and sustainable strategy for rural development. Supplementary to the National Agenda for a Living Countryside, this strategy is to give elbowroom for regional and local collaborations.
• The government, together with other authorities, the sector and societal organisations, is to develop a viewpoint on land-related agriculture. This viewpoint is to give direction, and will be in line with the European Agricultural Policy.
• The government is to develop a solid system to compensate for societal services in the way the Council already advised earlier in its advice on Green Services (RLG 02/7 'Green Services: from Direct Support to Rural Enterprise).
In the period 2007 to 2013, a number of results must have been achieved. It will be the time of reaping the harvest:
• Agriculture will be carried out with responsibility for the surroundings. Societal costs will be internalised.
• Exchange of knowledge between local collaborations and on the European and international levels will be reinforced.
• The new rural policy will be flexibly organised and as such adjusted to the differences in urbanisation level, nature values and possible unwanted depopulation of the rural area.
• Agro-environmental measures, such as the management of the lands and nature, will be a compulsory part of operational management.
• A compensation system for providing societal services and management has already been developed. The funds will come from various - consolidated - sources.
• The interrelated approach of functions in the rural area will consolidate the measures mutually
In de period after 2013, the following will be applicable to agriculture and the rural area:
• Despite the rapid diminution in EU subsidies for agriculture, the remaining agriculture will be economically vital, sustainable and connected with the regional economy and society.
• Further decentralisation will make that the responsibility for the implementation of rural policy rests much more with the regional and local level than is the case now.
There will be synergy on the regional level between various economic and societal activities. The wide range of capital will be sustainable employed and developed here.