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Finnish Agriculture and Food Sector 2016/17 Natural resources and bioeconomy studies 49/2017 Finnish agriculture and food sector 2016/17 Jyrki Niemi and Minna Väre (eds.) Natural resources and bioeconomy studies 49/2017 Finnish agriculture and food sector 2016/17 Jyrki Niemi and Minna Väre (eds.) Natural Resources Institute Finland, Helsinki 2017 Report drawn up by: Jansik Csaba chapters 1.3, 1.4 Karhula Timo chapters 2.2, 2.4, 3 Knuuttila Marja chapters 1.1, 1.2 Koikkalainen Kauko chapter 5 Koivisto Anu chapter 2.3 Latukka Arto chapter 4.3 Miettinen Antti chapter 5 Mäkilä Outi layout Niemi Jarkko chapter 2.4 Niemi Jyrki chapters 2.1, 3, editor Rantala Olli chapter 4.2 Sulkava Mika chapter 4.3 Tauriainen Jukka chapter 4.2 Valtiala Juho chapters 2.1, 3 Väre Minna chapter 4.1, editor ISBN: 978-952-326-444-1 (Print) ISBN: 978-952-326-445-8 (Online) ISSN 2342-7647 (Print) ISSN 2342-7639 (Online) URN: http://urn.fi/URN:ISBN:978-952-326-445-8 Copyright: Natural Resources Institute Finland (Luke) Authors: Jyrki Niemi and Minna Väre (eds.) Publisher: Natural Resources Institute Finland (Luke), Helsinki 2017 Year of publication: 2017 Cover photo: Ulla Jauhiainen/Luke Printed at and publication sold by: Juvenes Print, http://luke.juvenesprint.fi Natural resources and bioeconomy studies 49/2017 Foreword The annual review of agriculture and the food industry in Finland presents a current outlook for the sectors covered and the most recent research data in a single volume. It provides comprehensive information on the operating environment in agriculture and the food sector, the development of the agricultural and food markets, agricultural pol- icy, the structural development and economic situation in agriculture, and the interac- tion between agriculture and the environment. The special themes of the review at hand explore the competitiveness of the Finnish food chain, the implications of the UK leaving the EU for the agriculture and food mar- kets, the implementation of policy measures related to risk management in agriculture, and consumers' interest in animal welfare. We hope our readers in and outside Finland will find this report useful. Helsinki, 8 June 2017 Jyrki Niemi and Minna Väre Keywords: agriculture and food markets, production, consumption, income, profitabil- ity, agricultural policy, the environment. 3 Natural resources and bioeconomy studies 49/2017 Content 1. Operating environment of agriculture ............................................................. 5 1.1. Agriculture and the food sector in the national economy .............................. 5 1.2. Food consumption and consumer prices .......................................................... 10 1.3. Retail trade ............................................................................................................ 14 1.4. Food industry ....................................................................................................... 15 1.5. Foreign trade ......................................................................................................... 16 2. Agricultural and food markets........................................................................... 22 2.1. Trends on the world market ............................................................................... 22 2.2. Arable crops .......................................................................................................... 24 2.3. Horticultural production ..................................................................................... 28 2.4. Livestock production ........................................................................................... 33 3. Agricultural policy ............................................................................................... 41 3.1. Common agricultural policy of the EU ............................................................. 41 3.2. Payments of EU agricultural support in Finland ............................................. 45 3.3. National aid ........................................................................................................... 48 3.4. Structural support for agriculture and farm relief services .......................... 50 4. Structural development and economic situation of agriculture ................. 54 4.1. Structural development of agriculture .............................................................. 54 4.2. Development of results and profitability in agriculture and horticulture ... 57 4.3. Overall level of agricultural income .................................................................. 63 5. Agriculture and the environment ...................................................................... 69 5.1. Environmental impacts of agriculture .............................................................. 69 5.2. Agri-environmental regulation .......................................................................... 72 5.3. Guidelines for water protection ......................................................................... 74 5.4. Discussion topics and future perspectives ....................................................... 76 6. Sources .................................................................................................................... 80 Special topics: Competitiveness of the food chain can only be improved by a change of attitude .....18 Consumers interested in animal welfare ........................................................................... 38 Consequences of Brexit on the EU agriculture and food market………….....................51 Market margins and our American cousin..........................................................................66 4 Natural resources and bioeconomy studies 49/2017 1. Operating environment of agriculture 1.1. Agriculture and the food Consumer expenditure on foodstuffs and sector in the national beverages, € million. % 2014 2015 economy change Total 23,334 23,298 0 In Finland, the total annual consumption 12,445 12,288 -1 expenditure on food and beverages is Foodstuffs* €23.3 billion. Food and non-alcoholic bev- Non-alcoholic beverages* 1,292 1,288 0 erages consumed at home account for Alcoholic beverages* 3,414 3,319 -3 almost 60% of this at €13.6 billion. As living standards have risen, the Catering services 6,183 6,403 4 (eating out) share of food and non-alcoholic beverages consumed at home in the total consump- *Food consumed at home tion expenditure of Finnish households Source: Statistics Finland, National accounts. has decreased to about the same level as in the old EU countries. In 2015, this share was 12.4%, slightly down from the previ- Share of foodstuffs and non-alcoholic beverages ous year. in consumer expenditure of households, %. When alcoholic beverages and eating 2014 2015 out are also included, food accounts for EU28 12.4 12.3 21.3% of household consumption expendi- EU15 11.8 11.7 ture. The share of eating out (5.9%) has Belgium 13.1 13.3 remained fairly constant in recent years. It 11.5 11.4 is smaller than the share in the old EU Denmark countries (7%). Estonia 21.0 20.7 Finland 12.7 12.4 Agriculture and horticulture France 13.3 13.3 Germany 10.5 10.5 According to national accounts, the agri- Greece 16.4 16.6 cultural and horticultural output at the 14.3 14.3 basic price was €4.4 billion in 2015. Output Italy at the basic price went down 7.1% on the Norway 11.9 11.9 previous year. When all subsidies on pro- Portugal 17.3 17.0 duction are included, the output was €6 Sweden 12.4 12.5 billion. United Kingdom 8.7 8.4 The agricultural use of intermediate Source: Eurostat National accounts. products, i.e. one-off goods and services acquired, was €3.3 billion. Intermediate The agricultural and horticultural val- products went down 2% on the previous ue added at the basic price was €1.1 bil- year. The main intermediate products are lion. This is down €0.3 billion, or 20.1% on fertilisers, feedstuffs, plant protection the previous year. The share of agriculture products, electricity, transport fuels and and horticulture of the total value added various services that support production. was 0.6%, which is less than the previous year. In addition to weather conditions 5 Natural resources and bioeconomy studies 49/2017 during the growing season, fluctuations in Domestic wholesale and retail trade product and input prices influence the in foodstuffs financial out-turn of these sectors more than before. The whole sale and retail trade sector tra- Agriculture is very capital-intensive ditionally serves as an intermediate be- because of the machinery, buildings and tween producers and consumers. The fields needed in production. In 2015, total value of production in the whole sale and investments in agriculture were €1,072 retail trade sector is not as readily availa- million, which is down slightly on the ble as that of primary production and previous year. Its share of the total in- processing because, in most cases, only vestments of the national economy was information on sales and turnover is pub- 2.5%. lished. In addition to the retail trade, the trade sector also supplies foodstuffs to Food processing providers of catering services and engages in foreign trade by exporting and import- The output of the food industry decreased ing agricultural and food products. from €11.3 billion in the previous year to Foodstuffs require a great deal of han- €10.9 billion in 2015. The use of intermedi- dling, which is why wages and salaries ate products decreased from €8.6 billion to and production facilities are significant €8.3 billion. The value added
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