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Finnish Agriculture and Rural Industries 2009 Finnish Agriculture and Rural Industries 2009 TALOUS- TUTKIMUS ECONOMIC RESEARCH EKONOMISK FORSKNING Finnish Agriculture and Rural Industries 2009 ISBN 978-951-687-150-2 ISSN 1458-2996 Vammalan Kirjapaino Oy 2009 Report drawn up by: Aakkula, Jyrki (chapter 6) Ahlstedt, Jaana (layout, editor) Jansik, Csaba (chapter 2.5) Karhula, Timo (chapter 4.1) Knuuttila, Marja (chapter 1.1) Koikkalainen, Kauko (chapter 5) Koivisto, Anu (chapter 2.4) Latukka, Arto (chapter 4.4) Miettinen, Antti (chapter 5) Myyrä, Sami (chapter 4.2) Niemi, Jarkko (chapter 2.3) Niemi, Jyrki (chapter 2.1, 2.5, 3, summary, editor) Rantala, Olli (chapter 4.3) Rantamäki-Lahtinen, Leena (chapter 1.2) Sipiläinen, Timo (chapter 4.2) Tauriainen, Jukka (chapter 4.3) Tuomisto, Jussi (chapter 2.2) Turunen, Harri (chapter 4.1) Vihinen, Hilkka (chapter 6) Voutilainen, Olli (chapter 6) Väre, Minna (chapter 1.3) English translation by: Kola, Jaana Cover design: Ben Rydman Cover picture: Albert Edelfelt, Girl with a Rake (1886). Ateneum Art Museum Photo: Central Art Archives/Jukka Romu Albert Edelfelt (1854–1905) was one of the most significant Finnish painters and an influential figure in the artistic circles. He is widely known from his- torical paintings, pictures of peasant life and portraits, which won fame and recognition both in Finland and abroad. Many of Edelfelt’s paintings started off as studies for his larger works. This delicate picture ‘Girl with a Rake’ (oil on wood) from 1886, a close-up of a young girl, is a detail of a less-known autumn harvest painting ‘August’. Taloustutkimus JULKAISUJA 109a Finnish Agriculture and Rural Industries 2009 Edited by Jyrki Niemi and Jaana Ahlstedt Maa- ja elintarviketalouden tutkimuskeskus Agrifood Research Finland Economic Research PUBLICATIONS 109a ISBN 978-951-687-150-2 ISSN 1458-2996 Copyright MTT Economic Research, Agrifood Research Finland Publisher MTT Economic Research, Agrifood Research Finland, Luutnantintie 13, 00410 Helsinki, Finland www.mtt.fi Sales and distribution MTT Economic Research, Agrifood Research Finland, Luutnantintie 13, 00410 Helsinki, Finland Tel. +358 9 560 80, fax +358 9 563 1164 e-mail: [email protected] Printing Vammalan Kirjapaino Oy 2009 Preface The MTT Economic Research publishes an annual report on the state of Finnish agri- culture and rural industries. The report presents the main events and current challenges within the sector during the past year and anticipates the future challenges in the light of the most recent statistics. This annual report has been published in various formats since 1979, and in its present form it has gained an important position and is much looked forward to among all of those involved in the agriculture and food sectors and in rural issues. In the past couple of years the sudden changes in the prices of agricultural products have obviously been the main topic within the sector and also in the society. In the beginning of 2008 the cereal prices were record high, but they came down dramatically towards the end of the year. The world prices for dairy products also fell considerably from the top quotations reached a couple of years ago. The consequent fall in the pro- ducer prices took place quite rapidly, but the impacts on the input prices took more time to appear. The input prices fell the most towards the end of 2008 when the price for crude oil decreased and the impacts of the global economic recession were starting to show. During the summer there were major concerns that the profitability of agri- culture might collapse due to the high production costs and poor crop outlook. The year 2008 was very active in agriculture policy. In the early part of the year the impacts of the decisions concerning the national aid under Article 141 of the Accession Treaty, i.e. aid for serious difficulties paid in southern Finland, dominated the agenda, while towards the end of the year the main topic was the so-called health check of the EU’s common agricultural policy. In November 2008 the EU agriculture ministers reached an agreement on the main outlines for agricultural policy until 2013. The main issues for Finland were how to alleviate the impacts of the abolition of the milk quota system and the application of certain coupled payments also in the future. In the context of the health check it was also agreed that more funds will be transferred from direct payments to rural development measures (modulation). These measures relate to climate change, water protection, renewable energy and the dairy sector. During the year the discussion on agri-environmental policy was particularly vivid within Finland, and it helped to construct the necessary will to achieve an even better targeted and more efficient environmental payment system. The Special Topics of this year’s publication look into rural entrepreneurship through the people working on farms and rural enterprises. Among other things, the articles discuss the factors that influence the well-being of agricultural and rural entrepreneurs and challenges in coping with work. One of the articles deals with the introduction of a new operative model for agriculture concerning the production of environmental benefits and mitigating the negative impacts. On behalf of the MTT Agrifood Research Finland, I wish to thank Professor Jyrki Niemi and Research Secretary Jaana Ahlstedt for compiling and editing this publica- tion, as well a all the experts who took part in the writing process. Helsinki 13 March 2009 Pasi Rikkonen Director MTT Economic Research Contents Summary ............................................................................................................ 5 1. Operating environment of agriculture ............................................................ 8 1.1. Agriculture and food sector in the national economy .............................. 8 1.2. Rural enterprises .................................................................................... 12 1.3. Finnish farm ........................................................................................... 16 2. Agricultural and food market ......................................................................... 23 2.1. Trends on the world market .................................................................... 23 2.2. Arable crops ........................................................................................... 24 2.3. Livestock production .............................................................................. 29 2.4. Horticultural production ........................................................................ 34 2.5. Food market ........................................................................................... 38 3. Agricultural policy ......................................................................................... 45 3.1. Common agricultural policy of the EU .................................................. 45 3.2. National aid ........................................................................................... 48 4. Economic situation of agriculture .................................................................. 52 4.1. Agricultural income ................................................................................ 52 4.2. Productivity development in agriculture ................................................. 53 4.3. Profitability development of agriculture and horticulture enterprises ....... 56 4.4. Profitability differences in agriculture and horticulture enterprises ........... 60 5. Agriculture and the environment ................................................................... 65 5.1. Environmental impacts of agriculture ..................................................... 65 5.2. Agri-environment regulation .................................................................. 68 5.3. Agri-environment payments in 2007–2013 ............................................ 68 5.4. Water protection .................................................................................... 70 5.5. Main topics in 2008 and future perspectives ........................................... 71 6. Rural and regional policy ............................................................................... 75 6.1. Rural Policy Programme and its role in Finnish rural policy .................... 75 6.2. Content of the Rural Policy Programme ................................................ 77 6.3. Rural Policy Programme and the current state and future of the rural areas............................................................................................... 81 Appendices ......................................................................................................... 88 Special topics Women in changing farm entrepreneurship ......................................................... 20 CAP health check and Finland ............................................................................ 50 Mental well-being and coping at work among farmers ........................................ 62 Competitive bidding in producing environmental commodities .......................... 73 Green Care: Well-being to people, opportunities to rural enterprises ................... 84 SUMMARY In the past two years we have seen rapid the next few years, however, the economic changes on the international agricultural recession is likely to slow down the growth product market. The great and sudden in the global demand for food. fluctuations in agricultural product prices The great fluctuations in the produc- have taken all
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