Agriculture and Food Sector in Finland 2019
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Natural resources and bioeconomy studies 37/2019 Agriculture and food sector in Finland 2019 Jyrki Niemi and Minna Väre (eds.) FA2019.indd 1 19.6.2019 14.21 FA2019.indd 2 19.6.2019 14.21 Natural resources and bioeconomy studies 37/2019 Agriculture and food sector in Finland 2019 Jyrki Niemi and Minna Väre (eds.) Natural Resources Institute Finland, Helsinki 2019 FA2019.indd 1 19.6.2019 14.21 Report drawn up by: Jansik Csaba chapters 1.3, 1.4 Knuuttila Marja chapter 1.1 Koikkalainen Kauko chapter 5 Koivisto Anu chapter 2.3 Kortesmaa Tarja chapter 1.2 Latukka Arto chapter 3.3 Latvala Terhi chapter 1.2 Miettinen Antti chapter 5 Mäkinen Heikki chapter 3.2 Niemi Jarkko chapter 2.4 Niemi Jyrki chapters 2.1, 4, editor Niskanen Olli chapter 4 Ovaska Sami chapters 2.2, 4 Väre Minna chapter 3.1, editor ISBN: 978-952-326-770-1 (Print) ISBN: 978-952-326-771-8 (Online) ISSN 2342-7647 (Print) ISSN 2342-7639 (Online) URN: http://urn.fi/URN:ISBN:978-952-326-771-8 Copyright: Natural Resources Institute Finland (Luke) Authors: Jyrki Niemi and Minna Väre (eds.) Publisher: Natural Resources Institute Finland (Luke), Helsinki 2019 Year of publication: 2019 Cover photo: Jaakko Mäkinen / From Evijärvi in the winter of 2019 Printed at and publication sold by: PunaMusta Oy, http://luke.juvenesprint.fi FA2019.indd 2 19.6.2019 14.21 Natural resources and bioeconomy studies 37/2019 Foreword The summer of 2018 will be remembered for the extreme weather conditions in Fin- land. The unusual heat and very small rainfall in North and Central Europe caused the worst drought in two decades. The impacts of drought on the agricultural sector were significant as many farmers lost at least part of their normal yield due to parched fields. The impact was the worst in the Nordic and Baltic countries. Hence, the summer was difficult for agricultural entrepreneurs, but there were also good news as the EU legislation reducing the occurrence of unfair trading practices (UTPs) in the food supply chain moved forward. The main objective of the Commis- sion’s proposal published in April 2018 was ”to protect agricultural producers” be- cause they are considered ”the weakest link” in the supply chain. Agreeing on the rules related to UTPs in the food supply chain was one of the important targets the current EU administration had set itself before the May 2019 elections. In 2019–2020, the farm policy agenda in Europe is likely to be dominated by reform proposals which are planned for the next period of the Common Agricultural Policy. On 1 June 2018, the Commission submitted its legislative proposals for the policy re- form for 2021–2027. The proposals were created based on extensive stakeholder consul- tations during the past 18 months. Also, the withdrawal of the United Kingdom from the EU i.e. Brexit remains a cen- tral topic. The terms of future trade relations between the EU and the UK as well as the details of the withdrawal agreement are still open when writing this. The series of very complex negotiations, which lasted all year 2018, culminated in November in the withdrawal agreement between London and Brussels. However, it is still unclear if the deeply divided British Parliament can approve the negotiated agreement. The world food market was muddled up by the decisions of the US President Don- ald Trump whose trade war with China led to China placing tariffs for US agricultural products, such as soybeans. That is why the US has been seeking growing markets from Europe for soybean. The next pages present a short summary on the events of 2018 and a current out- look for what to expect from 2019. The special themes of this review highlight particu- larly organic production. The thematic articles discuss the development, structure, and environmental impacts of organic production as well as the world market prospects of organic products. Other special topics include the competitiveness of the Finnish meat chain, the investment development of agriculture, the ecosystem services of agriculture and the reform of the EU’s Common Agricultural Policy. We hope that our readers in and outside Finland will find this review useful. Helsinki, 20 June 2019 Jyrki Niemi and Minna Väre Keywords: agriculture and food markets, production, consumption, income, profitabil- ity, agricultural policy, the environment. FA2019.indd 3 19.6.2019 14.21 Natural resources and bioeconomy studies 37/2019 Sisällysluettelo 1. Operating environment of agriculture ..................................................5 1.1. The food sector in the national economy .............................................5 1.2. Food consumption and consumer prices ............................................. 11 1.3. Retail trade ................................................................................................16 1.4. Food industry and foreign trade ........................................................... 17 2. Agricultural and food markets ............................................................... 24 2.1. Trends in global markets ........................................................................ 24 2.2. Field crop production ..............................................................................29 2.3. Horticultural production ........................................................................32 2.4. Livestock production .............................................................................. 36 3. Structural development and economic situation of agriculture ..........46 3.1. Structural development in agriculture ................................................. 46 3.2. Development of results and proftability in agriculture and horticulture .............................................................. 50 3.3. Overall level of agricultural income ..................................................... 53 4. Agricultural policy ....................................................................................61 4.1. Common agricultural policy of the EU ................................................ 61 4.2. Payments of EU agricultural support in Finland ................................66 4.3. National aid ..............................................................................................69 4.4. Structural support for agriculture and farm relief services ..............70 5. Agriculture and the environment .......................................................... 74 5.1. Environmental impacts of agriculture ..................................................74 5.2. Agri-environmental regulation ..............................................................78 5.3. Guidelines for water protection .............................................................82 5.4. Discussion topics and future perspectives ...........................................84 Special themes Ecosystem services in Finnish agriculture – are farmers interested in producing services citizens want? .................20 Global market of organic food products growing strongly .....................27 Competitiveness of meat chain in Baltic Sea Region .................................42 Development of Finnish organic production and farm structure ........... 57 EU’s common agricultural policy will be renewed after 2020 .................64 Agriculture requires continuous investments ............................................72 Environmental impacts of organic production .......................................... 88 FA2019.indd 4 19.6.2019 14.21 Natural resources and bioeconomy studies 37/2019 1. Operating environment of agriculture 1.1. The food sector in the na- diate products in the production of other products. In 2017, the output of the opera- tional economy tors in the food sector was around EUR 27 In Finland, the total annual consumption billion at the basic price. When the impact expenditure on food and beverages is of intermediate products on the output EUR 23.7 billion. Of this, food and non-al- in other sectors is included, the value of coholic beverages consumed at home ac- the output in the food sector was around count for 56%, or EUR 13.4 billion. Food EUR 40 billion. This comprises roughly and non-alcoholic beverages consumed 10% of the output of the national econo- at home comprise 11.6% of the total do- my at basic prices. mestic consumption expenditure. This is the same proportion as the average in the Food and non-alcoholic beverages; percentage of old EU member states, and slightly lower total final consumption expenditure of households. than EU member states average of 12.2%. 2016 2017 When alcoholic beverages (EUR 3.3 EU28 12.2 12.2 billion) and eating out (EUR 7.0 billion) EU15 11.6 11.6 are included, food accounts for 20.6% of total household consumption expendi- Belgium 13.4 13.4 ture. In Finland the share of eating out Italy 14.3 14.2 (6.1%) of the total consumption expendi- Greece 17.1 16.9 ture is lower than the average level in the Norway 12.2 11.9 EU member states (7.1%), and, in particu- Portugal 17.0 16.7 lar, lower than the average level in the old France 13.4 13.2 EU states (7.4%). Sweden 12.4 12.4 Food and non-alcoholic beverages, current prices; Germany 10.6 10.6 million euro and %-change (change in volume). Finland 12.0 11.6 2016 2017 %-change Denmark 11.4 11.4 Total 23,523 23,729 0.9 (0.8) Estonia 20.3 20.3 Food* 12,257 12,099 -1.3 (0.0) United Kingdom 8.1 8.2 Non-alcoholic Source: Eurostat beverages* 1,271 1,304 2.6 (0.7) Alcoholic bev- Agriculture and horticulture erages* 3,307 3,283 -0.7 (-1.0) According to national accounts, the ag- Catering ser- vices (eating