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Agriculture and Food Sector in Finland 2018 Natural resources and bioeconomy studies 35/2018 Agriculture and food sector in Finland 2018 Jyrki Niemi and Minna Väre (eds.) Natural resources and bioeconomy studies 35/2018 Agriculture and food sector in Finland 2018 Jyrki Niemi and Minna Väre (eds.) Natural Resources Institute Finland, Helsinki 2018 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 Mäkinen Heikki chapter 4.2 Niemi Jarkko chapter 2.4 Niemi Jyrki chapters 2.1, 3, editor Väre Minna chapter 4.1, editor ISBN: 978-952-326-601-8 (Print) ISBN: 978-952-326-602-5 (Online) ISSN 2342-7647 (Print) ISSN 2342-7639 (Online) URN: http://urn.fi/URN:ISBN:978-952-326-602-5 Copyright: Natural Resources Institute Finland (Luke) Authors: Jyrki Niemi and Minna Väre (eds.) Publisher: Natural Resources Institute Finland (Luke), Helsinki 2018 Year of publication: 2018 Cover photo: Marjo Keskitalo/Luke Printed at and publication sold by: Juvenes Print, http://luke.juvenesprint.fi Natural resources and bioeconomy studies 35/2018 Foreword Finland celebrated one hundred years of independence, Donald Trump rose to power in the US, and Robert Mugabe’s 37-year rule in Zimbabwe came to an end – 2017 will be remembered for this. In the Finnish agriculture and food sector, 2017 will be remem- bered for exceptionally poor harvesting conditions. In certain parts of the country, the grain harvest was damaged by exceptional periods of rain and cold weather. At 3.4 billion kilos, the total cereal yield was the second smallest in the 2000s. The annual review of agriculture and the food industry in Finland, prepared, again, by the Natural Resources Institute Finland (Luke), presents a current outlook for the sectors covered and the most recent research data in a single volume. It provides com- prehensive information on the operating environment in agriculture and the food sec- tor, the development of the agricultural and food markets, agricultural policy, the struc- tural development and economic situation in agriculture, and the interaction between agriculture and the environment. The special themes of this review discuss the opportunities generated by digitalisa- tion for the development of the Finnish food chain, and the identification of the com- petitive edge of Finnish food both in the domestic market and in exports. Other topics include the future growth prospects of the horticultural production, and the interest among businesses and consumers in the cultivation of insects and insect food. The arti- cle on eutrophying phosphorus loading analyses the difficult choices that are made in agricultural water protection. We hope our readers in and outside Finland will find this report useful. Helsinki, 15 June 2018 Jyrki Niemi and Minna Väre Keywords: agriculture and food markets, production, consumption, income, profitabil- ity, agricultural policy, the environment. Natural resources and bioeconomy studies 35/2018 Table of Contents 1. Operating environment of agriculture 1.1 The food sector in the national economy .............................................. 5 1.2. Food consumption and consumer prices ............................................. 11 1.3 Retail trade ................................................................................................. 19 1.4. The food industry and foreign trade .................................................... 20 2. Agricultural and food markets 2.1. Trends on the world market ................................................................... 27 2.2 Arable crops ............................................................................................... 30 2.3. Horticultural production ........................................................................ 33 2.4. Livestock production .............................................................................. 37 3. Agricultural policy 3.1. Common agricultural policy of the EU ................................................ 48 3.2. Payments of EU agricultural support in Finland ................................ 51 3.3. National aid .............................................................................................. 55 3.4. Structural support for agriculture and farm relief services ............... 56 4. Structural development and economic situation of agriculture 4.1. Structural development of agriculture ................................................. 60 4.2. Development of results and profitability in agriculture and horticulture ......................................... 63 4.3. Overall level of agricultural income ..................................................... 67 5. Agriculture and the environment 5.1. Environmental impacts of agriculture .................................................. 73 5.2. Agri-environmental regulation .............................................................. 77 5.3. Guidelines for water protection ............................................................. 78 5.4. Discussion topics and future perspectives ................................................................................. 80 Special topics: Finland’s first-rate food production methods offer a competitive edge ............................................................... 24 Insects provide a new option for farm production? ................................. 43 Digitalisation refines the food chain into ecosystems ............................... 57 Great momentum towards the future of horticulture ............................... 70 Mitigating eutrophying phosphorus loading from agriculture .............. 84 Natural resources and bioeconomy studies 35/2018 1. Operating environment of agriculture 1.1 The food sector in the na- of the intermediate product acquisition on the output, the value of the output of the tional economy operators in the food sector was around In Finland, the total annual consump- €40 billion. This accounts for around 10% tion expenditure on food and beverages of the output of the national economy at is €23.5 billion. Food and non-alcoholic the basic price. beverages consumed at home account for almost 60% of this at €13.5 billion. The Food and non-alcoholic beverages; percentage of share of food and non-alcoholic drinks total final consumption expenditure of households consumed at home is 12.0% of the total 2015 2016 domestic consumption expenditure, com- EU28 12.2 12.2 pared to the EU member state average of EU15 11.6 11.6 12.2%, and the slightly lower average in the old EU member states, 11.6%, Belgium 13.3 13.4 When alcoholic beverages, €3.3 bil- Italy 14.3 14.2 lion, and eating out, €6.7 billion, are also Greece 17.1 17.2 included, food accounts for 20.8% of Norway 12.2 .. household consumption expenditure. Of Portugal 17.1 16.9 the consumption expenditure, the share of eating out (5.9%) is lower than the aver- France 13.3 13.4 age level in the EU member states (6.9%), Sweden 12.4 12.3 and the level in the old EU member states Germany 10.6 10.6 (7.2%). Finland 12.4 12.0 Denmark 11.4 11.4 Food and non-alcoholic beverages, current prices; Estonia 20.6 20.3 million euro and %-change (change in volume) United Kingdom 8.3 8.1 2015 2016 %- change Source: Eurostat Total 23,329 23,490 0.7 (1.0) Agriculture and horticulture Food* 12,292 12,241 -0.4 (0.6) According to national accounts, the ag- Non-alcoholic beverages* 1,288 1,272 -1.2 (0.9) ricultural output at the basic price was Alcoholic beverages* 3,319 3,303 -0.5 (-0.3) €4.4 billion in 2016. The value of the out- Catering services 6,430 6,674 3.8 (2.5) put was down 0.5% on the previous year. (eating out) The value of the output has decreased for *Eating at home three consecutive years, but this time, the Source: Statistics Finland, National Accounts fall was considerably smaller than in pre- vious years (6.9% and 6.5%). The volume In addition to domestic consumption, of production decreased for the fifth con- food produce is also exported and used secutive year. Output at the basic price as intermediate products in production. includes the sales revenues of production, In 2016, the output of the operators in the production for own use, and subsidies on food sector was around €27 billion at the products from agricultural aid (€0.3 bil- basic price. When we add to this the effect lion). 5 Natural resources and bioeconomy studies 35/2018 When we also consider the other sub- is considerably larger than its share of the sidies on production (€1.6 billion), the value added. value of output was €5.9 billion. The oth- er subsidies on production fell by 2.5%, Food processing compared to the drop of 7.0% in the pre- In 2016, changes in the food industry vious year. were small. The value of the output in the The value of intermediate products food industry was €10.9 billion. The val- used in production was €3.1 billion. ue of output was almost the same as the The value of the intermediate products previous year with a decrease of 0.3% on used decreased for the second consec- the previous year. However, the volume utive year, by around 4% in both years. of output increased by 1.3% on the pre- The volume of demand for intermediate vious year. The value of the intermediate products fell by 1.5%, while the figure for products used, €8.3 billion, is also close to the previous year was 2.1%. In terms of the previous year’s figure. The value of value, agricultural products account for the intermediate products used decreased the largest share of
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