Haifa Feng Interne Nota 491 AGRICULTURAL DEVELOPMENT INTH ENETHERLAND S An analysis of the history of Dutch agricultural development and its importance for China July 1998 ; L-5-HC^i C CONTENTS Page TABLES 5 FIGURES 6 ABBREVIATIONS 7 PREFACE 9 ACKNOWLEDGMENTS 11 1. INTRODUCTION 15 1.1 Statement of concern 15 1.2 Objectives of the report 16 1.3 Approach 17 1.4 Structure 17 2. GENERALAPPEARANC E OF DUTCH AGRICULTURE 19 2.1 Natural background 19 2.1.1 Favourable points 19 2.1.2 Unfavourable points 22 2.2 Current situation 22 2.2.1 Productive level 22 2.2.2 Production structure 23 2.2.3 Regional concentration 25 2.2.4 Farm structure 26 2.2.5 Farm income 29 2.2.6 Trade capacity 30 2.3 Contribution to the national economy 33 2.4 Position in the world's scoreboard 34 3. LONG-TERMTREN D 36 3.1 Pre-modern times: before 1880 36 3.2 First modernization phase: 1880-1950 38 3.2.1 Introduction of modern input factors 39 3.2.2 Institutional factors 41 3.3 Second modernization phase: 1950-1980 42 3.3.1 Mechanization 44 3.3.2 Scaleenlargemen t 45 3.3.3 Specialization 46 3.3.4 Intensiveness 47 3.4 Sustainable growth: after 1980 47 4. MAIN FEATUREO F DUTCH AGRICULTURAL DEVELOPMENT 49 4.1 Land ownership and tenure system 49 4.1.1 Types of land ownership and tenure system 49 4.1.2 Strong points 51 4.2 Freetrad e system 53 Page 4.3 Cooperative system 53 4.3.1 Agricultural cooperatives 54 4.3.2 Methods of agricultural cooperatives 55 4.3.3 Defence of the cooperative interests 55 4.4 Financing system 56 4.4.1 Financing sources 57 4.4.2 Financing methods 59 4.4.3 Major agricultural financial institute: Rabobank 61 4.5 Marketing system 65 4.5.1 The major points of marketing system 65 4.5.2 Auction inth e marketing system 68 4.6 Organizational system 68 4.6.1 The structure of farmers'organizations 69 4.6.2 The main points of farmers' organization system 70 4.7 Education, research and extension system 71 4.7.1 Education system 71 4.7.2 Research system 73 4.7.3 Extension system 75 4.8 Government policy system 76 4.8.1 The aspects of the Government function 76 4.8.2 Somestron g points of the Government policy system 78 4.8.3 The policy priorities for the coming years 78 5. SIGNIFICANCE OFDUTC HAGRICULTURA L DEVELOPMENT EXPERIENCE FORDEVELOPMEN T ECONOMICS 79 5.1 Concept about Dutch already in Development Economics 79 5.2 Can another concept about Dutch be summarized in Development Economics from Dutch agricultural development experience 80 5.3 The content of Dutch Model 80 6. ENLIGHTENMENT OFDUTC H EXPERIENCEO FAGRICULTURA L DEVELOPMENT TO CHINA 81 6.1 Sino agriculture compared with Dutch 81 6.2 Main obstacles of Sino agricultural development 81 6.3 What China can learn from the Dutch experience 82 LITERATURE 83 VITA 88 TABLES Table 2.1 Structure of agricultural production in 1994 Table 2.2 Number andtyp e of farms in 1995 Table 2.3 Percentual distribution of farms in relation to farm area size in 1995 Table 2.4 Percentual distribution of farms in relation to farm economic size in 1995 Table 2.5 Average farm size in 1995 Table 2.6 Percentual distribution of farms in relation to farm size measured in number of livestock per farm in 1995 Table 2.7 Farm income in 1995 Table 2.8 Structure of agricultural imports and exports by products in 1995 Table 2.9 Structure of agricultural exports and imports by countries in 1995 Table 2.10 Contribution of agricultural sector to national income Table 2.11 Comparison of agricultural productivity with European countries Table 3.1 Agricultural wages and rents and yield per cow around 1810 Table 3.2 Long-term development of agriculture, 1810-1880 Table 3.3 Number of people by 100 people working in agriculture in four countries Table 3.4 Number of land userswh o usedartificia lfertilizer s asa percentag e of the total number of land users byfar m size, around 1888 Table 3.5 Agricultural growth, 1950-80 Table 3.6 Growth of gross production per agricultural subsector, 1950-80 Table 3.7 Growth of agricultural exports, 1950-80 Table 3.8 Growth of agricultural productivity, 1950-80 Table 3.9 Agricultural workforce, 1950-80 Table 3.10 Increase in agricultural machinery, 1950-80 Table 3.11 Scaleenlargemen t according to area, 1950-80 Table 3.12 Average size of farms according to area, 1950-80 Table 3.13 Development in the number of animals per farm and per type, 1960-80 Table 4.1 Position of owner-occupied and rented land Table 4.2 Type of land tenure system according to holdings Table 4.3 Type of land tenure system according to land area Table 4.4 Type of rented land system Table 4.5 Type of rented land system Table 4.6 Capital structure of agriculture Table 4.7 Principal types of finance in agriculture Table 4.8 A model of the integrative functions of marketing inth e seed potato industry Table 4.9 Agricultural research organizations and their share in the total budget for agricultural research FIGURES Figure 2.1 Map of the Netherlands Figure 2.2 Land use structure Figure 2.3 Agricultural land use structure Figure 2.4 Concentration of agriculture Figure 2.5 Structure of working population Figure 2.6 Structure of gross domestic products Figure 4.1 Individual farmer's process Figure 4.2 Cooperative activity Figure 4.3 NRCa sa n umbrella organization Figure 4.4 Management of local Rabobank branch office Figure 4.5 Management of central Rabobank office ABBREVIATIONS LEI-DLO Agricultural Economics Research Institute in the Netherlands DLO Agricultural Research Department LNV Ministry of Agriculture, Nature Management and Fisheries in the Netherlands EU European Union EC European Community VNO-NCW Confederation of Dutch Employers TFP Total Factor Productivity AWU Annual Work Units ECU European Currency Unit CPB Central Planning Bureau in the Netherlands CBS Statistics Netherlands SDU NSU Netherlands Size Units NLG (f) Dutch guilder NCR National Cooperative Council for Agriculture in the Netherlands VOC OECD Organization of Economic Cooperation and Development NATO North Atlantic Treaty Organization ALGF Agricultural Loan Guarantee Fund in the Netherlands VECO Union of the Netherlands Seed, Seed Potato and Trade Potato Marketing STOPA Surplus Buying Agency in the Netherlands LTO Dutch Federation of Agricultural and Horticultural Organizations WTO World Trade Organization AUW Agricultural University in Wageningen in the Netherlands DLV Agricultural Extension Service in the Netherlands SEV Social-economic Advisory Service in the Netherlands ADRF Agricultural Development and Reorganization Fund in the Netherlands CAP Common Agricultural Policy of EU PREFACE In November 1995th e Chinese Minister of Agriculture, Mr. LiuJiang ,an d his Dutch counterpart Mr. J.J.va nAartse n agreed on a Letter of Intent of Agricultural Cooperation between both ministries. Part of it was an Agreement between the Chinese Academy of Agricultural Sciences(CAAS )an dth e NetherlandsAgricultura l ResearchDepartmen t (DLO- NL)o n cooperative research in agricultural economics.O nth e basiso f this Agreement the Institute of Agricultural Economics (IAE-CAAS) and the Agricultural Economics Research Institute (LEI-DLO) have formulated three joint research projects. One is'O n the experi­ ence of Holland Agricultural Development and its importance to agriculture inth e Peo­ ple's Republic of China'. Thetw o major objectives of these projects are: a) to reveal the causeso f the large difference between agricultural productivity in Chi­ na andth e Netherlands andt o find wayst o improve the efficiency of Chinese agri­ culture; b) to analyseth e developments in Chineseagricultur e with special referencet o market opportunities for Dutch agribusiness. The project will start with some basic reviews on the development of agriculture in the Yangtze Delta since 1978 and in the Netherlands in the last century. Prof. Dr. Feng Haifa, assistant director of IAE-CAAS,an d visiting scholar at LEI-DLO from November 1996t o May 1997,ha swritte n a report called 'On DutchAgricultura l De­ velopment'. Thisrevie w hasprove n to be an excellent step in the project. Evenfo r Dutch readers it will be interesting to learn from the developments in the past. Prof. Feng re­ ferred to one of threefamou s Chinese expressionst o illustrate this: 'Taking history asmir ­ ror,th e upsan d downs can be understood correctly.' It iseviden t and of great relevance to learn from past developments. Lookingfo r the effect of different economic,socia lan d institutional factors in differ­ ent stageso f agricultural development opensth e opportunity to learnfro m successesan d failures. It isclear , alsofro m this study,tha t there isneve r just one single factor involved. From the Dutch experience it is also clear that the agricultural development is a never ending story and therefore its adjustment isa constan t issue. Nevertheless, it ischallen ­ ging for agricultural economistst o provide relevant information to policymakers, farmers and agribusinesses to prepare for their decisions and actions.W e expect that the results of the project will provide an important contribution to the benefits of both nations. The questions to be answered inthi s project challenge Chinese aswel l asDutc h scientists. It hasbee n area l honour and pleasure for LEI-DLOt o have had prof. Feng Haifa as visiting scholar.Thank st o hisintensiv e effort, in only sixmonth s he hasoffere d asubstan ­ tial contribution to the project.