Denmark is self-sufficient in food production. In 1995, the country had 68,600 farms each averaging 36 hectares.
Agricultural policy. As a member of the European Union, Denmark's agriculture falls under the control of the CAP. In addition to agricultural spending under CAP programs, Denmark has a series of national programs relating to organic and ecological agriculture, financing and market development activities.
Because the country relies on export outlets for the majority of its agricultural production, recent policy actions have been taken to help domestic agriculture cope with the increased competition expected from approval of the General Agreement on Tariffs and Trade. Accordingly, the government is investing about U.S.$22 million annually in the next few years on agricultural and food research, production of healthy and nutritious food, quality control and education.
The program was adopted because of concern that Denmark will not be able to compete on price but will have to compete on quality to maintain and expand export market share. This policy corresponds with a consumer-focused approach to domestic agriculture that incorporates increasing demand within Denmark for organic and ecologically safe food products.
It is estimated that by 2000, 20% of all Danish food will be organically produced. The government is supporting the conversion of agricultural land to organically farmed land by paying per-hectare subsidies through 1998. The number of farmers applying for support in 1995 more than doubled from 1994, resulting in increased funding. Even with the program, organically farmed area is forecast to increase to a modest 7% of total agricultural area by 2000, restricting the amount of organically produced feed available for organic meat production. In the ecological area, the government also is considering legislation assessing taxes on the use of chemicals. Insecticides used in both in crop and livestock production, as well as fungicides, herbicides and growth regulating chemicals would be subject to a tax on the retail price. The amount would range from 15% to 37% depending on the chemical's ecological impact.
Another program designed to help Danish agricultural markets is an experiment to use wheat as a fuel in electric power stations and heating systems. According to farmer group estimates, one hectare of wheat could replace 3,000 to 6,000 liters of conventional fuel.
Flour milling. Denmark's flour is produced by a total of 13 mills, all but one of which grinds more than 2,000 tonnes of wheat a year. The mills are located in the middle and southern parts of the country. Only one milling company is vertically integrated with baking interests.
The recent move toward production of more higher-yielding feed quality wheat means that Danish millers must import when supplies of domestic bread-quality wheat are short. In 1993, for example, imported wheat accounted for about 15% of total wheat grind. Imports generally come from Germany, France and the United Kingdom.
Flour production is relatively stable. Between 1985 and 1992, production averaged 262,000 tonnes, wheat equivalent, in a range of 244,000 to 282,000. Mills generally operate 260 days a year.
In the past few years, flour imports have increased, notably from Germany. Consequently, the Danish government in 1993 established a program to export flour for food aid purposes.
Denmark's mills are represented by the Danish Millers Association. Of the 13 mills, only 5 are members, but they account for 95% of domestic flour production.
Livestock and meat. The livestock, meat and dairy product industries are major components of Denmark's agriculture and account for a large percentage of exports. Pork and cheese are the primary export products.
European Union countries and Japan typically have been the strongest markets for Danish meat exports, although Denmark's pork market in Japan has been eroded somewhat by increased Japanese imports of U.S. beef. But an increasing share of Danish pork is exported to markets outside the European Union, with Eastern Europe, which took about 11% of meat exports in 1994, as the fastest growing market. The market in Poland is particularly active, with Denmark accounting for about 60% of Poland's imported pigmeat.
Mergers and consolidations within the Danish meat industry have left only four processing groups: Danish Crown, Vestjyske Slagterier, Steff Houlberg and Tican.
With the GATT agreement, the Danish dairy industry is faced with the largest adjustment demands since the implementation of the E.U. milk quota system ten years ago. Price and quota reductions under GATT will fall hardest on Denmark because the country accounts for approximately one-third of total E.U. cheese exports and is by far the largest exporter of cheese to non-E.U. countries.
But the Danish dairy industry is positioned for the change. In the primary production area, the industry's structure is characterized by a continuous development towards fewer and larger herds and increasing milk yields. The structure of the processing and marketing links is considered among the best in the world, with large companies having the necessary resources for product development and marketing.