Country Focus: The Netherlands

by Intern Intern1
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Dutch agriculture is among the most advanced in the world. The Netherlands has established its expertise in adding value to agricultural commodities, whether they are domestically grown or imported. About 65% of the country's agricultural production is exported. Agricultural exports take the forms primarily of processed materials such as wheat flour, dairy cattle and swine breeding stock, day-old chicks to startup broiler industries in far-away countries, chocolates and starches.

The Dutch are also in the fore of horticultural technologies. Many of the world's most productive vegetable varieties have been developed in the Netherlands, whose seed manufacturers serve world markets.

Glasshouse technologies have found their highest expression in the Netherlands. More than 10,000 ha of glasshouses can be found throughout the country.

And, of course, when one thinks of the Netherlands, one thinks of flowers. Cut flowers and flower bulbs are major exports of the country. Its flower auctions attract not only the finest varieties produced in Holland but flowers from around the world.

The Dutch government estimated that there were about 123,000 farms in 1991, down from 132,000 farms in 1987. The number of arable crops (including grains) farms was set at 62,300.

The Netherlands is a grain-deficit country. It produces just a bit more than a third of the wheat and barley it consumes, and while it produces more than 2 million tonnes of maize for silage, it must import nearly that amount of maize for grain each year.

The Netherlands is a founding member of the European Community. As such, it adheres to the Common Agricultural Policy.

The CAP sets a floor under commodity prices, protects E.C. farmers from foreign competition and enables E.C. grain exporters to successfully compete for third country sales.

The CAP structure comprises intervention, target and threshold prices and export subsidies. Effective July 1, 1993, under the CAP reform, all grain (wheat, rye, barley, maize and durum wheat) is priced the same; in other words, there is one intervention price for all grains, one target price and one threshold price.

The intervention price provides a floor below which market prices should not fall. It is the price at which intervention agencies are obliged to buy grain. Under the CAP reform, the intervention price for grain is 117 Ecu/tonne in 1993-94, 108 Ecu/tonne in 1994-95 and 100 Ecu/tonne in 1995-96.

The target price is a designated market price, traditionally determined for Duisburg, Germany, and takes into consideration the intervention price plus the cost of transport and marketing of grain from Ormes, France, in the E.C.'s major surplus region, to Duisburg, in the E.C.'s major deficit region. The target price is fixed under CAP reform at 130 Ecu/tonne in 1993-94, 120 Ecu/tonne in 1994-95 and 110 Ecu/tonne in 1995-96.

The threshold price traditionally has been set to ensure that imported grain cannot be sold at Duisburg for less than the target price. Under CAP reform, the threshold price has been set at 175 Ecu/tonne in 1993-94, 165 Ecu/tonne in 1994-95 and 155 Ecu/tonne in 1995-96.

When world prices are below the threshold price, a variable levy is imposed that equals the difference between the third country offer price (normally the lowest c.i.f. price at which grain can be imported into any E.C. port) and the threshold price.

When internal E.C. market prices exceed world market prices, restitutions (subsidies) are paid to exporters to ensure that the E.C. grain is competitive with that of other exporters.

The institution of uniform prices for all grains may lead to changes in the amount of various grains and qualities of grain produced in different regions.

The price reductions will have a considerable impact on E.C. farmers. The blow will be cushioned by a system of direct payments and acreage reduction.

Farmers producing more than 92 tonnes of grain must set aside 15% of their base area in order to qualify for direct payments. Average past regional yields are used to determine how much grain the farmer would have been able to produce on the idled land. For each tonne not produced on the set-aside land area, the farmer receives 25 Ecu during the first year of the reform, 35 Ecu during the second and 45 Ecu during the third.

The Dutch government estimated that CAP reform will cut revenues of grain farmers by at least 6%, and in some cases, by as much as 12%.

There are 12 mills in the Netherlands with capacities greater than 2,000 tonnes per year, and about 40 mills with capacities of less than 2,000 tonnes per year. Those mills with a capacity of more than 2,000 tonnes belong to five companies. One of these holds a 60% market share. Four companies belong to De Nederlandse Maalindustrie, the national milling association, and these represent about 95% of total Dutch milling capacity.

The total flour consumption in 1992 was 1,255,000 tonnes, of which 245,000 tonnes was for starch, 245,000 tonnes was for export and 765,000 tonnes was for baked foods and family flour.

The total market for baked foods and family flour was almost 950,000 tonnes of which more than 180,000 tonnes was imported (mostly from Germany and Belgium).

Flour exports went mostly to African and Middle East/Arab countries, but more than 50,000 tonnes was exported to Belgium.

The trend is for flour production and consumption to increase. An increase in exports is expected, especially to non-E.C. countries.

Major issues facing the Dutch flour millers include increasing imports from neighboring countries, environmental issues and a decrease in the availability of European wheat with good enough quality for typical Dutch bread production. This problem will probably become more acute as a result of the CAP reform