The Dutch food system after corona

Every crisis leaves its mark, otherwise it wouldn't be a crisis. So is the corona crisis. But it is still very difficult to predict which things will soon be seen as 'before corona' and which as 'after corona', when it comes to our food system.

Doing business more digitally - whether it's video conferencing or ordering food online - may be here to stay now that we've been forced to learn how to do it. But does that also apply to the increased demand for more sustainable and healthier products and visits to the local farmer?

Predictions in this area quickly become speculation. Many such opinions are also mainly based on ideals, not on analysis. At the same time, all kinds of decisions are being made under pressure in government and in business at an astonishing speed, where until recently studies, social cost/benefit analyses, expert committees and political discussions were difficult to reach agreement. In other words: it is precisely now that we need to consider what future we want as a society. That's why I'm putting some reflections on paper - for what it's worth right now.

Health crisis
The first thing that stands out about the corona crisis is that it is a health crisis that has clear interfaces with the food system and exposes its weaknesses. It is a zoonosis that appears to have arisen from unprofessional, possibly even illegal, trade of exotic game in Wuhan. But it is a zoonosis and although for experts it has little to do with our way of keeping livestock, that is not how many citizens experience it: the interpretations that there is no essential difference with Q fever and that 'Mother nature strikes back' are widespread present. Right or wrong, 'feelings are facts' applies in management and politics.

A second striking phenomenon is that many of the ICU patients are men with obesity and lifestyle related disorders. Diet and lifestyle apparently play a role. In terms of prevention, we hardly saw a role for the government to help people with that lifestyle, but there is now a growing realization that, in addition to or in the study of medicines, more attention is also needed for preventive healthcare.

Cleaner living environment
Thirdly, there is the issue of air quality. Not only do people now experience what it is like to live in a cleaner living environment and this appears to save many lives, but there are also indications that air pollution plays a role in the number of victims. Due to transmission or because the health is less.

The fact that these phenomena occur among consumers/citizens and the living environment fits seamlessly into an analysis that researchers have been making of the food system and the need for transition for some time now. The negative effects are at the beginning and end of the chain, the weakest parties. And politicians find it difficult to correct that. So the question is what we learn from this for the post-corona era.

Economic crisis
The health crisis has also turned into an economic crisis due to the necessary 'housing measures'. In the short term, all kinds of agricultural chains have been seriously disrupted: the market for cut flowers and French fries potatoes has collapsed. It is proving difficult to shift flows from the out-of-home market to the supermarket channel. Experienced seasonal workers from Eastern Europe suddenly no longer show up and have to be replaced by unemployed catering staff.

International food markets are starting to be disrupted considerably, which is also affecting Dutch imports and exports. As in 2007/2008, protectionism is also emerging, which is very harmful to the less fortunate in developing countries.

An economic crisis of unprecedented magnitude is emerging worldwide. The economic crisis will haunt us longer than the health crisis: a sharp recession is approaching with sharply rising unemployment. This will affect the food system of the future.

Political crisis?
And if all that is not enough, there is also the risk that the geopolitical contradictions in the world will become sharper. Within the EU, cooperation is far from optimal, each country mainly tries to settle its own misery, we are once again gaining experience with closed borders. The financial measures that governments are taking now lead to much more debt, which could also lead to a political crisis in the EU. All the more so if the recession is changing views about the need for a Green Deal on climate (and other environmental policies) here and there.

Internationally, Asian countries seem better prepared due to viruses such as Sars and Mers. Populist leaders appear to have great difficulty in intervening quickly, with serious consequences. The question is what this means for the balance of power in the world, international trade and our thinking about the role of the state.

4-layer model
An analysis that wants to separate the short-term and temporary effects from the long-term structural effects would benefit from some methodology. The institutional-economic layer model of Oliver Williamson (2000) can be helpful here. On the bottom layer you will find the adjustments in markets, the allocation of goods with their prices and volumes.

There it concerns things like more (or less) demand for online food ordering and home delivery, more digital consultancy and inspections, less demand for seasonal workers from other countries, more demand for cheap chicken in times of recession, etc. Here are the trends perhaps the easiest to observe and predict. And markets for products and services can return to equilibrium fairly quickly.

Mechanisms that control
The next level is governance: through which mechanisms do we control production and consumption in the chain? Do we trade through auctions or contracts? Do we only pay attention to price or also to other aspects when purchasing and selling? You can expect companies to ask themselves some questions here too

going to set. Farmers who are now suddenly confronted with low prices for chips potatoes or veal calves through their contracts are starting to wonder whether those contracts are not unilaterally shifting the risk onto them. In the boardrooms, CEOs will have to wonder why they weren't insured for this situation (the Wimbledon tennis tournament was because they had a case of SARS at the time and adjusted their risk assessment). Similarly, a Polish retailer wonders whether the asparagus should not come from their own country in the coming years instead of from the low countries, which are struggling to supply cheaply.

If companies themselves don't ask that question, the government should. This brings us to Williamson's third layer: the formal laws and regulations. In a crisis, power gains authority and that is also the case with the European states. This provides opportunities to take action in more dossiers, such as climate change. Action is required first of all, where deficiencies have come to light.

Not only in healthcare and other critical infrastructure, but also in general in the labor market, where many self-employed and low-paid workers quickly run into problems. While they have now been labeled a 'crucial profession'. Such policies can also affect the food system, with its large amount of low-paid labour.

Loans and capital injections
Already in the short term, the government must also ask itself how it relates to the companies that we are now saving with capital injections and loans. If we keep KLM and Schiphol afloat instead of passing on the losses to (international) investors and continue after a restart (as happened once with Sabena and Swiss Air), then in the coming years we will also make agreements about climate, nitrogen space and the tax-free flying within a radius of 750 km?

An example from the food system could also have been included here: if we support the meat, dairy or French fries industry and farmers with tax money, are these loans that will be repaid in the coming years? Or is it aid with requirements on the size of production, since it is rather based on foreign inputs that cause environmental pollution here and we also have to solve a nitrogen crisis? Or is there actually reason to give the sector all the space it needs from a strategic point of view to be able to feed us and to spare the sector in environmental discussions? These are all questions that are already relevant now and will become even more so in the future.

Culture, norms and values
The fourth level in the layer model changes the slowest over time and often requires very serious crises: the layer of culture, norms and values. Speculation is perhaps the greatest in this area. Some think that we are becoming a slightly different person. With more sense of community again, more enjoyment of spring in your own garden or nature (which indeed seems to be experienced more intensely), more attention to healthy and sustainable living, also with a bicycle trip to the farmer in the short chain.

Others point to the fact that many - not least young people who are now giving in to frail older people - are demanding a similar commitment from the community and government to prevent the next crisis: that of the climate. But you could just as easily say that hedonic people will soon be back and want to make up for the damage. Despite or as a counterbalance to unemployment. After all, the Spanish flu was no obstacle to the Roaring Twenties. (Read more below the photo).

^{Photo: C. Welman / Shutterstock.com}
Large uncertainties are an excellent reason for a scenario analysis. It is then obvious to choose the two uppermost and most uncertain layers from Williamson's model as variables. Will we have a period with much or little government intervention and will we adopt a different lifestyle or not? This results in four scenarios.

Scenario 1: Business as usual
Little will change in our lifestyle and the role of the government in society. We are quickly returning to our old lifestyle of individualized society. The government is still managing the recession, but it turns out to be better than expected and, just like during the banking crisis, loans are being paid back properly by companies. Over time, the government brings its state holdings back to the stock exchange.

With the unchanged views there is little pressure on the government to tackle climate and other environmental issues energetically, politicians continue to struggle with such issues. That is not to say that nothing changes at all. At the lower levels of Williamson's model, shifts can indeed take place. More online, tightening contracts on risks, insurance against a pandemic are some examples.

Less concentrated production, but factories in several countries (which apparently you can manage very well from here with video conferencing and the Internet of Things) is certainly considered here and there and leads to significant changes in certain situations. But the world will not be very different in this scenario. In terms of resilience thinking, robustness is especially strengthened.

Scenario 2: The Hague Central
Is the name for a scenario in which our lifestyle changes little due to the corona crisis, but the government gains firm power. The neoliberal thinking Thatcher and Reagan embraced during the crisis of the 70s is shifting into the background. We again appreciate the government as an organizer of society, given its commitment to the crisis. The corona will be in our midst for quite some time and the economic crisis is deep and long.

The government is intensively involved in adapting the labor market. More is also being invested in health care and education. Taxes go up. Work, work, work is the adage and this is partly fulfilled by housing, which, given the experiences during the crises, is mainly sought in garden villages on agricultural land. Almere-Oosterwold as a source of inspiration for the 1,50 meter city. The European Green Deal is being very much watered down so as not to disrupt the competitive position with other continents.

Nevertheless, some of the public works have to do with climate and energy issues, because that is where international agreements apply and NGOs continue to support the courts. Farmers who think that the focus on employment will remove the environmental brake from production could well be disappointed. Nitrogen space disappears from agriculture to housing and industry. Circular agriculture is getting closer through extensification and land-based livestock farming.

An associated benefit: there are opportunities for food horticulture as a healthier alternative. In terms of resilience thinking, you can characterize this scenario as adaptive. Not only do certain chains adapt to become more robust, but the food system itself is adapted by government policy to the space available in the country and thus becomes less vulnerable. This forces export-oriented companies to expand abroad more often.

Scenario 3: Together in the region
Is a scenario in which we actually change our lifestyle, but neoliberal politics continues to dominate. The blossomed sense of community, the attention to nature and a healthy living environment with healthy food are permanent. Attention to tourism in our own country or at least in Northwest Europe is gaining in importance, partly under the influence of unemployment, low income growth and higher taxes to get the national debt in order. All this offers opportunities for short chains, multifunctional and organic agriculture.

Solidarity is considered important and this is reflected in, for example, regional products and authenticity. Initiatives from rural development programs such as the South Holland Food Families are widely followed. Labor costs remain low, also because there is interest from other Member States with economic problems to work here. There is regional political discussion about the environmental scope of agriculture, but it focuses more on odor and particulate matter than on climate, nitrogen or soil.

The large, export-oriented companies in the agricultural sector and the associated farmers therefore experience little opposition. The food system consists of a regional component with multifunctional farmers and short chains, but there is also 'conventional' agriculture and multinationals that produce cheap products for bargain hunters and exports in a strategy of scaling up. In terms of resilience thinking, you can also characterize this scenario as adaptive. Not only are certain chains adapting to become more robust, but the food system itself is becoming more diverse and adapting to new values ​​and standards.

Scenario 4: Upgrading the country
Is the most extreme scenario. As in the reconstruction of the 50s, the state takes on a much greater role in society. At the same time, our views on our lifestyle and how we want to interact with each other are changing. These two trends reinforce each other and the government is given the task of realizing a new economy. We only save from the old economy what we want to take with us into the future.

We want to be well prepared for the next crisis, so after a serious health and economic crisis, the government is given the task of preparing us for the climate crisis. Given the success of the apps with which our behavior has been managed for three years to intelligently get out of the lockdown, society is fully committed to ICT and transparency, partly at the expense of privacy. Farmers must make public their use of plant protection products and other environmental indicators.

Due to the major social experiment that is the corona crisis, the government is discovering that consumer behavior can indeed be influenced and is actively encouraging a transition from animal to vegetable protein. The meat tax was introduced quickly and helps to cover government deficits. The corona app is being expanded with a module to link food intake and health status, so that your smartphone turns red, orange or green after dinner and your doctor reads along with artificial intelligence software.

In contrast, the government regulates the tech companies and platforms to ensure the privacy and utility of those facilities. Similarly, by analogy with the self-employed, we will see that farmers are the executive arm of multinationals and that we can better settle them on the basis of true cost subsidize and regulate farmers. As in the 50s, cost prices are calculated independently for government intervention, now on the basis of true cost.

Robotic technology is permeating and replacing a large proportion of immigrants for seasonal work. This is particularly encouraged in horticulture. On the one hand, because we are going to eat healthier, but want to keep it affordable for lower economic classes. On the other hand, executive labor becomes more expensive. Due to all the innovations, the economic crisis is quickly disappearing from the picture and wages are rising, further boosting automation and robotization.

The combination of changing lifestyles, increasing incomes and a controlling government means that the size of the agricultural sector is being adapted to the available and declining environmental space. At the same time, a lot of new technology is being developed and exported. The large agricultural suppliers and food producers increasingly see themselves as a (Northwestern) European company and work in symbiosis with many smaller startups, which they sometimes buy up to increase their scale. Thinking in terms of resilience, this scenario focuses on transformation.

Closing comments
Of course, these scenarios do not come true. That's not what scenarios are for, they're not predictions. They only try to structure thinking and stretch the frame of mind. And to encourage a discussion: what kind of future do we actually want? For individual companies, organizations and individuals, scenarios are mainly intended to prepare for surprises. But collectively, we can also choose to some extent.

This has to be done partly at dizzying speed under the pressure of the moment. And that is helped with this type of analysis. These can be further filled in with quantitative assumptions in order to calculate them further in models and to detect new insights or inconsistencies. They can also be made more specific to certain government or business decisions. Updates are also desirable in the near future: it is likely that in six months more can be said in which direction things are going.

In terms of methodology, it also seems useful for new developments to interpret the facts on weak signals, then to see whether they can be classified in Williamson's layer model and to name the largest uncertainties at the higher layers of that model and to identify those with a technique to explore further from the expertise of foresight.

This analysis by Krijn Poppe, as a long read, is posted on the Wageningen UR website and reproduced with permission by Boerenbusiness.

Krijn J. Poppe

Krijn Poppe worked for almost 40 years as an economist at LEI and Wageningen UR and now holds a number of advisory and management positions. For Boerenbusiness he dives into his bookcase and discusses current developments on the basis of studies that have become classic.

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