Wrong thinking behind the criticism of export position

Recently, extensive attention has again been paid to our export position. I myself regularly have to correct texts in which authors carelessly write something about "large-scale, cost-driven, export-oriented agriculture" in consideration of our environmental challenges. I would be surprised if farmers who supply the Dutch retail sector produce much more sustainably than the colleagues who supply the German Rewe or the French Danone. Barring specific sustainability schemes. The export is often only just across the border: from Assen to Bremen is no further than to Breda.

Dutch agriculture has always been export-oriented, so the trade balance was often a point of attention. One of the best-known studies on this dates from 1985. Gerrit Meester and Dirk Strijker, then figureheads of the LEI, conducted a study at the request of the WRR, in which they established that not only was the Netherlands an exporter, but Europe was also a net exporter to the becoming was: "European agricultural policy beyond the self-sufficiency dividing line" was the summary title.

The study showed why the Common Agricultural Policy designed by Mansholt was reaching its limits and had to be adapted due to success. The policy instruments, such as import duties and export refunds, worked as long as the EU was a net importer. But now that the situation turned to net exporting it became unaffordable and you could wait for the complaints of the trading partners about export subsidies. So policy had to change in a liberalizing world.

Dutch export position acclaimed
The milk quota, the set-aside scheme and the fall in grain prices were therefore in the air and the way was once again clear for more exports. Also from the Netherlands, which has been acclaimed for years: the Netherlands is the second largest exporter in the world (and a major importer, although that received less attention). Until the arrival of the euro, these exports were a mainstay of the guilder exchange rate. But those days are behind us: for the balance of payments of the euro, the exports between the Netherlands and Germany have no more value than those between Friesland and Groningen.

In the meantime, we in the Netherlands seem to have once again crossed a dividing line: the extent to which our exports may be at the expense of our living environment. Citizens clearly set limits on this. With the repeal of the derogation in dairy farming, the European partners are now also stating that our exports could be reduced a bit in view of the environmental problems. We are at the bottom of a European list about the quality of our water system, which must be improved in the eyes of our competitors - who are also our customers.

Wrong thinking behind criticism
So it is understandable that some carelessly criticize the export orientation, when they mean production volume. Yet there is wrong thinking behind it. Namely the idea that the first part of the production is used for national consumption and the surplus is exported. That's not how the market economy works. If less milk is produced here, it is quite conceivable that the dairy industry will mainly focus on baby food, sports drinks, clinical nutrition, branded products and many other value-added products, while cheap basic dairy is sourced from abroad without many sustainability requirements. Such an increase in imports and exports can be a good development, because then we earn the most from our limited production capacity. And it fits in with the Netherlands as a trading country.

Dutch supermarkets would like to make a non-binding contribution to making livestock farming more sustainable by helping 'their' 20% of production become more sustainable. By binding a select group of companies that can supply sustainably and cheaply. That helps, but the consequence is that the government is then allowed to take care of the "export problem". Given the history of the Netherlands as an agricultural export country, such an ideology of self-sufficiency seems less desirable to me. The problem is not export, but realizing added value through more sustainable production. That added value lies more in international niche markets than in Dutch consumers who are looking for a bargain for their basic package of foodstuffs.

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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