Rutte IV’s agricultural and food ambitions under scrutiny: a lot of money, little concrete – Former policy official De Jong points to the role of the House of Representatives in policy implementation of the new cabinet – Foodlog

Who compares the coalition agreement of Rutte IV with that of Rutte III from 2017 sees that he should not have too many expectations of the beautiful goals and money flows. Despite all the billions, this coalition agreement will not offer agriculture the desired perspective. In times of dualism, however, there are plenty of opportunities for the members of the House of Representatives to actually make something of it.

In times of dualism, however, there are plenty of opportunities for the members of the House of Representatives to make something of it

Comparison with the 2017 coalition agreement

There is little to be found in this coalition agreement about agriculture and food from a European perspective, while in 2017 a separate section on Europe was included in the agricultural chapter. Especially now that the European Commission – with the Farm to Fork strategy – a has an ambitious program for food chains it is quite a mistake not to indicate how the Netherlands wants to deal with European policy.

In the 2017 coalition agreement, the Nitrate Action Program (NAP) was extensively discussed, but precisely now that the Commission is critical of the Dutch proposals for the 7th NAP, the coalition agreement is silent on how the Netherlands can meet the goals of the Nitrates Directive and the Water Framework Directive.

The 2017 agreement included the desire to reduce methane emissions in agriculture, but the subject is notable for its absence in the coalition agreement, while international agreements were made in Glasgow less than 2 months ago.

By neglecting the international dimension and European policy intentions, Rutte IV fails to visualize the necessary choices. The House of Representatives has the great challenge of asking the new minister for answers and, where necessary, coming up with solutions.

Earning models
There is a remarkable passage in the coalition agreement about revenue models in agriculture:
We are initiating the transition to circular agriculture with a good revenue model, so that farmers are enabled and socially appreciated to realize the necessary change, giving young farmers a future. In addition, we expect a non-binding contribution (JdJ in bold) from banks, suppliers, the processing industry and the ‘retail”.

The agreement does not make it clear how agribusiness or retail can or should provide a better revenue model, especially for young farmers. Do processors or retailers get paid extra for their products? That seems unthinkable to me.

Do processors or retailers get paid extra for their products? That seems unthinkable to me

Not without obligation implies legislation or covenants with clear sanctions if agreements are not met. Does the coalition have France in mind where the retail may not sell products below cost? In the Netherlands, Minister Verburg has sometimes protested against stunting with meat, but that has never materialized. A new minister could now put that into practice.

It also rightly points out PBL on the international dimension: “A lot of food consumed in the Netherlands is produced abroad and many products from Dutch agriculture are exported. This means that the chains extend further than the Netherlands, and that agreements are preferably made with both producers and buyers outside the Netherlands.” All the more reason to temper our expectations about these passages. It will be a challenge to allow chain parties to independently develop revenue models in which sustainability pays off.

In 2017, the government wrote: “The competition law is being amended so that cooperation in agriculture and horticulture is explicitly allowed. This is to compensate for the unequal balance of power in the chain”. That bill is still not in force. However, as a result of a European regulation, the “Unfair Commercial Practices” Act has come into force. But for the average farmer, there is still an unequal balance of power in the chain. Power relations in the chain are, as has been the case for hundreds of years, determined by supply and demand.
Markets for primary products are oversaturated in Europe. This causes the weak position of farmers.

This applies in particular to the exchangeable raw materials. The more distinctive a product is, the more attractive it becomes for the supermarket to have it on the shelves and to pay a little more for it. But only a handful of farmers and horticulturists know how to make such products or the raw materials for them – whether or not in collaboration with processors. Many still long for the milk quota system with a system of production control in which supply and demand in the markets were better matched. It wouldn’t be wrong to talk about the value of that system again. The announced obligation to “provide food produced in the Netherlands with an origin label” will hardly improve the position of Dutch producers. This is motivated in the text of the coalition agreement ‘to allow consumers to make a more conscious choice’. It remains unclear whether this obligation only applies to the end product with raw materials produced in the Netherlands. There is an increasing interest in regional products, but that does not necessarily mean that the interest in products produced in the Netherlands is increasing. Such a label does not say anything about whether the product is sustainable or healthier than other products. For years, the Netherlands has looked suspiciously at France or Germany, where their own product is also promoted in a similar way. You would not expect a country that is so dependent on exports to join the European trend to mainly display its own product. A label ‘Produced in the Netherlands’ should mainly be used to highlight products that excel in sustainability. Supermarkets (such as AH with ‘Better for’) are already developing their own strategy to distinguish themselves in that area.

Providing food produced in the Netherlands with an origin label will hardly improve the position of Dutch producers

The coalition agreement creates high expectations. Binding chain agreements will be announced, which will be legally guaranteed where necessary. Practice shows that agreements as laid down in covenants are rarely translated into legal safeguards with sanctions. In view of the experiences of recent years, there is also a reason not to fly the flag yet. This therefore requires concrete intermediate objectives in those agreements and regulations if those intermediate objectives are not achieved. Just as Stientje van Veldhoven has done with the introduction of a deposit on plastic bottles.

Earning models with other functions
The coalition agreement sees other opportunities for revenue models: “We stimulate new revenue models such as ‘bio-based’ building materials, ‘carbon credits’ and nitrogen fixation. We increase the possibilities of (agricultural) nature and landscape management with long-term agreements and appropriate compensation”. The new National Strategic Plan for the spending of CAP funds offers opportunities for carbon credits and nitrogen fixation. Thanks to the ZLTO there are pilots underway which provide a useful basis for this. Here are opportunities to gain synergy from market initiatives and government support. The House of Representatives must now insist on a reliable and objective certification system for a long-term approach.

Until now, the European Commission has been very reluctant to approve long-term agreements for agricultural nature and landscape management. Here Rutte IV raises expectations that most likely cannot be fulfilled. The Commission also sets strict requirements for the granting of appropriate compensation. These must fit within the framework of the WTO, which means that for product-related management agreements (such as mowing at a later date, for example), the compensation can consist at most of lost income and costs incurred. These WTO preconditions do not apply to the construction and maintenance of landscape elements, which means that (in the eyes of farmers) there are more options for appropriate compensation. But here too I seriously question whether the expectations can be met.
Issuance on lease or long lease of land for nature and landscape management by the land bank to be established does offer opportunities for a long-term approach because this is not subject to the WTO requirements or the Brussels state aid regime.

A plea is rightly made in the coalition agreement for land-based dairy farming

Land-based dairy farming

A plea is rightly made in the coalition agreement for land-based dairy farming: We close cycles by using residual flows in animal feed, replacing fertilizer with organic fertilizer and a land-based (JdJ in bold) dairy farming. Agreements are made about this with suppliers and the processing industry. Minister Schouten had already made a plea for land-based dairy farming. With this phrase, the coalition agreement is in line with an advice from the NZO and the LTO from 2018 (5). The core of that advice is that every dairy farm should be able to largely meet its own protein requirements. It seems strange to me whether agreements with suppliers and the processing industry are the most appropriate means for this. Asking suppliers to supply less animal feed is like asking a butcher to sell less meat. Feed suppliers should focus more on the use of residual flows.

Minister Schouten recently indicated that it is not yet certain whether the Netherlands will be able to make use of the derogation (nitrates directive standards for manure) in the coming years. Failure to do so will mean an acceleration of land-based dairy farming. This leads to upward pressure on land prices as companies with an intensive stocking density will try with all their might to buy additional land. It also means that organic fertilizers are replaced by artificial fertilizers, so that nitrogen and phosphate leaching into the ground and surface water continues. As a result, the goals of the Water Framework Directive are certainly not achieved and legal standards are required for the amount of fertilizer that is applied.

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Rutte IV’s agricultural and food ambitions under scrutiny: a lot of money, little concrete – Former policy official De Jong points to the role of the House of Representatives in policy implementation of the new cabinet – Foodlog