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Do farmers get paid too little?
Translated from Dutch. View the original post
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In the #boerenprotesten In addition to the opposition to the nitrogen measures, three complaints invariably come back: the farmer gets too little, #supermarkten go iron with profits and the consumer does not want to pay more. But is that right?
Only in part, says Willy Baltussen of Wageningen Economic Research, who has been researching food price formation for years. 'These arguments contain some truth, but they are also false arguments. The world is more complicated.”
Do farmers get too little?
'We have a market of supply and demand in Western Europe. On the one hand, the commissioners of the growers are responsible for ensuring that their products are sold. On the other hand, buyers of supermarkets have to fill the shelves. Those two parties know each other well. If there's a lot of supply, the buyers make laps. Because they know: if they do not succeed at A, then they succeed with B. If the proportions are reversed, then the game is played the other way around. At present, the market shows that there is more supply than demand in the long term. I can think of few products that are lacking. '
In a normal market, supply decreases when demand is reduced. Why is this not the case with agricultural products?
'Having a business is a way of life for many farmers. Then they accept that they have to live on a lower income. Most people think, “I'm good at this, I can't do anything else.” Or they hope it'll work out someday. For many farmers, the place where they live and work is the same. At the moment of stopping your business, you need to look not only for other work, but also for another house. As a result, the offer is not flexible. If you look at the number of bankruptcies in the agricultural sector, that is very low. '
But that's what they're gonna ruin it for the others?
'About 30 percent of farmers are below the low income limit. They may have power, but it's trapped in their possession. Living poor and dying rich is a well-known saying in the agrarian world. On the other hand, you have a group of farmers who make great profits. It depends on how you handle the trade. One farmer has a huge income at a milk price of 30 cents, while the other has to dwell for it. '
“Companies that move survive. This can be through innovation or enlargement. Those who linger, slip. It's going gradually. In the beginning, a farmer still has a good income, which becomes less and less. Until, at some point, he has to invest and the bank says, “We don't put any more money into that, because you can never pay it back.” They didn't survive the rat race.”
The image that is now being evoked is that supermarkets benefit. A kilo of onions costs a few dimes, but is in the store for a euro. No wonder farmers are blocking supermarkets distribution centers.
“That image is wrong. There are sometimes two or three parties between the farmer and the supermarket. They all add value. Those onions need to be kept, sorted and packaged. Supermarkets make costs with distribution centers and shops. There, too, balding takes place, it is not a gold mine. If you look at the profit margins throughout the chain, it's about percentages everywhere. I don't know any industries that make huge profits in the food chain. '
Chicken breasts fly out of the supermarket as soon as they are advertised, says Willy Baltussen.Image ANP
Three quarters of Dutch agricultural production is exported. How important are Dutch supermarkets for price formation?
'It's important, though. Prices for cheese, onions, pork and chicken are determined on the world market. But products such as potatoes and tomatoes remain largely within Western Europe. Large supermarkets also make the service there. Albert Heijn is also active in Belgium, Aldi and Lidl are everywhere. '
That rat race: do farmers impose themselves, or is it imposed on them?
“We impose them on them as a society. By saying the market is sacred. That was already set in motion after the Second World War. Initially, to make sure that there was enough food for everyone. But nowadays mostly to keep food cheap.”
Because the consumer does not want to pay more, farmers complain.
'Dutch people are raised with the thought: if you can get something for a dime, you don't pay a quarter. I know hordes of people who go through all the leaflets and tune their messages to them. We have researched chicken breasts: they flew out of the store when they were advertised. In unimaginable quantities. One part is eaten immediately, the rest goes into the freezer.
That's allowed, right?
'It helps to remove surpluses from the market. The downside is that consumers only buy cheap products. You get a price reduction that has to be left or right out of the market. In the end, it's the chicken farmer who pays for those offers. We can see that there is a growing group of consumers who are willing to pay more for sustainable products. But you have to make sure you reach it and show that something is really more sustainable. For a few centimeters more living space for pigs, they won't run faster. '
Do we help our farmers by buying only Dutch products?
“It sounds weird, but I don't think so. Three quarters of our agricultural production goes abroad. When we say that you only have to buy products from your own country, how are we going to tell the Germans to buy our stuff? Many Dutch pigs are slaughtered at Tönnies, a German slaughterhouse just across the border that supplies many Dutch supermarkets. The question is whether this pig is Dutch or German. '
Food prices in the Netherlands on the European average
Food prices in the Netherlands are a fraction above the European average. This is evidenced by figures from Eurostat, the Statistical Office of the European Union. The price index for the Netherlands is 101, the average is 100. Meat in the Netherlands is almost a quarter more expensive than the European average, bread is cheaper. Consumers in Belgium and France have lost more money for their food. Food prices in Germany are about the same level as in the Netherlands.
Only in part, says Willy Baltussen of Wageningen Economic Research, who has been researching food price formation for years. 'These arguments contain some truth, but they are also false arguments. The world is more complicated.”
Do farmers get too little?
'We have a market of supply and demand in Western Europe. On the one hand, the commissioners of the growers are responsible for ensuring that their products are sold. On the other hand, buyers of supermarkets have to fill the shelves. Those two parties know each other well. If there's a lot of supply, the buyers make laps. Because they know: if they do not succeed at A, then they succeed with B. If the proportions are reversed, then the game is played the other way around. At present, the market shows that there is more supply than demand in the long term. I can think of few products that are lacking. '
In a normal market, supply decreases when demand is reduced. Why is this not the case with agricultural products?
'Having a business is a way of life for many farmers. Then they accept that they have to live on a lower income. Most people think, “I'm good at this, I can't do anything else.” Or they hope it'll work out someday. For many farmers, the place where they live and work is the same. At the moment of stopping your business, you need to look not only for other work, but also for another house. As a result, the offer is not flexible. If you look at the number of bankruptcies in the agricultural sector, that is very low. '
But that's what they're gonna ruin it for the others?
'About 30 percent of farmers are below the low income limit. They may have power, but it's trapped in their possession. Living poor and dying rich is a well-known saying in the agrarian world. On the other hand, you have a group of farmers who make great profits. It depends on how you handle the trade. One farmer has a huge income at a milk price of 30 cents, while the other has to dwell for it. '
“Companies that move survive. This can be through innovation or enlargement. Those who linger, slip. It's going gradually. In the beginning, a farmer still has a good income, which becomes less and less. Until, at some point, he has to invest and the bank says, “We don't put any more money into that, because you can never pay it back.” They didn't survive the rat race.”
The image that is now being evoked is that supermarkets benefit. A kilo of onions costs a few dimes, but is in the store for a euro. No wonder farmers are blocking supermarkets distribution centers.
“That image is wrong. There are sometimes two or three parties between the farmer and the supermarket. They all add value. Those onions need to be kept, sorted and packaged. Supermarkets make costs with distribution centers and shops. There, too, balding takes place, it is not a gold mine. If you look at the profit margins throughout the chain, it's about percentages everywhere. I don't know any industries that make huge profits in the food chain. '
Chicken breasts fly out of the supermarket as soon as they are advertised, says Willy Baltussen.Image ANP
Three quarters of Dutch agricultural production is exported. How important are Dutch supermarkets for price formation?
'It's important, though. Prices for cheese, onions, pork and chicken are determined on the world market. But products such as potatoes and tomatoes remain largely within Western Europe. Large supermarkets also make the service there. Albert Heijn is also active in Belgium, Aldi and Lidl are everywhere. '
That rat race: do farmers impose themselves, or is it imposed on them?
“We impose them on them as a society. By saying the market is sacred. That was already set in motion after the Second World War. Initially, to make sure that there was enough food for everyone. But nowadays mostly to keep food cheap.”
Because the consumer does not want to pay more, farmers complain.
'Dutch people are raised with the thought: if you can get something for a dime, you don't pay a quarter. I know hordes of people who go through all the leaflets and tune their messages to them. We have researched chicken breasts: they flew out of the store when they were advertised. In unimaginable quantities. One part is eaten immediately, the rest goes into the freezer.
That's allowed, right?
'It helps to remove surpluses from the market. The downside is that consumers only buy cheap products. You get a price reduction that has to be left or right out of the market. In the end, it's the chicken farmer who pays for those offers. We can see that there is a growing group of consumers who are willing to pay more for sustainable products. But you have to make sure you reach it and show that something is really more sustainable. For a few centimeters more living space for pigs, they won't run faster. '
Do we help our farmers by buying only Dutch products?
“It sounds weird, but I don't think so. Three quarters of our agricultural production goes abroad. When we say that you only have to buy products from your own country, how are we going to tell the Germans to buy our stuff? Many Dutch pigs are slaughtered at Tönnies, a German slaughterhouse just across the border that supplies many Dutch supermarkets. The question is whether this pig is Dutch or German. '
Food prices in the Netherlands on the European average
Food prices in the Netherlands are a fraction above the European average. This is evidenced by figures from Eurostat, the Statistical Office of the European Union. The price index for the Netherlands is 101, the average is 100. Meat in the Netherlands is almost a quarter more expensive than the European average, bread is cheaper. Consumers in Belgium and France have lost more money for their food. Food prices in Germany are about the same level as in the Netherlands.
“It sounds weird, but I don't think so.Three quarters of our agricultural production goes abroad.When we say that you only have to buy products from your own country, how are we going to tell the Germans to buy our stuff? Many Dutch pigs are slaughtered at Tönnies, a German slaughterhouse just across the border that supplies many Dutch supermarkets. The question is whether this pig is Dutch or German. '
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