Policies for the future of farming and food in the Netherlands

Immediate action is required to protect vulnerable nature areas and address other longstanding environmental challenges.

The country’s Agricultural Knowledge and Innovation System (AKIS) is strong and has an important role to play, but innovation alone is not sufficient to solve all problems and some adjustments to the sector will be required.

The government should set rules and policy incentives to clearly define environmental limits in a way that directs the AKIS towards public objectives while providing planning certainty for farmers.

A modern, efficient sector facing serious challenges

The Netherlands has an innovative and productive agriculture and food sector, competitive in global markets on both price and quality. The Netherlands is the second largest agricultural exporter in the world, in part due to its role as a major trading hub for Europe. Dutch agriculture

is highly efficient, and many products have relatively low emission intensity of production when compared with other countries. The environmental footprint of the sector per unit of output has been steadily improving via productivity growth and technical innovation.

Agro-food trade in the Netherlands is up 400% over the last 20 years

A strong innovation system led by the private sector has been a key driver of high productivity and is a central feature of policy – but innovation has not been able to solve environmental problems. A 2019 ruling by the Council of State requiring lower nitrogen deposition on “sensitive nature” made clear that some readjustments to the sector are required. Reducing nitrogen deposition from ammonia emissions to the point where it no longer threatens sensitive nature cannot be achieved by technological improvements alone, and maintaining current production systems will not be possible everywhere. This marks an important turning point for the sector, and significant financial resources have been allocated to support the transition to more sustainable agriculture.

The government has adopted an approach to reducing ammonia emissions that considers the local context when determining the amount of emissions reduction. This approach seeks to ensure that reductions are as cost-effective and efficient as possible. Working closely with local governments and stakeholders can also help to build consensus. The national government is responsible for setting, funding and achieving objectives, while the responsibility for planning and implementing emissions reductions has, to an important degree, been devolved to regional governments.

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Policies for the future of farming and food in the Netherlands

Agro-food trade, 2000 to 2021

Note: The Netherlands is the largest importing country within the European Union and is the second largest exporter of agricultural products in the world (by value), after the United States. Exports of agricultural goods (primary unprocessed goods and secondary processed goods) totalled EUR 122.3 billion in 2022. Of this, EUR 79.8 billion was domestically produced goods and EUR 45.2 billion in re-exported agricultural goods which originated from other countries. In 2022, an estimated 16.7% of Dutch goods exports were agricultural goods .

About 70% of land area has some level of excessive nitrogen deposition

Nitrogen deposition harms biodiversity by displacing local species adapted to nutrient-poor ecosystems. While the situation is improving with respect to the amount of excess nitrogen deposition, the amount of land area where deposition has exceeded limits has not changed

much over time. Agriculture represents 60% of domestic sources, and 40% of the total including emissions from abroad. This is mainly from dairy operations that emit ammonia to the air which then returns to nearby areas as nitrogen.

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Agro-food exports Agro-food imports

Policies for the future of farming and food in the Netherlands

Longstanding sustainability issues must be definitively addressed

Addressing other issues such as GHG emissions, water quality and biodiversity will also require difficult choices as targets in many cases remain far off. The OECD’s AgriEnvironmental Indicators show that nitrogen surpluses – a key challenge – have not improved since 2008, and are well above the EU average. Water stress, while low

in absolute terms, is above the OECD average, rising, and sensitive to the effects of climate change. Farmland bird populations are now only 54% of 1990 levels. While relatively more spending is directed to farmland than to natural areas, the outcomes in terms of biodiversity improvements on farmland have been generally worse.

Target species doing worse in agricultural areas compared to natural areas

A 2015 OECD Agriculture Innovation Review recommended that the Netherlands strengthen the ability of agricultural policy to improve the environmental performance of agriculture by focusing on objectives and outcomes and revisiting the balance between regulation and economic incentives The Netherlands has made many improvements that align with these recommendations. For example, the agricultural education system now brings together farmers and research institutions to enable change at the farm level. However, the farm advisory system has still not fully adapted to the need for holistic advice regarding farm sustainability.

The world-leading research capability of WUR and the close partnership between public institutions and private enterprises are strengths of the system. However, research still emphasises productivity improvements, and farmers engage much more readily with the AKIS for productivity innovations than for environmental performance

improvements. Stronger government leadership is needed to ensure that public investments are used effectively to produce public benefits.

The circular vision for agriculture put forward in 2018 expresses the government’s aspirations for the sector. This vision needs to be made more concrete and compelling to change the mindset of all actors in the sector, and needs to be more present in the policy making process if ambitious long-term goals are to be realised. Policy stability continues to be an area where more work is needed. Environmental legislation has been continually strengthened, though as a result of missed targets. This frequent revision of rules and regulations has led to perceptions of government policy as a major source of risk to farm businesses. Providing policy certainty requires maximising the probably that targets will be met by ensuring that the sector operates well within environmental limits rather than at the edges of them.

Note: In natural areas, the average numbers of target species of vascular plants and summer birds increased compared with the 1975-1989 period, but these decreased in agricultural areas. Species that make the highest demands on their habitats are becoming increasingly rare. Long term trends are even worse: since 1900, plants on arable fields have declined by 35%; grassland butterflies by 80%, and characteristic birds of open farmland by 85%.

The long-term prospects for the sector remain good

Many opportunities remain for the agriculture sector in The Netherlands, and its future is bright. But that future can only be made a reality if main sustainability concerns are addressed, and as quickly as possible. Delay brings

only higher costs, uncertainty and reduced prospects for the future. Once on sustainable footing, the sector will be better placed to seize future opportunities.

Recommendations for improved policy in the Netherlands cover four main areas:

Reduce environmental pressure on the sector quickly and accelerate the transition to a sustainable future. Environmental limits need to be clearly identified to provide policy certainty for farmers. Decisive action in the short-term to bring the sector into a sustainable path should be combined with a strong government vision of a viable future for the sector. Deeper engagement with stakeholders, including with respect to agendasetting, can increase buy-in and help make policies less susceptible to short-term political forces.

Realign economic and regulatory incentives to ensure that the private sector is fully responsive to environmental pressures. Clear policy objectives combined with better data and analysis can reduce uncertainty for farmers and induce innovation. Defining responsibilities for regional and local governments and other stakeholders can set the stage for effective partnerships. Building upon the success of existing innovative agri-environmental programmes can make results-based approaches a larger part of the policy framework.

Develop an ambitious strategy to create a data-driven sector that can assess and monitor its economic and environmental performance. Develop a strategic vision for the sector that provides clear priorities towards an environmentally sustainable path and improve the government capacity to lead innovation in that direction. Use data to design and implement better policies based on results and to inform farmers regarding their environmental performance. Create an overall data strategy to lift barriers to digital technology adoption on farm and by advisory services.

Keep the strengths of the innovation system while boosting its capacity to improve the sustainability of the sector. Making incentives for social and environmental sustainability factors more present in the innovation system requires reflecting environmental limits in regulation and markets, targeting funding towards environmental innovation and a stronger government role in agenda-setting in the AKIS. Advisory services need more capacity related to adoption of environmental sustainability innovations. Farmers need more incentives to engage with knowledge opportunities by linking on-farm environmental planning to existing support programmes.

• Policies for the Future of Farming and Food in the Netherlands

• Innovation, Agricultural Productivity and Sustainability in the Netherlands

• Innovation, Productivity and Sustainability in Food and Agriculture

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