The environmental damage caused by agriculture in the Netherlands is much greater each year than the economic yield of the sector. The added value of agriculture is 13.3 billion euros, while the costs due to emissions and loss of biodiversity amount to 18.6 billion. This leaves an annual damage amount of 5.3 billion euros.
Financial consultant Deloitte calculates this in its social cost-benefit analysis The hidden account. It is the first time that an accountancy company has made such a factual analysis of the entire agriculture (arable farming, livestock farming and horticulture). The Robin Food Coalition and the Food Transition Coalition – both advocates of sustainable agriculture – commissioned the study published on Thursday.
Social costs are largely borne by later generations; this concerns, for example, expenditure on health care, repair of environmental damage and adaptation to a warmer climate. has the largest share in hidden costs according to Deloitte greenhouse gas emissions (7.9 billion euros per year) and nitrogen emissions (7.2 billion). The loss of biodiversity due to agricultural activities (2.5 billion) is also a problem.
Solid indication
“I am surprised by the magnitude of those social costs,” says agricultural economist Krijn Poppe, one of the scientific supervisors of the report. “Nevertheless, the calculations have been conservative, and that is necessary with such a study. It is about the solid indication that you want to show. These figures indicate that the problem is acute.”
The largest share of these hidden costs is greenhouse gas emissions (7.9 billion euros per year) and nitrogen emissions (7.2 billion).
According to Poppe, who was previously associated with the Wageningen Economic Research research center, many people will be tempted to blame farmers for the costs being so high. “That is of course nonsense. In general, it is due to the system, the way we have organized it. Consumers choose low prices, and it is very attractive for the food industry to be in the Dutch delta.”
Because part of the problem, such as excessive nitrogen emissions, is due to congestion, according to Poppe: too many farms in too small an area. “Parts of France are now being forested because agriculture there is no longer competitive. Unfortunately, there is no European policy for spatial planning that ensures good distribution within the European Union.”
Organic farming
Current agricultural production is sufficient for 2.5 times the population of the Netherlands. The report also discusses alternatives that involve less intensive and more organic farming, and where the emphasis is more on vegetable proteins than on animal proteins. If all farmers switched to organic farming, the negative impact (damage minus yield) would decrease from 5.3 billion euros to 1.1 billion, according to Deloitte. For example, organic farmers do not use pesticides and fertilizers.
The production of animal proteins has a greater negative impact on the environment than plant-based proteins.
Photo Sem van der Wal/ ANP
Organic farming is less intensive and leads to lower production. If the entire sector does it, it can ‘only’ feed 1.7 times the Dutch population. Consumers will notice this lower production in the prices. Nowadays, organic products are on average half as expensive as non-organic ones. Given future economies of scale, Deloitte expects this price difference to gradually reduce to 30 percent.
Deloitte also calculates a third scenario, in which not only organic farming takes place. More investments are being made in innovation, both in terms of agricultural methods and the electrification of machines such as tractors. Furthermore, the emphasis will be on vegetable proteins, instead of animal proteins. This does result in a positive balance. The social costs are 2.7 billion euros, much lower than the value that agriculture adds.
According to Poppe, it is up to the government to quickly come up with a vision of how the Netherlands should organize its food production. “That should not be an excuse to do nothing for another two years. We have seen that often enough now.”
Reward system
According to the agricultural economist, a clear choice must be made. “Do we want to continue to focus on large-scale, export and low prices? Or do we say: agriculture is not only food production, but also a great instrument for keeping the areas between cities open. To manage that space – more nature and recreation – you must create a reward system for farmers.”
In practice, it will not be a choice between scenarios as Deloitte describes, according to Poppe. “I think that as a government you should say much more: these are the emissions that we will still tolerate in 2035 or 2040. Then you automatically focus on more extensive farming and innovation. This report also makes it clear that a standstill is not sustainable. We must stop looking for goat paths for separate files.”
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