在荷兰看农业

    --荷兰农业发展的经验对中国的启示

厉为民

                          一、序言     二、英语简介   三、目录

序：荷兰奇迹

荷兰，这是欧洲的一个小国：人口1 600万，相当于我国的上海市；国土面积4万多平方千米，大约是江苏省的2/5。

可是，10多年来，在世界农产品净出口额^[1] 的排行榜上，荷兰一直是仅次于美国的“银牌”得主！

这里没有包括园艺类产品（鲜花、观赏植物等）和渔业产品。这些产品荷兰都有大量的净出口，而美国则有大量的净进口。^[2] 加上这两类产品，荷兰的净出口值就增加到了176亿多美元，而美国变为148亿多美元（都是1995~1999年平均）。可见，在农产品净出口方面，荷兰是真正的“世界冠军”。

从世界农业的视野来看，荷兰还赢得了多块“金牌”：

一、农产品出口世界第一

1．人均创汇率高。按荷兰农业就业人数计算，每人平均的年出口值超过14.06万美元^[3]。

2．出口增速最快，在1961~1999年间，荷兰农产品净出口额约增加45倍。

3．单位面积土地创汇率高。荷兰平均每平方米农用地的出口额为1.86美元。

4．除了享誉全球的鲜花、观赏植物等占据世界第一外，荷兰种用马铃薯出口占世界市场的60%以上，鸡蛋（包括蛋制品）、啤酒、番茄、奶酪等的净出口额均名列世界第一。

二、土地生产率名列世界第一

荷兰的土地生产率（1991年）为2 468美元/公顷^[4]，名列世界第一。

三、设施农业世界一流

1．水利和防洪设施标准极高。荷兰的防洪大坝的防洪标准至少是1 250年一遇，有的甚至达到“万年一遇”。

2．荷兰的玻璃温室面积达到1.1万公顷，约占世界的1/4。

荷兰的农业人口不足世界的0.02%、耕地不到世界的0.07%，出口的农产品占了全世界的9%（花卉等还不算在内）！这些比例是如此“不相称”，荷兰有什么“秘密武器”吗？

荷兰的农业奇迹是怎样产生的？荷兰有什么“诀窍”吗？

本书就试图回答这个问题。

本书分为四大篇：

第一篇是“总论”，对荷兰农业发展的经验作了概括的描述，从全球的视野、与我国农业的比较中观察荷兰农业。在分析荷兰农业结构变化及其影响的同时，描述了荷兰农工商综合体产业链条各个环节的互相关联，介绍了为“农业奇迹”作出重大贡献的支持系统，展示政府在其中的作用，试图通过多侧面的分析和比较，全面揭示荷兰“农业奇迹”发生的内在原因。

第二篇是“探索和讨论”，从理论上进一步揭示荷兰“农业奇迹”的秘密。古人云，“以人为镜，可以明得失”。作者通过国际比较（特别是日本与荷兰的比较），力图将荷兰的成功经验升华，使之具有一定的理论深度。从日本遇到的问题中，我们可以更好地理解和借鉴荷兰的经验。这些大都是一些思想的“火花”，希望得到读者的批评指正。

第三篇是“所见所闻”。这是作者在荷兰的亲眼所见、亲耳所闻的“故事”，也是本书的特色所在。基本素材均来自作者在荷兰各地考察时所做的工作日记。从这些第一手的资料中，读者可以真实地感知荷兰农业的现状。

在总结性的第四篇，作者谈了自己对学习荷兰经验的一些看法，提出了一些政策建议。

作者想把这本书（尤其是第三篇）献给我国农民。作者衷心希望：我国农民能够看到这本书，通过这个窗口，特别是从作者本人那些所见所闻得到启示，能够在致富的道路上看到新的希望，找到新的思路，开辟出一片新的天地。

作为中国、荷兰两个农业经济研究所合作项目的成果之一，作者特意撰写了详细的英文摘要，以利国际交流。荷兰农业经济研究所（LEI）的同行对文字作了不少修改，增色不少，作者对此深表感谢。

本书的出版得到了LEI多方面的帮助，包括资金方面的赞助，作者再一次表示深切的谢意。

厉为民

2003年5月于北京

Dutch Agriculture Through the Eyes of a Chinese Economist

- The Experience of Dutch Agricultural Development and Its Importance for China

The Netherlands is a small and densely populated country. Its population accounts for about 0.26% of the world, while its agricultural land only 0.068%.

However, most people do not know that such a small country has won so many “gold medals” in the world: the net export value of Dutch agricultural products and foodstuffs increased 45-fold in a period of 39 years (from US $318 million in 1961 to $14,269 million in 1999[i]). How did these enormous changes take place in this country?

During the period 1995-1999, the Dutch annual net export value was US $15.53 billion, while that of the United States was $20.64 billion. Besides, the Netherlands had an annual net export value of about $1.81 billion for flowers and ornamental plants, and $296 million for fishery products in this period, while the USA imported $5.79 billion (net) per year for these products. That made the former a bigger exporter at about $17.64 billion per year, while the latter amounted to only $14.85 billion. The Netherlands is therefore, without doubt, the “first violinist” in world agricultural produce and foodstuffs exports, once imports have been deducted.

That is a veritable miracle! What is the secret behind it?

This book tries to identify the reasons for the success of this small country, based on detailed statistical data and, in particular, the author’s field trips in the Netherlands and decade-long observations and research.

The book is divided into four parts:

n         General Review (Chapters 1-7);

n         Probing the “Secrets” (Chapters 8-10);

n         Observing Dutch Agribusinesses (Chapters 11-14), and

n         Learning from the Netherlands (Chapter 15).

Part One: General Review

This part gives a general and fairly comprehensive review of the Dutch agricultural sector, or agricultural complex, from farms to market chains, from infrastructure to the institutional issues. In order to probe the “Dutch secret” in depth and from different angles, the author processed numerous reliable statistical data sources from LEI (Agricultural Economics Research Institute, the Netherlands), the Food and Agriculture Organisation (FAO) and other authoritative organisations, and has found some unexpected results, contradicting some widespread notions about agricultural exports in the world.

Chapter 1. The Netherlands: People and Country

This chapter introduces this European country, the Dutch character and its agricultural resources. Chinese readers will notice that there are many comparable aspects between the Netherlands and China (especially the Yangtze Delta), and the Dutch and Chinese people.

The share of agriculture in the Dutch national economy is not large (3%), as is the case in most industrialized countries, while the output added value of the whole agricultural complex makes up 11.7%.

The author compares the Netherlands with its neighbouring countries (Belgium, France and Germany), Japan, and the United States to show the uniqueness of Dutch agribusiness in the world. During the period 1995-1999, Japan (with 2.2% of the world’s population) accounted for 10.6% of the world’s imports, and its average net agricultural import amounted to $51.6 billion per year.

As far as the United States is concerned, its land area per capita is 11 times that of the Netherlands, its agricultural population 12 times larger, and land area per agricultural labourer 16 times that of the Netherlands. How did the latter manage to catch up and to surpass the world superpower in net exports of agricultural and food products?

Chapter 2. The Vitality of Farms

Farms can be compared to the cells in a living organism. It is easier to analyse the agricultural performance in different countries by studying their individual farms. This chapter answers several essential questions: Who produces food? How many farmers are producing? What kind of people are they?

Family farms are dominant in the Netherlands, and the whole farm system is a dynamic one. Their number has been declining for a long period, while their average size has been growing. This is associated with a mechanism for farmers to leave the agricultural sector. This also can be compared with the process of metabolism in living things. In a highly competitive economy, only strong farms, which manage their farms according to market demand and closely follow the latest changes in technologies, can survive. The workers of the relatively poorly managed farms, having failed to stand firm, therefore choose to work in other sectors of the economy. They sell their land or end the land-leasing contract. The land would pass into the hands of a competitive farmer who feels his farm would otherwise be too small to make full use of his potential production capacity. In fact, the number of farms in the Netherlands almost halved from 1950 to 1980, and decreased from 145,000 in 1980 to less than 100,000 in 2000.

The number of agricultural workers decreased from 282,000 in 1994 to 268,000 in 2001. On average, a Dutch farm had 2 family workers and 0.89 hired workers in 2001. The percentage of farm workers within the total labour market was very close to that of the agricultural sector within the national economy. This is an important indicator, explaining why the average farmer’s income is comparable to that of an urban worker.

Farm size has been increasing significantly during the last several decades. The size can be examined in two ways: firstly, in absolute terms (hectares of land, or number of animals), and secondly in “Dutch size units” (DSUs), which measures a farm according to its standard gross margin. This is comparable with gross added value. For example, only 14% of dairy farms had 50 cows or more in 1975, while this percentage increased to 54% by 2001. The same is true for other kinds of farms. In the case of seed potatoes, large farms of 10 ha or more accounted for 11% of all farms in 1975, but in 2001, their share reached 42%. One DSU was equal to 1,390 euro in 1998. It is useful to measure the size of different enterprises. For example, in terms of DSUs, 1 ha of round tomatoes cultivated under glass is 141 times larger than 1 ha of wheat in the Netherlands.

It is interesting to note that with a very small land area per capita (less than 0.06 ha), the average farm size in the Netherlands (18.6 ha) is in fact bigger than the EU average (18.4 ha), and about 5 times that of the EU if this is calculated in terms of standard gross margins at the European level (84.11 as opposed to 16.67 European size units, ESU).

About 90% of Dutch farms are specialised. This is more typical in the horticultural sector: some only produce tomatoes, some only grow roses, some only mushrooms. Specialisation can be understood as an effective measure to “compensate” for the limited space available to increase the size of a farm. The number of mixed (less specialised) farms declined much more rapidly, reflecting their relatively poor performance and viability. A high level of specialisation is an important factor in the enhancement of the competitiveness of Dutch farms.

Higher efficiency results from specialisation, because there is a stronger incentive for these farmers to acquire new knowledge and to improve their management methods. Their income is totally dependent on their farms. For example, egg farms only care about their laying hens; cooperatives and different companies (pedigree breeding and hatchery farms, egg collectors and packers, wholesalers and manufacturers) help them in all sections of the chains, from supplies to marketing and processing. There were 3,416 poultry farms in the country in 1999, while the number of enterprises associated with this sub-sector totalled 2,128! These enterprises not only helped poultry farms to raise their productivity, but also generated thousands of job opportunities.

Chapter 3. Production Structure

This chapter, with 13 statistical tables, portrays a comprehensive picture of the primary sector of the Dutch agricultural sector. Naturally, resource endowment plays an important role in the agricultural development of a country. However, from the perspective of changing production patterns in the Netherlands, it is evident that the natural resources alone do not determine the sector’s performance and competitiveness in the international market. With limited natural resources, Dutch farmers are quick to respond to changes (e.g. changes in the world market, EU policies), to make the right decisions and to adjust themselves according to the new market setting. The changed Dutch agricultural production patterns are based on the comparative advantage of the country, and helped the sector to sharpen its competitive edge.

There are many comparable features between the Netherlands and the Yangtze Delta of China. Their agricultural mix, however, differs significantly. Climate conditions and traditional consumer preference are, of course, important factors relating to these differences. Another related factor is the purpose of production – for own consumption or for export, especially when China suffered from food shortages two decades ago.

There are about 1.93 million ha of agricultural land in the Netherlands. Of this total area, just over 2/5 is for arable farming, while more than half is used as grassland for grazing. In other words, the ratio between arable land and grazing land is about 1:1.25. Horticulture accounts for the rest – about 6%. Some Chinese people may be puzzled by such a land-use pattern, as land-use in China is directed mainly to arable production.

The total agricultural production value was €18,337 million in 2001, 2.1% of the GNP of the Netherlands. Crop products (including horticulture) contributed €10,145 million, while livestock farming accounted for €8,190 million. In the same year, the Dutch agricultural complex exported €45,725 million and imported €26,582 million. Net exports were €19,143 million.

Horticulture is far more important than arable farming in the Netherlands. The ratio of the production value of horticulture and arable crops was about 4:1 in 2000. When people talk about horticulture, they usually specify the type: open field or glasshouse, vegetable or flower, and bulbs or cut flowers. This is also due to high-levels of specialisation in this sub-sector. The crops in arable farming include potatoes, sugar beet, cereals (wheat or barley), fodder maize, etc. Potatoes and sugar beet are the most important arable crops. However, farms cannot specialise in these crops because crop rotation with cereals is necessary to preserve land fertility.

Livestock farming was the most important sub-sector in agriculture. In the past several decades, however, due to the fast growth of horticulture, and also due to the EU quota system and environmental concerns, livestock farming has been facing more constraints and hence its importance is declining. In Dutch terms, there is difference between so-called intensive livestock farming (pigs and poultry) and grazing livestock farming (dairy and beef cattle, sheep and horses). This division also reflects the specialisation of farms.

In ancient times, the name Holland itself meant “country of wood”. However, forestry in the Netherlands today accounts for quite a small area, only 3,233 square kilometres, or 13.7% of land territory. Timber has to be imported. The country encourages afforestation and the protection of forests in particular for recreation and nature development.

The Netherlands is a net exporter of fishery products. The output value of fishery was €510 million in 2001. The EU has also introduced a quota system for catches in the North Sea. The quota on the famous Dutch herring allowed 41,240 tonnes to be caught in 1997. In the meantime, aquaculture has grown considerably, especially in the Wadden Sea and the Oosterschelde waters. The total area amounts to about 7,500 ha.

There is a clear relationship between structure and productivity in agriculture.

It is a common phenomenon in the world that limited land is taken over by various non-agricultural purposes as the population grows and welfare increases. This can also be observed in the Netherlands; its agricultural area is being reduced over time. Moreover, the number of farm workers has declined. On the other hand, the Dutch primary sector has increased its output of some agricultural products many times during past decades. Its export volume has surged a dozen times over. How was this possible?

This is clear evidence of increased productivity in the Netherlands. This was possible as a result of the aggregation of many strong points of the Dutch farming system.

The solution was to strengthen the production factors, especially the human capital as an important catalyst for productivity growth. This has been reflected in a far-reaching process of the substitution of capital and technologies for land and labour. That has been accompanied by ongoing structural changes in Dutch farm system – a continuous decline in the number of farms and the amount of labour employed in the agricultural sector.

Chapter 4. From Field to Table

This chapter answers the following question: for whom do Dutch farmers produce, and how are their products efficiently distributed domestically and internationally? “Produce for the market” is often the credo of all producers, but it is not easy to do so without efficient supply-distribution chains.

The marketing chain in the Netherlands has been continuously extending and improving. From the supply side, seed and feed play an important role in Dutch arable farming, horticulture and livestock farming. Most plant and animal products do not go to consumers directly. The strong processing industries in the Netherlands not only create more utilities (time, place and form), but also generate output value. Moreover, the food and beverage industries generate tens of thousands of job opportunities. This chapter gives some examples (dairy, meat, potatoes, sugar, etc.) to show their significant contribution to Dutch exports.

The Dutch auction system is well-known worldwide for its marketing of perishable products. This is a genuinely unique and efficient way of selling flowers, ornamental plants and vegetables to domestic and foreign wholesalers and retail outlets in large quantities, and in just a few hours. This system improved the price-setting process for the growers.

Nowadays, food safety has attracted much more attention than before. This chapter shows how the Dutch agricultural sector strengthened food quality control by adopting a series of quality standards and systems. GMP feed, KKM (Keten Kwaliteit Melk, Chain Quality Milk), IKB (Integrale Keten Beheersing, Integrated Chain Management), and many other measures, for example, have been introduced in the dairy quality control system.

Chapter 5. Big Imports and Big Exports

Dutch farmers are strongly export-oriented because the domestic market is too small and the Netherlands is situated in a densely populated part of the world with great and growing purchasing power. Trade has been an important policy of the Dutch government for centuries.

Land is a non-tradable production factor; nevertheless, grain and oilseeds produced on land are the most common tradable goods on the world market. The Netherlands imports large quantities of cereals and feed to feed its millions of pigs and hens, and industries then process pig meat, poultry meat and eggs for export, thus creating great added value and numerous job opportunities.

Without a large quantity of imported goods (feed for animals and materials for the processing industries), the Netherlands would never have become a large exporter of agricultural products and foods, let alone the number one net exporter in the world! “Using world resources” is the solution to break through the limits of the small territory of the Netherlands.

Large imports, however, are not necessarily linked with large exports (cf. Japan or the former Soviet Union). The core lies in the competitiveness of the Dutch agricultural sector. This can be shown by examining its trade pattern. The Dutch agricultural sector does not export everything in large volumes. Some products are lagging a long way behind, some rank number one or two in the world export market. According to FAO statistics and other sources, among the Dutch commodities ranking first in the world net export, the most important are as follows: cut flowers, bulbs, ornamental plants, tomatoes, potatoes, eggs in shell, cheese, barley beer, cocoa cakes and cocoa butter. Pig meat, chocolate products and tobacco (unmanufactured) rank second.

The Dutch agricultural sector gained its competitive edge by means of: a) applying capital-intensive and knowledge-intensive technologies; b) altering methods of production, for example growing flowers in greenhouses all-year round; and c) adding value through sophisticated processing technologies.

The open economy of the Netherlands and its export-oriented agricultural sector has many merits for the national economy. That is reflected in the following: a) The clear comparative advantage of the country. The self-sufficiency ratio varies greatly – from 25% (cereals) to eggs (252%) and vegetables (256%); b) Stimulating technical innovation as a result of very frequent information exchanges; and c) Developing and maintaining friendly relations with all trade partner countries. In critical times (e.g. the late 19th century, with the introduction of the quota policy in EEC, and environmental pressure), the Dutch government and the agricultural sector managed to adjust quickly and wisely to the new situation.

The importance of imports is often underestimated. However, imports as a component of an open economy play a crucial role in the restructuring of Dutch agricultural production and exports.

It is recognised that economic growth in a country depends, in the short run, on investment, consumption and export. A larger net export contributes greatly to the country’s GDP growth. However, in the long run, the sources of economic growth are an increased supply of factors and higher total factor productivity (TFP). The factors includes capital (e.g. land-intensive products, inflow of foreign capital) and labour force; TFP growth is realised through the optimisation of farm structure and size, institutional innovations, technological advances, and breakthroughs in alleviating the scarcest constraining factors in a particular country. An economic interpretation of the significant contribution of “big imports” by the Dutch agricultural sector is quite simple: the obtaining of scarce resources from the world market, where the costs are lower. This strategy resulted in specialisation not only of the individual farms but also of the whole agricultural system.

Most of the goods that the Netherlands imports fall within three categories:

a) Land-intensive goods, such as cereals, beans, oilseeds and feed, which have become the material basis for livestock farming. In the period 1980-1999, feed imports totalled $6.84 billion, but that is still little compared to the export volume of animal products. The output-input ratio was very profitable;

b) Tropical commodities, such as cocoa, coffee, tobacco, tea, cassava and tropical fruits. Some of them have been intensively processed and re-exported (e.g. chocolates and tobacco). This can be labelled as “zero-resource economy”; and

c) Products that are supplied domestically in great quantities, yet are not enough to “feed” the processing industry. Milk is a good example. Milk output in the Netherlands is about 700 kg per capita. The dairy industry demands a greater supply, but the quota system has built a high barrier for Dutch farmers trying to meet this requirement. It is more profitable to import milk from other countries than to produce it domestically. Careful calculations show, for instance, that the Netherlands imported 663,000 tonnes of milk (average for 1997-1999) at $329 per tonne, while exporting 236,000 tonnes at $786 per tonne (based on FAO statistics). Its net import of milk cost about $21 million, while its net export of cheese alone reached $1,374 million! Again, the benefits are not confined to increased export earnings. One only has to look at the number of workers employed in the food and beverages sectors.

The last paragraph in this chapter discusses an interesting issue: Why does this only happen in the Netherlands? Nobody in the world seems to understand this “secret”, except for Dutch businessmen.

Firstly, the country enjoys a favourable geographical environment and mild climatic conditions. Dutch businessmen have been smart traders for several centuries. But this is only a partial explanation. Among the billion Chinese people, there must be millions of capable businessmen.

Secondly, this country has established a unique production structure, producing high-value commodities. Dutch farmers count profit in terms of square metres. This occurs only in the Netherlands! In the 1880s, when cheap American grain expanded its share in the European market, Germany and a number of other countries chose to “protect” their farmers. The Dutch government insisted on a free trade strategy, encouraging the farmers to raise animals using the cheap feed. Meanwhile, it took the initiative to improve agricultural education, research and extension. Once the quota system had been adopted in the EEC, the Dutch farmers, losing no time, actively responded to the new situation. In the dairy industry, for example, marginal farms terminated milk production and sold their quota rights to other dairy farmers. The latter, confronted with the quota system, would try even harder than before to reduce his costs to improve profitability. He would buy the quota to enlarge his farm or use his land in other directions (e.g. meat production). Poultry production increased rapidly because it became more profitable. All this shows the superior ability of the Dutch people to discover potential market opportunities and to adapt to new trade systems.

Thirdly, the majority of Dutch farms are highly specialised. This is not the case elsewhere. In addition to that, they have very efficient cooperatives. They are strongly export-motivated and oriented. To become a winner in the highly competitive international market, they need to continually increase their expertise, upgrade the quality of their products, and expand their range and so on. Technological innovations reinforce their competitiveness in the world market.

Other essential factors are historical, cultural and social factors. As a reflection of the never-ending struggle against water, the Dutch people have forged a unique “polder model” in their lives. Most economic issues (i.e. conflicts of interests) can be solved peacefully, though usually in a time-consuming manner, through consultations between all stakeholders, the government, employers and employees. Dutch society is characterised by its tolerance and accommodating nature. In centuries past, Holland became home for many immigrants (including talented technicians and craftsmen) from other countries, who were forced to leave their native land for various reasons.

A combination of the above-mentioned factors, as the author suggests, forms a basic explanation for the trading success of the Dutch.

Chapter 6. Three Pillars of Development

The pillars refer to infrastructure, cooperatives and farmers’ organisations, and the OVO-triad (onderzoek, voorlichting en onderwijs research, extension and education). Dutch farms would not be so efficient without them.

The first section shows the great achievements in water control, polder development, land consolidation, road and highway construction, Schiphol plus its efficient airline services, etc.

The second part gives a brief introduction to Dutch farmers’ cooperatives and their contributions to the agricultural sector. Their most important function is to transform “small” into “large”, i.e. to make each individual farm part of a large supplier in the competitive market. Solidarity, consultation and confidence in cooperatives are pillars of the Dutch economic order. Most Dutch farmers join three or four cooperatives because they feel common interests with them. Dutch cooperatives, like the farms, are generally specialised: supply cooperatives are skilled in buying high-quality seeds, fertilisers, feed, and machinery. Auctions are specialised in selling flowers, ornamental plants or vegetables, with comprehensive services including delivery to the trucks or airport. Those cooperatives specialised in processing are usually strong companies, which produce all kinds of quality foods. The most interesting and unusual is Rabobank, which is a farmers’ cooperative and has grown into a very strong multinational enterprise, providing financial services worldwide. With the bank’s relatively low interest rate and attentive services, Dutch farmers are able to renovate their technologies to raise productivity and therefore profits.

The Dutch knowledge innovation system itself is an example of innovation. This is reviewed in the third section.

Several centuries ago, the Netherlands began to attach importance to attracting know-how and talents and technical transfers. Even today, it is surprising to learn that the Dutch authorities not only rewarded talented people for their inventions, but also issued patent certificates to protect them, including immigrants. It was probably the first country in the world to do this. In the Golden Age, Amsterdam became the commercial centre of Europe; a centre not only for currency exchanges, but also for information and knowledge. Technological innovation is one of the most powerful engines at the disposal of the Dutch agricultural sector in terms of competitiveness.

Examining the Dutch knowledge innovation system from this historical background allows us the chance to better understand its fundamental characteristics. This system has set a clear target to directly benefit its final clients – farmers and agribusinesses. This system is a mutually-reinforcing one: the knowledge-generators keep constant and close relations with the final users, and receive feedback from them about their actual needs. It is a system with wide participation from enterprises and farmers’ organisations. This knowledge and dissemination system is therefore full of vitality.

The Dutch government is the organiser and coordinator of the knowledge and innovation system. It is responsible for agricultural education. It is the main investor in this system, but also encourages private enterprises to contribute their resources to formulate and strengthen human capital. The recent reorganisation of DLO and its integration into Wageningen University and Research Centre was an important event in the Dutch knowledge innovation system.

Chapter 7. Institution, Strategy and Policy

It is impossible to maintain sustainable economic and social development without a capable government. Unfortunately, not every country in the world has a good government. A capable government can be understood as a “scarce resource” in economic growth. Other than normal production factors, the government provides the following “products”:

Institutions. As the World Bank noted, institutions are rules, enforcement mechanisms, and organisations. “The wrong kind of rules can actively discourage the creation of wealth.”^[ii] “Effective institutions are those that are incentives-compatible.”^[iii] A good institution results in a good mechanism. This means that a good institutional arrangement leads to a better allocation of scarce resources, higher productivity and competitiveness. This chapter demonstrates the unified management of the whole chain of the agricultural complex in the Netherlands within the framework of the Ministry of Agriculture, Nature Management and Fisheries (LNV), and the effects of land legislation and land consolidation projects. As for the “informal institutions”, the Dutch cooperative and farm organisation systems are good examples. Initially, they grew on the basis of a private initiative. To a certain extent, they are supported and promoted by the government.

Development strategy. A good strategy determines the right direction of development. For instance, what should the Dutch government have done when farmers were suffering due to large imports of American wheat? All reports after the event told us that the strategic choice made then was right to maintain the comparative advantage, and enabled the Dutch agricultural sector to compete on the international market.

Policies. Policies are the goals and measures to achieve the desired outcomes by the responsible institutions. Good policies come from good institutions and policy-making procedures. Examples are the Dutch policies on knowledge generation and dissemination, structural policies, and environment policies. This section shows the effects of Dutch agricultural policy (within the framework of EU policy), and how the farmers benefited from this.

Services. The government should provide different kinds of public goods and services, efficiently and at the right time. This category must include also a peaceful environment for the people – both domestic and international. That is the precondition for a steady growth of the economy. All types of services must contribute to the welfare of the whole nation.

Part Two. Probing the “Secrets”

This part includes some of the thoughts of the author or reflections from research carried out by him in the past, but with new findings during recent years, in constant comparison with the Dutch experience. Some of them can be seen as “hypotheses” due to the absence of sufficient historical documents or a lack of empirical studies. However, the author wants to share his views with all readers and awaits their comments.

Chapter 8. Sources of High Efficiency

This chapter covers three topics:

1. The efficiency of agriculture in land-scarce countries

Both China and the Netherlands face the problem of a very limited amount of land per capita. How can China break through this barrier and build a highly efficient agricultural system? This section summarises the Dutch experience, to answer this question from a technical perspective.

a) Substituting labour for land. In former times in the Netherlands, wetlands were drained through manpower and the use of windmills.

b) Improving the infrastructure. The land reclamation project in the Netherlands increased the land area (through the creation of polders). Greenhouses are an example of the substitution of scarce land with capital (and techniques).

c) Creating wealth through knowledge. A fertile hectare sown with improved seeds is the equivalent of several hectares of ill-managed land sown with low-yielding seeds. Soil-less cultivation makes it possible to grow flowers and vegetables on land which was originally not suitable for agriculture. Modern techniques have shortened the period of time required for seed production, with a significant improvement of seed quality and higher yields. The same is true for the selection of the best cows. Biotechnology can have many different functions. All this is a result of advanced expertise and its application.

d) Reducing the loss and damage of resources. Improved storage and processing techniques reduce post-harvest loss of crops and also add time and location utilities, which is equivalent to an increase of scarce resources.

e) International (or interregional) exchanges of abundant resources for scarce ones. The “large-scale imports and large-scale exports” strategy has helped the Netherlands to overcome the constraints of limited resources in its small territory.

The man-made resources – technologies, management skills, institutions, structures and the scale of economies are the fruits of knowledge developed by human brains. When they are used as inputs in production, they seem to be “intangible” factors. Hence, in a country where per capita visible resources are limited, the human capital is far more important than in other land-abundant nations.

Switzerland, a small landlocked and mountainous country, is a good example in its economic development, achieved by enhancing its human capital.

2. Specialisation and technological innovations

When discussing the issue of comparative advantage, J. Stiglitz included specialisation as one of the four basic factors[iv].

In fact, specialisation stimulates inventions, which reduce production costs and increase productivity and profitability. Moreover, some technical innovations often have “chain effect”, that is, they “induce technological inventions” to complement the initial invention. This can be seen in Dutch greenhouse horticulture. To make greenhouses more efficient, growers call for more inventions, such as more transparent glass, energy-saving heating facilities, automatic sunshade screens, carbon dioxide collectors, etc.

Regional specialisation is the yeast to agro-technical innovations. When specialised farms are concentrated in a region, as a rule, the farmers have similar technical demands. This results in a “signal” to the R&D institutions for technical innovations. That signal is much stronger than the signal from small, part-time farms that are scattered here and there. A well-organised extension network and frequent information exchanges reinforce this signal, and help new techniques to reach farmers.

Another advantage of regional specialisation is that it reduces the average costs of infrastructure, as these can be shared between several farmers with the same needs. This explains the high efficiency of flower auctions, in combination with seed companies, transportation and equipment enterprises in the Westland region.

Specialisation is also a “double-edged sword”. Putting all one’s eggs into a single basket is risky. Market demand and prices change over time, and a dense concentration of livestock farms can cause environmental pollution. To avoid all these negative effects, a proper institutional arrangement is of essential importance.

3. The merits of dairy farming: socio-economic impacts

As illustrated by Dutch and European history, dairy farming not only has high economic value, but also significant impacts on society. The merits can be summarised as follows:

a) Organizational innovation. Milk is the most perishable commodity. It must be consumed, sold or processed as soon as possible. Selling milk by oneself is not profitable. This called for labour division (cooperation) and technical innovation (e.g. cooling). One of the earliest cooperatives was formed by dairy farmers. The first cooperative in Denmark was the milk-processing factory in 1882. Dairy cattle caused an institutional innovation.

b) Technical innovation. Dairy farmers receive payments more often and regularly than pig or beef cattle keepers because they sell milk daily. Assuming M is a careful farmer, he would compare his own income with his neighbour N in terms of everyday receipts and his production methods. M would learn from N if the latter had a higher income. Through such a process, M and his fellow villagers would improve their productivity in dairy farming. Thus, the milk collecting point became a centre for information exchanges. That was the first push of technical extension.

c) Creation of capital. The regular proceeds from milk marketing induced initial capital creation in rural Europe. The dairy farmers could use the fund to purchase more productive calves from their neighbours. They had to borrow money if the fund was running too low. Another kind of cooperative appeared – the farmers’ bank. This was the story of the Rabobank in the Netherlands. It served as a catalyst, push socio-economic development forward in rural areas. More capital in a farm meant a higher productive capacity, which generated higher output and income and created more social wealth.

d) Market and urbanisation. The concentration of wealthy residents in cities and a stable market for dairy products helped the suburban farmers to increase their earnings. The city lifestyle had a major impact on the rural population, especially the younger generation. People tried to move to the cities, seeking market and job opportunities (mainly in the service sector). The outflow of rural labour made it possible for capable farmers to expand their farm size. Urbanisation called for higher agricultural productivity. This process resulted in better labour division. A variety of services improved the efficiency of the market, and promoted specialisation and labour productivity.

Historically, dairy cattle were a typical, labour-intensive industry in Europe. It might be also a good choice for China, with its abundant labour resources. However, before the 1980s, arable farming was dominant. With the exception of commercial dairy farming around large cities, managed chiefly by a few state farms, dairy farms were hardly to be found in the eastern and central rural areas of the country. The low efficiency of the Chinese agricultural production structure could, at least partly, be explained by ignorance of the importance of dairy farming. As the result, milk output was so low that it was not reported in Chinese Statistical Yearbook until the mid-1980s. Millions of hectares of grassy hills and pastureland have deteriorated during recent decades due to a lack of investment. There were double losses: the lost potential benefits from the pastures and grassy hills and the huge cost of the recovery of the degraded land. That is a lesson for China.

Chapter 9. “Greenness” and Competitiveness

Agriculture is one of the most closely ecosystem-related sectors in the national economy. A healthy ecosystem and a pleasant environment, harmony between nature and humans, the maintenance of biodiversity and the sustainable use of resources – all these aspects are associated with a “green” agricultural system. This chapter is devoted to “green” agriculture and its competitiveness, before turning back to Japanese agriculture in order to reveal the Dutch “secrets” in depth.

1. How the “Green” idea emerged

In ancient times, there were philosophical thoughts about the relationship between humans and nature, but there was no systematic or comprehensive understanding of the importance of the benign balance of production by humans and the protection of the environment and nature management.

In very poor areas, the people do their utmost, by hook or by crook, to feed themselves. Finding enough food is their primary concern. On the other hand, in sparsely populated or virtually untouched areas, there is little need for concern about the threat to the natural environment. In both cases, the awareness of “greenness” has no ground in which to grow.

It is no accident that “green” awareness emerged in relatively populous developed countries. This was a result of a combination of factors: the people were wealthy, but there were also some clear environmental problems. Nature is becoming a scarce resource in wealthy economies. The “green” awareness of these people became a focal point in their pursuit of a better quality of life. This “green” awareness is related to the environment and to nature. The environmental debts should be repaid by those who had caused the problems, and remuneration should also be paid to those who contribute to the improvement of nature.

Economic history has shown that “greenness” comprises a kind of productive force. Instead of judging a nation’s strength exclusively on the grounds of its gross national product (GNP), the World Bank has established a concept of “Green GNP”^[v], which includes environmental and resource quality as a factor in a nation’s wealth.

As mentioned above, the Netherlands and the Yangtze Delta have many comparable characteristics. While “green” methods of agricultural production now dominate in the Netherlands, water pollution and the overuse of chemicals remain a problem in the Yangtze Delta and surrounding areas.

What are the reasons for these differences? Some explanations follow, based on farm structure and specialisation.

a) Specialised production must be market-oriented – for consumers in cities or other countries. In a competitive market in developed economies, as a rule, the consumers have more choice, require higher quality farm products and are more concerned about the food safety issue. At the same time, it is necessary for farmers to improve their product quality to increase their profitability. Densely populated urban areas in the Netherlands made it possible to keep the farmers up to date on consumer preferences. It was the competitive market that cultivated the farmers’ “green” awareness. Such a market did not exist in China’s centrally planned economic system, especially during the years of general food shortages. “Green” production therefore had no basic ground in which to emerge, even in the populous Yangtze Delta (its population density higher than the Netherlands), the “land of fish and rice” for more than two thousand years. Chinese ancient philosophy about “the harmony between the Heaven, land and man” is well known to the educated Chinese. There must be other important factors.

b) The pursuit of technological advances is inherent for specialised farmers, while part-time producers are less concerned with this with regard to their agricultural profitability. It is more likely that the former are quick to respond to changes in market demand, and they also have the willingness and ability to upgrade their technologies.

c) Regional specialisation goes hand in hand with the concentration of many related institutions such as R&D institutions and frequent exchanges of information. As mentioned above, if livestock farms are concentrated in a small area, they will have a negative impact on the local environment. The environmental problems would encourage consciousness on the protection of nature and the environment. This effect can be compared, by analogy, with a kind of “vaccine”. Of course, the “toxicity” of the “vaccine” must be temporary and limited to a certain degree, otherwise it would cause too much damage to the environment, and the cost of recovery would be very high.

In the densely populated Yangtze Delta, tens of thousands of farm households used to keep pigs, whether just a single animal or several, although their main income came from crops and later from the rural industries. Their methods of production were generally traditional in nature. A large pig population caused problems, but that only recently started to act as a “vaccine”, awakening “green” consciousness. That must be associated not only with the level of economic development, but also with the farmers’ educational and cultural background.

2.“Greenness” and international competitiveness

The international competitiveness of a nation’s agricultural sector is, in essence, a struggle to capture a larger share of the international market. In a sense, it is like the Olympic games. Every country is eager to win as many gold medals as possible, and the strength of a nation is reflected in its number of medals (market share). The competitiveness in terms of the export of agricultural commodities among (exporting) countries comes from the comparable productivity in the agricultural sector. The source of this productivity, in turn, is dependent on all the farmers and entrepreneurs.

Background: long-term development. A number of industrialised countries are the major players in the world market of agricultural commodities, as well as processed foods and beverages. During the period 1970-2000, the population of developing and developed countries grew by 82% and 21%, respectively; agricultural labour in the former increased by 51%, while that in the latter declined by 46%. The global share of the agricultural imports of developed economies decreased from 81% to 68% of the world, while their exports increased from 63% to 71%. In 1970, the developed countries were net importers, while in 2000, their exports and imports were more balanced. On average, an agricultural worker in a developed country exported $365 in 1970, but the figure rose to $5,820 in 2000. If we compare the exports of a farm worker in a developing country and in a developed country, their ratio increased from 1:16 to 1:62 in the same period. In short, developed economies, with their 1/5 of the world’s population, have a share of more than 2/3 of the world’s imports and exports of agricultural products and foods.

From this fact we might conclude that the main buyers and sellers are in the developed world. If the foods produced in a developing country do not meet the standards of the wealthy countries, these commodities can hardly be sold to latter’s supermarket at a reasonable price.

As of spring 2002, the first year after China’s entry into the WTO, many Chinese farmers’ hopes were shattered when they learned that their products had failed to enter into the EU or Japanese market. They thought that their products were excellent, of the highest quality. Why then did the buyers refuse to accept their products? What must they do to break through the “green barrier”?

It is true that more and more consumers in wealthy countries are becoming fastidious, demanding not only high quality products, but also making demands about the process and the environmental impact of their production (e.g. animal welfare in some cases). Some decades ago, such “details” were neglected in many countries, but now they have to learn and adapt to the standards of the wealthier world. This is linked with “Green” awareness, and is now referred to as “green productive forces”.

Therefore, “greenness” has become a passport to the international market. “Green productive forces” represent international competitiveness. The Dutch farms and agricultural sector have paid more attention to methods of “green production” and have maintained and enlarged their share in the international market.

In short, international competitiveness is a combination of numerous factors – farmers’ education level, export-oriented production, advanced production methods, well organised market chains, and so on.

Chapter 10. Why Is the Netherlands Stronger than Japan?

Japan is an industrialised country and the second biggest economy in the world. At the same time, Japan is the largest importer of the majority of foodstuffs and agricultural products. This is in sharp contrast with the Netherlands. What is happening in Japanese agriculture? It is interesting to compare the agricultural systems of these two countries.

1. Structure of agriculture

Many Japanese economists believe that Japanese agriculture has been “under siege”. That can be examined first at the farm level.

a) To answer this question, the author first analysed an “average” Japanese farm (J) and a Dutch farm (D). The average land area for D (all farms, including intensive livestock and horticulture) is about 8 times that of J. In fact, the farm size of D is much bigger than that of J, if the farm size is estimated in terms of gross added value. This farm structure limits the economies of scale of Js greatly.

b) In addition, 90% of Ds are specialised, and most of them are full-time farms, while part-time Js account for 86%. In particular, the number of type II part-time Js (those whose non-agricultural income exceeds their agricultural income) surged from 32% to 72% of the total between 1960 and 1988.^[vi] Incentives to improve farm management are totally different between the part-time and specialised farms. There are on average 2 family workers per D, but less than 1 per J. This has led to enormous gaps in productivity between the two countries.

c) There is also a clear contrast in terms of the production mix. In Japan, land-intensive rice is the dominant crop. Moreover, 57% of rice was produced at less efficient type II part-time Js in 1988. In contrast, the wheat self-sufficiency ratio has been very low in the Netherlands (around 1/4), but exports of land-saving products (e.g. flowers, vegetables, mushrooms, etc.) are huge in quantity. Only a small number of farms are engaged in land-intensive production, such as cereals production. Keeping the self-sufficiency ratio of rice very high (often 100% or more), Japan has to import many kinds of products in large quantities, including vegetables. Japan only had 4,200 ha of greenhouses in total in 1999 (3,100 ha in 1985).

d) It is very difficult to find Japanese-made food brands in supermarkets outside the Japanese archipelago, because the food processing industries in Japan are not competitive. In contrast with Japan, the Netherlands has developed strong and competitive food processing capabilities and is able to re-export great varieties of processed foods and drinks, made with imported raw materials, to all parts of the world.

e) Land prices in Japan are extremely high. As a result, big farmers have few opportunities to expand their size at reasonable prices. Japanese consumers must not only pay a much higher price for many agricultural products, but also bear an immense loss of efficiency due to the irrational farm structure and the decline of agriculture.

As a result of all these differences, labour productivity in Japan is only about 1/10 of that in the Netherlands.

2. Institutional factors

In many aspects, Japanese agriculture is characterised by its sophisticated technologies and advanced equipment. Japanese agriculture has been suffocated by the irrational allocation of resources and, much more importantly, policies and institutional distortions.

Two issues are discussed:

Cooperatives. In the Netherlands, cooperatives are not centralised, and are not involved in politics. They are largely specialised and have a single purpose. In contrast, the Agricultural Cooperative Association of Japan, known as “Nokyo”, fulfils many functions (political, economic and social). Nokyo, with its mass membership, political affiliations and the extensive business and institutional resources it controls, constitutes one of the major power groups in Japanese society. Nokyo is therefore favoured by the Japanese government with privileges, regulations, and in several cases even with monopoly rights.^[vii]

Furthermore, the government and Nokyo have continuously aimed to keep as many families in farming as possible. This has gradually resulted in a farm sector and farmers’ organisations in Japan, which consists mainly of part-time farmers. The interests of inefficient small farms tend to dominate. This cooperative system has major vested interests, which may conflict with the interests of bigger farmers, and especially with full-time farmers. Nokyo uses its power to fight against the private companies that try to serve big farms. There are many obstacles for enterprising farmers who want to expand the size of their farms. As a result, gains from economies of scale equal to those in the Netherlands cannot be reaped in Japan.

Land policy. Many farm policies in Japan are responsible for retarding farm specialisation and increases in size. The land reforms following World War II eliminated the biggest farms and created a larger number of small, homogeneous farms. The high price levels for rice allow even very inefficient farmers to stay in business, and are conducive to the emergence of part-time farming. Agricultural price support and land policies have pushed land prices up continuously. The prospects for considerable increases in farm size through the purchase of land are not good in Japan. Most Japanese farmers are convinced that it is wise to retain their assets, not only because land assets protect farmers against possible inflation, but also because the sale of land and the termination of farming is subject to a huge tax payment, while part-time farming is supported by investment subsidies.^[viii]

The situation in the Netherlands represents a sharp contrast with Japan. Part-time farming is not seen as desirable and is therefore not supported. Full-time farmers are considered more dedicated and dynamic than part-time farmers, as well as being more sensitive to the long-term effects of policies. In the Netherlands, investment subsidies are of much less importance than in Japan, and are only awarded to so-called viable farms. Part-time farming has never received significant support. Instead, there are considerable retirement subsidies for small farmers with the explicit condition that they have to sell their land to other farmers or to an intermediate government agency, which takes care of the reallocation of the assets for the purposes of farm-size enlargement.

Ironically, Japan’s highly protected agricultural sector has not yielded the results desired by policy-makers. Mr Tanaka Kakuei, the former Japanese Prime Minister, once claimed: in rural Japan, you only see older people working in the fields, enduring all kind of hardships. Farmers cannot feed their families with just their agricultural income. The farms have no successors. How can such a rural area support tomorrow’s Japan?

The above analysis may help us to better understand the “secret” of Dutch agriculture. Indeed, there are big differences between Japan (and China) and the Netherlands with regard to farm structure, the production mix, etc. However, a much more important element is those institutional factors which have led to a great difference in the performance of their agricultural sectors. Ill-designed institutions can actively discourage the creation of wealth. They can counteract the effects of any advanced technologies used in Japanese farms. It is true that “institutions are more important than technologies.”

Part Three. Observing Dutch Agribusinesses

All data in this section are taken from the daily notes of the author during his visits to the Netherlands, between November 1995 and December 2002. Visiting Dutch farmers and talking to them was an unforgettable experience for him. The facts provided here support many of his points in the above chapters. Most of the stories here are not only interesting, but also instructive for Chinese readers. These real stories enable us to better comprehend the underlying successful factors of Dutch agriculture.

Chapter 11. The Stories of Three Farmers

These farms are located in the north-eastern polder, the Westland region, and the eastern part of the country respectively. The first two are very specialised farmers. The first is a seed potato producer in the Noordoostpolder. The author visited him three times between November 1995 and September 2000. This arable farmer, Harry Koenraadt, showed the author around his two huge warehouses for potatoes (mainly seed potatoes), talked about his crops and yields, the enlargement of his farm, and so on. The other is a young farmer, Dick Kooij. He is a greenhouse horticulturalist who shifted his production from cucumber to flowers. He is a very ambitious entrepreneur. The last story is about a family farm located in an area with high natural and landscape values. The author had no time to visit him personally, but his friend (a colleague at LEI) talked a great deal about him. The farmer there agreed to stop pig farming and, with financial compensation from the government, built a new barn for sheep. It is, however, necessary for the farmer to find paid work outside the farm to supplement the family income.

The author had no opportunities to see more ex-farmers and to learn about their post-farming employment, but he had an interesting talk with former farmer Mr Verbeek. His first name was also Harry, he worked at LEI and was driving the author to visit a greenhouse horticultural establishment. He used to have a farm not far from Rotterdam. The size of his greenhouse was 1 ha, and he grew more than 2,000 varieties of cactus. He had to sell his land due to the expansion of the city some years ago.

These stories show the dynamics of Dutch farms from the 1950s to the early part of this century. Most farms are growing strongly, enlarging their size and increasing their competitiveness in the domestic and international markets. However, some are now feeling the restrictions of policies and nature management. Many farms have been closed and the families now work in other sectors of the economy. This is a general trend in the Netherlands and in the rest of Europe.

Chapter 12. Producing for Markets

The purpose of these essays is to tell Chinese farmers how farming operates in the Dutch fields and greenhouses.

The essays on horticulture cover crops such as tomatoes, cucumbers, sweet peppers, roses, chrysanthemums and tulips, as well as the Keukenhof. The most profound impressions left in the mind of the author were of the growers’ entrepreneurship, their management skills and their advanced technologies. When the tomato producer was talking about his yield and profitability, he used the “square metre” as the measure unit. That was the first time that the author had heard a square metre being used to evaluate income in agriculture (in China, the measurement mu, or 1/15 ha, is used). Another case was in the chrysanthemum greenhouse. The grower told the author that he had arranged his production according to an exact calendar, which comprised a 72-days “crop season” cycle, meaning that the whole process could be seen in his greenhouse every day of the year!

With regard to livestock farming, the author tells stories about a calf farm (which is rare in China), and how the company “Sloten” provides “baby food” for animals, about the advantages of milking-machines in dairy farms, about changes in poultry farming methods to meet the demand for “animal-friendly” products, and about two companies – Moba and Friki. Moba is the largest manufacturer of egg grading and egg packing machines in the world, while Friki is a very successful cooperative of poultry farmers, capable of processing one million broilers a week.

Chapter 13. Services for Farmers

In this chapter, the author intends to demonstrate how the cooperatives, research institutions, and government help farmers in every aspect of their production and marketing chains. They are: Veeteelthuis (NRS) and Holland Genetics in Arnhem, auctions (flowers in Naaldwijk, cattle in Zwolle and fish in Scheveningen), Nedato (a potato processing cooperative), and the Rabobank in Rijnburg.

The author had an interesting interview with the chairman of the National Cooperative Council (NCR), Mr Kees Veerman, who is a part-time farmer and also a professor of agricultural economics at two universities. He talked about the merits of Dutch family farms and the reasons for their cooperatives, relations b