Finnish agriculture

Finland

• Surface area 338 419 km2

– forestry land 262 700 km2 (78%)– agricultural land 22 500 km2 (6.7%)

• Population 5 300 000 – share of rural population about 30%

• Population density 17.4 persons/km2

– (EU-27 114.7 persons/km2)

• GDP– 178.8 billion euros (€)– 33 803 €/capita– share of agriculture and forestry 26%

Finland – World’s northernmost agricultural country

• Geographical location the greatest handicap

• Growing season (in the picture)180 - 120 days

• Temperature sum 1 300 - 400 degree days - Germany 2 000 - 1 600 degree days - Spain 2 800 - 2 400 degree days

• Natural conditions reflected especially in yield levels→ only about half of those in Central Europe

Farms receiving support by production sector in 2008 (%)

South Finland

EastFinland

North Finland

WestFinland

Dairy cattle10.7%

Pigs 4.6%Beef 4.3%

Poultry 1.8% Other 5.2%

Plant production73.5%

Dairy cattle19.9%

Pigs 5.1%Beef 6.4 %

Poultry 1.4% Other 4.9%

Plant production62.4%

Dairy cattle32.2%

Pigs 1.2%Beef 7.4%

Poultry 0.2% Other 7.6%

Plant production51.4%

Dairy cattle19.4%

Pigs 3.8%Beef 6.2%

Poultry 1.3% Other 5.8%

Plant production63.6%

Whole country

Dairy cattle32.6%

Pigs 1.5%Beef 10.0%

Poultry 0.4% Other 7.4%

Plant production48.0%

NUTS II regions Uusimaa and Åland Islands included

in southern Finland

Source: MTT, Tike, Rural Business Register

Number of farms receiving support in 1995 and 2008

South Finland

East Finland

NorthFinland

West Finland

NUTS II regions Uusimaa and Åland Islands included

in southern Finland

Source: MTT, Tike, Rural Business Register

WHOLE COUNTRY

95562

65292

020000400006000080000

100000

1995 2008

4310429368

01000020000300004000050000

1995 2008

1770811501

01000020000300004000050000

1995 2008

2479417119

01000020000300004000050000

1995 2008

9956 73040

1000020000300004000050000

1995 2008

Number and average size of active farms (ha)in 1990–2007

1000 farms ha

0

20

40

60

80

100

120

140

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

0

5

10

15

20

25

30

35

40

Farms, 1000 Size, ha Source: MTT, Tike

Structural change in agriculture in 1995-2008

Size class distribution of farms

1995 2008

Arable area ha

Number % Number %

<10 22 850 24 13 120 20

10-20 30 698 32 14 262 22

20-30 19 669 21 10 539 16

30-50 15 414 16 12 762 20

50-100 5 706 6 10 923 17

>100 784 1 3 304 5

• Total number of farms fell by 32% ( 95 121 → 64 910)

• Average size of farms grew by 50% (22.8 ha → 34.2 ha)

• Number of farms with over 50 ha doubled (6 490 → 14 227)

0

5000

10000

15000

20000

25000

30000

35000

1995 2000 2005 2010

lypsykarjat (-6,5 %)

nautatilat (-7,2 %)

sikatilat (-6,2 %)

siipikarjatilat (-9,5 %)

Development of farm numbers and outlook for 2010

Dairy (-6.5%)

Beef (-7.2%)

Pig (-6.2)

Chicken -9.5%

Number of farms

YearSource: MTT

Changes in the shares of production sectors

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

1995 1997 2000 2002 2004 2006

Number of farms

Crop farms (-1.7%)

Dairy farms (-53.2%)

0

1 500

3 000

4 500

6 000

7 500

9 000

10 500

1995 1997 2000 2002 2004 2006

Number of farms

Other cattle farms (-49.2%)

Pig farms (-45.6%)

Poultry farms (-53.8%)

• Share of livestock farms decreased, share of crop farms increased

• In 1995 52% of the farms were livestock farms and 39% were crop farms

• In 2006 34% of the farms were livestock farms and 61% were crop farms

Finland in international context

Average length of the thermal growing season, days

150

200

250

300

60 N

70 N

Arctic circle

Source: MTT

Productivity:

Yields 2004 Finland - France

0

2

4

6

8

3.4

7.9

0

20

40

60

80

37

70

0

10

20

30

40

23

41

Source: MTT

Winter wheat,

tonnes / ha

Sugar beet,

tonnes / ha

Potatoes,

tonnes / ha

05

075

1

125

15

175

2

1985 1990 1995 2000 2004

year

Index 1980=1

Denmark

FinlandSwedenNorway

Total Factor Productivity (TFP) growth in agriculture

Source: MTT

Food industry

Food industry

• Agriculture is closely linked to domestic processing industry → 85% of the raw material of food industry is domestic

• Food industry is the 4th largest industrial sector in Finland

• Key figures for food industry (2008):– gross value of the production 10.5 billion euros – added value of the production 2.2 billion euros – share of Finnish GDP 1.6%– share of Finnish industrial production 7.6%– number of staff 34 600– number of places of business 1 900– research and development expenditure 63 million euros– exports 1.4 billion euros, imports 3.3 billion euros

Sectors of food industry (2008)

Dairy 215%

Brewery 81%

Feed 58%

Confectionary 38%

Bakery 113%

Milling products29%

Sugar 30%Alcohol 26%

Oils and fats 22%

Fish 14%

Other 30%

Vegetables andfruit 49%

Meat 267%1

Fish 1.7%

Meat 23.8%

Dairy products and ice-cream 23.1%

Other (incl. sugar) 13.5%

Beverages 11.8%

Bakery and pasta products 10.0%

Feed 6.2%

Vegetables and fruit4.5%

Milling products and starch 3.0 %

Oils and fats 2.4%

Gross value of the production of food industry 10.5 billion euros in 2008

GDP share of agriculture and food industry (%)

1 At factor price Source: MTT, National acccounting 1998-2006e, Statistics Finland

Agriculture and related services1

Manufacture of food,beverages and tobacco

0

05

10

15

20

25

30

1998 1999 2000 2001 2002 2003 2004 2005 2006

Agricultural production and productivity

Finnish farm

Total number of farms 65 300

Finnish agriculture is based on family farms

→ 88.4% of farms privately owned

In 2008 a Finnish farm had the average of:

2.1 persons employed in agriculture (2007)

34.2 hectares of arable land

48 hectares forest

52 bovines/cattle farm

24 dairy cows/dairy farm

586 pigs/pig farm

7 206 birds/poultry farm

earnings and capital income from agriculture

14 569 euros (2006)

Structure of farm income (2008)

• Total return on agriculture and horticulture 4.60 bill. €

• Total costs of agriculture and horticulture 3.72 bill. €

→ agricultural income 869 mill. € = 13 200 €/farm

• Agricultural support payments are based on the common agricultural policy of the EU

1 Preliminary, Gallup Food and Farm Facts Sources: MTT and Gallup Food and Farm Facts 2 Incl. compensations for crop damages and rent income 98 mill. €

Income total

6.9 bill €

1 Sales income of agriculture and horticulture 2.61 bill. €

2 Support 1.86 bill. €

3 Forest income 0.59 bill. €1

4 Other income 1.84 bill. €12

35%

29%

27%

9%

Sales income %total 2.61 bill. €

Meat25%

Milk39%

Eggs 2%

Arablecrops18%

Horticulture16%

38%

27%

27%8%

Use of agricultural land (2008)

• Because of northern climate maize is not cultivated in Finland

Cereal area 1.3 mill. ha

Barley49%

Oats30%

Wheat18%

Rye2 %

Other1 %

Use of agricultural land (2008)

• Because of northern climate maize is not cultivated in Finland

Cultivated agricultural land 2.3 mill. ha

Oilseeds 3%

Cereals

55%

Grasses

29%

Other

9%Fallow 4%

Cereal area 1.3 mill. ha

Barley49%

Oats30%

Wheat18%

Rye2 %

Other1 %

Arable crop production (2008)

Area

1000 ha

Yield

kg/ha

Total yield

mill. kg

¹Domestic use

mill. kg

¹Self- sufficiency

%

Wheat 216.3 3 640 787.5 689.3 114

Rye 23.6 2 580 60.8 88.6 68

Barley 585.5 3 640 2 128.6 1 791.3 119

Oats 354.5 3 420 1 213.4 785.9 154

Cereals total 1 193.8 3 540 4 229.1 3 417.6 124

Pea 3.2 2 250 7.2 9.8 73

Potato 26.2 26 120 684.4 616.7 111

Sugar beet 13.6 34 520 468.0 not available not available

Dry hay 102.0 3 610 367.8 not available not available

Silage 451.4 17 790 8 032.7 not available not available

Turnip rape and oilseed rape

63.7 1 390 88.9282.0 32

1 preliminary

Livestock production (2008)

1 Liquid milk, soured milk products and cream (consumption figures for 2008 preliminary)

Production

mill. kg/l

Consumption

mill. kg/l

Consumption

per capita, kg/l

Self-sufficency %

Milk total 2 243.6 not available not available 101

Liquid milk products1

1 046.3 1 048.8 189.2 100

Butter 46.6 14.7 2.8 317

Cheese 105.4 97.9 18.4 107

Ice-cream 52.2 67.2 12.6 78

Meat total 400.8 387.4 76.7 103

Bovine 81.9 96.6 18.2 85

Pig 217.1 187.4 35.3 116

Poultry 100.9 98.1 18.5 103

Eggs 58.3 51.2 9.6 114

Number of active farms and agricultural income in 1994–2007

Number of farms

Change from year before%

Change from 1994, %

Agriculturalincome at 2007prices, mill. €

Index 1992–94 average: 100

2007 66800 –29 –35 988 63

2006 68766 –05 –33 924 592005 69088 –28 –33 1017 652004 71100 –13 –31 1126 722003 72000 –19 –30 1181 762002 73386 –27 –29 1221 782001 75384 –32 –27 1190 762000 77896 –52 –24 1142 731999 82142 –41 –20 1077 691998 85690 –30 –17 1031 661997 88370 –32 –14 1253 811996 91281 –45 –11 1300 841995 95562 –72 –7 1488 961994 103000* 1699 109

*Estimate of MTT Economic ResearchSources: MTT Economic Research, Support register of Ministry of Agriculture and Forestry

Yields per hectare in 1987–2007

Source: MTT, Tike

1987 1992 1997 2002 2007

kg/ha

0

1000

2000

3000

4000

5000Rye

1987 1992 1997 2002 20070

1000

2000

3000

4000

5000kg/ha

Spring wheat

1987 1992 1997 2002 2007

kg/ha

0

1000

2000

3000

4000

5000Barley

1987 1992 1997 2002 2007

kg/ha

0

1000

2000

3000

4000

5000Oats

2000

3000

4000

5000kg/ha

1987 1992 1997 2002 2007

Dry hay

10000

15000

20000

25000kg/ha

1987 1992 1997 2002 2007

Silage

Production of milk, meat and eggs in 1997–2007

mill. litres

1997 1999 2001 2003 2005 2007

2500

2450

2350

2300

2250

2200

2400

Milk production

To dairies

mill. kg

Pigmeat

Beef

EggsPoultry meat

1997 1999 2001 2003 2005 2007

250

200

150

100

50

0

Source: MTT

Trend in agricultural income in 1994–2008

Source: MTT

Nominal

Real

1994 19981996 2000 2002 2004 2006 2008e

Ratio110

100

90

80

7060

50

40

Trend in the result and profitability of agriculture by sector in 1998–2007e

Source: MTT

Dairy farmsAll farms

0

020

040

060

080

100

00 02 04 07e98 99 01 03 05 06

120

Pig farms

Cereal farms

Profitability coefficient

Agricultural support areas

C1

A

C2

C3

C4

B

C2north

Source: MTT

Typology of Finnish municipalities 2006

Source: MTT, Kajaani University Consortium of the University of Ouluand Finnish Regional Research FAR

Urban (58)Urban-adjacent rural

(89)Rural heartland (142) Sparsely populated rural

(143)

Fertiliser use levels in Finland(kg/ha)

Source: MTT, Tike

Nitrogen

PhosphorusPotassium

250

200

150

100

50

088 90 92 94 96 98 00 02 04 06 08

kg/ha

Food chain

National Quality Strategy for the Finnish Food Economy

• Programme launched jointly by actors in the Finnish food sector in1997

→ aims to construct a quality chain for food from farm to table

• Purpose of the quality chain is to ensure safe, high-quality foodstuffs (traceability of origin) and efficient operations all through the chain

Inputindustry

Primary production

Foodindustry

TransportTrade Consumer

Food services

• Quality can be verified through e.g.– certified systems (e.g. ISO 9000, ISO 14000)– product certification– verifiable quality contracts– verification by official authorities

• Fundamental aim of the quality strategy is to– improve the competitiveness of the Finnish food chain– reinforce socially responsible action in the food chain– improve the competitive advantages of Finnish food chains– improve consumer awareness of the work done in the food chain

• Programme is administered by the Ministry of Agriculture and Forestry• Budget for 2009 is 1.37 million euros

National Quality Strategy for the Finnish Food Economy

Trend in the manufacturer and consumer price for food and in the general consumer price index in 1995–2008

130

125

120

115

110

105

100

9595 96 97 98 99 00 01 02 03 04 05 06 07 08

Consumer price index

Consumer prices

Manufacturer prices

Ratio

Source: MTT

Productivity ratios of labour and capital in 1992–2008 according to the total calculation of agriculture

The year 1992 is indicated by 1 (2008e=forecast)

92 94 96 98 00 02 04 06 08e

2,5

2,0

1,5

1,0

0,5

0

Productivity ratio of labour

Productivity ratio of capital

Source: MTT

World market prices for cereals in 2004–2008

2004 2005 2006 2007 2008

€/tonne250

200

150

100

50

Wheat

Barley

€/tonne250

200

150

100

502004 2005 2006 2007 2008

Rye

Oats

Source: MTT

Finnish food exports by target country in 2008 (%)

Total value: 1 401 million euros

EU-15 – 38.5%Sweden 15.3Germany 6.1Denmark 3.8Great Britain 3.4France 2.4Netherlands 2.2Belgium 1.8Other 3.5

Member States as from 2004 and 2007 – 17.5%

9.73.5

1.11.6

0.6

EstoniaPoland

LatviaLithuania

Czech RepublicOther 1.0

Other countries – 19.9%

Russia – 24.1%

Norway 4.2USA 4.0

Other 8.6

Switzerland 1.6Japan 1.5

Source: MTT, Board of Customs, ULJAS database

Finnish food imports by country in 2008 (%)

Source: MTT, Board of Customs, ULJAS databaseTotal value: 3 585 million euros

EU-15 – 64.2%

Other countries – 25.8%

Member States as from 2004 and 2007 – 10.0%

Estonia 2.7Poland 2.5Czech Republic 2.0Lithuania 1.1

Other 0.8Latvia 0.9

Germany 14.1Sweden 10.9Netherlands 10.4Denmark 6.5France 5.9Spain 4.4Belgium 3.4Italy 3.4Other 5.2

Brazil 5.1Norway 3.3

USA 1.2Colombia 1.1

Other 12.1

Indonesia 1.9

Chile 1.1

WTO negotiations on agriculture

- Doha round of trade negotiations on the liberalisation of agricultural trade since 2001

- Agreement and schedule still open

- In the negotiations on agriculture the European Commission has approached the extreme limits of its mandate

- The solution is all but finalised; now disputes not related to the EU as the obstacle

- Main questions at the final stage of agriculture negotiations:

- sustainable solution on market access

- legal certainty of the rules for green support

- The decisions lead to growth in price competition in Finland and the EU due to easier imports and abolition of export subsidies