How the mystery of Danish farming adds up
I’ve been reflecting on what we saw and heard on the Farmers Weekly study tour of Denmark a few weeks ago.
For, as you may have realised from my first report a couple of weeks ago, some of it doesn’t add up in UK terms.
On the one hand, Danish farmers have just as many, and probably more, problems with finance, environmental regulations and public opinion as we do in this country. On the other, they achieve efficiencies of production not being reached in Britain and their contribution to Danish export earnings is much greater than their numbers, land quality and average farm size would suggest. So, how does this happen and what is their secret?
To put things into perspective, it’s important to realise that Denmark is a small country of mainly light land farms. At the last census a few years ago, there were 41,000 holdings with an average size of 61ha, and two-thirds of the farmers have other full-time jobs. That said, agriculture and food processing are, together, the biggest employer, which is indicative of the intensity of the farming and processing and the fact that almost two-thirds of what’s produced is exported.
But, as I said before, most Danish farmers are up to their necks in debt. Much of this can be blamed on the long-standing rule forbidding parents from leaving farms to their offspring. To provide parents with a pension, the law states, they must sell the farm to their family – admittedly at discounted prices – but this forces sons and daughters to borrow heavily when they take over.
Add to that a propensity to what we would call extravagance in buying tackle, putting up buildings and so on, and they end up with an industry living on credit. When the value of collateral – ie land – collapses, as in recent years, the industry is technically bust.
The glib answer to why it works is because it has to. When you produce three times more food than is needed by your domestic population, you have to export to live. And the necessary skills rest with co-operatives. They dominate Danish farming and food, with 13 dairies (the biggest being Arla), two slaughterhouses (Danish Crown), one egg and 17 supply co-operatives. And trading members receive dividends on their profits. There used to be more in all sectors, but rationalisation has reduced numbers and added strength to those left. The same policy has recently been adopted by representative bodies. They’ve all been headquartered in the same building in Copenhagen for years, but in 2009 they merged into the same organisation – the Danish Agriculture & Food Council. It’s the kind of unity I’ve long dreamed of in this country, but I fear we’re destined to continue with our disparate institutions and petty infighting for a while yet.
Perhaps the most important offshoot of this structure is a nationwide network of advisory offices. There are 31 of them and they offer sophisticated advice on all aspects of farming based on research that they control and co-ordinate. The service isn’t free. Farmers have to pay for the advice they receive, but well over 90% choose to do so, we were told.
The Farmers Weekly study party was gobsmacked at many of the things that this advice, combined with astute farm management, was achieving. Quite simply, Danish agriculture is ultra-efficient. But we still couldn’t quite work out how, while being so heavily in debt.
David Richardson
Read more from David Richardson and our other columnists at www.fwi.co.uk/columnists