Sanna-Helena Fallenius - Finnish agriculture
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PP from EIARD meeting in Helsinki 26.10.2015.
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Sanna-Helena Fallenius - Finnish agriculture
- 1. 04.11.15 1 Finnish agriculture - history and current challenges EIARD 21st European Coordination Group Meeting Sanna-Helena Fallenius 26 November 2015
- 2. 04.11.15 2 Finland • Surface area 338 419 km2 – forestry land 262 700 km2 (78%) – agricultural land 22 500 km2 (6,7%) • Population 5 489 211 (23rd October 2015 of which – In rural regions 41 % – In intermediate regions 30,6 % – In urban regions 28,4 % • Population density 17,9 persons/km2 – (EU-27 114,7 persons/km2 ) • GDP 2013 – 195 billion EUR (€) (nominal) – 35 988 €/capita – 28 948 Purchasing power – share of agriculture, hunting and fishing 2,9 % – Agriculture of total employment 4,6 %
- 3. Finland – World’s northernmost agricultural country • Geographical location the greatest handicap • Growing season (in the picture) 180 - 120 days • Temperature sum 1 300 - 1 400 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 04.11.15 3
- 4. History • Agriculture was first introduced in the form of slash- and-burn cultivation 4,000 years ago and developed into permanent agriculture 3,500 years ago. • Finland's isolation required that most farmers concentrate on producing grains to meet the country's basic food needs. • The total area under cultivation was still small. • Finland engaged in very limited agricultural trade. 04.11.15 4
- 6. History - production pattern shift • This traditional production pattern shifted sharply during the late nineteenth century -- inexpensive imported grain from Russia and the United States competed effectively with local grain. • Rising domestic and foreign demand for dairy products and the availability of low-cost imported cattle feed made dairy and meat production much more profitable. • Finland's farmers switched from growing staple grains to producing meat and dairy products 04.11.15 6
- 7. War - food shortages • Winter war and II wordl war - food shortages • Finland cedes Karelian to the Soviet Union (about one-tenth of farmland) • The experiences the war years -- to secure independent food supplies to prevent shortages in future conflicts. 04.11.15 7
- 8. Resettling people and displaced farmers 04.11.15 8
- 9. After war • As a result of the resettlement and land-clearing programs, the area under cultivation expanded by about 450,000 hectares, reaching about 2.4 million hectares by the early 1960s. • Finland thus came to farm more land than ever before, an unusual development in a country that was simultaneously experiencing rapid industrial growth. 04.11.15 9
- 10. After war • During this period of expansion, farmers introduced modern production practices. The widespread use of modern inputs (fertilizers, agricultural machinery, improved seed varieties) sharply improved crop yields. • All farms didn’t keep up with the pace of development • Structural change, urbanisation, migration wave to the towns. 04.11.15 10
- 11. Number of farms receiving agricultural support in 1995 and 2014 Finnish Agriculture and Rural Industries 2015 11 Southern Finland Eastern Finland Central Finland Northern Finland Main regions of Uusimaa and Åland according to NUTS II have been included in Southern Finland. Source: Finnish Agency for Rural Affairs. 43,104 25,119 0 10,000 20,000 30,000 40,000 50,000 1995 2014 17,708 10,027 0 10,000 20,000 30,000 40,000 50,000 1995 2014 9,956 6,460 0 10,000 20,000 30,000 40,000 50,000 1995 2014 24,794 14,410 0 10,000 20,000 30,000 40,000 50,000 1995 2014 Whole country 95,562 56,016 0 20,000 40,000 60,000 80,000 100,000 1995 2014
- 12. Number of farms and average size (ha) Source: Luke, Statistical services Finnish Agriculture and Rural Industries 2015 12 Farms, ha Active farms, haFarms Active farms Agricultural and horticultural enterprises 0 9 18 27 36 45 0 50 100 150 200 250 Average size, haFarms, 1,000
- 13. Structure of agricultural holdings 04.11.15 13 Source: European Commission
- 14. Importance of rural areas 04.11.15 14Source: European Commission
- 15. Distribution of farms receiving agricultural support according to production line in 2014 Finnish Agriculture and Rural Industries 2015 Dairy husbandry 15.6% Pig husbandry 2.6% Beef production 6.2% Poultry production 1.0% Otehr 5.5% Crop production 69.1% Whole country Main regions of Uusimaa and Åland according to NUTS II have been included in Southern Finland. Source: Finnish Agency for Rural Affairs. Dairy 16.2.% Pig 4.0% Beef 6.6% Poultry 1.2% Other 4.5% Crop production 67.6% Dairy 25.6% Pig 0.9% Beef 9.9% Poultry 0.3% Other 6.8% Crop production 56.5% Beef 7.4% Dairy 26.6% Pig 0.9% Poultry 0.1% Other 6.6% Crop production 58.4% Southern Finland Eastern Finland Central Finland Northern Finland Dairy 8.4% Pig 3.0% Beef 4.2% Poultry 1.4% Other 5.2% Crop production 77.8% 15
- 16. Structural development in Finnish Agriculture Number of farms in different production lines 1995-2012 Change 1995 2000 2005 2012 1995-2012 Milk production 32 715 23 079 16 495 9 800 -70% Beef production 9 394 6 077 4 508 3 630 -61% Pig production 6 249 4 380 3 165 1 770 -72% Poultry production 2 329 1 349 976 590 -75% Crop production 42 287 42 530 41 960 39 600 -3% All farms 95 562 79 783 69 517 58 898 -38% 04.11.15 16 Source: MTT
- 17. Number of Farms in 2020 04.11.15 17 Forecast Change 2012 2020 2012-2020 Milk production 9 800 5 500 -43% Beef production 3 630 2 200 -39% Pigmeat production 1 770 900 -49% Poultry production 590 250 -58% Grain production 26 560 24 000 -10% All farms 58 898 48 000 -19% Source: MTT
- 18. Number of farmers by age categories in 2004–2014 Source: Luke, Statistical services Finnish Agriculture and Rural Industries 2015 18 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 2004 2006 2008 2010 2012 2014 65– 55–64 45–54 35–44 –34
- 19. 04.11.15 19 Production of milk, meat and eggs in Finland from 2002 to 2012 million litres 2100 2200 2300 2400 2500 2002 2004 2006 2008 2010 2012 Milk production Delivered to dairies 0 50 100 150 200 250 2002 2004 2006 2008 2010 2012 million kg Pigmeat Beef Poultry meat Eggs
- 20. Harvested areas in 2000–2012 04.11.15 20 1,000 ha 0 100 200 300 400 500 600 700 2000 2002 2004 2006 2008 2010 2012 Oilseed crops Wheat Dry hay Silage Oats Barley Source: MTT
- 21. Result and profitability development of agriculture and horticulture • Entrepreneurial profit Interest claim on equity 1,000 €/enterprise Costs Wage claim Gross return Net result Entrepreneurial profit / loss Entrepreneurial income –50 0 50 100 150 200 2000 2002 2004 2006 2008 2010 2012 2014e21 Finnish Agriculture and Rural Industries 2015
- 22. Exports and imports of agricultural and food products (CN 01–24) in 2004–2014 22 Finnish Agriculture and Rural Industries 2015 Source: Finnish Customs, ULJAS database million € 0 1,000 2,000 3,000 4,000 5,000 6,000 2004 2006 2008 2010 2012 2014 Import Export
- 23. Finnish Agriculture and Rural Industries 2015 04.11.15 23
Editor's Notes
- Good morning, my name is Sanna-Helena Fallenius and I work as a senior officer in our ministry’s eu-coordination. I am here to give you an overview on Finnish agriculture – its history and current challenges. I don’t go to the details but I hope I will give you a good picture about agriculture here in North.
- Finland is a rather big country, area wise, because it is 5th biggest country in EU. Mainly covered by forests and lakes. Only about 7 percent of land area is agricultural land. Finland is the most sparsely populated country in EU. Finland is the most predominantly rural country in Europe, with more than 80% of the country consisting of sparsely settled rural areas The share of agriculture of the GDP was in 2013 about 3 %, Agricultrure consist 4,6 % of the total employment but together with the food industry and forestry with which it is linked, it forms a significant part of the Finnish economy.
- Moving on to the next slide of my presentation In this slide you can see the European map with the lenght of growing season in Europe. As you can see the greatest hancicap for Finnish Agriculture is the geographical location Growing season varies between 180 – 120 days. Our yield levels are only half of those in Central Europe. .When we are talking about Finnish agricultue, it is quite important to underline the weather. Finland is world’s northernmost agricultural country. Our geographicl location is the greatest handicap. Growing season varies between 180 to 120 days. . And of course natural conditions reflected especially in yield levesl. They are only about half of those in central europe.
- Along with the spread of slash-and-burn cultivation, human settlements spread to central and eastern Finland, especially from the 16th century onwards. In the 18th and 19th centuries, forests in Finland were also used for tar production, to meet the needs of the mining and shipbuilding industries Farms also grew small quantities of potatoes, other root crops, and legumes. Cattle grazed in the summer and consumed hay in the winter. Essentially self-sufficient,
- Urbanisation - people were moving to towns and cities with an ever diminishing number working in agriculture, in the 1960’s.
- Moving from the history to the present and on to the next slide of my presentation. This slide gives you a good picture about structural change in Finnish Agriculture. In 1995 Finland joined the EU and there were over 95 500 farms in the country. In 2014 the total number of farms which had applied for agricultural support was little over 56 000. This was about 1500 farms fewer than in 2013.
- The decrease in the number of farms does not mean a decrease in production amounts. As the number of farms has decreased the average farm size has grown. In 1995-2014 the average size increased by almosr 79 % About half of the growth in the farm size has occured through leasing. In 2012 almost 34 % of the total cultivated arable area of farms was leased. In 1995 the share of leased area was 22 %.
- The farms are getting bigger. Over than ten years a The structural change is also reflected in the proportional share of the different size categories: in the past seventeen years the share of farms with less than 20 ha has fallen from 56 % to 41 % and the share of farms with more than 50 ha has more than tripled from 7 % to 25 %. Here is the situation in 2003 and 2010. As you see the share of farms with more than 100 ha and farms with 50-100 ha has increased.
- Here we see the importance of rural areas. Althoug in the terms or territory the share of rural regions is high, but also in terms of other factors such as population the share of rural regions is significant GVA= gross value added
- The production structure has also changed in recent years. The share of livestock farms has fallen while the share of crop farms has increased. In1995 the share of livestock farms was 52 % and that of crop farms was 39 %. While in 2014 about 26 % of the farms were livestock farms and 69 % were crop farms. Most of the dairy farms are located in Central and Eastern Finland. While most of the pigmeat production is located in southern and western Finland. Also the poultry farms are located in southern and western Finland. More than half of the Finnish crop farms are in souther Finland. Although, in the recent years the number of crop farms and their share of all farms have grown the most in eastern and northern Finland.
- Here you can see the structural development in number of farms. As you see the number of dairy farms has fallen about 70 %. As well as pig production and poultry production. The first 15 years in the EU for Finnish agriculture have not led to any significant changes in the volume of Finnish agricultural production, although the operating environment of the food economy changed radically when Finland joined the EU in 1995. The total production volume in 2009 was 99% of the level in 1992, according to a report by MTT Agrifood Research Finland. Structural change has led to a positive development in the productivity of Finnish agriculture. In 2009 the same amount of inputs yielded almost 21% more output than in 1992. On average the productivity of agriculture grew by 1.2% a year. The productivity of labour, in particular, has increased rapidly in the past 15 years, by the average of about 5% per year. On the contrary, there have been no major changes in the productivity of capital in Finnish agriculture. The decline is focused on the smallest farms, and the unit size of the remaining farms will increase.
- Only one fifth of farms would be livestock farms. The decline is focused on the smallest farms, and the unit size of the remaining farms will increase Move onto the next slide and the forecast of structural change in the future. The number of all farms continues to fall. the competitiveness of Finnish agriculture calls for the present kind of rapid structural development➔ however, there are certain limits to increase productivity in Finnish circumstances
- The average age of farmers on farms receiving agricultural support was 51,8 years in 2014.
- Here you can see the most important cereals and silage cultivated in Finland. Our weather conditions are not suitable for maize production like in central europe.
- The MTT Economic Research calculates annually the results and profitability development of Finnish Agriculture. The results are based on the data of the about 900 bookkeeping farms. In recent years the operating enviroment of agriculture has been more uncertain than before. The constant rise of the input prices has increased the costs and weakened profitability. The rise in the prices of energy and feedingstuffs has been particularly strong. In 2011 the production costs of agriculture increased 3 % Even the gross return has increased when we deduct the costs the entrepreneurial income is about 20 000 per farm. The entrepreneurial income is the compensation for the use of own resources in agriculture. Such as labour input and own capital. When the wage claim for own labour and interest claim for own capital are deducted from entrepreneurial income we obtain the entrepreneurial profit where all costs of the production is taken into acoount. As you see it is negative. Various forms of support payments have played a central role during the first 15 years in the EU in ensuring that Finnish agriculture succeeded in common EU markets. On market prices alone, the survival of Finnish agricultural production would have been very diffic
- The special circumstances in 2014 - the embargo on Russia has affected export and import. It would be intrestring to see what kind of Russia has for a long time been the main destination for Finnisg food exports. Export to russia declined by more than a quarter in 2014.