The Agriculture of the Netherlands

The resurrection of the Agricultural sector

The Netherlands are the largest exporter of food in the European Union and the second largest in the world, behind the United States. Surprising? Well yes, being such a small country how has the Netherlands become the Silicon Valley of agriculture?

Typically, as countries become more developed they tend to move from the primary sector (agriculture in this case) and focus heavily on the service sector due to opportunity cost. The opportunity cost of creating one acre of land into a field to grow crops instead of creating a factory or office building can be huge for such small countries. Furthermore, agriculture is not as greatly subsidised as for other EU countries such as France and Greece. So why did the Netherlands choose option 1? 

In the 1970s, the economy of the Netherlands was a powerhouse in Europe. Companies such as Shell and Phillips were growing. Their most valuable export - natural gas - increased the value of their currency and their economy. All these seemed golden for the Dutch economy but unfortunately, their agriculture sector was experiencing a nightmare. With an increasing GDP and GDP per capita, people wanted high paying jobs which were only offered in the service sector and agriculture was struggling to entice people. Another problem they were facing was a decreasing amount of arable land for farming as industrialization continued in the country. If the Dutch were to look at this problem from an economic perspective, this sector would have been abolished right away, however, the farming associations were not ready to back down. Farming associations had tremendous power in the Netherlands and an open-door policy with the government. They were keen to put pressure on the government to support their sector. From here, the government has 2 options - either to shut down the sector entirely and strip the power of this association or to support this sector even more than before. They chose option 2. And even though it may not be the most popular option in the day, it has turned out to have numerous positive benefits. How did they support this dying sector? One word - Technology. The dutch concluded that if this sector was going to stay a part of their growing economy productivity had to be increased tremendously. The University of Wageningen receives full credit for the success of the dutch agricultural sector. It is what Stanford is for Silicon Valley. Wageningen only works in the world of agriculture and has provided some of the world’s most comprehensive research and technology for this sector. Wageningen not only increases productivity but also provides students with high paying jobs in this sector. 

Although it is a public university, it is funded by both the public and private sectors. In the last 2 decades, the public sector funding for research has doubled to make productivity even more efficient. The private sector funding mainly comprises agricultural firms. This allows the university to be connected to the business community as well. This causes the economy to boom due to the agglomeration effect. The agglomeration effect or agglomeration economies is a benefit that arises when firms or people are located near one another in industrial clusters. In this case, when the university is working closely with agricultural businesses and thriving to boost productivity, this entices more firms to connect with the university causing greater business opportunities in the agricultural sector and creating more jobs in these firms as well. The university also has close links to business and entrepreneurship programs in the field of agriculture. This has caused students from all corners of the world to earn degrees in Wageningen and continue to improve the agricultural sector in the Netherlands. 

Furthermore, the university is not only a pioneer in producing research it also tells farmers how to use this research. For example, a farmer growing potatoes may receive a large share of money for growing their potatoes but how would they use this money to buy the right and necessary equipment. This is where the university steps in and provides step by step procedures of what machinery or how the machinery should be used, according to their research. 

Sustainable Economic Growth

Sustainable economic growth is the rise in real output or GDP of a country without a rise in severe economic problems for our future generations. Such problems include a lack of non-renewable resources or common-pool resources. 

The Netherlands agricultural research not only includes how to increase productivity, rather how to increase sustainable productivity. This can be seen by their tomato exports. They have created a method to grow 1 Kg of tomatoes, using LED light technology, with under 8 litres of water. To put this in perspective, the world’s largest food exporter, the USA uses 126 litres of water for 1 kg of tomatoes. A saving of 118 litres of water per kg of tomato is substantial for our future and this is why the Netherlands are a leading country in tomato exports. Being an open and trading country, their technology and research are being exported to countries such as Singapore and the US to encourage sustainable growth in their respective countries as well. 

Conclusion - the Netherlands playing its own game

Fast forward to the present day, the agricultural sector exports 65 billion euros worth of produce. This accounts for 17.5% of all Dutch exports. The largest importer of these exports is Germany that receives one-quarter of these exports. Germany is also one of the Netherlands’ largest trade partners. Furthermore, this sector accounts for 10% of the Dutch economy and employment. It's safe to say that the Netherlands has truly changed the agricultural game and shown that the service sector was not the only way to expand an economy. We now only hope that their innovations and research in the agricultural field can help not only growth but sustainable growth for the world.

Written by Aryan Jain | Proofread by Alexey Dudarev