The Agri-food Sector’s Current Challenge

In the current economic model, ecology and other elements of broad prosperity are not yet sufficiently incorporated in the sector’s dominant business models. As a result, these models mainly focus on minimizing costs, even if this is at the expense of broad prosperity, including ecology.

Agriculture and horticulture place relatively high demands on the available environmental space. This is the amount of space that human activities can occupy without permanently impacting the environment.

The environmental space can roughly be divided into air, water, soil, and biodiversity. With respect to air, this mainly concerns the emission of greenhouse gases, nitrogen, and particulate matter. Fertilizer and pesticide runoff impacts water quality, while irrigation decreases the availability of water. In turn, these emissions and extractions impact the soil, including its structure, composition, and ecosystem. Soil compaction is also a major concern as this has a negative impact on crop yields, water balance, and the soil ecosystem. Finally, all these pressures also impact biodiversity: The quality of the environment and landscape is influenced and determined by air, soil, and water quality.

Dutch agriculture and horticulture emissions have decreased significantly over the past decade. Moreover, nature-friendly farming is making a cautious upswing. Yet there is still a lot to be done: Future policy specifies a further 20 - 40 per cent reduction in emissions over the next five to ten years. Achieving these goals will require a combination of management measures, innovation, extensification, and a further expansion of nature-friendly agriculture and horticulture. For agriculture entrepreneurs, this means that we are anticipating three dominant farm types in the future: Highly productive or high-tech, nature-friendly, and multifunctional agricultural companies. Read more background and analysis regarding the pressures on the environmental space in our article Agricultural transition: Shrinking environmental space demands further adjustments (only available in Dutch: Landbouwtransitie: de krimpende milieugebruiksruimte vraagt verdere aanpassingen).

In an uncertain world, it is becoming increasingly important that the Netherlands and the European Union’s food production and supply are independent and sustainable. Climate change also raises the question of what we will be able to produce and where.

The Dutch government recognizes this and states that policy should contribute to maintaining production capacity, protecting critical chains, and creating space for innovation and sustainability, especially at European level. Rabobank supports this direction. It is important that Europe reduces its dependence on imports from outside the EU, for products such as soya, fertilizer, and natural gas. At the same time, it is important that the EU ensures sufficient local production capacity, including agricultural land. This is essential in the context of more extensive production in a sustainable system.

One of the biggest food system challenges is consumer health. According to the Nederlands Huisartsen Genootschap (Dutch GP Society), the annual healthcare costs resulting from unhealthy diets amount to around €6 billion. Combined with an increasingly ageing population, this is no longer viable in the long term.

The task for food producers is clear here: Work toward a healthier supply. This can be done by making existing products healthier, such as by reducing sugar, salt, and unhealthy fats. Increasing consumer knowledge and awareness is also just as important. Clear information on packaging, reliable certification labels, and smart incentives can help people make healthier choices.

There is also an opportunity for systematic integration of food education within primary and secondary education, to ensure that the next generations grow up with the knowledge to make healthier and more sustainable choices.

Cooperation between the food and healthcare sectors is also crucial. Offering healthier foods can help reduce future healthcare costs. We also expect the government to take a more proactive role in promoting healthy eating, for example through VAT reductions, excise taxes, or other measures. Of course, this presents opportunities for agricultural sectors that wish to capitalize on this trend.

The Netherlands is a global agricultural innovation leader. We need to protect and capitalize on that lead. From precision farming to using satellite data, from variable rate application techniques to automation, and from digital platforms to innovative management practices: Innovation is essential for sustainable and resilient Dutch agriculture and horticulture sectors. Innovative management practices are already being widely implemented, including Renure, ammonia scrubbers, Lely Sphere, and low-protein feed.

Sometimes innovation leads directly to improved sustainability, for example, by reducing the use of chemical pesticides, energy consumption, or emissions. In other cases, innovation opens the door to entirely new markets, products, and revenue models. For example, alternative proteins or new concepts and chains, such as Edamame or Lupin chains. Innovation can also reduce the standard production cost price and increase the agricultural companies’ efficiency and resilience, for example via automation, robotization, data, and artificial intelligence.

Entrepreneurs are unable to recoup the costs of some of the necessary innovations in the market, even though these innovations are in the public interest. It is important that the government and industry stakeholders are involved in such innovations so we can increase True Value and reward entrepreneurs. In general, innovations require cooperation among stakeholders to facilitate their validation, licensing, and funding.