The CAP Health Check introduced the notion of ‘new challenges’ which refer to climate change, renewable energy, water management, biodiversity and support for the dairy sector to accompany the phasing out of milk quotas (due to expire in 2015). Member States have until 15 July to submit revised Rural Development Programmes (RDPs) to the Commission outlining how additional funds raised through modulation and the European Economic Recovery Plan (EERP) will used to address the ‘new challenges’ (and potentially rural broadband in the case of the EERP).

The Finnish Case for Dairy?

Thus, the requirement to address the ‘new challenges’ has set a challenge for national authorities in deciding how to direct newly available support. In the case of Finland, there seems to be a clear consensus amongst farmer organisations and national authorities that the dairy sector should a clear national priority. This comes as no surprise since 60% of all agricultural income in the country comes from the dairy sector [a]. Of the total package available to address the new challenges - € 42.428 million - Finland proposes to channel € 29.528 million to strengthen its agri-environment programme. This will happen through two schemes: an existing scheme for site-targeted buffer zones to protect water courses and a new scheme aimed at dairy farmers including a grazing measure as well as further support for further processing of milk, innovations, education [b]. Distribution of the funds between the two schemes is not known yet, and will likely to depend on the rate of payment of the second.

While the objective of helping farmers to adapt to the new market situation may be understandable, it is hard to justify an investment in dairy production by society unless it is based on a clear principle of 'public goods' going beyond the mere maintenance of milk production within the national borders. Among such goods are improved environmental and animal welfare performance of the sector. In addition, recent assessments have demonstrated conclusively that diets rich in animal derived products are the worst possible choice for the planet and the human health alike [c].

One approach to the problem of farmers' livelihoods is to place greater priority on other support mechanisms aimed at diversification of the employment of dairy farmers (such as tourism, bioenergy, etc. – all potentially supported through the Rural Development Programme). A coherent socially responsible policy would also include a comprehensive educational programme for lowering consumption of meat and dairy products. Up to now, this has seemed to be too sensitive politically (although in neighbouring Sweden, proposals on ‘environmentally effective food choices' have recently been published).

Grazing Measure to be the Focus of Dairy Support

One of the two schemes to receive the modulation money is currently being developed by the Ministry of Agriculture and Forestry. Though originally seen by the Central Union of Agricultural Producers and Forest Owners as a new subsidy to dairy sector, it has been evolving into explicit support for grazing by livestock. This will be made available not only to dairy farmers but also for grazing beef cattle, sheep, goats, and horses). The main objectives would be to:

• encourage continuous grazing,
• sustain an adequate grazing intensity on pastures so that both over- and undergrazing are avoided,
• support unique biodiversity dependent on pastures and grazing animals, and
• contribute to animal welfare.

The proposal, if intelligently elaborated and successfully implemented, would limit the ongoing decrease in grazing practices in favour of intensive indoor production and corresponding decrease in grass-based fodder. Presently in Finland, as little as 8% of cattle feed intake originates from pastures, and nearly half of it is crop-based. The proposal would be in line with a policy of extensification of agricultural production if the grazing density and number of grazing days prevent overgrazing and discourage use of a non-grass protein-rich fodder. Finally, it clearly presents a 'public goods' approach.

The current version of the scheme looks a highly promising new tool to address several 'challenges', even if it does not answer the expectations of all parties. For example, a recent economic assessment has demonstrated that in order to retain the current Finnish dairy herd, a per cow support of up to €300 is deemed necessary [d]. Since a headage payment is at the moment impossible, money received through the agri-environmenal contracts are based on ‘income forgone’ formula, and for many modern dairy producers grazing virtually impossible because of the land constraints, a new scheme may fall short of providing the sufficient funds for many farmers.

For its environmental virtues, however, such a scheme could prove to be timely in the European context and could potentially be extended to all Member States. One might also envision a European-wide certification scheme for pasture-based meat and milk products to give a consumer a purchasing vote, and to further promote an array of positive externalities related to 'happy cows'.

Sources and notes

[a] Finnish Agriculture and Rural Industries 2008. Agrifood Research Finland 108a.

[b] Other proposed funding lines include education (€4.7 million), innovations (€6 million), Leader projects (€2.2 million). Additional to this, Finland plans to spend €24.57 million on broadband instalment in rural areas (proposal to the Commission of 3 June 2009).

[c] For example, Garnett, T. 2007. MEAT AND DAIRY PRODUCTION & CONSUMPTION Exploring the livestock sector’s contribution to the UK’s greenhouse gas emissions and assessing what less greenhouse gas intensive systems of production and consumption might look like. Working paper of the Food Climate Research Network based at the Centre for Environmental Strategy, University of Surrey. Available here.

[d] Ryhänen; M., Huhtanen, P., Sipiläinen, T. and Ylätalo, M. 2009. Evaluation of the dairy sector economics during changes in milk prices. Unpublished report, in Finnish.