Finnish Agriculture and Rural Industries 2011 ISBN 978-951-687-160-1 (Printed version) ISSN 1798-5897 (Printed version) Vammalan kirjapaino Oy 2011 F in n is h A g ric u ltu re a n d R u ra l In d u s trie s 2 0 11 Report drawn up by Ahlstedt Jaana layout, editor Jansik Csaba chapter 2.5 Järvinen Jyri chapter 4.2 Knuuttila Marja chapter 1.1 Koikkalainen Kauko chapter 5 Koivisto Anu chapter 2.4 Latukka Arto chapter 4.2 Liesivaara Petri chapter 2.2, 3 Miettinen Antti chapter 5 Myyrä Sami chapter 4.3 Niemi Jarkko chapter 2.3 Niemi Jyrki chapter 2.1, 2.5, 3, editor Rantala Olli chapter 4.1 Rantamäki-Lahtinen Leena chapter 1.2 Tauriainen Jukka chapter 4.1 Vihinen Hilkka chapter 6 Voutilainen Olli chapter 6 Väre Minna chapter 1.3 English translation by Kola Jaana Publications ot the Agrifood Research Finland, Economic Research No 98 Lehtonen, H. 2001. Principles, structure and application of dynamic regional sector model of Finnish agriculture. 265 p. No 99 Vihinen, H. 2001. Recognising Choice. A Study of the Changing Politics of the Common Agricultural Policy through an Analysis of the MacSharry Reform Debate in Ireland and the Netherlands. 247 p. No 100 Peltola, J. 2002. Three Approaches to Mathematical Models for Finnish Natural Resource Management. 97 p. No 101 Niemi, J. & Ahlstedt, J. (toim.). 2002. Suomen maatalous ja maaseutuelinkeinot 2002. 94 s. No 101a Niemi, J. & Ahlstedt, J. (eds.). 2002. Finnish Agriculture and Rural Industries 2002. 94 p. No 102 Jansik, C. 2002. Determinants and Influence of Foreign Direct Investments in the Hungarian Food Industry in Central and Eastern European Context. An Application of the FDI- Concentration Map Method. 312 p. No 103 Niemi, J. & Ahlstedt, J. (toim.). 2003. Suomen maatalous ja maaseutuelinkeinot 2003. 94 s. No 103a Niemi, J. & Ahlstedt, J. (eds.). 2003. Finnish Agriculture and Rural Industries 2003. 94 p. No 104 Niemi, J. & Ahlstedt, J. (toim.). 2004. Suomen maatalous ja maaseutuelinkeinot 2004. 94 s. No 104a Niemi, J. & Ahlstedt, J. (eds.). 2004. Finnish Agriculture and Rural Industries 2004. 94 p. No 105 Niemi, J. & Ahlstedt, J. (toim.). 2005. Suomen maatalous ja maaseutuelinkeinot 2005 - Kymmenen vuotta Euroopan unionissa. 94 s. No 105a Niemi, J. & Ahlstedt, J. (eds.). 2005. Finnish Agriculture and Rural Industries 2005 - Ten Years in the European Union. 94 p. No 105b Niemi, J. & Ahlstedt, J. (red.). 2005. Finlands lantbruk och landsbygdsnäringar 2005 - Tio år i Europeiska unionen. 94 s. No 106 Niemi, J. & Ahlstedt, J. (toim.). 2006. Suomen maatalous ja maaseutuelinkeinot 2006. 96 s. No 106a Niemi, J. & Ahlstedt, J. (eds.). 2006. Finnish Agriculture and Rural Industries 2006. 96 p. No 107 Niemi, J. & Ahlstedt, J. (toim.). 2007. Suomen maatalous ja maaseutuelinkeinot 2007. 96 s. No 107a Niemi, J. & Ahlstedt, J. (eds.). 2007. Finnish Agriculture and Rural Industries 2007. 96 p. No 108 Niemi, J. & Ahlstedt, J. (toim.). 2008. Suomen maatalous ja maaseutuelinkeinot 2008. 96 s. No 108a Niemi, J. & Ahlstedt, J. (eds.). 2008. Finnish Agriculture and Rural Industries 2008. 96 p. No 109 Niemi, J. & Ahlstedt, J. (toim.). 2009. Suomen maatalous ja maaseutuelinkeinot 2009. 96 s. No 109a Niemi, J. & Ahlstedt, J. (eds.). 2009. Finnish Agriculture and Rural Industries 2009. 96 p. No 110 Niemi, J. & Ahlstedt, J. (toim.). 2010. Suomen maatalous ja maaseutuelinkeinot 2010. 96 s. No 110a Niemi, J. & Ahlstedt, J. (eds.). 2010. Finnish Agriculture and Rural Industries 2010. 96 p. No 110b Niemi, J. & Ahlstedt, J. (red.). 2010. Finlands lantbruk och landsbygdsnäringar 2010. 94 s. No 110c Ниеми, Ю, Альстедт, Я. и Синисало, А. (ред.). 2010. Сельское хозяйство Финляндии 2010. 103 с. No 111 Niemi, J. & Ahlstedt, J. (toim.). 2011. Suomen maatalous ja maaseutuelinkeinot 2011. 96 s. No 111a Niemi, J. & Ahlstedt, J. (eds.). 2011. Finnish Agriculture and Rural Industries 2011. 96 p. Taloustutkimus JULKAISUJA 111a Finnish Agriculture and Rural Industries 2011 Edited by Jyrki Niemi and Jaana Ahlstedt Maa- ja elintarviketalouden tutkimuskeskus Agrifood Research Finland Economic Research PUBLICATIONS 111a ISBN 978-951-687-160-1 (Printed version) ISBN 978-951-687-161-8 (Electronic version) ISSN-L 1798-5900 ISSN 1798-5897 (Printed version) ISSN 1798-5900 (Electronic version) Copyright MTT Economic Research, Agrifood Research Finland Publisher MTT Economic Research, Agrifood Research Finland, Latokartanonkaari 9, 00790 Helsinki, Finland www.mtt.fi Sales and distribution MTT Economic Research, Agrifood Research Finland, Latokartanonkaari 9, 00790 Helsinki, Finland Tel. +020 772 004, fax +020 772 040 e-mail: julkaisut@mtt.fi Printing Vammalan Kirjapaino Oy 2011 Preface The MTT Economic Research publishes annually a report on Finnish agriculture and rural industries. The report provides an account of the state and trends in agri-food sector and in rural areas in general in light of the most recent information available. It also takes us to the future by looking into the current challenges and development prospects of the sectors. Like before, the report offers an up-to-date information package to all those who work in the field or are interested in it. In recent years we have become used to rapid fluctuations in the market situation of both inputs and agriculture and food products. The rapid rise in cereal prices in autumn 2010 close to the peak level in early 2008 continued the discussion on the highly vulner- able food markets, where various factors repeatedly lead to serious instability. The func- tioning of the food market and a more sustainable management of price variations have become increasingly important. The topics discussed both in Finland and globally include access to food, food safety, climate change mitigation and adaptation, environmental load, and objectives relating to renewable energy. Variations in the input and product prices on the agricultural and food market pose a very challenging equation to farmers. At the same time the new technologies and rapid structural change in agriculture require new kinds of entrepreneurial skills. Production processes, technology choices, impacts of changes in market prices on the economy of farms, and policy impacts should all be managed in a comprehensive way. Growth in the farm size also leads to greater risks in the business activity. In agricultural policy the focus was on the more detailed preparation of the content and especially the frameworks of the future policy launched on the basis of the Commis- sion communication released at the end of 2010. The preparation is further complicated by the aim in the agricultural policy reform for even more comprehensive social effec- tiveness. It is to be expected that the regional, environmental, rural, climate, trade, and energy policy issues receive even more weight than before, both in the policy discussion and in the content of the future policy. Managing such a complex entity is very challeng- ing also as regards the schedule in which the reform can be prepared and put to practice. The most eagerly expected element, the structure and amount of the budget for the next programming period to be applied as from 2014, is yet to come. The earliest time when the legislative proposal of the Commission, with the relevant parliamentary proceedings, on the content and financial frameworks of the future policy could be available for discus- sion is in summer 2011. The special themes of this report deal with the highly topical agricultural policy reform, success of rural enterprises and promoting entrepreneurship, national strategy for invasive species published recently, possibilities to increase protein self-sufficiency in Finland, and the new total calculation of agriculture. On behalf of the MTT I wish to thank Professor Jyrki Niemi and Research Secretary Jaana Ahlstedt, who edited the publication, and all the experts involved in the writing process. Helsinki 2 May 2011 Pasi Rikkonen Director MTT Economic Research Contents 1. Operating environment of agriculture ............................................................ 5 1.1. Agriculture and food sector in the national economy .............................. 5 1.2. Rural enterprises .................................................................................... 10 1.3. Finnish farm ........................................................................................... 14 2. Agricultural and food market ......................................................................... 18 2.1. Trends on the world market .................................................................... 18 2.2. Arable crops ........................................................................................... 20 2.3. Livestock production .............................................................................. 25 2.4. Horticultural production ........................................................................ 32 2.5. Food market ........................................................................................... 36 3. Agricultural policy ......................................................................................... 43 3.1. Common agricultural policy of the EU .................................................. 43 3.2 EU support payments in Finland ............................................................ 45 3.3. National aid ........................................................................................... 47 3.4. Structural support for agriculture and farm relief services ....................... 49 4. Economic situation of agriculture .................................................................. 52 4.1. Development of results and profitability of agriculture and horticulture .. 52 4.2. Economic development of Finnish agriculture and horticulture .............. 59 4.3. Productivity development in agriculture ................................................. 62 5. Agriculture and the environment ................................................................... 64 5.1. Environmental impacts of agriculture ..................................................... 64 5.2. Agri-environment scheme ...................................................................... 67 5.3. Water protection guidelines .................................................................... 69 5.4. Main topics and future perspectives ........................................................ 70 6. Rural and regional policy ............................................................................... 74 6.1. Changes in Finnish rural areas ................................................................ 74 6.2. Finnish rural policy ............................................................................... 76 6.3. The role of national rural policy programmes in Finnish rural policy ...... 78 6.4. Socioeconomic role of agriculture in rural areas ...................................... 80 6.5. Resources of the countryside .................................................................. 82 Appendices ......................................................................................................... 87 Special topics Protein self-sufficiency – Feasible or not? ........................................................... 30 Finnish perspectives on the CAP 2013 reform .................................................... 50 New method for calculating the sectoral economic result .................................... 57 Proposal for a national strategy on invasive alien species completed .................... 72 Success stories and promoting enterprise ............................................................ 83 5 1. OPERATING ENVIRONMENT OF AGRICULTURE Consumer expenditure on foodstuffs and bev- erages, € million. 2008 2009 % change Total 20,052 20,221 1 Foodstuffs* 10,399 10,593 2 Non-alcoholic beverages* 984 988 0 Alcoholic beverages* 3,081 3,271 6 Catering services (eating out) 5,588 5,369 –4 *Food consumed at home Source: Statistics Finland, National accounting. Share of foodstuffs and non-alcoholic bever- ages in consumer expenditure of households, %. 2008 2009 EU 27 13.0 13.1 EU 15 12.3 12.5 Denmark 11.4 11.3 Estonia 20.6 22.3 Finland 12.4 13.0 France 13.5 13.5 Germany 11.4 11.2 Sweden 12.3 12.6 United Kingdom 9.1 9.7 Source: Eurostat National accounts, Statistic Sweden. 1.1. Agriculture and food sector in the national economy In Finland the total annual consumer expenditure on food and beverages is € 20.2 billion. The share of food and non- alcoholic beverages consumed at home is a little over a half of this, € 11.6 billion. The share of food and non-alcoholic beverages consumed at home in the con- sumer expenditure of households has decreased to about the same as in the old EU countries. From 2008 to 2009 there was a slight increase in this share from 12.4 to 13%, mainly due to the weaker economic situation of households. When alcoholic beverages and eating out are included, food represents 22.6% of the consumer expenditure of households. The share of food consumed outside home is 6%, which is lower than in the old EU countries (7.2%). The total value of the annual money flows in the food sector is about € 24.3 billion, when food exports and agricultural support payments are taken into account, in addition to the total private and public consumer expenditure. This is 14% of the Finnish GDP. Agriculture and horticulture According to the national accounting, the gross value of agricultural and hor- ticultural production in 2009 was about € 5.9 billion, when production support of 2.1 billion is taken into account. The gross value of the production fell by 4% from € 6.1 billion in 2008. In agriculture the value of production did not fall as much as in the economy as a whole, which is why the value added produced by agricul- ture and horticulture to the Finnish GDP increased from 1.9% in 2008 to 2.1% in 2009. Fluctuations in the value added of agriculture cannot be explained by the vari- ations in volumes due to the weather con- ditions alone, but the changes in the prod- uct and input prices are also reflected in the sector more clearly than before. Intermediate products such as fertilis- ers, feedingstuffs, energy, transport fuels and various kinds of services account for about a half of the gross value of agricul- tural production, € 2.7 billion in 2009. In 2008 this share was € 3.1 billion. Agriculture is very capital intensive because of the various kinds of special machinery and buildings needed in the production. In 2009 the share of agricul- ture in the total investments of the national economy rose to 3.4% from 3.0% the year 6 Estimated money flows in the Finnish food sector in 2009. Total € 24.3 billion Food industry € 2.6 billion Other industries € 4.8 billion (Agricultural trade, business services, transportation, etc.) Agriculture € 3.2 billion Catering services € 1.9 billionProduct taxes € 4.6 billion Import of other inputs about € 1.0 billion Food trade € 2.7 billion Food imports (exl. tobacco) € 3.4 billion 13 % 11 % 11 % 8 % 19 % 4 % 14 % 20 % before. The share of agriculture in total investments is clearly higher than its share in the GDP. Food processing In 2009 the gross value of the production of food industry fell to € 10.4 billion from € 10.6 billion the year before. The use of intermediate products fell from € 8.1 bil- lion to 7.8 billion. The use of intermedi- ate products decreased more than the gross value of the production, and thus the value added created in food industry rose from € 2.5 billion in 2008 to 2.6 billion in 2009. The food sector produces indispens- able goods, which is why it has coped bet- ter in the weakening economic situation than the other sectors. The GDP share of food industry rose from 1.5% in 2008 to 1.8% in 2009. During the same time the share of food industry in the value added of the manufacturing industries increased from 6.9% to 9.7% Measured by both the gross value of the production and value added, food industry ranks the fifth largest sector in Finland, after the manufacture of electro- technical products, pulp and paper indus- try, machinery and equipment industry, and metal industry. Food industry is more raw material intensive than agriculture: intermediate products represent more than 70% of the gross value of the production. Food indus- try purchases most of its raw material from the domestic agriculture and horticulture. Because of the transportation costs, a sig- nificant share of the food industry depends on domestic raw material. The share of imported products in the gross value of the production is about 14% (€ 1.4 billion). From 2008 to 2009 the tangible domestic investments of food industry fell from over € 0.4 billion to a little less than 0.4 billion. However, the share of invest- ments in food industry of total investments stayed at the same level as before, 1.1%. The level of investments is still lower than the GDP share of the sector. Domestic trade in foodstuffs The trade sector sees to the final distribu- tion of foodstuffs to the consumers. The value of production in the trade sector is more difficult to estimate than that of pri- mary production and processing because, in addition to foodstuffs, the trade sec- tor includes other perishable and durable goods. According to the financial state- ments on the trade sector of the Statistics Finland, in 2009 the turnover of the trade in perishables totalled € 15 billion, which was 4% higher than the year before. Food- stuffs account for about 80% of the trade 7 GDP share of agriculture1 and food industry (at basic price) and investments (at current prices). 010, 014 DA 010, 014 DA Share in investments Year Agriculture and related services Manufacture of foodstuffs, beverages and tobacco Agriculture and related services Manufacture of foodstuffs, beverages and tobacco Agriculture and related services Manufacture of foodstuffs, beverages and tobacco million € million € % % % % 2009 3,196 2,632 2.1 1.8 3.4 1.1 2008 3,057 2,478 1.9 1.5 3.0 1.1 2007 3,254 2,439 2.0 1.6 3.3 1.2 2006 2,892 2,276 2.0 1.6 3.3 1.1 2005 2,918 2,350 2.1 1.7 3.4 1.3 2004 2,827 2,318 2.1 1.7 3.4 1.1 2003 2,875 2,395 2.3 1.9 3.9 1.5 2002 2,935 2,384 2.3 1.9 4.3 1.6 2001 2,924 2,231 2.4 1.8 3.8 1.4 1Agriculture at factor price, including subsidies on products and subsidies on production. Source: National accounting 2000–2009e, Statistics Finland. in perishables. The value added of the wholesale and retail trade, i.e. their share in the GDP, is estimated at about € 2.7 billion. Foodstuffs require a great deal of handling, which is why wages and salaries constitute a signif- icant item in the value added of the trade sector. Other major cost items are trans- portation and logistics and various kinds of business and real estate services. The position of trade at the end of the food chain differs from primary produc- tion and processing. The trade sector is not dependent on domestic primary produc- tion in the same way as the food industry, and thus it is capable of taking advantage of competition, both within the domestic food industry and between the Finnish and foreign companies. Food trade is still largely in the hands of domestic operators, founded on chains of wholesalers and retailers, where the buying-in operations both in Finland and abroad are highly centralised. Besides the German discount chain Lidl, which came to Finland in 2002, the small markets and high transportation costs have not attracted any other foreign food chains. Foreign trade in foodstuffs Because of the weakening economic situa- tion, the value of food imports (CN 1–24) did not grow in 2009 but fell from € 3.6 billion in 2008 to € 3.5 billion in 2009. The value of food exports fell from € 1.4 billion in 2008 to 1.2 billion in 2009. Total imports decreased even more than food imports, which is why the share of food imports increased from 5.8% in 2008 to 8.1% in 2009. Similarly, the share of food exports in the total value of exports rose from 2.1% to 2.6% as total exports fell by almost a third. In 2010 the value of food imports started to grow again and reached the level of € 3.9 billion, which is 7.6% of total imports. The value of food exports increased as well to € 1.3 billion, which represents 2.5% of total exports. The most significant imported food commodities are beverages, including alcohol, and fruits. Some of the imported foods are primary products which cannot be produced in Finland (coffee, cocoa, tea) or the quantities produced are not suffi- cient (fruit, vegetables). However, the 8 Employed of agriculture and food industry (%) in different regions in 2008. Source: Regional account- ing, Statistics Finland. South Ostrobothnia Central Ostrobothnia Pohjois-Savo Ostrobothnia North Karelia Etelä-Savo Åland Satakunta Itä-Uusimaa Kanta-Häme North Ostrobothnia South Karelia Varsinais-Suomi Kainuu Päijät-Häme Central Finland WHOLE COUNTRY Kymenlaakso Lapland Pirkanmaa Uusimaa 0 4 8 12 16 % A_01 Agriculture and game husbandry DA Manufacture of foodstuffs, beverages and tobacco export and import of products represent- ing the same product categories, such as cheeses, beverages and confectionary, has increased as well. Besides the finished food products the food sector imports various inputs needed in the production, such as raw materials for processed foods and feedingstuffs, fuels and various kinds of chemicals, and most of the machinery and implements. Taxes and support in the food sector The State functions in the food chain as it collects taxes and allocates financial sup- port to agriculture. In addition to the value added tax, the consumers pay excise duties in the prices of foodstuffs and beverages, as well as energy taxes included in the pro- duction inputs. Income tax is collected in the food chain on wages and salaries and on capital income. In 2009 the value added tax and excise duties on foodstuffs and beverages totalled about the same as the year before, € 4.6 billion. In 2010 the tax revenue fell to € 4.3 billion, but it is expected to rise again in 2011. The value added tax reve- nue from food decreased slightly from the year before to € 1.7 billion. In 2010 the value added tax revenue from food was € 1.3 billion, while some increase is again expected for 2011. The value added tax revenue from restaurant services was about the same in 2009 as the year before, € 1.2 billion. In 2010 it fell to € 1.1 billion and some decrease is also expected for 2011. The value added tax revenue from alcoholic beverages stayed at the level of about € 0.5 billion in 2009 and in 2010 it rose to € 0.6 billion. The excise duties on alcoholic bev- erages rose to € 1.2 billion in 2009 and 1.3 billion in 2010. The VAT on food was lowered from 17% to 12% in the autumn of 2009 and raised to 13% in July 2010. The VAT on restaurant services was lowered from 22% to the same 13% in July 2010. The value added tax revenue from food represents about 10% of the total value added tax rev- enue. When restaurant services and alcohol are included, the share of food commod- ities in the total value added tax revenue rises to almost 20%. The various types of support, a total of about € 2.1, billion, are funded by the EU, co-funded by the EU and from national 9 Employment effect of the use of intermediate products in agriculture by sectors in 2007 (number of employed persons). 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 1. Trade 2. Business services 3. Feed industry 4. Other manufacturing industry 5. Transport and storage 6. Health, administration, training 7. Building 8. Electricity, gas and water supply 9. Other primary production 10. Other 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. number of employed persons funds or paid from the national funds only. The EU contributions total about € 0.8 billion. Economy-wide effects of the food sector Besides agriculture, food industry and the trade sector, many other sectors are involved in the food chain and serve food production in various ways. These include, for example, trade in agricultural imple- ments, transport and storage, and various kinds of business and real estate services. In practice the effects of food production extend all through the economy, also to the chemical and energy sectors and water and waste management. Indirect effects of food production are also created in households through the use of income earned in food production for purchasing goods and services. In the rural areas the economic impact of household consumption may be greater than that of input demand. Part of the investment effects flow abroad, especially through the purchase of machinery. The effects of building are more directly directed to the regions themselves than investments in machinery. Besides agriculture and the processing industry, in recent years building investments have also been made in food trade. Employment effects of the food chain In 2010 the number of people employed in agriculture was about 84,000, which is 3.4% of the employed labour force. This is 4,000 persons less than the year before. The share of agriculture in the employed labour force is greater than its share in the GDP. The number of people employed in agriculture has fallen in all regions along with the number of farms and increased substitution of machines for labour. In absolute terms the number of peo- ple employed in agriculture is the great- est in the regions of South Ostrobothnia, Southwest Finland, North Karelia and North Savo. Proportionally the share of agriculture in the employed labour force is still the highest in Ostrobothnia. By purchasing production inputs agri- culture also employs people in other sec- tors, such as manufacturing industry, trade, logistics and energy production about 15,000 persons. Most of these jobs are, however, located in urban areas and popu- lation centres, not in the rural areas. Food industry employs about 38,000 persons. Its share in the total employed labour force is 1.5%, which is about the same as its GDP share. Almost a quarter of the jobs in food industry are in Uusi- maa. Proportionally food industry is the greatest employer in South Ostrobothnia, where it employs 3.6% of the employed labour force. While the number of jobs in primary production and processing are decreas- ing, more people find employment in res- taurants and catering services and in food trade. Because of the weaker economic sit- uation the number of people employed in restaurants fell by 500 persons from 2008 to a total of 65,700 in 2009. The trade in daily consumer goods employed 46,766 persons, which was almost 1,400 persons more than the year before. 10 Rural enterprises in Finland in 2000–2007. Year 2000 2002/2003 2004/2005 2007 Change 2000– 2007, % Total 136,400 130,400 131,500 137,600 1 Basic agriculture farms 58,000 50,150 45,200 45,000* –22 Diversified farms 21,800 23,550 24,300 23,200 6 Enterprises with no link 56,600 56,700 62,000 69,400e 23 e Preliminary estimate by MTT Economic Research, * incl. horticulture enterprises Source: Information Centre of the Ministry of Agriculture and Forestry MMM/Tike. Register of small rural enterprises (www.mtt.fi/pienyritysrekisteri). 1.2. Rural enterprises The Finnish countryside has changed quite dramatically, with strong differentiation in the development trends in different types of rural areas. In many sparsely populated areas the population is decreasing and age- ing rapidly, while the number of rural resi- dents and enterprises has been growing in urban-adjacent rural areas. Small rural enterprises can be divided into three groups: farms engaged in basic agricultural production and farm forestry, diversified farms with other business activ- ities besides agriculture and farm forestry, and small rural enterprises with no connec- tion to farms. In 2007 the total number of enter- prises in Finland was about 309,000. The number of small rural enterprises was esti- mated at about 137,600, of which 33% were engaged in basic agriculture, 17% were diversified farms and 50% were other small enterprises. Agriculture and farm forestry still con- stitute the most significant single rural industry. The Finnish farm structure and changes which have taken place in this are presented in more detail in Chapter 1.3. Diversified farms in Finland and Europe In 2007 the number of farms practising other gainful activities besides agriculture was 23,200, which means that about 34% of the Finnish farms were diversified. New information on the number of diversified farms will be available when the results for 2010 are published. Starting other gainful activities is often connected to changes in the operating environment of farms, creat- ing new demand for the products and ser- vices, while new challenges to agriculture may have encouraged the farm families to seek new sources of livelihood. In 2007 the number of diversified farms was the greatest in South Ostroboth- nia and Southwest Finland. Proportionally the number of diversified farms was the highest in Uusimaa (southernmost Fin- land), Lapland and the Province of Åland and the smallest in North Savo and North Ostrobothnia. Diversified farms operate in various sectors, but the majority of them, 70% in 2007, are engaged in services such as rural tourism, contracting and transport and real estate services. Other types of tourism and various other services are also quite com- mon. In recent years especially the number of diversified farms engaged in the produc- tion of renewable energy has grown rap- idly and energy production has become the largest industrial sector. More than a third of the diversified farms practice more than one gainful activ- ity besides agriculture. These are often connected to agriculture so that the farm equipment, buildings, land or products are used and the owner of the farm, the spouse, other family member or a partner in a farm 11 Number of diversified farms in 2000, 2003, 2005 and 2007. Sector 2000 2003 2005 2007 Diversified farms, total 21,838 23,551 24,295 23,179 Primary production other than agriculture and forestry 744 1,328 1,815 1,505 Fish, crayfish etc. farming on farms 112 102 64 120 Fur farming 632 647 510 505 Reindeer husbandry * 423 574 471 Fishing * 156 144 191 Other primary production * * 523 218 Industry 4,786 4,140 3,753 4,774 Food processing 1,065 846 684 620 Other further processing 134 78 152 140 Wood processing 1,349 1,134 889 1,122 Handicraft 274 337 277 413 Production of renewable energy 648 701 820 1,286 Peat production 311 267 217 286 Manufacturing of metal products 625 580 541 700 Other manufacturing 380 197 173 207 Construction** * 697 881 1,043 Trade 1,056 1,234 1,299 1,299 Services 15,019 16,143 16,547 14,470 Tourism, accommodation, recreation services 2,272 2,041 1,865 1,627 Contracting 8,880 9,039 10,013 8,539 Care services 263 249 234 309 Transportation 1,055 1,083 833 782 Services to business * 736 680 661 Horse husbandry services (renting of stables, horse training) * 717 734 882 Real estate maintenance, cleaning and environmental management services * * 264 190 Other services 2,549 2,278 1,924 1,480 Other 233 * * 88 *Different classification of sectors, this sector not accounted for in the year concerned. **Clearing, demolition and groundwork building included in machine contracting. Source: Information Centre of the Ministry of Agriculture and Forestry. company is involved in the other business. Of the diversified farms in Finland 79% were engaged in this kind of activity, using the same resources as agriculture. Most of these activities (65% of farms) were also taxed together with agriculture under the Agricultural Tax Act. Other gainful activities on farms are usually quite small in scale. In 2007 their turnover was less than € 10,000 on about 40% of the farms. However, on 15% of these farms the turnover of other gain- ful activities was more than € 100,000. In 2007 employment in these other activities represented about 22,300 AWU. Most of the work is done by the farm families, but the role of hired labour has been growing. On the European scale statistics on diversified farms have only been kept since 2003. The statistics only include farms where the agricultural resources and other gainful activities are closely linked to each other. In 2007 there were a total of 1.35 million diversified farms in Europe. 12 Diversified farms in Europe in 2007, including farms where the same resources are used for agriculture and other gainful activi- ties. Source: Eurostat. N/A21.5–27.69.1–21.55.1–9.13.9–5.10.7–3.9 In recent years the relative share of diversified farms has grown in all parts of Europe. Within the EU about 10% of the farms are diversified. In absolute terms the number of diversified farms is the greatest in Rumania, France and Italy. Relative to the total number of farms diversification is the most common in Northern and West- ern Europe, in particular, in Finland, Nor- way France and Great Britain. Except in Rumania and Cyprus the farmers who run diversified farms are younger than farm- ers on average. Measured by the economic size the diversified farms are a little larger than other farms both in Finland and in the EU as a whole. The Netherlands is the only EU country where the diversified farms are smaller in size than other farms. Other rural enterprises There are regional differences in the num- ber of small rural enterprises, which usually follows the general trends in the economy, and in their structural development. The number of enterprises has grown in rural heartland areas and urban- adjacent rural areas, while in the sparsely populated rural areas it has stayed about the same. The following chap- ters present some of the most important rural indus- tries and trends in these. Energy production and bioenergy The resources available in the countryside have an increasingly important role especially in the produc- tion of bioenergy and other renewable energy. Bioen- ergy is derived from bio- mass growing in forests, mires and fields as well as from organic solid, liquid and gaseous biowaste suit- able for energy production from commu- nities, agriculture and industry. The share of bioenergy in the total energy consump- tion in Finland is about 25%, and it repre- sents almost 90% of our renewable energy sources. Most of the bioenergy produced and used on farms consists of chips or fuel- wood from forests. The most important energy crop in agriculture is reed canary grass, most of this sold to be used as fuel in large power plants. In 2007 about 200 farms were engaged in bioenergy con- tracting, which comprises the production of biodiesel, ethanol and biogas. In 2009 the total number of SMEs that practised bioenergy production was 502. In 2008 the total turnover of the enterprises in the field was € 775 million, which was 5.7% higher than the year before. The number of people employed in the field is expected to grow from the 4,000 persons in 2008. According to the long-term Climate and Energy Strategy, the use of bioenergy in Finland should increase by 28 TWh by 2020. In 2009 energy consumption in Fin- 13 land totalled about 368.7 TWh (1,326,236 TJ), which was 6% lower than the year before. The main sources of energy are oil, nuclear power, coal and natural gas. Food processing In 2010 there were about 2,900 food com- panies in Finland. The majority of food processing enterprises are in the rural areas. The field is strongly polarised into few large companies and numerous small enterprises. Most of the enterprises (71%) employed fewer than 5 persons. The most common sectors are the manufacture of bakery products and further processing of meat. In 2007 almost 800 farms engaged in further processing of foodstuffs and this was the main business activity on 600 of these. The most common types of food processing on farms are further processing of vegetables and berries, manufacture of bakery products, and slaughtering and fur- ther processing the meat. Rural tourism Rural tourism is the part of the tourism industry where the opportunities largely derive from resources characteristic to the countryside. The total number of rural tourism enterprises is estimated at 4,900 and their total turnover is about € 510 million. According to the follow-up of the occupancy of accommodation facilities by the theme group on rural tourism, the field is doing quite well. The long-term devel- opment prospects should also be quite favourable. Equine industry In this context equine industry comprises the breeding and rearing of horses and care services for them, training, riding schools and horse-related tourism Equine industry is one of the most rapidly growing busi- nesses in the rural areas: about 75% of the enterprise in equine industry takes place on farms and 17% otherwise in the coun- tryside. The estimated number of horses in 2009 was about 75,000. The total number of stables in Finland is about 15,000, of which about a quarter are companies. The annual money flows in the industry are estimated at more than € 830 million and it is estimated to employ 15,000–16,000 persons. Trotting is a very popular sport in Finland. Almost 9,000 horses start off each year at trotting races and the annual turnover of betting in horse races is over € 200 million. The number of riding schools and leisure riding stables approved by the Equestrian Federation of Finland is about 300. There are a total of about one thousand riding stables, of which about a half are enterprises that may be consid- ered riding schools. About 150,000 peo- ple enjoy riding as a hobby, the majority of them adults. Reindeer herding Reindeer herding is a highly significant business in the sparsely populated rural areas in northern Finland. It is a source of livelihood as such, and it is also significant in terms of the image of tourism and the Lappish culture. The number of reindeer has stayed about the same during the past decade, but in the very recent years there has been some decrease. In 2009/2010 the num- ber of reindeer totalled about 196,500, of which 100,000 were slaughtered. In recent years the production of reindeer meat has totalled 2.3–2.8 million kg. In the reindeer herding year 2008/2009 the average turnover of reindeer farms was about € 17,000 and the profitability coef- ficient was 0.33. On the largest reindeer farms with more than 230 reindeer the average turnover was € 33,000 and the profitability coefficient was 0.78. 14 Number of farms receiving agricultural support in 2000–2010. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Whole country 77,896 75,384 73,386 72,000 71,100 69,088 68,766 66,821 65,292 63,716 62,450 Southern Finland1 35,319 34,192 33,375 32,771 32,245 31,272 30,967 29,945 29,368 28,694 28,098 Eastern Finland 13,675 13,219 12,935 12,630 12,498 12,121 12,173 11,812 11,501 11,218 11,033 Central Finland 20,019 19,443 19,023 18,656 18,458 17,986 17,947 17,574 17,119 16,650 16,177 Northern Finland 8,883 8,530 8,053 7,943 7,899 7,709 7,679 7,490 7,304 7,154 7,142 1 Main regions of Uusimaa and Åland according to NUTS II have been included in Southern Finland. Source: Finnish Agency for Rural Affairs. Number of farms receiving agricultural support in 1995 and 2010 (main regions of Uusimaa and Åland according to NUTS II have been included in Southern Finland). Source: Finnish Agency for Rural Affairs. Eastern Finland Northern Finland Whole country Central Finland Southern Finland 95,562 62,450 0 20,000 40,000 60,000 80,000 100,000 1995 2010 24,794 16,177 0 10,000 20,000 30,000 40,000 50,000 1995 2010 43,104 28,098 0 10,000 20,000 30,000 40,000 50,000 1995 2010 17,708 11,033 0 10,000 20,000 30,000 40,000 50,000 1995 2010 9,956 7,142 0 10,000 20,000 30,000 40,000 50,000 1995 2010 1.3. Finnish farm Number and size distribution of farms In 2010 the total number of farms (over 1 ha) which had applied for agricultural support was a little under 62,500. This was about 1,300 farms (2.0%) less than in 2009. In both absolute and rel- ative terms the decrease in the number of farms was close to the long-term average. During the fifteen years in the EU (1995– 2010) the number of Finnish farms has fallen by almost 35% from 95,562 farms in 1995 by a total of about 33,112 farms. On average the number of farms has decreased at a rate of 2.8% a year. Proportionally the decrease has been the greatest in eastern Finland (38%) and the smallest in northern Finland (28%). In both southern and central Fin- land (33%) the number of farms has fallen less than in eastern Fin- land. While the number of farms is decreasing, the average farm size has been growing. The average size of farms receiving agricultural support in 1995–2010 has grown by more than 60% from 22.8 ha of arable land to almost 36.5 ha. The annual growth in the average size has varied from 0.5 ha to 1.5 ha. The growth is due to both the decrease in the number of small farms and increase in the number of large farms. The structural change is reflected in the proportional share of the different size cat- 15 Size class distribution and average arable area of farms receiving agricultural support in 20101. Whole country Arable land Southern Finland2 Eastern Finland Central Finland Northern Finland 1995 2010 Number of farms % Number of farms % Number of farms % Number of farms % Number of farms % Number of farms % <10 ha 5,206 19 2,663 24 3,339 21 1,547 22 22,850 24 12,755 20 10–20 ha 5,558 20 2,617 24 3,744 23 1,359 19 30,698 32 13,278 21 20–30 ha 4,274 15 1,791 16 2,623 16 1,001 14 19,669 21 9,689 16 30–50 ha 5,467 20 1,981 18 3,079 19 1,400 20 15,414 16 11,927 19 50–100 ha 5,313 19 1,547 14 2,587 16 1,348 19 5,706 6 10,795 17 >100 ha 2,083 8 397 4 727 5 466 7 784 1 3,777 6 Number of farms 28,005 10,996 16,099 7,121 95,121 62,221 Average arable area, ha/farm 39.03 30.28 34.02 33.42 22.77 36.48 1 The figures do not include horticultural enterprises if they have no fields under cultivation. 2 Main regions of Uusimaa and Åland according to NUTS II have been included in Southern Finland. Source: Finnish Agency for Rural Affairs. Area of leased arable land (ha) in 2001–2010. Source: Finnish Agency for Rural Affairs. 0 100 200 300 400 500 600 700 800 2001 02 03 04 05 06 07 08 09 2010 1,000 ha egories: in the past fifteen years the share of farms with less than 20 ha has fallen from 56% to 42% and the share of farms with more than 50 ha has more than tri- pled from 7% to 23%. Despite the growth in the average size, however, the share of small farms is still high in Finland. Very large farms with more than 100 ha of ara- ble land represent about 6% of the Finn- ish farms. About two-thirds of the growth in the farm size in 1995–2010 has occurred through leasing. In 2010 the total culti- vated arable area of farms receiving agri- cultural support was 2.278 million ha, and about 797,000 ha (35%) of this was leased. In 1995 the share of leased area was 22%. In the 2000s the leased arable area has grown by about 12%. There is considerable regional varia- tion in the leased area: in Lapland and the Province of Åland more than 45% of the arable area is leased, while in some regions in southern and central Finland and Ostrobothnia the share of the leased area is less than 33%. Despite the growth in the farm size, the small size of parcels is still a problem as regards, for example, the efficient utilisation of machinery. In 2010 the average size of base parcels was 2.43 ha, varying from over 3 ha in south- ern Finland to less than 2 ha in eastern and northern Finland. There has been hardly any growth in the average size of parcels. Finnish agriculture is almost exclu- sively based on family farms: in 2010 88.4% of farms receiving support were pri- vately owned and 10.4% were owned by heirs and family companies and corpora- tions. Cooperatives and limited companies owned 1.0%, general and limited partner- ships 0.2%, and the State, municipalities, schools and parishes 0.3% of the farms. 16 Number of farmers by age categories in 2001–2009. Source: Information Centre of the Ministry of Agricul- ture and Forestry. 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 65– 55–64 45–54 35–44 –34 The average age of farmers on farms receiving agricultural support is 51.4 years. Since 1995 the average age of farmers has risen by about three years. The farm popu- lation has been ageing so that in 2009 only 62% of the farmers were under 55 years of age while in 2001 their share was still 74%. The share of the under 40-year-olds has fallen the most, by about 40%. Production structure of farms Measured by the number of farms, the pro- duction structure of Finnish agriculture has changed considerably since 1995. The share of livestock farms has fallen while the share of crop farms has increased clearly. In 2010 28% of the farms which applied for support were livestock farms and 66% were crop farms, while in 1995 the share of livestock farms was 52% and that of crop farms was 39%. However, livestock pro- duction still represents almost four-fifths of the return on agricultural production at market price, with a 79% share in 2010. In 2010 about 11,000 farms practised dairy husbandry as their main activity. This is 18% of the farms that applied for agri- cultural support. In 1995–2010 the num- ber of dairy farms fell by more than 21,000 farms, at a rate of about 6.8% a year. Meas- ured by the total value of the production, dairy husbandry is still the most significant agricultural production sector in Finland. In recent years milk has accounted for about half of the return on agricul- tural production at market price (46% in 2010). Proportionally the share of dairy farms is the greatest in east- ern and northern Finland (30% of all farms). Dairy farms are more evenly distributed to all regions of Finland than the other sectors. In 2010 the number of farms spe- cialising in pig husbandry was about 2,040, which is about 3.3% of farms that applied for support. Of the pig farms 615 specialised in piglet produc- tion, 705 farms specialised in pigmeat and 716 farms practised combined pig production. In 1995–2010 the number of pig farms fell by 67%, i.e. 7.2% per year. Most of the pigmeat production is located in southern and western Finland. Pig- meat represents about 14% of the return on agricultural production at market price. In terms of the value of the production it is the second most important agricultural product after milk. In 2010 about 3,790 farms (6.1% of all farms) specialised in beef production, and the share of beef in the value of agri- cultural production was about 10%. In 1995–2010 the number of these farms fell by about 5,300, at a rate of about 5.6% per year. The distribution of beef farms across the country is quite similar to the regional distribution of dairy farms. The number of poultry farms was 724, which is about 1.2% of the farms that applied for support. During the EU period the number of poultry farms has decreased by a total of 67%, i.e. about 7.1% per year. The number of farms specialised in egg production has decreased the most, which is why the share of poultry meat farms of all poultry farms has grown. In 2010 about 56% of poultry farms specialised in egg production, 31% in poultry meat pro- duction and 13% were breeding units. In 2000 the respective shares were 68%, 21% and 12%. Most of the poultry farms are located in southern and western Finland. 17 Distribution of farms receiving agricultural support according to production line in 2010 (main regions of Uusimaa and Åland according to NUTS II have been included in Southern Finland). Source: Finnish Agency for Rural Affairs. Beef production 4.1% Poultry production 1.6% Dairy husbandry 9.8% Other 5.2% Pig husbandry 3.8% Crop production 75.4% Southern Finland Other 7.5% Crop production 51.0% Dairy husbandry 29,9% Poultry production 0.3% Pig husbandry 1.2% Beef production 10.0% Eastern Finland Central Finland Crop production 64.6% Dairy husbandry 18.3% Other 4.8% Pig husbandry 4.7% Beef production 6.2% Poultry production 1.3% Crop production 54.2% Dairy husbandry 29.9% Other 7.4% Pig husbandry 1.0% Beef production 7.3% Poultry production 0.1% Northern FinlandWhole country Crop production 65.9%Dairy husbandry 17.8% Other 5.8% Pig husbandry 3.3% Beef production 6.1% Poultry production 1.2% In 2010 there were about 41,100 crop farms, which is almost 3,900 more than in 1995. In the very recent years, however, the number of crop farms has decreased as well. After years of growth the num- ber of crop farms has turned to a decrease especially in southern Finland, with about a half of the crop farms, and in central Fin- land, where about a quarter of the Finn- ish crop farms are located. Instead, in east- ern and northern Finland the number and share of crop farms has increased in recent years as well. In 2010 return on crop pro- duction represented almost 21% of the return on agricultural production at mar- ket price. 18 2.1. Trends on the world market In the past few years we have seen quite dramatic and rapid changes on the inter- national agricultural product market. The great and sudden fluctuations in agricul- tural product prices have taken all market participants by surprise. The variations in cereal prices on the world market in 2007– 2008 were almost unforeseeable. The world cereal prices were almost double the prices in the past few years. The world market prices of dairy products were also much higher than in the previous years. The dramatic rise in the prices was fol- lowed by a rapid fall during the latter part of 2008. In summer 2010 the world prices for cereals started to rise again at a fast rate. The changes are founded on both ran- dom and structural causes. A major share of the sudden and dramatic changes was due to variations in the yields caused by exceptional weather conditions in impor- tant agricultural regions and the global economic crisis. In 2007–2008 the world economy was overheated and the price for crude oil was very high. Besides this, the stocks of both wheat and rice were record low. Furthermore, the growth of specu- lation on the commodity exchange market impacts on price formation. In the United States, for example, the fall in stock prices in autumn 2007 steered growing amounts of money to agricultural commodities. The fall in cereal prices in 2008 was much steeper and the prices end- ed up at a lower level than had been expected. The world cereal crop was very good and the stocks grew. The world economy ran into a recession and the money invested in the agri- cultural commodity market disap- peared just as quickly as it had gone 2. AGRICULTURAL AND FOOD MARKET World market price for maize, soy and wheat in 1998– 2010 Source: USDA, CBOT, CBR. USD/1,000 kg 0 100 200 300 400 500 600 1998 99 00 01 02 03 04 05 06 07 08 09 2010 Wheat Maize Soy there. Very likely the prices would not have collapsed as drastically had it not been for the recession. The rapid rise in cereal prices in sum- mer 2010 started from the news about drought in the Black Sea region and the consequent yield losses. In recent years the Black Sea region (Russia, Ukraine and Ka- zakhstan) has been among the greatest ce- real exporters on the world market. The ban on cereal exports in Russia in August 2010 caused growing anxiety among the importing countries and accel- erated the rise in prices. The heavy rains in Australia at the turn of the year 2010/2011 weakened the quality of the wheat crop, while floods completely destroyed part of the crop. Argentina suffered from drought caused by the La Nina weather pattern. Cereal production in both the current and the next period is expected to remain below the consumption, which means that the stocks will again diminish. In April 2011 the International Grain Coun- cil (IGC) estimated the production volume of the market period 2010/11 at 1, 730 million tonnes and the consumption at 1, 790 million tonnes. This means that the production would be 60 million tonnes, more than 3%, smaller than the consump- tion. The IGC estimates the world wheat 19 production at 650 million tonnes and con- sumption at 662 million tonnes. Mainly because of the higher prices, the cereal production is expected to in- crease in all the main production regions in the next crop year. Based on estimates by the IGC, the grain area will grow in the market period 2011/12 by about 4%, which would imply a total output of 1,800 million tonnes. The production would be higher than the year before, but it would still remain slightly below the consump- tion, which continues to grow. World demand for dairy products is growing largely because of the economic growth in Asia, especially in China. Be- cause of the growing demand the prices started to rise towards the end of 2010. The prices of cheeses, milk powders and butter increased considerably be- tween the beginning and end of 2010. The butter prices rose by as much as 30–40% and the prices for cheeses and milk powder by 15–20%. The world market prices for meat have also risen due to the growing de- mand, but the changes on the meat market have been smaller than on the cereal and milk market. According to FAO statistics, in 2010 the prices for meat rose by a little more than 10%. In the future growing pressures on world prices will be caused by the population growth and growth in prosperity. The world population increases by about 80 million people a year. The competition for higher standard of living in the population- rich Asian countries means that grow- ing numbers of people are consuming more meat and dairy products. Rear- ing livestock consumes large quanti- ties of cereal, which means that larger arable areas now used for food pro- duction will be needed for growing animal feed. This leads to higher pric- es for both cereals and meat. The prices and price outlook are also influenced by the growing de- mand for cereal and raw material for biofuels. The increase in biofuel produc- tion inevitably takes over part of the arable area which otherwise would be used for food or fodder cereal production. Very likely the great fluctuations in the supply of agricultural products and the re- lated considerable variations in the prices have come to stay. Today even quite small indications of changes in crop outlook are rapidly reflected in the world market prices. Some of the reasons behind the fluc- tuations in agricultural commodity prices are not directly linked to the balance be- tween the supply of and demand for food. Like in the case of credit crisis, expecta- tions, speculation and suspicion have their role to play in price variations. Export prices of butter and skimmed milk powder in 2006–2010. Source: Canadian Dairy Information Cen- tre. Trends in the world grain production, consumption and stocks in 2006–2011. Source: IGC. 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2006 2007 2008 2009 2010 Milk powder Butter USD/1,000 kg 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 billion kg Production ConsumptionStocks 20 2.2. Arable crops The year 2010 was characterised by great variations in both the weather conditions and on the cereal market. The Finnish cere- al crop was the smallest of the decade. The total cereal crop remained at about 3 bil- lion kg, which is 30% lower than in 2009. The main cause for this was the decrease in the cereal area by 16% from the year before. The total grass yield was 8% lower than in 2009 in spite of the growth in the cultivation area. The prices of cereal crops peaked at the turn of July/August. Weather conditions The year 2010 will be remembered for the extreme weather events. Record tempera- tures were hit many times during the ex- ceptionally warm summer. The year also remains in history because of the heavy storms and quite long heat waves. How- ever, because of the cold temperatures in both the early and late part of the year the average annual temperature in the whole country remained 0.6 degrees below the long-term average. The average tempera- ture of the year varied from 5 degrees in south-west Finland to –3 degrees in north- ern Lapland. The lowest temperature of the year, –41.3 °C, was measured on 20 February in Kuhmo in north-east Finland. The highest temperature, +37.2 °C, which was also a national all-time record, was measured at Joensuu airport in eastern Finland on 29 July. The length of the thermal growing pe- riod was quite normal. In the south the growing period started on 25–26 April and ended on 11 October. In southern Finland the growing period was 169 days long, in central and western Finland it was about 160 days and in the north it was 135 days, which is a little longer than normally. Because of the very warm summer the effective temperature sum was also higher than the average. In Jokioinen in south- central Finland the temperature sum accu- mulated was 1, 500 °C (long-term average 1,245 °C), in Jyväskylä in central Finland it was 1,402 °C (1,134 °C) and in Rovaniemi in the north it was 966 °C (879 °C). The average total precipitation in the whole country was about 560 mm, which was about 30 mm below normal. During the summer, however, there was consider- able regional variation in the rainfall. In some locations within a zone from south- western Finland to Kainuu in the north- east it rained more than 650 mm. In some places it rained almost twice as much as usually in the spring, while during the summer the precipitation was less than half of the average. The highest rainfall during one day, 69.5 mm, was measured in Sim- pele in eastern Finland on 4 August. Areas and yields The utilised agricultural area in Finland is about 2.3 million ha, which is 6.8% of the total surface area and 7.5% of the land area. Compared to the average in the Europe- an Union, 46.7%, the share of agricultural area is very small in Finland. In 2010 cereals were cultivated on about 951,500 ha in Finland, which is 16% less than the year before. Instead, the area under grass grew from 2009. The to- tal cereal output fell by 30% from the year before to about 2, 989 million kg. The area under fodder cereals was about 715,100 ha in 2010 and the yield totalled 2,196 million kg. The decrease in the total fodder cereal yield by 34% from 2009 was mainly due to the fall in the cul- tivation area by 21% from the year before. The quality of fodder cereals suffered from the low hectolitre weight and small grain size of oats. Only 49% of the fodder barley crop reached a hectolitre weight of more than 64 kg, while in the previous year this share was more than 80%. The hectolitre weight of oats was the lowest in more than 20 years. Of the oats crop 71% was above the 21 hectolitre weight of 52 kg, which is the minimum requirement common- ly used by the feedingstuffs industry. Only 3% of the oats crop was above the hectolitre weight of 58 kg usually required for grits, while in 2009 this figure was 27%. The yield of malting barley in 2010 was 61% lower than the year before. The total yield was 244 mil- lion kg, of which was almost a quarter, about 55 million kg, was fit for malt- ing. The main reason why part of the crop was not suitable for malting was the too high protein content. The total area under bread cereals in 2010 was 236, 400 ha and the total yield harvested was about 793 million kg. The total yield was 15% smaller than in 2009, mainly due to the lower hectarage yield of spring wheat. The total yield of winter and spring Harvested areas in 1995–2010, 1,000 ha. Barley Oats Silage Dry hay Wheat Oilseed crops0 100 200 300 400 500 600 700 1995 1998 2001 2004 2007 2010 1,000 ha Harvested areas and yields of main crops in 2009 and 2010. 2009 2010 Area Yield Total Area Yield Total 1,000 ha kg/ha million kg 1,000 ha kg/ha million kg Winter wheat 16.4 3,890 63.7 22.3 3,970 88.5 Spring wheat 199.8 4,120 823.3 188.9 3,370 635.9 Rye 16.4 2,550 41.7 25,2 2,720 68.5 Barley 561.8 3,860 2,171.0 417,4 3,210 1,340.2 Oats 322.0 3,460 1,114.7 278.3 2,910 809.7 Mixed cereals 15.0 3,020 45.3 19.4 2,380 46.5 Peas 4.2 2,660 11.2 6.1 2,190 13.4 Potatoes 26.4 28,610 755.3 25.2 26,210 659.1 Sugar beets 14.8 37,710 559.0 14.6 37,120 542.1 Dry hay 86.1 3,370 289.7 106.1 3,600 382.4 Silage 450.3 17,690 7,964.7 451.6 17,890 8,081.3 Green fodder 14.7 7,870 115.7 13.6 8,820 120.3 Cereals harvested green 69.8 4,970 346.9 57.5 4,180 245.0 Turnip rape 69.9 1,690 118.0 141.5 1,120 158.6 Rape 11.0 1,980 21.9 16.2 1,230 19.9 Pasture 78.7 77.3 Other crops 47.1 55.1 Total 2,004.4 1,916.3 Set aside and managed uncultivated arable land 229.8 307.0 Source: Information Centre of the Ministry of Agriculture and Forestry. wheat was 724 million kg, of which about 485 million kg fulfilled the quality crite- ria for bread wheat. The yield of spring wheat was about 636 million kg and that of winter wheat about 88 million kg. The hectarage yield of winter wheat was high- er than in 2009 as well as above the long- 22 Yields of main crops in Finland from 1990 to 2010. Source: Information Centre of the Ministry of Agriculture and Forestry. kg/ha kg/ha kg/ha kg/ha kg/ha kg/ha 0 1,000 2,000 3,000 4,000 5,000 1990 1995 2000 2005 2010 Rye 0 1,000 2,000 3,000 4,000 5,000 1990 1995 2000 2005 2010 Spring wheat 0 1,000 2,000 3,000 4,000 5,000 1990 1995 2000 2005 2010 Barley 0 1,000 2,000 3,000 4,000 5,000 1990 1995 2000 2005 2010 Oats 2,000 3,000 4,000 5,000 1990 1995 2000 2005 2010 Dry hay 10,000 15,000 20,000 25,000 1990 1995 2000 2005 2010 Silage term average. Of the spring wheat 70% was fit to be used as bread cereal, the pro- tein content of the crop was high and, on average, the hectolitre weight was good. However, regional variations were great in wheat production. The total yield of rye, about 68 million kg, was 64% higher than in 2009. More than 90% of the crop was fit to be used as bread cereal, while the year before less than half of the crop fulfilled the criteria for this. The area sown with rye in autumn 2010 was about 29, 000 ha, which was as much as 43% larger than in autumn 2009. The silage area was about 452, 000 ha, which is 2% more than in 2009. The to- tal yield was 8% higher, about 7, 400 mil- lion kg. The average silage yield was about 17, 890 kg/ha, which is slightly above the average. The dry hay area grew from the previous year to 106, 600 ha. The yield of dry hay totalled 382 million kg, which is 23 Market prices of cereals in Finland from 2006 to 2010. Source: Information Centre of the Ministry of Agriculture and Forestry. *2009 statistics has changed. Rye Oats €/tonne Wheat Barley €/tonne 50 100 150 200 250 2006 2007 2008 2009* 2010* 50 100 150 200 250 2006 2007 2008 2009* 2010* 32% higher than in 2009. The hectarage yield of 3,600 kg/ha was close to the ten- year average. The pasture area was 77,200 ha, which is a little less than the year before. The area under green fodder decreased slightly to 13, 600 ha. The potato yield of 2010 totalled about 659 million kg, of which 291 mil- lion kg were ware potatoes. The total yield was 13% smaller than in 2009, when the hectarage yield of potato was clearly above the average. The yield of sugar beets totalled 542 million kg, which is 3% less than in 2009. The cultivation area stayed about the same, at 14, 600 ha. The hectarage yield of 37, 120 kg/ha was about the same as in 2009 and 3% higher than the average yield of sugar beets over the past ten years. The Finnish sugar quota of 81 million kg was exceeded slightly in 2010. The cultivation area of oilseed crops totalled 158,000 ha in 2010, which is as much as 95% larger than the year before. The total yield of turnip rape was about 159 million kg and that of oilseed rape was about 20 million kg. The total yield of tur- nip rape was 35% higher than the year be- fore but the hectarage yield fell by 44% to 1, 120 kg/ha, which is also lower than the average hectarage yield. The hectarage yield of oilseed rape, 1, 220 kg/ha, was also lower than in 2009. Market prices for arable crops In 2010 we again saw a quite dramatic rise in the market prices of cereals. In the early part of the year the prices were at a very low level, but in August and after that news form drought in Russia and the Black Sea region kept pushing the prices up. The ban on cereal exports imposed by Russia raised the world market prices even fur- ther. The domestic cereal prices followed the trend in world market prices after a certain lag. The last time when the prices peaked in the same way was in 2007/2008. It seems that quite strong fluctuations in cereal prices have come to stay, both on the world market and in Finland. The prices continued to rise until Oc- tober, and this was the level on which the Finnish prices also stayed for some time. Another rise took place in December, caused by the uncertainty relating to the quality of the wheat crop and the news that the total production of the year would not be sufficient to meet the total demand on the world market. Cereal prices rose on the domestic market as well so that at the end of the year 2010 the price level was much higher than in the beginning. The price level of fodder barley was also low in the early part of 2010. After the increase, which started in August, the average price for fodder barley had risen 24 Market prices of cereals in 2009, €/1,000 kg. Rye Wheat Barley Oats Finland 134.2 132.0 - 86.4 Sweden 75.3 107.4 85.7 71.6 Denmark - 120.9 126.2 100.7 Estonia 73.7 104.4 98.2 69.5 Austria 132.5 83.2 - 77.9 England - 122.9 103.7 103.3 Spain 121.8 142.4 124.7 126.9 Source: Eurostat. Market prices of cereals in Finland from 2000 to 2010, €/1,000 kg. Rye Wheat Barley Oats 2010 142.24 143.62 120.51 104.32 20091 134.15 131.95 93.93 86.41 2008 207.02 189.14 160.71 137.80 2007 192.19 159.90 145.80 149.73 2006 139.81 110.50 102.00 107.26 2005 118.41 106.20 99.51 87.13 2004 120.90 119.80 106.51 87.32 2003 124.88 126.66 105.57 92.21 2002 126.57 131.79 106.00 104.38 2001 131.31 132.36 109.66 111.37 2000 131.19 134.55 119.41 117.73 1 Statistics has changed. Basic price paid to farmers on delivery to first customer Source: Information Centre of the Ministry of Agricul- ture and Forestry. to more than 150 €/tonne from the lev- el of about 98 €/tonne in July. A similar rise took place in the price for malting bar- ley so that in December 2010 the average price, 168 €/tonne, was about 65% higher than in January 2010. The average price of oats in 2010 was about 104 €/tonne. At its lowest in Janu- ary the price was 81 €/tonne, but at the turn of July/August the average price rose by about 42%. Oats prices continued to rise all through the autumn so that in De- cember the average price of oats was 160 €/tonne. The average price of wheat in 2010 was 143 €/tonne, which is slightly high- er than the average price in the previous year. Of the cereals the price of wheat rose the most during the year: the average price of 193 €/tonne in December was as much as 75% higher than the monthly average in January. The price of rye also rose all through the year to the highest level of 190 €/tonne in December. At its lowest in April the price was 108 €/tonne, and the aver- age price of rye for the whole year was 142 €/tonne. The prices for oilseed crops did not rise as much as the cereal prices, even though the prices of both turnip rape and oilseed rape kept rising quite steadily all through the year. The average price of the year was about 325 €/tonne, which is 19% higher than the year before. The price was at its lowest, 285 €/tonne, in January 2010, but after the steady increase from one month to another the average price at the end of the year was 386 €/tonne. The average price of ware potato in 2010 was 117.5 €/tonne. Until July the price varied between € 90 and 100, but from August the average price of ware po- tato started to rise as well so that in Octo- ber it was 150 €/tonne. In December the price was as high as 190 €/tonne, which was more than double the price in the ear- ly part of the year. The low price level in the early part of the year was due to the re- cord yield of ware potato in 2009. One of the reasons for the rapid rise in the price in the autumn was the growing demand for potato especially in Russia, where the po- tato crop was weak because of the drought. The Finnish cereal market reacts to changes on the world market quite slow- ly. The price of, for example, bread wheat stayed lower in Finland than in the rest of Europe all through the year. The prices on the Finnish market follow the price trends in Western Europe after a certain lag, and the price level reached at the end of the year was not as high as in the other West- European countries. 25 Milk production and the amount of milk delivered to dairies in Finland from 2000 to 2010. Source: Informa- tion Centre of the Ministry of Agriculture and Forestry. million litres Delivered to dairies 2,100 2,200 2,300 2,400 2,500 2000 2002 2004 2006 2008 2010 Milk production 2.3. Livestock production Milk The amount of milk delivered to dair- ies in 2010 totalled 2, 222 million li- tres, which was 7 million litres (0.3%) more than in 2009. The production of organic milk totalled 30 million li- tres (+2.2%). The total volume of milk produced grew for the second year in a row. However, from 2001 the volume has decreased by 7%, and today it is less than the domestic con- sumption. The production of organ- ic milk has increased five-fold during the 2000s. In the quota period 2009/2010 milk production in Finland fell 216 million li- tres short of the national quota. In the pe- riod 2010/2011 the shortage was 242 mil- lion litres (10%). Gallup Food and Farm facts has forecast the milk output in 2010 to total 2,240 million litres. Milk was produced on 10,920 farms (–5%), of which 117 were organic farms. The average dairy herd size grew by 1.3 cows to 26.3 cows. The number of dairy cows decreased by 0.4% and the number of calves born by 1%. The average yield of dairy cows rose by 0.7%. In 2010 the production of butter to- talled 44.5 million kg (–8% from the year before) and a total of 17 million kg (+8%) was consumed. The consumption of fat blends grew from the previous year to 15 million kg. The production of liq- uid milk products totalled 709 million li- tres (–0.3%) and the consumption was 688 million litres (–1.5%). The produc- tion of buttermilk totalled 68 million li- tres (–0.6%). In 2010 a total of 117 million kg of yoghurt was produced (+0.4%) and the consumption was about 125 million kg (+4%). Cheese production totalled 101 million kg (+3.6%) and consumption 115 million kg (+3.4%). The production of open texture cheeses and processed cheese increased the most. The production of soured milk products increased by 4% and that of soured whole milk “viili” by 2%. There is a great need to both export and import items representing specific dairy products. Approximately half of the milk’s fat produced in Finland is used to manufacture export products. Instead, the protein fractions in milk find use in Fin- land. In 2009, yoghurt exports totalled 29 million kg (+14%) and imports 37 mil- lion kg (+27%). The import of liquid milk rose to 50 million kg. Cheese exports to- talled 51 million kg (+3.4%) and imports 44 million kg (+0.4%). Of the cheeses produced in Finland almost a half are ex- ported, while imports represents 37% of the cheese consumption. Butter exports fell by 13% to 31 million kg. The export of powders grew, with fat-free milk pow- der as the most important export product. Beef In 2010 a total of 82 million kg of beef was produced in Finland, which is one million kg (+1%) more than the year be- fore. Beef consumption totalled 99 mil- lion kg (+5%), of which 17.5% was im- ported meat. Gallup Food and Farm Facts has forecast that in 2011 beef consumption stays at 99 million kg and production rises to 83 million kg. 26 imports came from Poland, Denmark and Germany. Processed meat was imported primarily from Sweden, where Finnish meat companies are also operate. Beef ex- ports totalled 1.7 million kg (2% of pro- duction). Finnish beef is exported almost exclusively to Sweden and Norway. Pigmeat Pigmeat production totalled 203 million kg, which is 1% less than in 2009. Pig- meat consumption grew by 1% to 189 mil- lion kg. The production fell for the second year in a row. One reason for this has been the decoupling of national aids from the volumes produced. The Gallup Food and Farm Facts has forecast that pigmeat pro- duction falls to 201 million kg in 2011 and consumption stays at 189 million kg. The number of pigs slaughtered in 2010 was about 2.2 million (–4%). The average slaughter weight of fattening pigs rose to 88.4 kg (+2.6 kg). One reason for the increase was the strike at the Finnish slaughterhouses, which delayed the slaugh- terings so that in April 2010 the average slaughter weight was as high as 92.7 kg. The number of sows slaughtered decreased by 8% and the number of piglets sold for fattening by 2%. In December 2010 there were 146,000 sows in Finland (–6%) and 526, 000 fat- tening pigs (≥50 kg, –2%). By the end of the year the number of pig farms fell below 2,000. Most of the production is located in south-west- ern Finland and Ostrobothnia, where almost 75% of the pigs are kept. In 2010 a total of 36.6 million kg of pigmeat was exported (–19%) and imports totalled 28.4 million kg (+21%). About 18% of the produc- tion was exported. Exports to Russia fell strongly and Estonia became the most significant export destination. Other important export destinations were Sweden, New Zealand, South Production of beef, pigmeat, poultry meat and eggs in Finland from 2000 to 2010. Source: Information Centre of the Ministry of Agriculture and Forestry. million kg Pigmeat Poultry meat Eggs 0 50 100 150 200 250 2000 2002 2004 2006 2008 2010 Beef In recent years beef production has varied between 80 and 87 million kg and consumption between 95 and 99 million kg. When pigmeat and poultry meat are in- cluded, Finland became a net importer of meat in 2010 as the total production of all types of meat was 1.7% lower than their consumption. The number of bovines slaughtered was almost 265, 000 (–1% from 2009), of which 54% were bulls, 32% cows and 14% heifers. The number of bulls slaughtered fell by 1% and that of cows by 2%. The number of heifers slaughtered increased by 4%. Since 1996 the average slaughter weight of bulls has increased by 73 kg. In 2010 the average slaughter weight of bulls was 346 kg, (+9 kg from 2009), that of cows was 280 kg (+5 kg) and heifers 250 kg (+6 kg). The number of suckler cows has in- creased in recent years. In May 2010 there were 55,400 suckler cows in Finland, which is 7% more than in 2009. The num- ber of farms specialised in beef production was about 3,700, of which 40% specialised in suckler cow production. The average weight of calves sold rose slightly and their number fell by 3%. The number of calves born decreased by 1%. In 2010 a total of 17.3 million kg of beef was imported, which is 2.1 million kg more than the year before. Most of the 27 Livestock production in Finland from 2000 to 2010. Dairy milk Beef Pigmeat Eggs Poultry meat million litres million kg million kg million kg million kg 2010 2,222 82 203 62 96 2009 2,215 81 206 54 95 2008 2,188 80 217 58 101 2007 2,226 87 213 57 95 2006 2,279 85 208 57 88 2005 2,293 84 203 58 87 2004 2,304 91 198 58 87 2003 2,323 94 193 56 84 2002 2,376 91 184 55 83 2001 2,378 90 174 57 76 2000 2,371 91 173 59 64 Source: Information Centre of the Ministry of Agriculture and Forestry. Korea and Japan. Of the pigmeat con- sumed 15% was imported, mainly from Germany, Denmark and Poland. Half of the processed meats came from Sweden. Poultry meat In 2010 poultry meat production in Fin- land totalled 96 million kg and consump- tion 98 million kg. The production grew by 2% from the year before. About 90% of the poultry meat produced in Finland is broiler. Broiler meat production totalled 88 million kg (+2% from 2009) and that of turkey meat 9 million kg. At total of 88 million kg of broiler meat (+5%) and 9 million kg of turkey meat (+4%) was consumed. Besides these, small amounts of other poultry meats were produced and consumed. The production of broiler meat has been approximately 90 million kg in the past few years, but the production of turkey meat has decreased by 37% from 2005. According to the forecast of the Gal- lup Food and Farm Facts, in 2011 the con- sumption of poultry meat rises to 101 mil- lion kg, of which 91 million kg is broiler meat and less than 10 million kg is turkey meat. The production volume is forecast at 99 million kg of which 90 million kg is broiler meat and less than 9 million kg is turkey meat. The number of broilers slaughtered in- creased by 5% from the year before, but the average slaughter weight fell by 3% to 1.6 kg. The number of turkeys slaughtered and their average slaughter weight (9.2 kg) were about the same as the year before. A total of 12 million kg broiler meat (+18%) and 2.5 million kg turkey meat (+15%) was imported to Finland. Most of the broiler meat imports came from Bra- zil and Denmark. Processed meats came mainly from Thailand, Germany, Den- mark and Brazil. Turkey meat was import- ed mainly from Germany, where turkeys from several neighbouring countries are also slaughtered, and from Poland. To- day meat preparations represent well over half of the imports. A major share of the carcass meat imports is boneless meat or breast fillets with bones. Imports account for 13.5% of broiler meat and 26.5% of turkey meat consumption. Broiler meat exports from Finland to- talled 14 million kg (+4% from 2009) and turkey meat exports 1.8 million kg (+24% from 2009). The exports went mainly to Estonia, Russia, Hong Kong, Sweden and Latvia. 28 Market prices for livestock products in selected EU countries in 2010, €/100 kg1. Milk Pigmeat Beef (bull) Poultry meat2 Eggs3 Finland 37.15 141.7 289.5 240.9 107.2 Sweden 33.68 145.8 296.2 202.4 174.1 Denmark 31.94 126.3 307.0 197.7 178.3 Estonia 27.74 142.5 226.4 - 108.2 Germany 30.97 144.4 313.9 245.6 121.0 France 30.92 129.9 318.6 194.9 94.7 1 Average prices of January–December, - information not available. 2 Sale price at slaughterhouse, 3 Sale price at packaging plant. Source: European Commission. The producer prices of the most important live- stock products in Finland from 2000 to 2010 including production support (€/100 kg, milk €/100 l)1. Milk Beef Pig- meat Poultry meat Eggs 2010 36.92 240 137 120 88 2009 39.74 247 141 124 87 2008 44.05 241 144 130 92 2007 38.25 221 132 114 77 2006 36.39 212 126 109 62 2005 35.22 205 128 114 60 2004 35.75 190 120 117 74 2003 36.68 186 115 117 80 2002 36.83 190 137 120 79 2001 36.26 208 150 117 69 2000 34.97 206 129 111 82 1 The figures include estimated retroactive payments. Producer price for milk with standard protein and fat content, does not include quota levies. The price for 2010 includes estimated retroactive payment of 1.29 cents/l. Source: Information Centre of the Ministry of Agriculture and Forestry. Eggs The amount of eggs delivered to packaging in 2010 totalled 61.5 million kg. Besides this, about 1% of the production has gone to direct sale or farm household use. Egg production was 14% higher than the year before. It was the first time since 1998 that egg production was this high. The produc- tion of organic eggs rose by 20% and pro- duction in barn systems by 23%. Egg pro- duction in battery cages increased as well, but only by 11%. Thus the sector seems to have recovered from the salmonella epi- demic which removed 440,000 hens from production in 2009. Of the eggs produced 3% came from organic production, 23% from barn sys- tems and 68% from battery cage systems. About 30% of the production still takes place in battery cages, which will become prohibited in 2012. Thus farms need to invest in new production facilities if they intend to continue in the sector. If such in- vestments are not made, egg production is likely to fall, at least temporarily. Egg consumption totalled 52 million kg, which is 3.2% more than in 2009. The consumption of shell eggs increased a lit- tle more, by 3.7%. The growth in the pro- duction led to a growth in exports by 10.7 million kg (+55%). According to the forecast by the Gal- lup Food and Farm Facts, in 2011 egg pro- duction should stay at about 60 million kg. The number of hens is expected to be about 3.4 million, which is the same as in 2010 but more than in 2009. Producer prices The market prices of livestock products in the EU influence their prices in Finland, but the Finnish prices also have special characteristics. The market prices for pig- meat and milk, for example, usually vary less in Finland than in many other EU countries. In Finland there is oversupply in eggs, and their producer price is low com- pared to the other parts of the EU. Instead, the prices paid to the Finnish milk produc- ers are slightly higher than in the EU on average, and in Finland the seasonal varia- tion in prices is also greater. Studies show that the price changes observed on the Eu- ropean meat market are transmitted to the Finnish prices quite slowly. In 2010 the average producer price for 29 € 60. In Finland the pigmeat prices were slightly above the EU average. The price for piglets was clearly high- er than in the EU but much lower than in Sweden. The average producer price for poultry meat, 1.23 €/kg, was 3% lower than the year before. The price for broiler meat was 1.20 €/kg. In the EU price statistics broiler prices in Finland were lower than the EU average, but the product concerned here (whole broiler) is poorly repre- sentative of the Finnish market. The average producer price for eggs was 0.88 €/kg, which was 1% higher than in 2009. In the EU statistics the sale price of packaging plants fell by 12% to a level below the EU average. The price for eggs produced in barn systems was a tenth higher than the price of eggs from battery cage systems, and the price of organic eggs was three times higher. At the end of 2010 the prospects on the pigmeat and poultry meat markets weakened due to the news about dioxin contaminated feed which had been fed to the animals in Germany, as well as the rap- id increase in feed prices. The meat and egg sales in Central Europe suffered from the dioxin scandal simultaneously when the soaring feed prices led to a strong increase in the meat and egg production costs. Producer prices of beef, pigmeat, poultry meat and eggs in Finland from 2006 to 2010. Source: Informa- tion Centre of the Ministry of Agriculture and Forestry. Producer price of milk in Finland from 2006 to 2010. Source: Information Centre of the Ministry of Agricul- ture and Forestry. €/100 litres Milk, excl. production support Milk, incl. production support 25 30 35 40 45 50 55 2006 2007 2008 2009 2010 €/100 kg Beef Pigmeat Eggs Poultry meat 0 50 100 150 200 250 300 350 2006 2007 2008 2009 2010 standard milk with quality premiums was 36.85 €/100 l (–5% from 2009). In addi- tion, the average of 7.48 €/100 l was paid as production aid. The share of quality pre- miums in the price was 2.28 €/100 l. The final price for milk is determined when the dairies complete their financial statements and the retroactive payments based on the result are decided. In 2009 the average ret- roactive payment was 1.29 €/100 l. The price of milk varies from one month to another and according to the ability of dairy to pay to the producers. The average price paid by the three dair- ies with the lowest price was 2.73 €/100 l less than the average price paid by the three dairies with the highest producer price. The average price paid to the pro- ducers for bull meat was 2.78 €/kg, which was 2% lower than the year be- fore. The average price for all types of beef was 2.40 €/kg (–3%). The price of cow meat fell by 5%. The prices paid for calves rose by 2–4% from 2009. The average price paid for a male colostrum calf was € 154 and that paid for a female calf was € 82. In 2010 the average price paid for pigmeat was 1.37 €/kg, which is 2.5% less than the year before. The average price paid for fattening pigs was 1.41 €/kg (–3%). The average price paid for piglets (30 kg) was 30 Protein self-sufficiency – Feasible or not? Jarkko Niemi, Timo Sipiläinen and Timo Karhula Almost two-thirds of the plant-based feed protein consumed in the EU is obtained from soybean, 12% is from rape seed meal, 5% from sunflower and 4% from leguminous plants. The EU imports approximately 70% of the plant- based feed protein and as much as 98% of the soybean. The situation is forecast not to change much in the current dec- ade. Hence, our pig and poultry produc- tion is heavily dependent on imports of feed protein. Every year thousands of tonnes of protein-rich feed ingredients are imported to Finland. More than half of this is soybean and soya prod- ucts. The value of the soya imports alone totals tens of millions of euros a year. In recent years, however, imported soy- bean has become less important as the production and import of turnip rape have grown (see figures). The need for protein is increasing on the global scale due to the growth in the world popula- tion and rise in the standard of living. According to the OECD, meat con- sumption in the current decade increases by 2.4% in the developing countries and 1.1% in the rest of the world. Amino acid composition of protein important Feed is one of the main cost items in livestock production. In the pig fattening, for example, protein feed represents approximately a third of the feed cost. Domestic vegetable protein should not cost too much and its composition should meet the animal’s needs. The most important source of protein for pigs and poultry is protein-rich soy- bean. Its amino acid composition is also well suited for the needs of the animals. For example, the metionin content of field bean is 75% lower and that of pea is 70% lower than the metionin content of soybean meal. With respect to milk and beef production the situation is better: The main source of protein for ruminants is high-quality grass feed. Besides the price and the protein content, the availability of feed also matters. The availabil- ity of organic protein feed, in particular, is scarce in Finland. There are very limited amounts of pulses (pea, field bean, lupin) on the market. The supply of non-GMO soybean has also declined. The most important protein crops to be cultivated in Finland are pulses, turnip rape and oil- seed rape. Grasses and clovers with high protein content are suitable to be used as cattle feed. The amount of soya in the ruminant’s feed is typically small and even this can be substituted by, for example, turnip rape or pulses. Whole grain silage containing pulses could also be utilised as cattle feed. In the feeding of pigs soya could be replaced by, for example, a pea-field bean-turnip rape Imports of soybean, turnip rape and oilseed rape to Fin- land in 1995–2010. Source: Eurostat. Total yield of turnip rape, oilseed rape, pea, field bean and silage (mill. kg) in Finland in 1995–2010. Source: Information Centre of the Ministry of Agriculture and Forestry Tike. 0 20 40 60 80 100 120 140 160 180 1995 1998 2001 2004 2007 2010 Million kg 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Million kg silage Silage Turnip rape Oliseed rapePea Field bean 0 50 100 150 200 250 1995 1997 1999 2001 2003 2005 2007 2009 Imports million kg/year Soybean Turnip rape and oilseed rape By-products of soya oil* By-products of turnip rape and oilseed rape*Soybean meal *Products created in separation of oil such as oil cakes, pel- lets and groats. 31 mixture. In the case of poultry replacing the soya completely by domestic protein is challenging. The most important domestic sources of protein for poultry are pea, field bean and turnip rape. In pig husbandry pea purchased from the market seems a competitive alternative as its price has been low relative to its nutritive value as feed. More turnip rape and field bean could also be used in feeding pigs, if their prices were low enough. If, for example, pea or field beans is used to substitute for soybean meal in the pigs’ feed, the share of barley in the feed must be reduced. Cultivation costs are of primary interest Field bean contains about 30% of protein. The protein content of pea and turnip rape is approxi- mately 23% and that of barley is 11–14%. Hence, barley should yield 2–3 times the crop of field bean to produce the same amount of protein per hectare. In grass silage the protein content is 12–23%. In order to increase the production of protein-rich crops, their cultivation should be profitable when compared to other crops. According to studies at the Agrifood Research Finland (MTT), with a sufficiently high hectare yields pea, field bean and turnip rape could provide a higher profit margin than feed barley. In addition, the risk associated with cultivation should not be greater than in other arable crops, because farmers are risk-averse. Pulses are valuable in crop rotation, because they reduce the need for nitrogen fertiliser in the subsequent year. A problem with pulses is that the risk of a poor yield is higher than in cere- als. The seed cost is also high: In the cultivation of pea, purchased seed can represent as much as 70% of the variable costs. Fortunately, plant breeders have managed to increase water and drought-tolerance of pea, and to increase its protein content while reducing the tannin content. The length of the growing season restricts the cultivation of field bean in central and northern Finland. The cultivation of turnip rape in turn suffers from the high fertilisation cost. The cul- tivation areas are limited because pulses and turnip rape are recommended to be cultivated on the same parcel maximum once every 3–5 years. Besides aforementioned aspects, the production costs also depend on the costs of labour, machinery, land and land improvements, but in this respect the differences in comparison to cereals are minor. Public support, collaboration and plant breeding as the means Reducing the unit costs of production is one of the key issues in the efforts to increase protein self-sufficiency, because affordable price of protein is vital to livestock producers and food indus- try. The incentive to farm protein-rich crops probably cannot be increased by providing farmers with a price premium, because this would only shift the demand to other protein sources such as imported protein, whose price is determined on the world market. Improving protein self-sufficiency calls for comprehensive solutions on the farms and through the production chain. Crop rotation and composition of feedingstuffs should be redesigned based on the domestic protein production. Specialisation and economies of scale could be utilised more efficiently by ensuring the functioning of the market for the yields of protein-rich crops and by increasing collaboration between farms. Protein self-sufficiency could also be improved if the mixing of feeds at farm became more common. Improved availability of complementary feed ingredients on the market would ensure that it is possible to mix the feed based on several dif- ferent feed ingredients. The prerequisites for arable farming in Finland depend a great deal on the EU policies. The use of arable land can be steered, for example, by targeting product development and arable pay- ments to protein crops or by offering protection against crop damages to protein crops that are susceptible to these. Plant breeding should be targeted to high-yielding plants and varieties of cereals, turnip rape and pulses. The amounts of processed turnip rape could also be increased in order to increase protein-rich feed originating from it. As the production of biofuels has been estimated to increase, its by-products may also become an important source of protein. 32 Areas under horticultural production in 2004–2010, ha. 2004 2005 2006 2007 2008 2009 2010 Production in the open, total 16,025 15,417 15,468 15,357 15,533 15,734 16,032 Vegetables grown in the open 8,837 8,254 8,327 8,405 8,146 8,378 8,731 Berries 6,552 6,495 6,470 6,283 6,300 6,278 6,206 Fruits 636 667 671 669 690 685 696 Greenhouse production, total 399 405 404 399 392 375 369 Vegetable production 239 245 243 242 240 231 231 Ornamental plants 161 160 161 157 152 143 138 Source: Ministry of Agriculture and Forestry, Support Register. 2.4. Horticultural production Cultivation areas and horticulture enterprises In 2010 the area of horticultural produc- tion in the open was about 16,000 ha, which is 300 ha more than the year before. There was some growth in the area of both outdoor vegetables and fruits, while the berry production area decreased slightly. In terms of the cultivation area vegetable production in the open is the most signifi- cant horticultural production sector, with a 54% share of the total area. The share of berries is 39% and that of fruits 4% of the total area. Nursery and ornamental plants are cultivated on about 500 ha. The total greenhouse production area was about the same as the year be- fore, about 400 ha. Vegetables account for 63% and ornamental plants for 37% of the greenhouse production area. In 2009 there were a total of 4,700 horticulture enterprises of Finland, of which 3,600 were engaged in production in the open and a little more than 1,700 were greenhouse enterprises. Some of the enterprises practice both outdoor and greenhouse production. From 2008 the number of horticulture farms fell by about 5%, about 230 enterprises. The total hor- ticultural production area stayed the same, which means that the remaining enterpris- es grew in size. The most significant horticultural pro- duction area in Finland is Southwest Fin- land, with 18% of the enterprises practis- ing production in the open and 21% of greenhouses. North Savo is an important berry production region. More than half of the greenhouse production is located in support area C. Weather conditions The winter 2009–2010 was very cold, with a lot of snow. Berry plants benefit from abundant snow cover, which provides them with good overwintering condi- tions. Instead, for the greenhouses which are empty in winter the heavy snow load was a problem, even causing some green- house to collapse. Even if the winter was cold, there was no more ground frost than usually and plantings were not delayed. The abun- dant snow cover melted quite early and the planting and sowing of vegetables got started at the normal time. In some locations heavy rains delayed the sowing or even destroyed plantations, but in the country as a whole the weather conditions for planting and sowing were quite normal. The summer was very hot and dry. For most outdoor vegetables, berries and fruits a good crop cannot be achieved without efficient irrigation. The majority of hor- ticulture crops suffered from the heat and 33 the yields of, for example, onion, leek, car- rot, lettuce and black currant were lower than the year before. Greenhouse plants suffered from excessive heat as well. The quantities of vegetables grown in the open stored for the winter were also smaller than the year before. Production in the open In terms of the area garden pea is the most common vegetable, with a cultivation area of about 2,500 ha in 2009. The second most common is carrot, which was cul- tivated on 1,600 ha. The carrot crop of 2009, 70 million kg (13 kg/capita), was the highest ever. The two main crops represent almost half of the vegetable production area in the open. Other important out- door vegetables are onion (920 ha) and white cabbage (620 ha). The main crops cultivated under production contracts with the processing industry are garden pea, carrot, beetroot and gherkin. About 2% of the vegetable pro- duction area in the open was un- der organic production. In terms of the areas the most significant organic vegetables are carrot (50 ha), garden pea (22 ha) and on- ion (34 ha). Strawberry is by far the most significant berry plant in terms of both the area and the crop yield. In 2009 it was cultivated on almost 2,900 ha and the to- tal yield was almost 12 million kg. The cultivation area of straw- berries as well as the number of strawberry farms has decreased over the past decade, while the crop yields have stayed about the same, with some annual var- iations due to the weather condi- tions. The second most impor- tant berries are black and green Areas under the most important horticultural products grown in the open and yields in 2009. Area Yield Total ha kg/ha 1,000 kg Vegetables grown in the open Garden pea 2,546 2,401 6,114 Carrot 1,626 43,293 70,411 Onion 917 23,613 21,663 White cabbage 615 38,730 23,819 Cauliflower 280 13,201 3,691 Beetroot 405 31,080 12,591 Swede 356 39,280 13,964 Gherkin 212 43,748 9,279 Chinese cabbage 193 19,294 3,732 Other plants 1,196 11,364 13,588 Total 8,346 21,429 178,850 – share of contract production 1,816 27,002 49,036 Berries and apples1 Strawberry 2,881 4,019 11,578 Black and green currant 1,571 1,094 1,718 Raspberries and raspberry- arctic bramble cross bred 386 1,471 567 Other berries 575 1,139 655 Total 5,413 2,682 14,518 – share of contract production 842 1,977 1,665 Apple 565 7,557 4,268 1 Crop yielding area Source: Information Centre of the Ministry of Agriculture and Forestry, Register of Horticulture Enterprises 2009. currant