Future farmers will sell both products and services
The market strategy of Dutch agriculture and horticulture is evolving from a focus on lowering production costs towards valorising the additional expectations that consumers are placing on growers. It means the various sectors in the Netherlands will continue to specialise, according to researchers Marianne Groot and Herman Schoorlemmer. “This will require cooperation between everyone who depends on the agricultural sector for their lives and livelihoods.”
The WUR Field Crops farming business in Lelystad is where Groot and Schoorlemmer can set out their vision of the future of agricultural livelihoods. The researchbased business is working to establish connections with the local environment, residents, politicians, agricultural technology firms, and anyone else striving to improve the local built and natural environment and its biodiversity. The Farm of the Future is there to discuss and showcase these initiatives. The nature of consumer demand today requires changes in farmers’ revenue models.
“Our old model, based on my experience of fruit cultivation, was all about delivering large volumes of uniform, highquality produce,” says Groot. “Those are the products that look good at auction.” “Exactly,” says Schoorlemmer. “And it’s similar in arable farming. There was always a strong production focus. The whole cluster would work to achieve a high-quality product for a lower price than their competitor could offer, and that was important in terms of exports too.”
The researchers now see a change emerging in that model. In other words, production and quality are not the only criteria anymore. Now there are social ones too. Under the old model, there were two ways of staying in business: reduce costs, and increase scale. “But where does it end?” asks Schoorlemmer. “The Netherlands is the second largest agricultural exporter in the world after the US. That’s a huge achievement. But now we’re experiencing the negative side effects of that, which aren’t internalised in the price. The challenge therefore is to achieve a sustainable production system.”
"The Netherlands is the second largest agricultural exporter in the world after the US. That’s a huge achievement. But now we’re experiencing the negative side effects of that, which aren’t internalised in the price." Photo: Ruud Ploeg
Leading the way
Groot and Schoorlemmer argue that the Netherlands leads the way in research and has a wealth of well-organised structures to support production and export. Groot points to the country’s approach to phytosanitary issues by way of example. “You can see how well organised that is, with the certification of inputs for example.” Schoorlemmer highlights the Netherlands’ strengths in innovation and collaboration. “In terms of the agricultural sector, I really have faith in its capacity.”
We’ve reached the limit of fine-tuning our existing model. In the future, Schoorlemmer and Groot expect a variety of new pathways to emerge for agricultural producers to earn money from their work. Schoorlemmer expects these to include sustainability initiatives that benefit the farming operation, such as soil fertility and climate adaptation, while also improving the sustainability of the supply chain and providing ecosystem services. For Groot, the choice of pathway will be inextricably linked to landscape impacts. Society will have to play its own part in achieving the additional objectives it sets for farmers, because those objectives can have conflicting impacts.
To illustrate this point, the researchers point to consumer demand for production methods that eschew crop protection agents to combat diseases. “With fruit, that might mean the innovative use of retractable roofs. These help keep crops dry, which ought to then substantially reduce the need for chemical inputs. But that has a huge impact on the appearance of the site and how it fits in the landscape. So how do we weigh up the use of chemicals against landscape considerations? Would we rather have a retractable roof than use chemicals?”
The role of research
According to Schoorlemmer, movements aiming to create change in agriculture tend not to have a clear economic perspective applicable to the majority of agricultural businesses. The social objectives they espouse can also conflict with each other. “We’re talking about major changes, because there’s pressure to reduce carbon emissions, reduce fossil fuels, increase biodiversity, but also to feed billions of people. As researchers, we work out what the effects of these major developments will be. Innovators, on the other hand, are focused on solutions. The role of research is to look at whether the innovators are contributing to sustainability objectives but also to work with them to improve their ideas. That’s called co-innovation.”
"The role of research is to look at whether the innovators are contributing to sustainability objectives but also to work with them to improve their ideas. That’s called co-innovation." Photo: Ruud Ploeg
The Farm of the Future in Lelystad is an incubator where innovations can be tested and improved in the context of a comprehensive, economically viable system. Groot is keen to apply that model to fruit cultivation. “At the same time, we need to engage with people who live alongside these developments. We’re doing that in a European project through multi-actor platforms.”
Wageningen’s living labs are an example of that, says Schoorlemmer. What they’re revealing is a structural change in agricultural innovation. “In the past you would carry out research, develop an intervention and then get farmers on board. Now you get all the community stakeholders involved from the start and develop something together. That’s why, as researchers, we have some co-workers who focus on development and others who focus on facilitating that process.” The researchers anticipate that this approach will result in a wider support base and also accelerate innovation.
Businesses as partners
The agriculture and horticulture sectors stand to benefit from more sustainable forms of mechanisation that can lower their production costs. “We’re working with agricultural businesses and other stakeholders to develop future scenarios for the sector,” says Schoorlemmer. “Within those scenarios we’ll be looking at what mechanisation might look like, for example. This will, in turn, help technology businesses make strategic choices. That’s how we’re providing developmental support.”
Ultimately, the solutions that the agricultural sector adopts will be the smart ones that give them a financial return. “It may be that the returns on sustainable agriculture are lower, but that as a whole it delivers greater value to society,” says Schoorlemmer. The additional costs of those changes should therefore not be solely the responsibility of the agricultural sector, according to Groot. Both researchers feel that growers may be able to ensure their financial viability by monetising activities other than product sales.
One way of extracting added value from products is to make them less anonymous. The idea of short supply chains and local products has garnered more media attention lately, and this model can be tied into local/regional environmental conservation. In terms of exports from the Netherlands the opportunities are more limited, and meanwhile local sales account for only a small share of production. “Even so, you have to start somewhere or nothing will ever happen,” says Groot. “So we have to consider every promising opportunity.”
“Expanding the revenue model to include circular agriculture, energy production or ecosystem services is a challenge." Photo: Ruud Ploeg
While the emphasis is on diversification, circular agriculture and sustainability, Groot and Schoorlemmer think the specialist nature of Dutch growers will prevail. According to Groot, there is a great deal of expertise within specialist agricultural businesses and they operate in supply chains that are becoming increasingly integrated. These specialised businesses will remain strong players in international chains. At the regional level, collaboration between these specialised businesses in the form of land exchanges is an obvious way of facilitating circular agriculture.
Summing up, Schoorlemmer says that for agriculture to be a viable business a farmer has to have technical competence and communication skills. “Expanding the revenue model to include circular agriculture, energy production or ecosystem services is a challenge. Supply chains are going to become even more closely integrated and more flexible, with the freedom of business owners becoming more restricted. The farmer of the future will have to engage with others and operate in a transparent and collaborative way.”
According to Marianne Groot and Herman Schoorlemmer, the strength of the Netherlands in the international agricultural produce market is down to the quality of its products. “That’s why agricultural craftsmanship must remain a part of training programmes,” says Groot. Schoorlemmer believes the Netherlands must never compromise on the quality of its export products. “Otherwise those products will only be in demand when there’s a shortage somewhere.”
The Netherlands could be disadvantaged in the export market if production standards or land costs exert upward pressure on product prices. Putting this into perspective, Schoorlemmer says: “Land is a very safe investment. So for farmers it’s fairly risk free, and I wouldn’t worry about that. For young people taking over a business or new entrants in the sector, land prices are certainly a barrier. You could therefore separate out land ownership and land use.”