A report published Thursday by the Ministry of Agriculture and Forestry said the income commercial farmers earn is continually declining, their position in the food industry has worsened and the possibility for increasing farmers’ profits is weak.
The overall scenario of farmers in Finland does not look good, according to the ministry’s report, which was written by advisor Reijo Karhinen, the former executive chair of OP, Finland’s biggest financial group.
Karhinen said that Finland’s farming sector is in crisis and that the challenges it faces are not temporary, but structural ones.
The report was requested by Prime Minister Juha Sipilä and Minister of Agriculture and Forestry Jari Leppä, both from the historically agrarian Centre Party. They aimed to examine the possibilities of raising the incomes of commercial farming industry by half a billion euros. The industry has seen earnings drop since the beginning of the millennium.
Karhinen wrote that in order to boost earnings in the farming sector, the entire food industry would need to undergo major changes and reforms.
The main reason behind the industry’s weak profitability is Finland’s membership in the EU, a situation which carries challenges for the sector to adapt to an increasingly demanding world, according to the report. Finland joined the union in 1995.
However, Karhinen’s sharpest criticism in the report was directed at Finland’s food retail industry.
The report said the farming sector needs assistance to adjust to major changes taking place across the industry, some of which are results from global climate change and new technologies.
Karhinen said that in order to make those changes, farmers would need strong compensation-based support. One of the suggestions cited in the report was to establish a new support and resource centre in conjunction with the Natural Resources Institute (Luke).
Another problem, according to the report, is the weak position food producers are in as they deal with the retail grocery sector. It said the poor internal workings of the commercial food chain has given the retail sector the upper hand.
The report said Finland’s food chain needs a common vision for the future and a clearer “win-win” strategy, saying that the farming industry also needs to increase its financial management skills.
Mats Nylund, an MP from Vaasa and chair of the Swedish-language farmer’s association SLC, said Karhinen’s report hit the nail on the head.
He said the report should be the starting point for a renewal of Finland’s agricultural industry.
“The most interesting part was Karhinen’s emphasis on consensus in the food chain. This applies particularly to the grocery trade, which must be included in a ‘win-win’ situation. The proposals to improve the flow of information - and the [proposal] that the two large retail chains with their dominant market positions should open their customer data to third parties - would really help competitiveness,” Nylund said in a press release issued by SLC on Thursday.
Gaining access to the financial figures of the retail grocery trade would help improve the transparency of prices, and it would also strengthen confidence in the food chain in general, Nylund said.