Swiss farm produce is expensive. It is not uncommon to pay over CHF 100 (US$ 105) per kilogram for the best cuts of beef in Swiss supermarkets, a multiple of two to three times the price of many other countries. Similarly high prices exist for many other farm products in Switzerland. Why is this?
Small uneconomic farms
Many farms are so small that they are not economically viable. A Swiss Farmers Union report calculated the average Swiss farm size at 18 hectares in 2012, small by world standards. By comparison the average New Zealand farm in 2012 was 248 hectares. According to another study a quarter of Swiss farmers live below the poverty line.
Swiss farmers struggle despite world’s second highest subsidies
To keep Swiss farmers from poverty the government pays them large subsidies. In 2013, Swiss farmers received the world’s second highest subsidy payments, equal to 49.4% of gross farm receipts. Despite this helping hand from taxpayers many still lead lives of economic hardship.
Import restrictions keep prices high
Import restrictions and duties keep the price of many Swiss goods high by preventing Swiss importers and residents buying anything other than small quantities of foreign produce at lower prices across the border in France, Germany, Austria or Italy. Anyone who has entered Switzerland after an international shopping trip knows how expensive it can be to exceed his or her tax free personal meat allowance, currently one kilogram per person.
High environmental cost
Agriculture’s negative impact on Swiss biodiversity is of concern. According to the Swiss Federal Office for the Environment (FOEN) over one third of all surveyed species are under threat. Excess ammonia, which mainly originates from agriculture, spreads through the air and results in the over-fertilisation of sensitive ecosystems. Switzerland compares poorly to most of the countries in the report’s comparison on biodiversity. Subsidies still exist for environmentally damaging inputs such as farmers’ exemption from mineral oil tax.
The OECD recommends an overhaul
The Organisation for Economic Cooperation and Development (OECD), in a recent report on Switzerland, prioritises farming industry reforms. It describes Swiss farming as lagging behind most of the rest of the world on productivity and recommends removing all import restrictions and making farm subsidies conditional on environmental outcomes – for example removing mineral oil subsidies, introducing taxes on environmentally damaging inputs such as fertilisers and taxing harmful outputs like methane from livestock. It also suggests removing impediments to shifting agricultural land to other uses, in particular changing inheritance laws that favour passing farms between generations.
Perhaps it is time to put old ideas out to pasture and explore some new ones.
OECD farm subsidy statistics (in English)
The unseen environmental cost of Swiss farming (Le News – March 15)
New Zealand farm facts (in English)
Swiss customs information (in English)
Swiss Farmers Union report (in French)