Agricultural income in Finland increased by 10% in 2007 - biofuels give farmers a boost
An interesting case study of the major benefits of the growing biofuels market comes from Finland. There, farmers are at last seeing major income increases from growing crops, after years of low agricultural prices. By extention, the findings might be extrapolated to all rural populations in the future. In the least least developed countries, they make up more than half the population. And 75% of the world's poor are farmers. Pushed into endemic poverty for decades, the new biofuels market finally offers them some hope. Some analysts even go so far as to state that biofuels can help end global hunger, a largely rural phenomenon.
According to the MTT Agrifood Research - an expert body operating under the Finnish Ministry of Agriculture and Forestry - agricultural income increased by almost ten percent last year compared to the previous year, as indicated MTT's overall calculations for agriculture and horticulture. In 2007, agricultural income reached €988 million, while in 2006 it amounted to about €900 million. Profits in the grain market reached records.
Agricultural income, which indicates the return on agricultural entrepreneurs’ labour input and capital investment, thus saw an increase for the first time since 2002. Despite the increase, agricultural income in 2007 fell almost 14 percent short of the figures in 2002.
The central factor in the rise in agricultural income is the increase in producer prices both in plant farming and in domestic animal production. On the other hand, a slight decrease was recorded in the volume of agricultural and horticultural subsidies compared to the previous year.
Costs continued to rise rapidly last year, and as a result the increase in income was almost two thirds lower than it would have been otherwise. Total costs rose by over five percent to almost €3.3 billion. Especially feed costs, which rose especially rapidly at the end of 2007, increased total costs. The cost of construction also continued to rise faster than the standard rate of inflation. Furthermore, an overall rise in the level of interest rates and increased borrowing pushed interest costs up.
According to MTT’s calculations, the overall agricultural and horticultural income last year amounted to slightly over €4.3 billion, which is a six percent increase from the previous year. This increase in income resulted from a rise in producer prices of grain, milk, meat and eggs, in particular.
Sales proceeds from grain almost doubled in 2007. The increase in income is both a result of the increase in grain volumes due to good crops and the 50-percent increase in the average price. Grain prices are expected to remain high throughout the year, as the supply of grain on the global market is scarce compared to demand:
biomass :: bioenergy :: biofuels :: energy :: sustainability :: ethanol :: biodiesel :: agriculture :: economics :: rural development
In 2007, the price of pork increased by an average of five percent, the price of beef by four percent, and the price of poultry by two percent compared to the previous year. The growth in production volumes of pork and poultry further increased the income.
The eight percent increase in the producer price of milk boosted sales proceeds of milk by almost six percent, despite the production volume being two percent lower than in the previous year.
Horticultural income only increased by just over 0.5 percent compared to the previous year. There was a clear increase in the value of open-field production, whereas returns from greenhouse production dropped by over four percent. Berry and apple crops were quite disappointing. Due to heavy rain, grey mould ruined some strawberry crops. However, the slightly higher prices of strawberries compared to the previous year partly compensated for the loss of crops.
High agricultural prices are the result of increased oil prices, rising demand from Asia and the increased production of biofuels.
A detailed report from the United States on farm incomes in 2007, also showed the new biofuels market has led to all time record net farm incomes. The era of depressed prices is over, leading to major benefits to the farming sector (previous post).
It is too early to tell whether these effects will help the world's poor, the vast majority (75%) of who make a living from agriculture. These rural populations have been kept in poverty for decades because of declining world prices for agricultural commodities. But current high prices do not immediately translate in an increased capacity to tap opportunities in the market. Poor farmers often lack market access and infrastructures to do so.
However, over the longer term, many analysts agree that the biofuels market offers great opportunities for development in poor, rural countries in the South (more here). Some have gone so far as to say that the biofuels market can help end hunger - a largely rural phenomenon (previous post).
References:
MTT Agrifood Research: Agricultural income increased by almost ten percent - March 6, 2008.
Biopact: Biofuels lead to all-time record farm income in the United States - December 17, 2007
Biopact: Study: Global Biopact on biofuels can bring benefits to both rich and poor nations - February 20, 2008
Biopact: Worldwatch Institute: biofuels may bring major benefits to world's rural poor - August 06, 2007
According to the MTT Agrifood Research - an expert body operating under the Finnish Ministry of Agriculture and Forestry - agricultural income increased by almost ten percent last year compared to the previous year, as indicated MTT's overall calculations for agriculture and horticulture. In 2007, agricultural income reached €988 million, while in 2006 it amounted to about €900 million. Profits in the grain market reached records.
Agricultural income, which indicates the return on agricultural entrepreneurs’ labour input and capital investment, thus saw an increase for the first time since 2002. Despite the increase, agricultural income in 2007 fell almost 14 percent short of the figures in 2002.
The central factor in the rise in agricultural income is the increase in producer prices both in plant farming and in domestic animal production. On the other hand, a slight decrease was recorded in the volume of agricultural and horticultural subsidies compared to the previous year.
Costs continued to rise rapidly last year, and as a result the increase in income was almost two thirds lower than it would have been otherwise. Total costs rose by over five percent to almost €3.3 billion. Especially feed costs, which rose especially rapidly at the end of 2007, increased total costs. The cost of construction also continued to rise faster than the standard rate of inflation. Furthermore, an overall rise in the level of interest rates and increased borrowing pushed interest costs up.
According to MTT’s calculations, the overall agricultural and horticultural income last year amounted to slightly over €4.3 billion, which is a six percent increase from the previous year. This increase in income resulted from a rise in producer prices of grain, milk, meat and eggs, in particular.
Sales proceeds from grain almost doubled in 2007. The increase in income is both a result of the increase in grain volumes due to good crops and the 50-percent increase in the average price. Grain prices are expected to remain high throughout the year, as the supply of grain on the global market is scarce compared to demand:
biomass :: bioenergy :: biofuels :: energy :: sustainability :: ethanol :: biodiesel :: agriculture :: economics :: rural development
In 2007, the price of pork increased by an average of five percent, the price of beef by four percent, and the price of poultry by two percent compared to the previous year. The growth in production volumes of pork and poultry further increased the income.
The eight percent increase in the producer price of milk boosted sales proceeds of milk by almost six percent, despite the production volume being two percent lower than in the previous year.
Horticultural income only increased by just over 0.5 percent compared to the previous year. There was a clear increase in the value of open-field production, whereas returns from greenhouse production dropped by over four percent. Berry and apple crops were quite disappointing. Due to heavy rain, grey mould ruined some strawberry crops. However, the slightly higher prices of strawberries compared to the previous year partly compensated for the loss of crops.
High agricultural prices are the result of increased oil prices, rising demand from Asia and the increased production of biofuels.
A detailed report from the United States on farm incomes in 2007, also showed the new biofuels market has led to all time record net farm incomes. The era of depressed prices is over, leading to major benefits to the farming sector (previous post).
It is too early to tell whether these effects will help the world's poor, the vast majority (75%) of who make a living from agriculture. These rural populations have been kept in poverty for decades because of declining world prices for agricultural commodities. But current high prices do not immediately translate in an increased capacity to tap opportunities in the market. Poor farmers often lack market access and infrastructures to do so.
However, over the longer term, many analysts agree that the biofuels market offers great opportunities for development in poor, rural countries in the South (more here). Some have gone so far as to say that the biofuels market can help end hunger - a largely rural phenomenon (previous post).
References:
MTT Agrifood Research: Agricultural income increased by almost ten percent - March 6, 2008.
Biopact: Biofuels lead to all-time record farm income in the United States - December 17, 2007
Biopact: Study: Global Biopact on biofuels can bring benefits to both rich and poor nations - February 20, 2008
Biopact: Worldwatch Institute: biofuels may bring major benefits to world's rural poor - August 06, 2007
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