How the Danish leading sector, Agriculture, is loosing competitivenessFriday, 13 January 2012
The Danish agricultural productivity and competitiveness has deteriorated sharply over the past decade according to a new report.
A country that has made its name in high level industrial agriculture has seen its interest in the sector gradually eroded according to an analsysis from Födevareekonomisk Institute (FOI), or known in English as the Danish Institute of Food and Resource Economics.
AdvertisementThe leading driver for this gradual deterioration has been blamed High debt and high wages in three new reports from the Food and Resource Economics Department which examines agriculture and food industry, environment and competitiveness.
According to the summary of the reports, the main message is clear – that high capital and labour costs hinder competitiveness. The relationship is amplified by a low-productivity development in Danish agriculture and food industry in the last decade compared to several European countries.
On average, farmers' competitiveness deteriorated by 1.2 percent a year over the past ten years.
The Danish farmers have long lived under pressure and are now seeing this development about to hit the legs of one of Denmark's most important export industries.
During the same period, the major competitor and neighbouring countries such as Germany, Britain and Sweden have shown a positive trend of agricultural productivity.
"When we compare Danish farms with farmers in the rest of Europe we can see that the cost of capital, including interest payments, are significantly higher in Denmark, where there also has been a massive build up of debt, "said Henrik Zobbe, director of the FOI.
The analysis draws particular attention to two reasons why the Danish farmers have difficulty competing.
"They pay the highest hourly wages in the EU and they are by far the most indebted, "says Erik Zobbe.
In the 27 countries, the farmers' debts, on average stood at 15 percent of assets. In Denmark, the debt percentage of 54
"If interest rates rise, the consequences for Danish farmers become serious, "he says.
By Scancomark.se Team
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