1. Implementation of the 2015 recommendations
This chapter finds that the Netherlands has taken actions that fully or partially address about 80% of the recommendations made in 2015. The innovation system remains a world leader and effectively translates R&D resources into results on the farm. The system is stronger than it was eight years ago thanks to action to improve funding sources, research infrastructure and institutional arrangements. It benefits from a defined vision for the future and associated long term goals. The connection between actors in the agricultural knowledge system has been improved by better integration of research, education and extension. A key challenge is ensuring that the innovation system is as effective as possible in targeting issues of public importance such as environmental sustainability.
Overall, the Netherlands has taken actions that fully or partially address about 80% of the 2015 policy recommendations, displaying a solid engagement with the recommendations and a willingness to transform and future-proof their agricultural production system.
The Dutch agricultural innovation system remains world-class and is stronger in many ways than it was in 2015. The situation observed in the 2015 review regarding insecure funding and a declining research infrastructure has improved.
Noteworthy progress has been made in the following areas:
A comprehensive bundle of programmes has been put in place to define a vision for agriculture, establish long-term goals and increase policy stability for the involved stakeholders. These include the 2018 circular agriculture vision, the 2018 Dutch Research agenda, the 2019-2030 LNV knowledge and innovation agenda and the mission-driven innovation policy for the Topsectors introduced in 2019.
Implementation of the CAP for 2023-27 continues to reduce coupled payments and provides increased support for investments in innovation and sustainability.
The Groenpact initiative has improved integration between education, business and government and helps to address future labour demand. Green education has been integrated into general education and the government continues to provide sufficient funding for institutions and research projects.
The Innovation on the Farmyard programme introduced in 2019 encourages individual farmers’ adoption of agricultural methods that contribute to biodiversity, sustainability, and mitigation of climate change. More than 10 000 farmers have been supported with knowledge and advice due to this program. The SABE system of training vouchers finances impartial advice on these subjects from an independent registered advisor.
There is still potential for improvement in some areas, including:
The 2015 review pointed to the need for the Top Sector system to pay more attention to public goods. The new “mission driven” approach gives more emphasis on social challenges, but more can be done to ensure that the system is as effective as possible in targeting issues of public importance such as environmental sustainability.
The long-term vision for the sector has not sufficiently shaped the decision making of relevant stakeholders in a way that puts the sector on a sustainable path for the future.
The OECD 2015 Report “Innovation, Agricultural Productivity and Sustainability in the Netherlands” (the Innovation Review) examined the conditions in which food and agriculture businesses use innovation to become more productive and environmentally sustainable and provided several recommendations (OECD, 2015[1]) (Box 1.1). This chapter recalls these recommendations and looks at the related actions undertaken in the Netherlands. Overall, it finds that substantial progress has been made with respect to the recommendations of the Innovation Review. The situation faced by the sector has changed since 2015 and further adjustment of the agricultural knowledge and innovation system will be required if it is to be as effective as possible. For example, the Paris Climate Agreement, the ammonia situation, the new CAP reform, the COVID crises and the Russian aggression in Ukraine all occurred subsequent to the 2015 report.
Four key areas for improvement were identified with respect to the capacity, orientation and approach of the AKIS system:
Improve incentives for private investment including by minimising the transaction costs of compliance to regulations, for registering new products, and improving the architecture of investment support programmes, in particular by revisiting tax incentives and investment support programmes.
Improve capacities and services for innovation including by better anticipating future demand for skills, facilitating labour mobility and on-the-job training, strengthening linkages and breaking institutional boundaries between "green" and general education funding to ensure equal access.
Strengthen agricultural policy incentives to innovation for sustainability and longer-term challenges, by developing a longer-term vision reconciling productivity growth and sustainability; continuing to provide information on current and future opportunities and challenges, increasing further the targeting of CAP rural development programmes towards support for the adoption of innovative practices; improving the capacity of farmers to participate in the agricultural innovation system (farm advisory, producer groups, agri-environmental incentives); and revisit the existing mix of regulation, financial incentives, and innovative market-based mechanisms to improve the preservation of natural resources and foster eco-innovation, i.e. innovation that is less environmentally harmful than relevant alternatives.
Strengthen the long-term performance of the food and agricultural innovation system, by reinforcing the role of the government in shaping the research agenda to improve the consideration of longer-term and public good issues; by including longer-term impacts in policy evaluation; by introducing mechanisms to better reflect societal demand and foster investment in public goods and long terms challenges such as climate change; by identifying new, more stable sources of funding for longer-term challenges; by improving long-term stability in funding, by dedicating some public investment for knowledge infrastructure and institutions, and long-term challenges; by continuing to monitor and evaluate innovation adoption, by including environmentally-friendly practices; and by strengthening the links between agriculture-specific innovation systems and related areas (health, environment).
Source: OECD (2015[1]).
This stocktaking of progress since 2015 sets the stage for the present country review as it allows to consider recent policy actions. At the same time, the 2015 Innovation Review followed a different method than is currently used in PSR country studies. The modern approach is standardised around a broader set of subjects and tools covering productivity, sustainability and resilience. In contrast, the 2015 report, as the name suggests, was focussed on innovation even though it also covered related topics.
Dutch policy makers were asked to respond to a comprehensive survey on the implementation of the 2015 recommendations. This response was complemented with follow-on discussions to establish a clear picture of policy actions taken after 2015. A broader questionnaire covering the full set of issues covered in this current review also provided evidence regarding the implementation of the 2015 recommendations (Box 1.1).
Senior officials from the Ministry of Agriculture, Food and Nature (Ministerie van Landbouw, Natuur en Voedselkwaliteit ‒ LNV) have indicated that the findings of the Innovation Review were seriously considered and mostly implemented. While competency for implementing the majority of the 2015 recommendations lies mainly with LNV, some of the recommendations involve other ministries, agencies and the private sector.
Some actions taken since the 2015 Innovation Review that speak to its recommendations are worth highlighting. With respect to the four focus areas of the 2015 review, these are as follows.
1.1.1. Improve incentives for private investment
Financing gaps have been identified and investment support programmes have been revised. New programmes have been established providing targeted support to young farmers and those farmers looking to transition to sustainable business practices.
Recent reforms of product market regulations (Integral Afwegingskader, IAK) have lowered administrative burden by removing burdensome regulations. The process for the design of new regulations has been adjusted and stakeholders such as SMEs are now consulted at an earlier stage.
The 2018 SME Action plan (MKB-actieplan) provides better support to SMEs and facilitates research and development (R&D) as well as market uptake of innovations.
The new strategic Evaluation Agenda increases policy stability and predictability. It evaluates the effectiveness and efficiency of policies pursued to achieve policy goals set out by the strategic agenda in a 4–7-year cycle.
1.1.2. Improve capacities and services for innovation
The Groenpact initiative brings education and businesses together to provide training of in-demand skills for the labour market. Green education is now more tightly integrated with the general education system.
The Subsidy Module agricultural business advice and education (SABE) helps producers to access independent farm advisory services on a range of topics including nitrogen management and precision agriculture.
In 2017, the distinction between general and green education was eliminated, ensuring equal access to funding.
1.1.3. Strengthen agricultural policy incentives to innovation for sustainability and longer-term challenges
Steps were taken to develop a long-term vision reconciling productivity growth and sustainability and reduce policy uncertainty in 2018, with the launch of the long-term vision for the Netherlands as a world leader in circular agriculture.
The design of the new CAP 2023-27 improves over past implementations in several ways.
1.1.4. Strengthen the long-term performance of the food and agricultural innovation system
The new strategic evaluation agenda (SEA) lengthens policy cycles and improves evaluations of policies on effectiveness and efficiency with respect to long-term objectives.
The circular vision for agriculture set out in 2018 helps establish directions for policy that is compatible with environmental and social goals, though more is needed to refine this.
The 2019-30 LNV Agricultural Knowledge and Innovation Agenda (KIA) translates the circular agriculture vision and guides stakeholder engagement along outlined societal challenges.
The new Dutch Research Agenda (NWA) introduced in 2018 outlines the research focus areas and objectives. It displays stronger goal setting by the government and includes targeted programmes for long-term challenges such as sustainable production of safe and healthy food.
In 2019 the government introduced mission-driven innovation policy for the Topsectors. To increase the predictability of the policy mix, there is an increasing effort to switch from means and action-oriented to goal-oriented policies.
Since 2020 the Subsidy Module Agricultural Business Advice and Education (SABE) enables farmers to learn about sustainable agriculture through independent advice.
With the introduction of the National Growth Fund, the Dutch government has dedicated EUR 20 billion between 2021 and 2025 for knowledge development, R&D and innovation across all sectors.
Co-financing by the government enabled Dutch researchers to participate successfully in EU-funded programmes such as Horizon 2020.
Overall, the Netherlands has taken actions that fully or partially address about 80% of the 2015 policy recommendations, displaying a solid engagement with the recommendations and a willingness to transform and future-proof their agricultural production system. Improvements are noticeable across all four policy areas.
Some of the challenges identified in 2015 still require sustained effort to achieve lasting improvements:
Administrative burden on start-ups, especially licenses and permits, is an area where the regulatory system still can improve.
R&D support remains skewed towards tax incentives. While targeted programmes have increased in use that benefit SMEs, tax incentives are still the main support vehicle for R&D.
The agricultural vision has not motivated the involved stakeholders to deliver on long-term goals. Farmer's protests against plans to reduce ammonia emissions demonstrate that acceptance of the current policy path remains low both in the private sector and within the farming community.
While substantial success has been achieved through the Groenpact initiative, some skill gaps persist. Migrant and seasonal workers remain under-skilled and would benefit from additional training. Moreover, the willingness of farmers to participate in lifelong learning is below the EU average, which can slow progress towards the circular agriculture vision.
There are still insufficient mechanisms to ensure that private companies’ contributions to the system are at the same level as the benefits they draw from it.
A lot has happened since the 2015 Innovation Review and not all the 2015 recommendations will sit at the top of the government’s priority list. The 2019 court ruling has major implications for ammonia emissions from agriculture. The situation in the Netherlands is highly dynamic as policy responses are developed and refined. The food chain disruptions due to the COVID pandemic, Russia’s war on Ukraine and the ensuing shortages of staff, fertilisers, commodities and energy have revealed the food system's vulnerability to external shocks. The mainstreaming of sustainability, climate mitigation and resilience in every policy area, in concert with public demand, private company interest and in conjunction with a broader shift of policy objectives at the EU level, has drawn increased attention to the responsibility of the agricultural sector to deliver on their share of these objectives. A common thread running through the new reality for the sector is that agriculture policy must better integrate with national priorities and the sector must thrive within its environmental limits.
Multiple programmes were established in 2022 and their design is yet to be finalised. This includes the Agreement on agriculture (Landbouwakkoord) based on recommendations by a report of mediator Johan Remkes. The result will later feed into the National Rural Area Programme (NPLG ‒ Nationaal Programma Landelijk Gebied). It aims to translate country wide policy objectives down to the local level. The central government and the provinces expect to produce the NPLG which by July 2023. The LBV+ scheme (LBV plus-regeling) is a modification of the LBV programme that targets peak loaders for early action. Details of the process and eligibility of farmers for LBV+ is forthcoming as of this writing.
The evidence shows that the Dutch government has taken substantial action to address past shortcomings and build upon the strengths of the innovation system that were identified in the 2015 Innovation Review. At the same time, many of the concerns raised in the 2015 assessment have come to pass and will require more action to address. Most prominent among these are the risk that the Topsector approach would pay insufficient attention to public goods issues and the need to establish a long-term plan for the sector that puts it on a sustainable path for the future while increasing policy certainty. For these and other matters, this current PSR Review of the Netherlands makes new recommendations for actions to help put the sector on a productive and resilient transition to a sustainable future.
Each of the four major themes are organised into sub-themes and specific recommendations (Table 1.1). Policy changes act systemically and although specific recommendations fall mostly into one of the outlined key policy areas, they are often relevant for others. While recognising these spill-over effects, to avoid redundancy the recommendations are primarily discussed solely within the context of the most fitting policy area.
Reference
[1] OECD (2015), Innovation, Agricultural Productivity and Sustainability in the Netherlands, OECD Food and Agricultural Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264238473-en.