25. Switzerland
Since the 1980s, Switzerland has undertaken gradual reforms to liberalise agricultural trade, resulting in moderate reductions in support to agriculture, which then plateaued in the early 2010s. Support to producers as a share of gross farm receipts remains high at 49% on average in 2020-22, more than three times the OECD average. However, changes in the structure of support have been pronounced, as direct payments replaced a substantial share of market price support (MPS).
MPS remains the main component of support, arising mostly from tariff rate quotas (TRQs) with high out-of-quota tariffs. MPS represented 86% of total producer support in 1986-88, but decreased since to about 40%. Domestic prices were 46% above world prices on average in 2020-22. Large price gaps lead to substantial shares of Single Commodity Transfers (SCT) in commodity gross farm receipts for many products – notably poultry, eggs, and pig meat – while sugar benefits from direct budgetary support.
Switzerland provides significant direct payments to farms, almost all of which are subject to environmental cross-compliance. Total payments to farmers have been relatively stable over the past 20 years at 28% of gross farm receipts. The share of these payments in total support increased from 14% in 1986-88 to 60% in recent years, following the phase down of MPS. Direct support was reformed in 2014 towards more decoupling and mostly consists of area payments to agricultural land not tied to a specific commodity, payments to maintain farming in less-favoured conditions, and payments to farmers who apply stronger environmental or animal-welfare-related practices.
Switzerland’s expenditures for general services (General Services Support Estimate, GSSE) are high. GSSE relative to agricultural production value rose from below 6% in 2000-02 to nearly 9% in 2020-22, among the highest of countries covered in this report. Almost half of GSSE expenditure goes to the agricultural knowledge and innovation system. Total support to agriculture (Total Support Estimate, TSE) fell as a share of Gross Domestic Product (GDP) from 2% in 2000-02 to less than 1% in 2020-22.
The Federal Council published its report on the future orientation of agricultural policy in June 2022. It responded to Parliament’s request to further analyse the food security and sustainability implications of policy reform options, after the 2021 suspension of a first reform proposal (AP22+). The report proposes a long-term strategy for Swiss agriculture and food systems to 2050, structured around food-supply resilience, climate, environment- and animal-friendly food production, value-added creation, and healthy and sustainable consumption.
To start implementing this plan, new water-quality measures approved by the Federal Council in April 2022 came into force on 1 January 2023. These include a ban on high-risk pesticides, more-restrictive spraying rules, and adjustments in direct payments to disincentivise pesticide use, supporting the goal to reduce the risks associated to the use of pesticides by 50% by 2027. Additional measures were approved, tightening fertiliser application rules and allocating 3.5% of cropland area to the promotion of biodiversity. Entry into force of these latter measures was postponed to 2024 due to the Russian war of aggression against Ukraine.
Switzerland implemented measures to ensure its supply of nitrogen fertilisers, in response to various crises, among which the COVID-19 pandemic, the high energy prices, and later the war in Ukraine. As of December 2021, the Confederation had released 20% of its strategic reserve of nitrogen fertilisers in response to early supply difficulties in international markets, which corresponds to 8% of annual national need. Tariffs on feedstuff were also lowered in reaction to high grain prices, whereas sanctions similar to those of the European Union targeted fertiliser imports from Russia, without substantial impact on Swiss production.
In winter 2022 and spring 2023, Switzerland’s Parliament approved new socioeconomic measures initially part of the AP22+ package, including federal support to crop-insurance schemes. This evolution is in line with the Adaptation Action Plan for 2020-25, which defines a series of measures for agriculture.
Switzerland is now implementing its second climate-change adaptation plan, including detailed measures on agriculture, which illustrates the commitment for climate action in that area. Large investments in research and innovation – including adapting breeds and practices, and better monitoring climate and natural resources – provide a strong basis for adapting to future climate changes and reinforce the sector’s resilience.
At the same time, successive political reversals in past years – notably rejection of the revised CO2 Act by referendum and postponement of agricultural reform AP22+ in 2021 – have delayed concrete climate action and the necessary transformations to food and agriculture. New legislative proposals will have to demonstrate the capacity of the country to align the sector with long-term objectives in a timely manner.
While Switzerland reduced its share of most-distorting producer support over the past decades, border measures and output-based payments remain among the highest in the OECD. Continuing efforts to decouple income support from farm output would decrease pressure on food prices and the environment, and facilitate adaptation in the sector consistent with its food-system objectives.
High level of support to the agricultural knowledge and innovation system has not translated into increased total factor productivity. Further investments in improving the resource-efficiency of production would support environmental and climate goals.
Large payments allocated to environmental preservation have helped reduce environmental pressures, but the nitrogen surplus is still twice the OECD average. The new clean-water programme should support further reduction in fertiliser application, but stronger regulatory efforts may be needed to address this structural issue in the long run.
The sector must reconsider its production mix to achieve its food security and sustainability objectives, within a broader food systems perspective also encompassing consumers. Announced climate targets for 2050 and the goals of the Global Methane Pledge will be difficult to meet without reducing the ruminant herd. High levels of livestock production also increase the country’s reliance on crop imports and are a major driver of observed nitrogen and phosphorus cycle imbalances.
Overview of policy trends
Until the early 1990s, Swiss agriculture was largely isolated from world markets, due to high trade barriers and strong domestic market regulations. Substantial reforms of agricultural policy were implemented in the mid-1990s and early 2000s. These were prompted by commitments made under the GATT and later the WTO. There have been no systematic policy reforms since 2013, and current schemes are expected to extend until at least 2025.
The reforms implemented between 1993 and 2003 had three main elements:
1. Reduced barriers to imports and greater transparency in border measures, gradual removal of price guarantees and other market regulations, maintenance of production quotas for milk, and introduction (in 1998) of new market regulations for sugar.
2. New direct payments less coupled to production, and voluntary ecological direct payments linked to ecological services (1993-1998).
3. Cross-compliance requirements connecting almost all direct payments to proof of ecological performance as of 1999.
Between 2004 and 2013, policy reforms were comparatively modest and focussed on deregulation of agricultural markets. Export subsidies were phased out, and milk quotas were abandoned in 2009 even though the market remained strongly regulated.
In 2013, a new Agricultural Policy framework for 2014-17 (AP 2014-17) reformed the system of payments (OECD, 2015[1]). This framework was extended since then and is still in place today. The direct payment scheme was modified under this reform to improve its efficiency and effectiveness and create links to specific agricultural practices (OECD, 2017[2]).
Environmental modalities (regulations on pesticide and nutrient surpluses, cross-compliance requirements and budgetary support to sustainable practices) have been tightened in the context of a new Agricultural Policy framework (AP22+) preparation. Although the reform process was temporarily suspended, the future orientation of the agricultural policy, published by the government in 2022, sets new milestones for the reform in the coming decade, and some first environmental measures started to be implemented.
Support to farmers declined from close to 80% of gross farm receipts in the late 1980s but remained high at 45% in 2022. Potentially most production- and trade-distorting support (mainly market price support) also declined from around 80% to less than 40% of producer support between 1986 and 2022, while other payments grew.
Main policy instruments
Policy objectives
Swiss agricultural policy falls under the framework of the Agriculture Act (AgricA) from 1998, which establishes the principles and instruments for the regulation of the sector. The AgricA aims to ensure that agriculture is sustainable and innovative. It focuses on: 1) food security for the population; 2) conservation of natural resources; 3) preserving cultivated landscape; 4) decentralised occupation of the territory; and 5) improving animal welfare.
The key elements of the AgricA have been enshrined in the Swiss Federal Constitution (Art. 104). In 2017 a referendum led to the adoption of a new article on food security (Art. 104a), emphasising the need to guarantee the supply of food to the population through:
safeguarding the basis of agricultural production, especially land
adapting food production to local conditions and using natural resources efficiently
ensuring that the agriculture and food sector meet the market needs
building trade relationships that contribute to the sustainable development of the agriculture and food sector
The Constitution and the AgricA require securing sufficient long-term food supplies for the population, based on both domestic production and imports and considering the entire value chain. This is achieved through specific measures developed within four-year budget and programme cycles.
Budgetary support
The current support programmes are defined by the new agricultural budget for the period 2022-25 (AP 2022-25), which follows on the AP 2018-21 that covered the past four years. These plans are an extension of the policy framework first established in 2014. The budget allocation for AP 2018-21 was 1.7% lower in nominal terms than for AP 2014-17, whereas the new 2022-25 budget is 0.6% higher, compared to AP 2018-21.
Budgetary support to agriculture consists of three main elements, including direct payments, production and marketing expenditures, and support to improve the production base.
Direct payments to farmers target food security and environmental services (landscape, biodiversity, sustainable use of resources) and animal welfare. These payments are subject to environmental cross-compliance, with specific “ecological services requirements”.
Production and marketing expenditures mainly support dairy producers via three types of payments: (1) for milk processing into cheese; (2) for milk production without silage feed; and (3) for milk and dairy product sales from the farm (introduced in 2019). In addition, area payments apply to oilseeds, protein crops, cereals (introduced in 2019) and sugar beet. Some expenditures under this heading are for general services to the sector, including marketing and product promotion.
Policies to improve the production base include direct support to on-farm investments as well as general support for infrastructure improvement, social aid to farmers, and advisory services. These payments were first initiated as part of the AP 2014-17 policy framework.
Following the abolition of milk quotas in 2009, the inter-branch organisation for milk, l’Interprofession du Lait (IP Lait), implemented standard milk delivery contracts for its members. These set different prices and volumes for milk delivery (contingents A, B and C). These contracts became compulsory for all milk producers in 2013, including those outside IP Lait. In effect, this replaced the previous production quota system with another production control mechanism implemented on a private basis. This scheme was extended in 2021 by the Federal Council (Switzerland’s federal government).
Trade policy instruments
Agro-food imports to Switzerland are largely regulated by tariff rate quotas (TRQs) with relatively low in-quota tariffs and high out-of-quota tariffs. TRQs cover meat, milk products, potatoes, fruits, vegetables, bread cereals and wine. Since 1999, an auction system allocates some of the TRQs to traders. A notable exception to the quota system is feed grains, which are subject to single tariffs. These are regularly adjusted depending on market conditions to stabilise feed prices for the livestock sector.
Preferential tariff rates apply unilaterally to imports from developing countries under the general system of preferences. The Swiss Government grants zero tariffs to all products from Least Developed Countries (LDCs), so agricultural imports from LDCs (according to the official UN definition) are duty- and quota-free since September 2009.
Export subsidies for primary agricultural products were eliminated by 1 January 2010. The remaining export subsidies for some processed products were abolished as of 1 January 2019, following the Nairobi agreement in 2015. To compensate the impacts of that reform, additional payments to producers for commercial milk (Agriculture Act Art. 40) and grain (Agriculture Act Art. 55) were introduced.
Switzerland’s network of trade agreements consists of the European Free Trade Association (EFTA) Convention, the Free Trade Agreement with the European Union and some 33 agreements concluded with 43 countries. All were signed within EFTA, with the exception of agreements with the People’s Republic of China, Japan, the United Kingdom and the Faroe Islands.
Climate change mitigation in agriculture
Switzerland set the goal in 2019 to reach climate neutrality by 2050 and defined specific commitments for emissions reductions in the agricultural sector. Though not legally binding, the Long-Term Strategy (LTS) from 2021 targets 40% emission reduction for agriculture compared to 1990 by 2050.
The Climate Strategy for Agriculture of 2011 sets out action areas where specific mitigation objectives could be set. These are in the livestock sector (breed, herd management, animal feed, animal building), the crop sector (crop and variety type, management practices), fertiliser management (application rate, storage and spreading), and energy consumption (building, machinery and renewable energy). AP22+ was expected to develop actions in these areas but was suspended in 2021 following concerns by parliament (details below).
The Climate Strategy for Agriculture has set an overall emissions reduction target by 2050 of two-thirds for the food system as a whole, compared to 1990 levels. As part of the 2030 Sustainable Development Strategy, a separate target defined in 2021 called for reducing the GHG emissions footprint of each food consumer (including imported food) by 25% by 2030, based on 2020 levels.
Several measures support climate mitigation in agriculture:
A carbon tax on fossil fuels used to heat greenhouses and barns for livestock, as set out by the 2011 version of the CO2 Act. Following a public consultation in 2021, the level of this tax was stabilised at CHF 120 (USD 126) per tonne CO2 as from 2022. Transportation fuels are not subject to the carbon tax. Producers can opt out from the tax payment by submitting a long-term decarbonisation plan for their installations.
A requirement for fossil fuel producers and importers to offset part of transport-related CO2 emissions through national emissions reductions projects. Domestic agricultural projects can contribute to these with investments in anaerobic digesters or fertilisation improvements.
New measures were also adopted in 2022-23, such as the new water quality plan setting a fertiliser reduction target of 20% by 2030 and strengthened contributions to sustainable production systems through soil fertility improvement measures, higher use of organic fertilisers and longer productive lifetime for cows to reduce emissions per unit of output (see further below).
Initiatives are also in place to foster R&D, knowledge dissemination and innovation. These fund information platforms, association initiatives for climate protection in agriculture, or development of sustainability schemes.
Sustainable Development Goals
The Federal Council adopted in 2021 a 2030 Sustainable Development Strategy (SDS) and a related action plan containing, among others, a revision of the Climate Strategy for Agriculture. The SDS identifies three priority themes with specific objectives for 2030: Sustainable consumption and production; Climate, energy and biodiversity; and Social equity. For the transformation towards sustainable food systems, four targets were defined as part of the SDS Sustainable Consumption and Production theme:
A reduction of one-quarter in food GHG emissions footprint for Swiss consumer by 2030 compared to 2020 (described earlier).
A share of one-third of total population with healthy and sustainable dietary patterns by 2030, in line with the food pyramid (national dietary recommendations).1
A reduction of 50% in food waste per capita by 2030 compared to 2017, and a substantial reduction in food losses along the supply chain.
An increase by one-third by 2030 in the share of farms exceeding the ecological services requirements in a verifiable manner, compared to 2020.
In the context of the UN Food Systems Summit activities in 2021, Switzerland also set up a National Pathway for Food Systems Transformation. This was done in co-ordination with stakeholders and is closely integrated with the SDS. The Food Systems Summit Dialogues helped identify themes such as the development of a coherent cross-sectoral food systems strategy; the promotion of food systems transformation through awareness-raising and education; the reflection of the true cost of food in prices and fairer distribution of added value along the chain of actors; and the promotion of research, innovation, digitalisation and new technologies. These extra elements are to be addressed in a future revision of the SDS action plan or other relevant policy instruments.
Climate change adaptation policies in agriculture
Switzerland defined its climate-change adaptation strategy in March 2012, in a framework document from the Federal Council that describes approaches to be adopted by each sector of the economy. A first set of areas for action in agriculture had been identified in the 2011 Climate Strategy for Agriculture, and a revised strategy is expected to be published in the course of 2023 to strengthen these elements and link them to climate mitigation efforts.
Two successive action plans set out specific adaptation measures for each sector. The first of these covered 2014-19 and had 63 sectoral and cross-sectoral measures. The second, released in 2020 for 2020-25, has 75 measures, including 46 from the previous plan.2 These documents clarify what actions to undertake at federal, cantonal and communal levels, and lay out international collaboration channels to support climate adaptation. Some measures target agriculture specifically, while others have indirect implications in related domains (water management, biodiversity, human health, animal welfare).
Adaptation measures for agriculture, as defined in the successive adaptation plans, are organised around the following axes: (1) adapting products, production systems, and production practices; (2) improving knowledge of adaptation possibilities; and (3) mitigating weather-related risks for production and prices. Work started with the following action tracks:
optimised use of plants and suitable animal breeds, including pest management
analysis of opportunities to support private risk-management
Complementary actions with respect to water, soil, biodiversity, and human health can help agricultural adaptation. Examples in the domain of water management are determining water needs better, reviewing water-protection plans and management-planning tools, and developing improved drought-prediction systems. The current action plan includes soil-protection measures that link to carbon-sequestration objectives through a mapping of the state of Switzerland’s soils. Some measures related to biodiversity protection include the restoration of peatlands and creating areas with shade (including on agricultural land). Measures related to human health include protecting workers from high exposure to extreme heat, ultraviolet radiation, and other extreme events. For animal health, measures are planned to monitor and mitigate heat stress, as well as research on the emergence of new pests and diseases.
The Pilot Programme for Adaptation to Climate Change is an illustration of current federal efforts to support the uptake of these measures by funding specific projects that test adaptation actions. The first phase of the programme in 2013-17 funded 31 projects across Switzerland in the domains of water management, prevention of natural disasters, ecosystems and land-use management, urban development, and research. The second phase in 2018-20 funded 50 projects to analyse dairy-herd stress, ground-water management and reservoirs for irrigation, and agricultural development planning.
Other federal programmes also indirectly support adaptation efforts in agriculture. The Agri-food Quality and Sustainability Programme aims to increase the value-added and environmental and socioeconomic sustainability of agricultural production. The programme funds up to half the costs related to a selected innovative project. Similarly, the Sustainable Resource Management Programme (provision of Art. 77a under AgricA) covers up to 80% of the cost of investments in optimising the use of resources such as water, fertilisers, phytosanitary products, animal feed and drugs, and energy.
Adaptation strategies are also supported through public research activities. Agroscope’s 2022-25 research programme conducts several activities to develop new plant production and animal husbandry systems, and and animal varieties better adapted to the changing climate. This includes research on resource-efficient and site-adapted cultivation methods and production systems for field crops and special crops; new crop-breeding research based on genomic and phenotypic methods; and research on management and production practices. The climate adaptation plans also include knowledge-development activities that focus on regional climate-change scenarios for Switzerland, new hydrological data and scenarios for water policy, research on hail forecasting, and broader risk assessment at national and regional levels.
Domestic policy developments in 2022-23
On 22 June 2022, the Federal Council published its report on the future orientation of the agricultural policy. This report was published in response to requests from the two parliament chambers to examine in more detail long term food security and sustainability challenges in advance of the AP22+ reform. Taking a broad perspective encompassing production and consumption, the report proposes a long-term strategy for Swiss agriculture and food systems around four axes: 1) ensuring food supply resilience; 2) encouraging climate, environment and animal-friendly food production; 3) strengthening value-added creation; and 4) supporting a healthy and sustainable consumption. The report also provides a foresight for the Swiss agriculture and food systems by 2050, aiming at identifying the potential synergies and trade-offs between the different objectives and targets, notably:
Supplying half of national food needs from diverse local production.
Reducing GHG emissions from the agricultural sector by 40%, compared to 1990, and from food consumption per capita by two-thirds compared to 2020.
Improving nutrients cycling to respect sustainability thresholds in water and the atmosphere.
Ensuring a healthy and sustainable diet for all the population.
Championing innovation and adoption of environmentally friendly technologies.
To reach these objectives in Switzerland, the agricultural policy orientation report considers several lines of action: i) stronger innovation capacity and know-how; ii) more efficient use of natural resources and adaptation to local conditions; iii) more transparency and true cost accounting; iv) simplified policy instruments.
The implementation of that strategy is planned in three steps. First, new water quality measures approved in April 2022 by the Federal Council have come into force on 1 January 2023 and target the adverse environmental impacts of fertilisers and pesticides. These measures include:
Pesticides with high potential risk have been banned, except when no better alternative exists. Pesticide applications also must be more distant from rainwater collection spots. Direct payments schemes were adjusted to support reduction in pesticide use. These steps aim to reduce the risks associated to the use of pesticides by 50% by 2027, compared to the average level in 2012-15, to better protect water and ecosystems,
The tolerance margin of 10% for measurement of manure application will no longer apply from 2024, meaning fertiliser inputs should remain below 100% of the land nutrient needs to respect environmental cross-compliance for direct payments. In addition, farmers will have to dedicate 3.5% of their cropland area to the promotion of biodiversity. These new measures, initially aiming to reduce nitrogen and phosphorus fertiliser losses by 20% by 2030, compared to the average 2014-16 level, and expected to enter into force in January 2023, were postponed to 2024 due to the Russian aggression against Ukraine.
Producers will have the obligation as from 2024 to spread liquid farmyard manure using low-emission methods. The regulation of storage and spreading of farmyard manure will be added to the cross-compliance requirements.
In addition to new regulatory measures, sectors are also invited to take additional voluntary measures to reduce fertiliser losses, in co-ordination with the Confederation. Mandatory reporting on use of fertiliser, animal feed and phytosanitary products was introduced to increase transparency on current practices and their impact on the environment and incentivize changes in practices.
Second, the parliament adopted in winter 2022 and spring 2023 some direct payments adjustments focused on socioeconomic provisions. The new measures include:
an improved social security cover for spouses and partners working on the farm
the merging of the networking and landscape quality programmes
a restructuring of payments for the diversification of agricultural activities, as well as those limiting the negative environmental impacts of agricultural production via new buildings, installations, machinery and technological applications
support to regulatory control of plant protection products via laboratory analyses.
Third, a new draft legislation of agricultural policy orientation was requested from the Federal Council by 2027 to embrace a food systems approach and include additional elements of agricultural policy reform.
Beside elements of reform driven by the agricultural policy orientation process, other policy adjustments were undertaken to address more immediate needs. In February 2022, the parliament extended until 2026 temporary protections of the sugar sector and sugar beet production, through a modification to the AgricA. Thus, the sector continues to benefit from a tariff protection of CHF 70 (USD 73) per tonne of sugar and a support of CHF 2 100 (USD 2 200) per hectare of sugar beet, with an extra CHF 200 (USD 209) in the case of organic farming or integrated production practices.
In May 2022, the Federal Council changed the legislation on “Swissness” labelling (food items entitled to display the Swiss cross), which also defines the conditions under which exceptions were allowed. The list of such products will no longer be maintained by the Confederation. As from 1 January 2023, the sector itself determines and communicates what amount of primary ingredient should be sourced from Switzerland to earn such labelling.
In November 2022, the amendment of 19 agricultural ordinances was adopted by the Federal Council, most entering into force in 2023, among which:
New support for protein crops intended for human consumption, such as chickpeas and lentils, to take account of the increased demand for plant-based food proteins and encourage the production in Switzerland of such alternative food products.
New aid for the planting of robust varieties of grapes, stone fruits and pome fruits.
Modification of provisions related to summer pastures, with retroactive effect from 1 January 2022, to secure the long-term exploitation of the mountain pastures. Farmers can now receive full payments for summer pastures even if the increased presence of wolves forces them to remove their herds prematurely from mountain pastures.
Softening of some provisions planned on water quality due to the international market situation. The per area payments for security of food supply were reduced less than expected in 2023 and set at CHF 700 (USD 733) per hectare. Furthermore, the four-year commitment period (2023-26) for the two direct payment programmes for improving soil fertility was abolished and the requirement to register for such programmes postponed by one year.
New premia to preserve Swiss breeds with “critical” or “threatened” status. This scheme replaces the separate support for the Franches-Montagnes horse breed, while covering other Swiss breeds as well.
Domestic policy responses to Russia’s war of aggression in Ukraine
The Swiss Federation adopted on 4 March 2022 a first set of sanctions against Russia and started to take domestic measures to adapt its agriculture and food system to the new international market situation.
The Confederation took measures to ensure supply of main inputs to agriculture, by releasing some of its strategic reserves of fertiliser and fuel. In December 2021, prior to the war, the Federal Department of Economic Affairs, Education and Research (EAER) had already decided to release 20% of its strategic reserve of nitrogen fertilisers through 2022, in response to the supply difficulties in fertiliser markets triggered by high energy prices. This corresponds to about 8% of the annual national needs. This measure remained in force for all of 2022 to mitigate the adverse market effects of the war and ensure availability of nitrogen fertiliser for crop production needs.
In response to concerns over food security, the 3.5% set-aside of cropland for promotion of biodiversity, initially planned to enter into force in 2023, was postponed to 2024. A response plan was initiated for preparedness of Swiss emergency food stocks (these stocks are usually directed to international assistance through the World Food Program). An energy saving information campaign was put in place and preparatory work was done on a response plan to a potential nuclear accident in Ukraine, including for its consequences on Swiss agriculture.
In June 2022, labelling rules for sunflower oil and sunflower lecithin were temporarily relaxed due to the difficulties in these markets triggered by the war. These relaxed rules do not apply to other sunflower ingredients or substitutes containing or sourced from genetically modified organisms.
Trade policy developments in 2022-23
In November 2022, the Joint Committee on Agriculture related to the Agreement between the European Union and the Swiss Confederation on trade in agricultural products mutually recognised some new products’ designations of origin and geographical indications. This applied to specific charcuterie and baked products from Switzerland and to 60 products from the European Union.
In February 2023, the Federal Council approved the negotiation mandate for the opening of discussion to further develop the 2019 trade agreement between the Swiss Federation and the United Kingdom. Negotiations are expected to start in 2023, conditional to the mandate approval by the relevant parliament committees and the Conference of cantonal governments. The United Kingdom is among the ten most important trade partners for the Swiss Federation.
Low milk production in 2022 created significant tensions in the domestic butter market. In response, the tariff rate quota was expanded by 6 100 tonnes in 2022, through five successive decisions, to match the 40 000 tonnes domestic demand. For 2023, the TRQ was expanded by 3 000 tonnes.
Similarly, following the 25% decrease in the domestic production of bread cereals to 304 000 tonnes, the TRQ for these bread cereals was expanded from 40 000 tonnes to 110 000 tonnes in May 2022, and finally set at 130 000 tonnes one month later.
Trade policy responses to Russia’s war of aggression in Ukraine
On 8 March 2022, following the aggression of Russia on Ukraine and in response to its consequences on agricultural commodity prices, the Swiss Confederation decided to reduce border protection measures for animal feed imports. The decrease in tariff, which entered into force on 15 March 2022, was CHF 3 (USD 3.14) per 100 kg for wheat, barley, rye, triticale, maize grain and kibbled maize. For oats, the tariff decrease was CHF 1 (USD 1.05) per 100 kg, which set it to zero. For oilseed meals and vegetable oils, no tariffs were in place recently, as international prices are already higher than domestic ones. These tariffs were gradually brought back to higher levels after May 2022 as world prices weakened.
On 27 April 2022, the Federal Council adopted sanctions similar to those of the European Union on imports from Russia, targeting products of economic importance. In that context, import quotas were set on fertiliser imports (1 710 tonnes for potash and 1 636 tonnes for other synthetic fertilisers compounds). Thanks to the use of the fertiliser strategic reserves, these restrictions did not have any significant impacts on Swiss crop production.
Switzerland is a small economy with high GDP per capita, that had experienced low and periodically negative inflation until the 2022 global inflation surge with unemployment rates below 5% over the past two decades. GDP growth has been stable at around 2% prior to the COVID-19 pandemic, and it returned to pre-crisis levels in 2022, after a recovery period in 2021.
The relative importance of agriculture in the Swiss economy is low, accounting for just 0.6% of GDP and around 2% of employment. The farm structure is dominated by relatively small family farms. Hills and mountain farming areas (including alpine summer pastures) are used for extensive milk and meat production, while more concentrated pork and poultry production is located in valleys. Agricultural land covers 36% of the country area and is composed mostly of grassland, with arable land representing only 10% of total area. Crop production has shifted away from traditional arable crops (grains, oilseeds) towards an increasing production of fruits and vegetables over time.
Switzerland has consistently been a net agro-food importer, with 4.8% of its total imports in 2021 being agro-food products, compared to 2.9% of its exports.3 Swiss agro-food exports consist mostly of processed products for final consumption (86% of total agro-food exports). This category also represents half of the agro-food imports (Figure 25.6).
Total factor productivity (TFP) growth in agriculture has slowed significantly to close to zero between 2011 and 2020. However, both the use of intermediary inputs (-0.19%) and primary factor (-0.34%) decreased. As a result, overall output has declined over that period.
Swiss agriculture is largely rain-fed. Swiss farmers irrigate only 3.3% of their agricultural land and the share of agriculture in the country’s water abstraction (8%) is less than one-sixth of the OECD average. In addition, the water stress indicator is well below the OECD average. Agriculture’s share of energy use went down as well and is less than one-third of the OECD average. On the other hand, while nutrient surpluses have declined moderately, the surplus of nitrogen (59 kg/ha for N) is still twice the OECD average, which negatively impacts water quality and GHG emissions. Swiss agriculture emissions amounted to 5.8 MtCO2eq in 2019 (13.3% of national emissions), not counting emissions from energy consumption in agriculture, forestry and fisheries (0.6 MtCO2, i.e. 1.4%). This places the country above the OECD average. While the LULUCF sector in Switzerland is a net sink, thanks to forest management (-2.3 MtCO2 per year since 1990), cropland and grassland also emit together an average 0.7 MtCO2 (1.5% of the national emissions) due to changes in soil carbon.
References
[2] OECD (2017), “Reforming agricultural subsidies to support biodiversity in Switzerland: Country Study”, OECD Environment Policy Papers, No. 8, OECD Publishing, Paris, https://doi.org/10.1787/53c0e549-en.
[1] OECD (2015), OECD Review of Agricultural Policies: Switzerland 2015, OECD Review of Agricultural Policies, OECD Publishing, Paris, https://doi.org/10.1787/9789264168039-en.
Notes
← 1. This target is an intermediate milestone for a long-term ambition of the whole population adopting a healthy and sustainable diet by 2050.
← 2. In 2020, the Swiss Government found that 14 of the 63 measures in the first adaptation plan were fully completed, 28 were in advanced implementation, 19 were in the initial phase of implementation, and 2 were on hold.
← 3. Total imports and exports include here gold bars and other precious metals, coin, precious stones and gems as well as works of art and antiques.