Explaining Growth in Dutch Agriculture: Prices, Public R&D, and Technological Change

Table 1. Structural development of Dutch agriculture 1950-2000

Source: Van Bruchem (2001).

With respect to the input side, labor input has been substantially reduced. For hired labor the
decline took largely place in the period 1950-1973, after which it stabilized and since the mid-1980s
even slightly starts to increase again. In contrast, family labor shows a continuous decline, which since
the late 1980s outpaces the hired labor decline. The amount of aggregated output per unit of
aggregated labor showed a strong and steady increase since the early 1960s, with the ‘labor
productivity’ in 1996 being nearly 12 times as large as in 1950. The decline of labor input (aggregate
labor input declines by 62%) was compensated for by an increase in the input of capital. The capital
stock increased with 110% in the period 1950-1985, after which it started to slowly decline.

Fertilizer input showed a strong increase in the period 1950-1985 (+115%), but a strong decline
thereafter. The level of (total) fertilizer input in 1996 was only 1.4 times as large as in 1950. Fertilizer
use per unit of output was more or less stable over the period 1950-1967, but started to decline
thereafter. In 1996 the amount of fertilizer used per unit of output was 63% below the 1950-level. The
use of fertilizer per unit of land (arable and pasture) increased in the period 1950-1983 (+176%), after
which it started to decline (1983-1996: -40%). The strong increase in the intensive livestock
production and its heavy reliance on purchased compound feeds, is reflected in the feed use, which in
1985 and 1986 was more than ten times as large as in 1950.

The quasi-fixed land input is rather stable and slowly declining over time. In 1996 it has declined
by 17 percent as compared to 1950. Land productivity substantially increased: over the period 1950-
1996 the arable output per unit of arable land and the dairy output/unit of grassland increased by 260
and 300 percent respectively.

All output prices (normalized by price of fertilizers) are highly fluctuating over time. The price
for arable output fluctuated, but did not show a particular trend¹. Partly this will be due to the fact that
the arable output price and the feed price by which it is normalized contain a lot of common elements
(in particular shared coarse grain prices). The (normalized) milk price showed a downward trend until
the early 1980s, after which it started to strongly increase until 1989. After 1989 the milk price
increase stagnated. The introduction of the milk quota in 1984 and the policy reforms in the arable
sector (price declines for coarse grains) have improved the milk/feed price-ratio. The meat/feed price-
ratio showed strong fluctuations, and reached its highest values in the early 1970s. It seems that there
has been a level shift in 1958, after which the price-ratio fluctuated about 1.2 times its 1950-value. The
strongest input price increase has been the price increase of hired labor. It showed a strong increasing
trend until 1980, followed by stagnation in the early 1980s and a downswing in the second half of the
1980s.

Figure 1 gives the public expenditures for research and development on agriculture by the Dutch
government. The Netherlands is famous for its so-called OVO-drieluik, the integrated schooling,
extension services and research framework. This coordinated network is said to have contributed a lot
to the increase in the human capital of the farmers, to provide farmers with good information about
innovations and the potential benefits when applying them to their specific farm situation (Roseboom

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