The Hague, March 20 - Dutch agricultural exports could fall 10 to 15 percent in the first quarter of 2009, as the economic downturn cuts demand for flowers and organic food in particular, the head of the Dutch farmers union said on Friday.
Prices of roses, wheat and milk have plummeted at the start of the year but could improve in the second half of 2009 when demand may start to recover while supply has fallen, Albert Jan Maat, head of the LTO Netherlands union, said.
And if economies do start to stabilise by 2010, there is a high risk of a new food crisis, which farmers need to prepare for by developing intensive but sustainable agriculture and by setting up strategic reserves, Maat said.
"Dutch farming is a big export sector, so we are very much involved in what's happening in the world economy," Maat said in an interview.
"Flowers especially are hit by the crisis. In the Netherlands, they are part of the culture. But in Great Britain, Germany and Belgium they are more or less a luxury good and that's a problem at the moment."
He said flower prices had dropped between 20 to 50 percent on the year, and prices in the meat, dairy, and organic food sectors were also hit as the strong euro weighed on exports.
The Netherlands exports about 60 percent of its agricultural products, Maat said, with Germany, Belgium and Britain the top destinations. It dominates the world market in flowers, eggs and pigs, according to OECD data.
Maat said he estimated the value of Dutch agricultural exports had declined by between 10 to 15 percent in the first few months of 2009.
Overall Dutch exports are seen falling 11.75 percent in 2009, while the economy is set to contract by 3.5 percent this year, government think tank CPB said on Tuesday..
Maat said to support the farming sector the government should keep exports flowing by guaranteeing export insurances, and by ensuring taxes favour small and medium sized firms.
NEW FOOD CRISIS
Agriculture and the sectors closely linked to it such as the food industry make up about 10 percent of Dutch GDP, based on OECD data.
Maat said that as economies recovered, renewed energy and commodity shortages were likely to lead to another period of high food prices.
"We believe there will be a new situation of more demand but less supply starting in the second half of 2009," said Maat.
"If there is a stabilisation in 2010 we will have a new situation of food shortages," he said, adding a proposal by farmers unions from the Group of Eight (G8) industrialised nations to set up a world grain reserve was a "step in the right direction" for preparing for another food crisis.
"There will be a new food crisis and even in European agriculture we need to discuss about the strategic position for cereals, wheat and maybe for dairy products."
"Food is a different commodity to cars or televisions. You can still have a good life if you don't have a car or a television. But food is life: you have to eat every day."