There was a standoff in the province of Friesland, Netherlands, on the night of July 5th. Police shot at a group of farmers who were allegedly throwing tractors at police officers and their vehicles to get through a roadblock and onto the highway.
One tractor was hit by the shots and three arrests were made. This was just one heated event among countless during a campaign of tens of thousands of protesters that has now become an international confrontation between farmers and environmental regulators with global and potentially historic implications.
How it all started
The Dutch farmers’ protests began with an initial series of demonstrations in the Netherlands on October 1,
, in response to new carbon emission reduction legislation that disproportionately impacted farmers.
in June this year, the Dutch government released more extreme measures aimed directly at the agricultural sector. “Farms close to nature reserves are expected to reduce nitrogen production by 90%”, the magazine reported The Economist. “A reduction of about 30% of the country’s cows and pigs, along with a large part of the farms of cattle and milk.”
In response to this new legislation, about 50 1,000 Dutch farmers protested in front of government buildings and ministers’ homes and drove hundreds of tractors to block food distribution centers, including warehouses and grocery stores. Throughout July, the movement spread to Germany, Italy, Spain, Poland and other nations, each with farmers taking to the streets in repudiation of their governments’ measures to reduce the scale and production of the agricultural industry.
The trade-off of industrial agriculture
So what exactly is each side of this dispute fighting for?
The Netherlands, being the world’s second largest exporter of agricultural products after the United States, is among the most productive agricultural centers on Earth, but is also one of the biggest polluters.
“The Netherlands has become an agricultural giant by showing what the future of agriculture can look like,” according to a National Geographic article titled “This Tiny Country Feeds the World ”. But, as the Economist reports, “the Netherlands is the biggest nitrogen polluter in the European Union”.
Animals raised on farms that will likely soon be phased out because of regulations produce manure that mixes with urine and releases the nitrogen compound ammonia. This can harm wildlife and disturb sensitive ecosystems when it leaks into nearby rivers and lakes.
But there are simply no other known methods of generating such abundant agricultural production with available resources that Dutch farmers have. So this is a trade-off between protecting sensitive ecosystems, on the one hand, and, on the other hand, maintaining a thriving Dutch agricultural industry capable of supporting its workers while providing the market with affordable products.
“We have to move away from the low-cost food production model,” said Representative Tjeerd de Groot, from the Democrats 60 , which is part of the Dutch coalition government. “It is time to restore nature, climate and air, and in some areas this may mean that there is no longer any place for intensive agriculture.”
And according to the website DutchNews.nl, “Dutch agriculture needs to become much less efficient or the environment will suffer even more, say agro-environmental scientists.”
The introduction of ESG
If this regulatory crackdown on Dutch farmers were an isolated and unusual event, the effects on food availability, food prices and farmers’ wages would be bad enough. But given the political circumstances currently faced by farmers and other sectors that are being heavily blamed for environmental destruction, a reduction of 30% in the number of cows and pigs is likely to be just the beginning.
The deliberate move away from efficient, low-cost agriculture is in line with a broader global initiative to minimize and reorganize most industrial activities. And this initiative is known as ESG.
As Dan Sanchez has pointed out, “environmental, social and corporate governance” (ESG) policies have existed in codified form since 2004, when major financial institutions were tasked by the United Nations with developing guidelines to reform the financial sector through “social and environmental corporate governance”. The obvious objective was to divert capital investment from the global economy to companies willing to align themselves with the environmental and social values of the powers that be.
Since its invention in
, and especially in recent years, ESG has become a dominant form of governance increasingly supported by the state that has completely realigned incentives across the economy. In December 2021, the Reuters news agency named 2021 “the year of ESG investment” and in April 2022, Bloomberg reported that “few corners of the financial universe have been surrounded by as much marketing as ESG, which by some estimates represents more than US $30 trillion in assets.”
ESG funds, by definition , prioritize the moral values of their controllers, rather than just focusing on profitability. And many of these policy goals, such as racial and gender quotas on corporate boards and the massive downsizing of the energy sector, are at odds with maximizing output and minimizing costs for investors, workers, and customers. This may explain why ESG funds are performing poorly.
And that will be the fate of the Dutch agricultural industry as investors and entrepreneurs embrace the fact that industrial agriculture efficient has fallen out of favor among those wielding the powers of political reward and punishment. “Where will my son find support and how will he know what will be allowed in ten years?” asked Erik Stegink, a pig farmer protesting in the Dutch village of Bathmen.
Rising food insecurity
Such a drastic restriction of the Dutch agricultural industry, directly and indirectly, by limiting connected industries such as energy, will leave thousands of farmers unemployed, reduce food availability and raise food prices internationally at a time when food insecurity is increasing.
According to a statement released by the White House in June, “many of our neighbors are significantly dependent on food imports and are particularly vulnerable to the increase of food costs. The [Hemisfério Ocidental] is experiencing the biggest increase in food prices in a generation.”
The publication specifies that between
and 2019, the number of people facing severe food insecurity has almost doubled to more than
million in Latin America and the Caribbean. About a third of Venezuelans suffer from food insecurity, while 30% of their children under five show signs of malnutrition. The number of people facing food insecurity in Honduras has nearly doubled in the past year.
The current food crisis in Sri Lanka is a particularly horrific demonstration of just how tragic the results of regulation can be. heavy agricultural. About 90% of Sri Lankan households are skipping meals due to widespread food shortages and food price inflation of approximately 60%.
“It is a terrifying turnaround for a middle-income country that has previously had no problems to feed a population of 10 millions of people,” reports Bloomberg. And why did it happen? There are many reasons, but one of the main ones is that “in April 2021, the government, led by President Gotabaya Rajapaksa, banned the import of synthetic fertilizers in an attempt to target the country for organic agriculture.”
The Dutch economy and most Dutch farmers have enough resources to not suffer (for now) from the drastic food insecurity that many poorer countries have. are facing. They can afford to reduce their quality of life and secure their children’s future in other ways, as can most Americans who will have to pay more when going to supermarkets as a result of the shortage of Dutch agricultural exports. But shortages of manufactured goods and price increases are likely to mean immediate starvation for many marginalized in places like Sri Lanka and Latin America.
As some of the farmers pointed out, there is an argument that advancing agricultural progress ends up generating better, not worse, environmental impacts. This is because innovation, rather than impact reduction, has often proven to be the best path to sustainability. And innovation requires capital to invest in new processes and experimentation.
“Cars were very polluting, but they had the chance to become less polluting with innovation. That’s what we want”, explained the founder of the Dutch farmers’ party, Caroline van der Plas. And improvements in automobile sustainability are the rule, not the exception.
The history of industrial wealth creation and its environmental impacts consistently shows that new wealth tends to improve capacity people’s ability to adapt to a changing environment, at least as much as the corresponding environmental changes are problematic for human well-being. Economic data sets known as Kuznets curves suggest that, at least in modern times, hungry people who are focused on the short-term concerns of surviving another month actually tend to damage their environment more than relatively wealthy people who they can invest in their long-term well-being.
So how can one decide whether agricultural progress is worth its cost in ecological disruption? The answer becomes clearer when you take the two opposing goals to their logical conclusions.
Agriculture will always disturb ecosystems and cause pollution, but if allowed to flourish, it can also compensate this by continuing to improve through innovation, as it has for centuries, and making humanity rich enough to withstand an ever-widening range of potential environmental conditions, which will eventually be necessary anyway.
On the other hand, there is no good ending to the story of limiting and reducing the ability of the agricultural industry, possibly the most important human industry, to produce food. The less food a civilization has, the less it will be able to adapt to changing weather conditions. And since agriculture will always affect its environment, the goal of minimizing the environmental impact of agriculture and other industrial activities will never end until everyone starves to death.
Ecological Change it is a constant of biological reality – but humans who remain well fed are certainly not. And that hasn’t changed in modern times, as is demonstrated by the century’s 20 history of mass starvation caused by planning. central in places like China, Cambodia and the Soviet Union.
Nobel Prize-winning economist Friedrich Hayek once wrote that: “The more the state ‘plans’, the more difficult it becomes. planning for the individual. Dutch statists preventing farmers from growing food are a good example of this. This will make budget planning , careers and livelihoods more difficult for farmers being regulated, but will likely also make such planning more difficult for individuals around the world.
©2019 FEE – Foundation for Economic Education. Published with permission. Original in English.