11 Jan Changes bring focus to Denmark’s agri-foods industry
Flemming Nør-Pedersen, CEO, Danish Agriculture & Food Council, discusses the success of the Danish model in bolstering Denmark’s food exports and the government’s strategy to grow its green and sustainable segments to remain competitive
Can you give us an overview of the scope of Denmark’s agri-food sector?
We have quite a large agriculture and food sector in Denmark. We farm about 61 percent of the total Danish area. Compared to other advanced and wealthy Western European countries, the food and biological sectors in Denmark occupy a significant position due to our well-educated farmers and a few prominent international companies—usually cooperatives—such as Arla Foods in the dairy industry, Danish Crown in the pork industry and DLG and Danish Agro in the feedstuffs industries. Kopenhagen Furs was a large player, but all Danish fur animals were killed in November 2020 because of the COVID-19 pandemic, and we are no longer producing fur. There are likely some in storage that can be sold in the next two years, but there will be no more fur production based on a recommendation and political decision. We hold an extremely solid position when it comes to porcine genetics. We are co-owners of DanBred, which is a commercial company developing and selling genetics to raise industrial pig production. Denmark is also a leading producer of grass, clover and horticultural seeds. More than 90 percent of our total production of these products is exported to more than 100 countries. We also provide our customers with solutions that help them produce ways that are more climate friendly and environmentally efficient. In May 2021, the World Resources Institute in Washington published an analysis comparing the climate impact of one kilogram of meat, milk and corn. We were shown to be among the five best in terms of having the least impact on climate change. While we are pleased, we would like to do better. There is a growing global market for more environmental and climate friendly solutions, and we want to serve that part of the market.
How was Denmark’s agri-foods sector able to overcome challenges caused by the COVID-19 pandemic?
During the crisis, more and more customers began shopping online. When restaurants, catering and other services sectors closed, the obvious response was to move towards the internet or retailers. Being a small country allowed us to act in a nimble way and switch to online sales when it was necessary. Our members were quickly able to fulfill customers’ needs by selling online. Having direct trade to final customers via online shopping has brought food producers even closer to their final customers. A direct link between farmers or cooperatives and the final customer creates more precise feedback. Apart from minor sectors, it could easily have turned out much worse than it did. Denmark is extremely dependent on our labor force. If the pandemic had gone into the factories, we would have had catastrophic problems. We were able to keep everything under control through constant testing and maintain production, supply and exports. We held quite a strong position. This was bolstered by close public-private cooperation, which is an essential and traditional part of Danish society.
How robust is Denmark’s new food and agriculture strategy?
At the beginning of October 2021, the government implemented a 10-year plan for Danish food production. Almost all members of the Danish parliament signed on. No matter which political party, we can count on the same framework conditions. This Danish model comes out of the labor market where the unions negotiate with companies and enter into agreements for three or four years without involvement from the state. The authorities are tasked with providing us with a labor force, an education platform, health safety services, security and care of our children. With these pillars in place, we can do what we do best. The model successfully survived the pandemic and has worked exceedingly well within the food and agriculture sectors. When all parts can sit down around one table, negotiate and come to an agreement, we can be sure everyone will move forward together. For example, producing food organically has been high on our political agenda for decades. Part of the government’s ten-year plan is to double organic production and consumption. We would also like to export more organic food and are currently working on the Swedish and German markets. We are currently collaborating with the government to develop programs supporting organic production and organic export.
What is Denmark doing to lower the country’s carbon footprint in agriculture and livestock operations?
In Denmark, carbon dioxide emissions come mainly from production from fields and stables and our energy use. Although we do not yet know everything involved in achieving our ambitious goal of being climate neutral in 2050, we will be required to modernize and build new stables and produce more renewable energy in the form of windmills, solar cells or biogas. We are leaders when it comes to biogas, but we need to pass a much larger part of our process through biogas systems before it is put back in the field. We are thinking about new forms of carbon capture to heat it and make it stable for long periods. There might also be chemical substances added to cow feed that dramatically reduce methane emissions. Furthermore, we are working on feed efficiency or how to produce one kilogram of meat with less feed, which includes poultry and pork production. There is also a strategy of setting aside carbon-rich land. Almost all farmers have some square miles of carbon-rich land. On a volunteer basis, they will contribute land and be compensated through money from the EU and taxpayers. The goal is to have 386 square miles set aside within a set period. Additionally, we have had a plan for about three decades to double Denmark’s forests. This is going well and will continue through the following decades.
All new initiatives involve investment in innovative technology and research and development. An exact outline of how we will reach our goals is not yet fixed. We first require a lot of money to be allocated for more research, development, innovation and new technology. We need to find new ways to assure we can improve our production as opposed to halt our production. It must be made better and less expensive for customers. Lowered costs are likely to be an inevitable side effect. We want to produce more with less. We have been on this road for 30 years, producing a little more every year while cutting our loss of nitrogen, phosphorus, ammonia and methane and use of pesticides. We are trying to sell our solutions to the rest of the world. If our technologies and genetics can be shared globally, we could see a dramatic decrease in global emissions of greenhouse gas.
We cannot sit back and expect that everything will happen in 2029 or 2030. We have an enormous responsibility to get out of the warm offices in Copenhagen and get in contact with our members in Jutland and the countryside. We need to convince them to begin producing more climate efficiently now. If we sit and wait, there will be severe repercussions within two or three years. We will soon be able to add a little more on the market price or at least fulfill market preferences by having customers choose products because they know we deal with environmental and climate issues more than products from other countries. Labeling is a big discussion right now in Denmark in terms of how we can label food meat, milk and cheese to reflect different practices.
How are new digital technologies helping Denmark meet its sustainable end goals?
We see modern technology as a hugely important answer to climate efficiency and climate-neutral production. We believe in precision agriculture or using exactly what is needed at a specific spot and not the same average all over. We have research and innovation centers working closely together with SEGES, the leading agricultural advisor in Denmark. We are trying to find new technical solutions within digitalization and the use of big data. For example, we can now see that in two or three days from now there will be a problem with specific cows or poultry through in-depth analysis. Consequently, if you heat or cool the stable or give livestock more feed, we can mitigate or halt upcoming problems. Some Danish companies are pioneers in this area, such as SKOV. They are building and providing poultry farmers with stables and technology to help them operate in a more climate-friendly way.
What significant markets is Denmark focusing on in terms of agri-foods exports?
After its reunification 30 years ago, Germany became our biggest export market. In the last few years, China has gained ground, becoming our second biggest export market followed by Sweden, the U.K. and Poland. We also export a large quantity of piglets to Germany and Poland. The U.S. is number seven or eight on our export list; it is quite important. We would like to serve the Americans with more organic Danish food, especially on the east and west coasts in California, New York and Washington D.C., for example. We are currently trying to build a strong third leg for the Danish food sector that we can stand on, which is green proteins. We have had pork meat for more than a hundred years, and we have a long-standing traditional dairy industry. Hopefully many customers in California and on the east coast are interested in more plant-based food. Japan is also an important market. The EU has had a free trade agreement with the country for three years and they are increasing their home market protection. We will be able to gain shares in the Japanese market and possibly in China. We are looking in the eastern direction. In China, Korea and Vietnam there is a growing population and an increasing average income, which usually draws an increase in consumption of dairy products and meat. In Denmark, the northwestern part of Europe and North America, meat consumption is stable and even slightly declining.
How do Denmark’s agriculture and food products compete with other international markets?
We have high costs in Denmark; it is very expensive to have employees, taxes are high and gasoline and other necessary products are expensive. If you want to maintain production in Denmark, products need to be expensive; this only works if one lays down more value. We have done this through organic production, high food safety and a focus on research and development. Of course, to keep our highest standards, costs are substantial. Arla Foods is the world’s greatest organic dairy producer and is driven by farmer engagement. It is a cooperative; the farmers own the company but are extremely close to customers and non-governmental organizations. They are looking three to seven years ahead at the next issues and trends and what must be overcome and dealt with. They deal mainly with a business-to-consumer market. They are also leading the way in branded milk products such as cheese. They are not only competing on the lowest cost but are adding value through branding. This holds true for many Danish food companies.