Finland's agricultural policy has long been inspired by
than purely economic considerations. The need to maintain
food sources caused the Finns to subsidize uncompetitive
production rather than to allow further specialization in
and meat operations. Social concerns drove policies
maintain family farms and to give farmers incomes and
conditions more equal to those of other workers. The
maintain settlements in the sparsely populated northern
led to heavy subsidies for farmers in those regions. Other
included stabilizing retail food prices and increasing
In the late 1980s, agricultural policy making involved
tradeoffs among these partially contradictory objectives. For
security reasons, the government gave priority to ensuring
selfsufficiency in basic foodstuffs. But self-sufficiency,
farm-policy goals, resulted in costly agricultural
had to be dumped on international markets. Structural
designed to increase farm size, could improve efficiency,
strengthen family farms, and increase farm incomes, but
difficult to implement.
By the early 1960s, the first
been achieved. By the late 1970s, however, surplus
become a pressing problem. According to government
in the early 1980s, crop productivity would increase by
percent per year, and productivity in animal husbandry
increase by about 0.5 percent per year. Because Finland's
consumption of agricultural products was stagnant, crop
animal surpluses would therefore continue to grow--unless
agricultural prices were reduced.
In the late 1970s, the government stepped up programs
designed to encourage farmers to shift production from
in surplus, such as eggs, milk, and meat, to products that
replaced imports, such as wheat, sugar, and vegetables.
in the mid-1980s, worldwide agricultural surpluses
prices and made agricultural exports especially expensive.
response, the government redoubled its efforts to control
and to encourage reforestation of surplus farmland. This
had begun to make a significant impact by 1987.
Agricultural policy centered on target prices set by
Ministry of Agriculture and Forestry each spring and fall,
negotiations with the MTK. Administered under the periodic
income acts, which defined general rules for setting farm
the negotiations included two phases. In the first phase,
received compensation for increases in input costs
according to a
formula laid out in the applicable Farm Income Act. In the
phase, the negotiations addressed how much farm labor
paid. In general, farm pay settlements reflected
wage agreements, and they were based on estimated hourly
(see Human Resources
, this ch.). For example,
spring of 1986 farmers received no compensation for input
which had been stable (largely as a result of falling
energy prices), but they did achieve a 6.1 percent
income, much higher than the 2.4 percent agreed to in the
framework agreement for other workers. Observers
settlement to have been generous, but perhaps justified,
agriculture remained a low-wage sector.
Once the negotiation process had determined overall
income, the Ministry of Agriculture and Forestry fixed
prices for individual crops. In response to overproduction
problems, the ministry reduced prices for surplus products
required that farmers pay part of the costs of subsidizing
exports. Programs to reduce surpluses by lowering target
achieved only limited results, however, because increases
productivity often outweighed declines in target prices.
ministry established a dual-price system for milk and
made production beyond output quotas unprofitable, and
implemented a number of voluntary production controls,
contracts to increase fallow land or to limit production
beef, pork, and eggs. In the summer of 1987, the
prohibited clearing fields, introduced measures to
reforestation, and began considering heavier taxes on the
agricultural earnings of part-time farmers as well as
pensions for farmers who agreed to retire early.
Subsidies for agricultural consumption were partially
effective in increasing demand for surplus products.
concerns, however, apparently limited consumers'
eat more dairy and meat products. Surplus-reduction
having some effect by the late 1980s, but in 1987 farm
remained a serious problem.
Structural reforms also received considerable
slow the growth of large, "industrial" farms, the
required licenses for farms that exceeded certain
levels, hoping that limiting the size of farms would both
surpluses and help maintain family farms. The Agricultural
Development Fund provided low-interest loans and subsidies
investments in farm infrastructure; most of the loans from
fund went to farmers in northern Finland. Small farmers
wanted to enlarge their farms could also receive
credits. In an effort to keep new farmers from falling
the government also allowed farmers under the age of
to apply for state grants when they established a farm.
the state tried to make farming more attractive to young
by providing outside helpers to take over farm operations
temporarily. This arrangement facilitated maternity leaves
even annual vacations.
Farmer training programs, crop research, and extension
services helped farmers to improve agricultural practices.
schools provided agricultural training for youths who
attend specialized schools; university students could
agriculture. The Ministry of Agriculture and Forestry and
universities undertook research projects that emphasized
development of frost-resistant crop varieties. The
administered extension services that gave technical advice
communicated research findings to farmers. These training
research programs deserved much of the credit for the
that farmers had achieved during the postwar period.
Data as of December 1988