Markets and the finnish experience

by
Mikko Ryökäs
Ministry of Agriculture and Forestry
Finland

Financing is the central question in multifunctionality. Farms receive their incomes basically from two sources: from support measures and from markets. The market is the most important of these two and covers about 60-70 percent of the total farm income in Finland.

The market consists of four components: The industry, consumers, producers and trade. Consumer behaviour is the most essential of them all. If consumers are willing to pay enough there will be no problems at the farm level. Usually this is not the case and we have to study the elements in the market chain more carefully.

Finland joined the EU in 1995. Soon it became apparent that Finland had, for some products, the lowest prices inside the EU. This was the result of different factors. For example, oligopolistic structure of retail trade together with overproduction in the processing industry had made the negotiation position of the industry weaker. Also, the industry seemed to have other problems as well, as the low research and development investments indicate. At the same time, farmers were facing new challenges, and their capacity to cope with it gives reasons for concerns. These are problems that Finland has to follow carefully in the near future.

Finally, a functioning market chain is a very important factor for financing the multifunctional way of agriculture, and lacks in the market chain is very expensive to replace by support measures.