In 1994 permanent subsidies for organic farming were implemented . This was extended in 1996 where additional funding was provided for advice to farmers in the transition phase. At the same time subsidies for development initiatives were also given by the state for processing, marketing and distribution of organic products. Denmark also invested into schools, institutions and universities to educate farmers, increase knowledge and product development.Currently the Danish government provides farmers with subsidies for conversion and maintenance of organic farming . To encourage organic farming in Austria the government implemented several subsidies and incentives to help create the image of “Ecoland Austria”. “Without a doubt, the organic farming boom in Austria was caused by government subsidies distributed on a federal scale” . This is confirmed by Musshoff and Hirschauer , who stated that financial subsidies increased the willingness of farmers to convert. In 1989 three Austrian provinces started to provide subsidies to individual farmers for switching to organic farming. In 1991 the Federal Ministry of Agriculture and Forestry stimulated the growth by introducing subsidies and an incentive program. Grants for organic farming associations and national conversion subsidies were implemented. Also, during and after conversion,hydroponic dutch buckets assistance was given to the farmer . In 1992 these subsidies where supplemented by a program which supports organic production for existing producers .
After entering the EU in 1995 Austria implemented a new agri-environmental program: ¨ OPUL. This five-year national aid program encouraged conversion and maintenance of organic farmers.Respondents in Denmark indicated both farming conditions and stakeholder cooperation as highly relevant. For policy development of the sector it was very important that there was little competition between farm organizations. Consensus between parties on organic support and resource availability for the organic sector eases the establishment of new policies . Besides this, the development of the Danish Agriculture and Food Council has linked the interest of the organic sector with the agricultural sector. The association considered the interests of all parties as consumers, ministries and industrial organizations . The close cooperation between the organic agricultural sector and the Danish Agriculture and Food Council led to positive features. It increased the dissemination of new knowledge, establishment of advisory services and development of organic policies . In this paper, we analyzed potential barriers for upscaling organic dairy farming in the Netherlands and making a comparison with organic dairy in Austria and Denmark, two EU countries that have shown a strong growth in organic dairy farming. Here we first discuss the findings from the TIS analysis and the diffusion of organic dairy, while in the second part we discuss the larger ramifications with respect to a sustainability transition in agriculture.
In TIS, the functioning of an innovation system is analyzed in relation to the transition phases of the innovation process . Typically, in the early phases of development, the functions guidance of the search, market formation, resource mobilization, and counteract resistance to change may hamper the further upscaling if they are not positively fulfilled. In the final acceleration phase, where the innovation diffuses into the socio-technical regime, barriers in market formation may hamper diffusion . Additionally, Schiller et al. identified various interdependencies amongst the TIS functions in agroecological food systems, and as such weaknesses of functions could cascade throughout the whole innovation system. Based on the barrier analysis, our results of Dutch organic dairy farming indicate that the functioning of guidance of the search, entrepreneurial activities, resource mobilization and market formation are hampered by various barriers that lead to an arrested diffusion of organic dairy farming. The lack of diffusion in the Netherlands can be explained first by a weak governmental support. The introduction of organic farming in the Netherlands in the 1990s occurred during a time of large policy reforms at the Ministry of Agriculture, triggered by a neoliberal political discourse that is still visible today . One example of this was a separation between policy making at the Ministry on one hand and implementation through privatized organizations on the other hand. This had impacts on agricultural research and education and led to a larger emphasis on technical solutions, export orientation and competitiveness of the agricultural sector . During the early 1990s organic farmers were strongly limited in their abilities due to the privatized networks of institutes and agribusiness and these hurdles were not solved by the Ministry .
As can be found in many newspaper articles published in the early 2000s, critics of organic farming saw the possible diffusion of organic agriculture as a step back. As such, the organic niche had to prove itself on a competitive market without much public support. The lack of explicit policy support in the Netherlands can also be illustrated by the many newspaper articles that dealt with environmental issues such as the long history of persistent manure problems in livestock farming, and this problem was reinforced after the abolishment of the milk quota in 2015. As a result the long-term negotiated derogation on manure application at the EU-level by the Dutch government came under political pressure. Because livestock density is lower on organic farms it adds less to the problem. Yet, governmental decisions to cut emissions were not alleviated for organic farmers. The governmental laissez-faire demand-side support towards organic farming and the strong belief that organic farming should grow by mainstream market mechanisms without niche protection was also reinforced by the incumbent regime. Repeatedly newspaper articles mentioned the resistance from the Dutch farmers association LTO to provide concrete measures to support organic farming. In contrast, Austria and Denmark applied supply-side support to organic dairy farming. In for example Denmark, explicit government support towards organic dairy can also be illustrated in relation to the use of pesticides by conventional farmers. Here, the Danish government found that this use was threatening the groundwater wells, and decided to tax pesticide use while tax revenues were used to further support organic farming . As such, the Danish government created a new level playing field between conventional and organic dairy farmers, making it more attractive for farmers to produce organic. Second, regarding resource mobilization the Dutch government only developed demand side policy instruments that mainly addressed knowledge development on market formation.
The Dutch government did not use CAP payments to support organic farming during transition and national transition subsidies were already phased out by 2002. Respondents indicated the high agricultural land prices in the Netherlands to be a barrier for transition. Indeed, agricultural land prices1 are about 6 times higher in the Netherlands compared to Denmark and Austria2 , and are the highest in Europe. Moreover, in the past organic farmers also indicated problems with additional labor force since organic farming is more labor intensive. Although from its onset the organic policy in Denmark was also demand side driven, it gradually shifted by 1995 towards a supply side approach to support farmers during and after the transition . Currently both in Denmark and Austria farmers are supported by transition subsidies and maintenance payments, using measure 11 of the European Agricultural Fund for Rural Development . Both respondents and literature suggest resource mobilization remains a critical issue to retain organic farmers, as many would shift back to conventional farming due to higher costs . Indeed, according to the annual report of Skal in 2019, 24% of the Dutch farmers that ceased organic farming indicated this for financial reasons . Third, the weak organic market formation in the Netherlands is probably related to the higher consumer prices. In a study on the repeated purchase of organic products, Marian et al. indeed found high prices to be an obstacle to consumers. However, high prices alone did not explain the low repeated purchase in their study. In conventional products, high prices are usually perceived as a quality cue . This is not always the case for organic products and consumers may perceive high prices as additional costs rather than quality improvement . To gain more repeated consumer purchase, Marian et al. suggested to further differentiate organic products through branding. To illustrate the effects of such a brand differentiation, the sustainable coffee market in the Netherlands can serve as an example. Here, certified coffee together reached a market share of 45% in 2010 .
The rapid market creation was the result of a competition between different brands on the market and the rivalry of multiple certification systems . Importantly here, retailers started to push the ‘less sustainable certification label’ as a standard brand in their collection. This also had positive effects on the purchase of more stringent coffee labels as discussions amongst coffee market leaders and retailers arose on the sustainability aspects, which led to an increased market share of all labels . This diversification approach is recently also applied to fresh domestic produce in the Netherlands. For example the market share of the new label “On the way to Planet proof” has grown 492% between 2018 and 2019 . The approach shows a strong growth of total market share of sustainable produced dairy to more than 15% in 2018, although the specific sustainability criteria of the various types of certification differ from organic.To conclude, our barrier analysis on the functioning of Dutch organic dairy farming innovation system thus indicates that the current development is more associated with the early phases of the transition than with a late transition stage . In contrast, in Denmark and Austria the diffusion of the organic market is in an acceleration phase, illustrated by exponential growth of organic purchase per capita since 2000 . It is suggested that in both Denmark and Austria mass distribution of organic dairy by large retail is the main driver of the diffusion and have led to smaller consumer price differences, bato bucket but to a much lesser extent in the Netherlands where large retail contributes to around 50% of total organic sales . In Austria and Denmark also strategic marketing campaigns were developed targeting regional origin , or health issues . Recently, agricultural transitions have been studied using the MultiLevel Perspective , drawing on earlier research conducted on the energy transition . However, agricultural sustainability transitions might be fundamentally different in comparison to the more ‘technology driven’ energy transition. First, farming is a land based activity where innovations such as organic practices are very often developed by regime actors who switch to alternative practices to challenge the incumbent sociotechnical regime, and not by the challenges of newcomers . This is referred in the transition literature as a ‘regime transformation’.
A regime transformation can occur through an accumulation of novelties in niche spaces that allow for radical practices to emerge , in which novelties are strongly related to so-called second order innovation changes in which pressure is put on the incumbent regime . Niches are the outcome of various processes, including knowledge development and sharing and social embedding that may lead to the certification of practices through standards, also to protect niches . To develop niches further, appropriate incentives to actors need to be in place, such as taxation systems or regulatory support . In addition, governments can facilitate niche development through financial support, a purchasing policy of certified products to increase market share, and active interventions at international declarations of intent with various market actors in the case of international commodities . Second, farming takes place in spatially diverse settings with very different farm structures resulting in different ‘transformation pathways’ . Various certification labels may be able to tackle these different settings through specialization and diversification of sustainability criteria . Indeed, motives and pathways towards sustainable farming may differ considerably between regions and farm types . In some areas organic farming might be a solution to the low competitiveness of family farms that produce under sub optimal conditions , in other regions, like in the Netherlands or Denmark, it may motivate farmers to escape the ‘productivist’ paradigm of conventional farming competing on world markets . Third, a sustainability transition in agriculture based on for example organic principles, is much less driven by technological improvements as they include mostly extensification of practices, leading to agricultural products that are always more expensive to produce than their conventional counterparts.