Technological breakthroughs, increased financial aid and amplified prioritization of goods produced locally are key drivers for agricultural growth in Switzerland. According to a report by the Organization for Economic Cooperation and Development, Swiss farmers are the most supported farmers in the world. Aside from their world-famous cheese, the Swiss have established another niche—that of organic farming and are forerunners in this field.
The Federal Constitution guarantees support for the agricultural sector owing to the immensely beneficial role that it plays in the economy of Switzerland. Agriculture not only plays the role of producing food but also ensures that the population of mountain areas is preoccupied and employed. The total agricultural area available amounts to 1.1 million hectares. The agricultural sector provides more than 50% of local plant products and almost all animal products. The livestock sub-sector is the main supplier of basic products for domestic consumption and export.
Predominant agricultural produce in Switzerland includes wheat and barley, root vegetables, sugar beet, and potatoes, as well as fruits, like apples and grapes (amounting to about 124 million liters of wine annually). Dairy products, such as milk and globally acclaimed Swiss cheeses, make up a significant part of agricultural income. Milk production and livestock income provide more than two-thirds of the total agriculture value. Milk, butter, cheese, and chocolate are the top products that keep this sector running profitably in Switzerland.
Subsidies, part of Swiss policies on agriculture
Subsidies extended to farmers have boosted the growth of the agricultural sector in Switzerland. According to a report made by the Organization for Economic Cooperation and Development, 56% of Swiss agricultural income comes from state subsidies.
In order to protect entrepreneurs who want to invest in Swiss agriculture, but also to ensure domestic needs, the federal government has developed a system of protection in this area, restricting import products, particularly dairy products and cereals.
The high tariffs for all imports and tariff quotas, limiting the number of goods imported goods externally, apply to most products manufactured internally. This provides many benefits to the country.
Manufacturers, particularly those in the alpine areas, have always received support from governmental authorities. Supporting the milk price is just one of the protectionist measures that make the product price remain significantly higher than in EU markets.
Swiss protectionism on agricultural products
Since 1993, Switzerland has reformed the agricultural sector due to the need to reduce the budget costs, as well as pressure from consumers and trade partners. Trade liberalization agreements have forced Switzerland to eliminate harsh import conditions, reduce export subsidies, revise agricultural tariffs, and reduce support for domestic producers. Consequently, the Swiss are now in synchrony with EU regulations in the field.
The process of reforming agricultural policy began with a downturn in dairy prices. Reform culminated in 1998 when Parliament approved a new package of agricultural policy measures. The package ensured continual drops in prices and conditioning of direct payments to agricultural holdings by the use of production methods, encouraged by organic farming.
Organic farming in Switzerland
In Switzerland, the main certifiers of organic products are bio.ispecta (founded in 1998) and BioTest Agro. Today, Bio.inspecta inspects and certifies more than 80% of Swiss farms, processors, and traders.
Swiss legislation requires agricultural players to abide by the minimum environmental standards to receive agricultural subsidies. The standards include:
crop-rotation with at least four crops;
implementing measures to combat soil erosion;
nutritional balance of plants;
Furthermore, Swiss farmers can choose from the various special programs, such as the land protection program with live hedges and the animal welfare program.
Several factors have led to the growth of organic farms. These include:
consumer concerns about less healthy food;
the government's agro-environmental policy, which supports organic farms with annual subsidies;
the availability of organic food in two of Switzerland's largest supermarkets;
the collaboration between Bio Suisse and FiBL, which provides research data and practical advice to farmers
All Swiss cantons offer an introductory course for farmers who want to convert to organic farming. Additionally, state advisory services provide technical advice to organic farmers in each canton. The consultancy services focus on technically assured support during the conversion period and on technical assistance in granting subsidies.
If you want to invest in this sector in Switzerland or to find out how the Swiss company incorporation procedure works, get in touch with us. Our consultants will provide you with all the information you need.