Growing a sustainable food system – the role of agriculture

Regulation

EU strategies such as the European Green Deal, Farm to Fork Strategy, and the Biodiversity Strategy for 2030 are shaping Nordic agricultural regulations for climate and environmental protection. Among Nordic nations, Denmark is a frontrunner in terms of political commitment to climate-focused agricultural reform. The Danish government, in collaboration with agricultural and environmental organisations, has established the Green Tripartite agreement. This agreement outlines measures to reduce GHG emissions and mitigate the impact of fertilizer and manure use on land- and marine ecosystems. 

Two key outcomes of the Green Tripartite are:

1. A significant change in land use: By 2030, farmers must cease draining and cultivating 140,000 hectares of peat soils. By 2045, 250,000 hectares must be reforested.
    
2. Implementation of a carbon tax on animal husbandry by 2030. 

Environmental regulation aimed at reducing the impact on ecosystems will require farmers to decrease input in crop production, potentially leading to lower crop yields. In addition, the EU Regulation on Deforestation-free Products may affect Nordic farmers who import a significant amount of soy as protein-rich feed for livestock. The use of certified deforestation-free soy is to a large degree already implemented in the Nordics. It would be fair to assume a price premium for certified soy, with increasing prices. 

Technology

Technology plays a crucial role in reducing emissions from agriculture. Farmers can decrease their use of fossil fuels by adopting green electricity or improving energy efficiency. However, this alone is not enough to meet political climate targets. The majority of GHG emissions in agriculture are related to biological processes, such as cows' digestion, manure handling and storing, fertilizer use and cultivation of peat soils. (See Greenhouse gas emissions from agriculture in Europe | European Environment Agency's home page.)

Technological solutions can address various emission sources:

1. Manure handling: Improved technologies in barns and storage facilities can reduce emissions.
    
2. Dairy farming: Feed additives can decrease emissions from cows’ digestion.
    
3. Fertilizer use: Additives can reduce emissions from fertilizer application.
    
4. Precision agriculture: GPS-guided application of fertilizers and pesticides ensures efficient use of inputs.
    
5. Biogas production: Converting manure to energy in biogas plants reduces methane emissions and fossil fuel usage in other sectors.
    
6. Biochar: This emerging technology can store carbon in soil and improve soil quality (see box below).

GHG emissions are generally higher from animal-based foods compared to plant-based foods (see Concito’s The big climate database). Consequently, technologies for plant-based alternatives and precision fermentation (see box below) are being developed to replace animal products and thereby reduce greenhouse gas emissions. Currently, plant-based dairy alternatives are the most successful, but other products are in development.

Consumers and the food Industry

Over the next decade, EU consumers are expected to continue shifting from red meat (beef) to white meat (poultry), with an overall decline in total meat consumption. However, global meat consumption is projected to increase, driven by population growth and rising affluence in Asia and Africa. This trend will support the global market for animal food products. A change in eating habits has barriers and will not happen overnight. A change requires new shopping and cooking routines, a shift in familiar dishes and social acceptance 

The Nordic food industry maintains a strong position in the global market for both animal and crop-based products. While this is expected to continue, we may see a reduction in total agricultural production due to:

1. A shift towards more extensive and environmentally friendly farming systems
    
2. Increased food production in Asia and Africa

(Sources: EU agricultural outlook & OECD-FAO Agricultural Outlook)

The food industry and retail sector are increasingly setting requirements for their supply chains, particularly regarding GHG emissions from farmers. These requirements are often linked to payment schemes designed to motivate farmers to reduce emissions. However, differentiating products based on GHG emission reductions in the value chain is complex and must be approached carefully to avoid accusations of greenwashing.

Climate change and weather events

The outlook for climate change in the Nordic region includes increasing temperatures, longer growing seasons and more frequent and severe weather events. These changes are likely to increase uncertainty in agricultural production, potentially leading to more volatile farm incomes from year to year. 

The financial impact of global climate change and weather events on Nordic agriculture is complex due to the interconnected nature of the global food market. For example, extreme weather in non-Nordic regions may reduce global food supply, potentially leading to higher prices for Nordic farmers. Conversely, Nordic farmers may experience years of significantly lower crop yields compared to average years due to local weather extremes. 

The chart below illustrates this variability, highlighting two recent examples: 2018, when a severe drought affected crop production in the Nordic region, and 2023, when extremely wet conditions affected agricultural output.

Chart 1 (Source: Nordic Statistics Crop yields)

Geopolitics

The geopolitical situation significantly influences agriculture in various ways: 

1. Trade barriers: These can reduce import and export of agricultural commodities, affecting global food supply chains.
    
2. Shift towards localisation: Geopolitical concerns are prompting governments and consumers to favour local food products and supply chains over globalised food production. This shift can lead to increased food prices.
    
3. Energy and input costs: Geopolitical events can cause fluctuations in energy prices, which in turn affect the cost of agricultural inputs like fertilizer. For example, the war in Ukraine led to increased energy prices, subsequently raising fertilizer and consumer food prices.
    
4. Supply shocks: Conflicts can disrupt the export of key agricultural products from affected regions. The Ukraine conflict, for instance, created a supply shock for wheat and sunflower oil due to hindered exports. 

Current situation (2025): We are observing a rise in food prices, although the food inflation rate is not as high as in 2022 and 2023. (See this Food Inflation chart from Trading Economics.)