Agriculture in Austria
Encyclopedia
The share of agriculture in Austria in the Austrian economy declined steadily after World War II
, agriculture
continues to represent an important element of the economy because of its social and political significance. The Chamber of Agriculture remains on an equal level with the chambers of commerce and labor, although its members produce only a fraction of the GDP
that industrial and commercial workers produce.
The Government Role
, as in most other Western countries, the government has played an important role in agriculture since the end of War World II. The government has concentrated on mitigating social, regional, economic, and even environmental consequences of the sector's decline, as well as delaying the decline itself.
Agricultural policy
has been carried out with different objectives and with different laws and policies depending on the times. In the early postwar years, the most important objectives were survival and self-sufficiency
. As a poor country, Austria needed to be able to feed itself if its population was to survive.
By the 1950s, however, the policy was changing to a more global perspective, while keeping intact the traditional form economy. The government wanted to protect domestic production, stabilize agricultural markets, protect farmers' incomes, and improve the sector's ability to compete in Austria and abroad. Increasingly, the government began to believe in the importance of maintaining rural society as an objective in its own right, for social reasons, and to protect the environment and encourage tourism
. Because of these aims, agricultural policy, more than any other economic policy
, reflects a mixture of economic and noneconomic objectives and concerns. The principal aim, however, is to preserve the existing number of farm
s as much as possible.
Within the structure of the social partnership
, various organizations work to maintain farm incomes and thus farm existence, among them the Grain Board, the Dairy Board, and the Livestock and Meat Commission. These organizations set basic support prices, taking into account domestic costs and local supply and demand
, with only weak linkages to world market price
s.
The boards and commission use a variety of measures to achieve their broad purposes. Among these measures are import restrictions, such as border control
s and entry controls—some of which may be bilaterally negotiated—and variable import duties. If import restrictions are not sufficient to maintain prices because of excess production, the surplus
is exported at subsidized prices (with the subsidies usually coming from federal or provincial authorities). Authorities also apply production controls, such as sales quotas or limits, on the size and density of livestock
holdings. Quotas exist for many different products, with the quotas usually fixed on the basis of past production. Price and quality controls and limits also exist, especially with respect to different prices for different grades of wheat
or milk
. The government can also pay direct income supplements, but these payments are generally restricted to certain mountain farming zones and other equally disadvantaged areas. Subsidies are mainly paid by the federal government
but may in some instances be paid by provincial governments.
Because of the complex system of price supports and market access
limitations, the exact share of subsidy costs to the government and to consumers is virtually impossible to calculate. Experts estimate that the total cost to the federal and other governments for agricultural and forestry
support during the late 1980s was approximately S16 billion a year, a level that would have been roughly at the same level as that of many other Organisation for Economic Co-operation and Development
(OECD) governments but slightly higher than the EC average.
The economic research institute Österreichisches Institut für Wirtschaftsforschung (WIFO) estimated after a major 1989 study that about 71 percent of the cost of agricultural support was borne by consumers in the form of higher prices, with the taxpayers carrying the remaining 29 percent through such different programs as direct and indirect federal and provincial subsidies or various kinds of market regulation.
Austria's decision to enter the EU
will have certain effects on its agriculture and forestry. Support prices in Austria are higher than those set under the EU's Common Agricultural Policy
(CAP), although the two systems are in many ways similar. Austrian government-borne subsidy costs are at about the same level as those in the EU, but consumer-borne subsidy costs are higher, so food prices in Austria average about 30 percent higher than those in the EU. Full integration into the EU will thus compel a number of adjustments in Austria. These adjustments may be even more severe if they become effective at the same time that some East European countries with lower production costs enter the EU. Much depends, of course, on any reforms that may take place in the CAP.
and Vorarlberg
) had more than 10 percent of their populations involved in farming. This contrasted markedly to the situation in 1934, when all but those same two provinces had more than 30 percent of their populations working in agriculture. Over this period of two generations, the decline in the Austrian farm population was as fast as any in the Western world.
Of Austria's total area of almost 84,000 square kilometers, about 67,000 square kilometers are used for farming and forestry. Roughly half of that area is forest
, and the remainder is arable land
and pasture
.
Agriculture and forestry accounted for about 280,000 enterprises in 1986, with the average holding being about twentythree hectares. There were about 4,500 corporate farms. Beyond those farms, however, only a third of all farmers were full-time farmers or farming companies. Over half the farming enterprises were smaller than ten hectares; nearly 40 percent were smaller than five hectares. Just as the number of farmers has long been in decline, so also has been the number of farms.
Family labor predominates, especially in mountainous areas and on smaller farms. Only a third of all farm and forestry enterprises were classified as full-time occupations in 1986. A full half of these enterprises are spare-time, that is, less than half of household labor is devoted to farming or forestry. The remainder are part-time. Farms up to ten hectares are more often tended by part-time and spare-time farmers rather than by fulltime farmers. For most farm owners and workers, nonfarm income is as important, if not more important, than farm income.
Despite the decline in the number of farmers and agriculture's share of GDP since 1960, agricultural output has risen. As of the early 1990s, Austria was self-sufficient in all cereal
s and milk products as well as in red meat
. This gain was achieved because of the considerable gains in agricultural labor productivity
.
The value of agricultural and forestry output is heavily concentrated in field crops, meat
, and dairy product
s, with most of it coming from animal husbandry
. Because large parts of Austria are mountainous, only the lowland areas of eastern Austria and some smaller flat portions of western and northern Austria are suitable for crop production and more intensive forms of animal husbandry. The remainder of the land is used for forestry and less intensive animal husbandry, most of which takes advantage of mountain pasturage.
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
continues to represent an important element of the economy because of its social and political significance. The Chamber of Agriculture remains on an equal level with the chambers of commerce and labor, although its members produce only a fraction of the GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
that industrial and commercial workers produce.
The Government Role
Government role
In AustriaAustria
Austria , officially the Republic of Austria , is a landlocked country of roughly 8.4 million people in Central Europe. It is bordered by the Czech Republic and Germany to the north, Slovakia and Hungary to the east, Slovenia and Italy to the south, and Switzerland and Liechtenstein to the...
, as in most other Western countries, the government has played an important role in agriculture since the end of War World II. The government has concentrated on mitigating social, regional, economic, and even environmental consequences of the sector's decline, as well as delaying the decline itself.
Agricultural policy
Agricultural policy
Agricultural policy describes a set of laws relating to domestic agriculture and imports of foreign agricultural products. Governments usually implement agricultural policies with the goal of achieving a specific outcome in the domestic agricultural product markets...
has been carried out with different objectives and with different laws and policies depending on the times. In the early postwar years, the most important objectives were survival and self-sufficiency
Self-sufficiency
Self-sufficiency refers to the state of not requiring any outside aid, support, or interaction, for survival; it is therefore a type of personal or collective autonomy...
. As a poor country, Austria needed to be able to feed itself if its population was to survive.
By the 1950s, however, the policy was changing to a more global perspective, while keeping intact the traditional form economy. The government wanted to protect domestic production, stabilize agricultural markets, protect farmers' incomes, and improve the sector's ability to compete in Austria and abroad. Increasingly, the government began to believe in the importance of maintaining rural society as an objective in its own right, for social reasons, and to protect the environment and encourage tourism
Tourism
Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...
. Because of these aims, agricultural policy, more than any other economic policy
Economic policy
Economic policy refers to the actions that governments take in the economic field. It covers the systems for setting interest rates and government budget as well as the labor market, national ownership, and many other areas of government interventions into the economy.Such policies are often...
, reflects a mixture of economic and noneconomic objectives and concerns. The principal aim, however, is to preserve the existing number of farm
Farm
A farm is an area of land, or, for aquaculture, lake, river or sea, including various structures, devoted primarily to the practice of producing and managing food , fibres and, increasingly, fuel. It is the basic production facility in food production. Farms may be owned and operated by a single...
s as much as possible.
Within the structure of the social partnership
Social Partnership
Social partnership is the term used for the tripartite, triennial national pay agreements reached in Ireland.The process was initiated in 1987, following a period of high inflation and weak economic growth which led to increased emigration and unsustainable government borrowing and national debt...
, various organizations work to maintain farm incomes and thus farm existence, among them the Grain Board, the Dairy Board, and the Livestock and Meat Commission. These organizations set basic support prices, taking into account domestic costs and local supply and demand
Supply and demand
Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...
, with only weak linkages to world market price
Market price
In economics, market price is the economic price for which a good or service is offered in the marketplace. It is of interest mainly in the study of microeconomics...
s.
The boards and commission use a variety of measures to achieve their broad purposes. Among these measures are import restrictions, such as border control
Border control
Border controls are measures used by a country to monitor or regulate its borders.The control of the flow of many people, animals and goods across a border may be controlled by government Customs services. Security is enforced by various kinds of Border Guards and Coast Guards...
s and entry controls—some of which may be bilaterally negotiated—and variable import duties. If import restrictions are not sufficient to maintain prices because of excess production, the surplus
Surplus
Surplus means when there is more supply than demand, as in extra resources.Surplus may refer to: dumd* "The Surplus", an episode of The Office* Surplus: Terrorized into Being Consumers, a documentary film...
is exported at subsidized prices (with the subsidies usually coming from federal or provincial authorities). Authorities also apply production controls, such as sales quotas or limits, on the size and density of livestock
Livestock
Livestock refers to one or more domesticated animals raised in an agricultural setting to produce commodities such as food, fiber and labor. The term "livestock" as used in this article does not include poultry or farmed fish; however the inclusion of these, especially poultry, within the meaning...
holdings. Quotas exist for many different products, with the quotas usually fixed on the basis of past production. Price and quality controls and limits also exist, especially with respect to different prices for different grades of wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
or milk
Milk
Milk is a white liquid produced by the mammary glands of mammals. It is the primary source of nutrition for young mammals before they are able to digest other types of food. Early-lactation milk contains colostrum, which carries the mother's antibodies to the baby and can reduce the risk of many...
. The government can also pay direct income supplements, but these payments are generally restricted to certain mountain farming zones and other equally disadvantaged areas. Subsidies are mainly paid by the federal government
Federal government
The federal government is the common government of a federation. The structure of federal governments varies from institution to institution. Based on a broad definition of a basic federal political system, there are two or more levels of government that exist within an established territory and...
but may in some instances be paid by provincial governments.
Because of the complex system of price supports and market access
Market access
Market access for goods in the WTO means the conditions, tariff and non-tariff measures, agreed by members for the entry of specific goods into their markets. Tariff commitments for goods are set out in each member's schedules of concessions on goods. The schedules represent commitments not to...
limitations, the exact share of subsidy costs to the government and to consumers is virtually impossible to calculate. Experts estimate that the total cost to the federal and other governments for agricultural and forestry
Forestry
Forestry is the interdisciplinary profession embracing the science, art, and craft of creating, managing, using, and conserving forests and associated resources in a sustainable manner to meet desired goals, needs, and values for human benefit. Forestry is practiced in plantations and natural stands...
support during the late 1980s was approximately S16 billion a year, a level that would have been roughly at the same level as that of many other Organisation for Economic Co-operation and Development
Organisation for Economic Co-operation and Development
The Organisation for Economic Co-operation and Development is an international economic organisation of 34 countries founded in 1961 to stimulate economic progress and world trade...
(OECD) governments but slightly higher than the EC average.
The economic research institute Österreichisches Institut für Wirtschaftsforschung (WIFO) estimated after a major 1989 study that about 71 percent of the cost of agricultural support was borne by consumers in the form of higher prices, with the taxpayers carrying the remaining 29 percent through such different programs as direct and indirect federal and provincial subsidies or various kinds of market regulation.
Austria's decision to enter the EU
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
will have certain effects on its agriculture and forestry. Support prices in Austria are higher than those set under the EU's Common Agricultural Policy
Common Agricultural Policy
The Common Agricultural Policy is a system of European Union agricultural subsidies and programmes. It represents 48% of the EU's budget, €49.8 billion in 2006 ....
(CAP), although the two systems are in many ways similar. Austrian government-borne subsidy costs are at about the same level as those in the EU, but consumer-borne subsidy costs are higher, so food prices in Austria average about 30 percent higher than those in the EU. Full integration into the EU will thus compel a number of adjustments in Austria. These adjustments may be even more severe if they become effective at the same time that some East European countries with lower production costs enter the EU. Much depends, of course, on any reforms that may take place in the CAP.
Structure of Agriculture
Despite the government's efforts to sustain agriculture, by 1991 not one province had as much as 10 percent of the population involved in agriculture and forestry. At the beginning of the 1970s, all but two provinces (ViennaVienna
Vienna is the capital and largest city of the Republic of Austria and one of the nine states of Austria. Vienna is Austria's primary city, with a population of about 1.723 million , and is by far the largest city in Austria, as well as its cultural, economic, and political centre...
and Vorarlberg
Vorarlberg
Vorarlberg is the westernmost federal-state of Austria. Although it is the second smallest in terms of area and population , it borders three countries: Germany , Switzerland and Liechtenstein...
) had more than 10 percent of their populations involved in farming. This contrasted markedly to the situation in 1934, when all but those same two provinces had more than 30 percent of their populations working in agriculture. Over this period of two generations, the decline in the Austrian farm population was as fast as any in the Western world.
Of Austria's total area of almost 84,000 square kilometers, about 67,000 square kilometers are used for farming and forestry. Roughly half of that area is forest
Forest
A forest, also referred to as a wood or the woods, is an area with a high density of trees. As with cities, depending where you are in the world, what is considered a forest may vary significantly in size and have various classification according to how and what of the forest is composed...
, and the remainder is arable land
Arable land
In geography and agriculture, arable land is land that can be used for growing crops. It includes all land under temporary crops , temporary meadows for mowing or pasture, land under market and kitchen gardens and land temporarily fallow...
and pasture
Pasture
Pasture is land used for grazing. Pasture lands in the narrow sense are enclosed tracts of farmland, grazed by domesticated livestock, such as horses, cattle, sheep or swine. The vegetation of tended pasture, forage, consists mainly of grasses, with an interspersion of legumes and other forbs...
.
Agriculture and forestry accounted for about 280,000 enterprises in 1986, with the average holding being about twentythree hectares. There were about 4,500 corporate farms. Beyond those farms, however, only a third of all farmers were full-time farmers or farming companies. Over half the farming enterprises were smaller than ten hectares; nearly 40 percent were smaller than five hectares. Just as the number of farmers has long been in decline, so also has been the number of farms.
Family labor predominates, especially in mountainous areas and on smaller farms. Only a third of all farm and forestry enterprises were classified as full-time occupations in 1986. A full half of these enterprises are spare-time, that is, less than half of household labor is devoted to farming or forestry. The remainder are part-time. Farms up to ten hectares are more often tended by part-time and spare-time farmers rather than by fulltime farmers. For most farm owners and workers, nonfarm income is as important, if not more important, than farm income.
Despite the decline in the number of farmers and agriculture's share of GDP since 1960, agricultural output has risen. As of the early 1990s, Austria was self-sufficient in all cereal
Cereal
Cereals are grasses cultivated for the edible components of their grain , composed of the endosperm, germ, and bran...
s and milk products as well as in red meat
Red meat
Red meat in traditional culinary terminology is meat which is red when raw and not white when cooked. In the nutritional sciences, red meat includes all mammal meat. Red meat includes the meat of most adult mammals and some fowl ....
. This gain was achieved because of the considerable gains in agricultural labor productivity
Labor productivity
Workforce productivity is the amount of goods and services that a worker produces in a given amount of time. It is one of several types of productivity that economists measure. Workforce productivity can be measured for a firm, a process, an industry, or a country...
.
The value of agricultural and forestry output is heavily concentrated in field crops, meat
Meat
Meat is animal flesh that is used as food. Most often, this means the skeletal muscle and associated fat and other tissues, but it may also describe other edible tissues such as organs and offal...
, and dairy product
Dairy product
Dairy products are generally defined as foods produced from cow's or domestic buffalo's milk. They are usually high-energy-yielding food products. A production plant for such processing is called a dairy or a dairy factory. Raw milk for processing comes mainly from cows, and, to a lesser extent,...
s, with most of it coming from animal husbandry
Animal husbandry
Animal husbandry is the agricultural practice of breeding and raising livestock.- History :Animal husbandry has been practiced for thousands of years, since the first domestication of animals....
. Because large parts of Austria are mountainous, only the lowland areas of eastern Austria and some smaller flat portions of western and northern Austria are suitable for crop production and more intensive forms of animal husbandry. The remainder of the land is used for forestry and less intensive animal husbandry, most of which takes advantage of mountain pasturage.