It was a standoff in the province of Friesland in the Netherlands on the evening of July 5. Police fired gunshots at a band of farmers who were reportedly driving tractors into officers and their vehicles to get past a blockade and onto the highway.
A tractor was hit by the gunfire, and three arrests were made. This was just one heated event among countless during a campaign of tens of thousands of protesters that has now become an international showdown between farmers and environmental regulators with global and potentially historic implications.
The Dutch farmer protests started with an initial bout of demonstrations in the Netherlands on October 1, 2019 in response to new carbon emissions reduction legislation that disproportionately impacted farmers.
Then, on June 10 of this year, the Dutch government unveiled more extreme measures targeted directly at the agricultural industry. “Farms next to nature reserves must cut nitrogen output by 70%,” the Economist reported. “About 30% of the country’s cows and pigs will have to go, along with a big share of cattle and dairy farms.”
In response to this new legislation, about 40,000 Dutch farmers protested outside government buildings and the homes of ministers and drove hundreds of tractors to blockade food distribution centers including warehouses and grocery stores. Throughout July the movement spread to Germany, Italy, Spain, Poland, and other nations, each with farmers taking to the streets in repudiation of their governments’ measures to reduce the scale and output of the agricultural industry.
The Industrial Farming Tradeoff
So what exactly is each side of this dispute fighting for?
The Netherlands, being the world’s second largest exporter of agricultural goods after the United States, is among Earth’s most productive farming centers but is also therefore one of the largest polluters.
“The Netherlands has become an agricultural giant by showing what the future of farming could look like,” according to a National Geographic article titled “This Tiny Country Feeds the World.” But as the Economist reports, “The Netherlands is the biggest nitrogen polluter in the EU.”
The farm animals that will likely soon be regulated out of existence produce manure which mixes with urine and releases the nitrogen compound ammonia. This can harm wildlife and disrupt sensitive ecosystems when it leaks into nearby rivers and lakes.
But there are simply no other known methods of producing such bountiful agricultural output with the resources available to the Dutch farmers. So this is a tradeoff between protecting sensitive ecosystems on the one hand, and on the other hand maintaining a thriving Dutch agricultural industry that is able to support its workers while providing the market with maximally affordable products.
“We have to move away from the low-cost model of food production,” said MP Tjeerd de Groot of the Democrats 66 party, which is part of the Dutch coalition government. “It’s time to restore nature, climate and air, and in some areas that may mean there is no more place for intensive farmers there.”
And according to DutchNews.nl, “Dutch agriculture has to become a lot less efficient or the environment will suffer even more, say agro-environmental scientists.”
The Introduction of ESG
If this regulatory crackdown on Dutch farmers were an isolated and unusual event, the effects on food availability, food prices, and farmer wages would be bad enough (see the next section). But given the political circumstances currently faced by farmers and those in other industries that are being heavily blamed for environmental destruction, a 30 percent reduction in cows and pigs is likely to be just the beginning.
The deliberate move away from efficient and low-cost farming is in line with a broader global initiative to minimize and reorganize most industrial activity. And that initiative is known as ESG.
As Dan Sanchez has delineated, “environmental, social and corporate governance” (ESG) policies have been around in their codified form since 2004 when top financial institutions were tasked by the United Nations with developing guidelines for reforming the financial sector through “environmental, social and corporate governance.” The evident goal was to skew the global economy’s capital investment toward firms willing to fall in line with the environmental and social values of the powers that be.
Since its invention in 2004, and especially in just the last few years, ESG has become a mainstream form of increasingly-state-backed governance that has thoroughly realigned incentives throughout the economy. In December 2021, Reuters named 2021 “the year of ESG investing,” and by April 2022, Bloomberg reported that, “Few corners of the financial universe have been surrounded by as much marketing froth as ESG, which by some estimates represents more than $40 trillion in assets.”
ESG funds by definition prioritize the moral values of their controllers rather than focusing purely on profitability. And many of those political aims, such as race and sex quotas on corporate boards and the mass curtailing of the energy industry, are at odds with maximizing production and minimizing costs for investors, workers, and customers alike. This might explain why ESG funds are underperforming badly.
And such will be the fate of the Dutch farming industry as investors and entrepreneurs incorporate the fact that efficient industrial agriculture has fallen out of favor among those who wield the powers of political reward and punishment. “For my son, where can he find a living and know what will be allowed in 10 years?” asked Erik Stegink, a protesting pig farmer in the Dutch village of Bathmen.
The Rise of Food Insecurity
Such drastic hampering of Holland’s farming industry, both directly and indirectly through the hampering of connected industries such as energy, will put thousands of farmers out of work, reduce food availability, and increase food prices internationally at a time when food insecurity is on the rise.
According to a statement that the White House released in June, “Many of our neighbors rely significantly on imports for food and are particularly vulnerable to rising food costs. The [Western Hemisphere] is experiencing the highest spike in food prices in a generation.”
The publication specifies that between 2014 and 2019 the number of people facing severe food insecurity nearly doubled to more than 90 million in Latin America and the Caribbean. About a third of Venezuelians are food-insecure, while 50 percent of their children under five are showing signs of malnutrition. The number of people facing food insecurity in Honduras nearly doubled last year.
The ongoing food crisis in Sri Lanka is a particularly gruesome display of just how tragic the results of heavy farming regulation can be. About 90 percent of Sri Lankan families are skipping meals due to widespread food shortages and food price inflation of roughly 60 percent.
“It’s a scary turnaround for a middle-income country that once faced no problems feeding a population of 22 million people,” Bloomberg reports. And why did it happen? There are many reasons, but as Bloomberg explains, a major one is that, “In April 2021, the government, led by President Gotabaya Rajapaksa, banned synthetic fertilizer imports to push the country toward organic farming.”
The Dutch economy and most Dutch farmers have deep enough coffers that they probably won’t suffer (for now) from the drastic food insecurity that many poorer countries are experiencing. They will have the luxury of cutting back their quality of life and their children’s futures in other ways instead, as will most of the Americans whose grocery store prices will rise as a result of the Dutch agricultural exports becoming scarcer. But manufactured scarcity and price increases will likely mean immediate starvation for many at the margins in places like Sri Lanka and Latin America.
The Logical Conclusions
As some of the farmers have pointed out, there is a case to be made that advancing agricultural progress rather than obstructing it would ultimately have better environmental impacts, not worse. This is because innovation rather than impact reduction has often proven the clearest path to sustainability. And innovation requires that there is capital to invest in new processes and experimentation.
“Cars were very polluting but they had a chance to make cars less polluting with innovation. That is what we want,” Dutch farmers party founder MP Caroline van der Plas explained. And improvements to automobile sustainability are exemplary of the rule, not the exception.
The history of industrial wealth creation and its environmental impacts shows consistently that new wealth tends to improve people’s ability to adapt to a changing environment at least as much as the corresponding environmental changes are problematic for human welfare. The economic datasets known as the Kuznets curves suggest that, at least in modern times, starving people who are focused on the short-term concerns of surviving another month actually tend to damage their environment more than relatively wealthy people who can afford to invest in their long-term wellbeing.
So how is one to decide whether agricultural progress is worth its cost in ecological disruption? The answer becomes clearer when you take the two opposing goals to their logical conclusions.
Agriculture will always disrupt ecosystems and cause pollution, but if it is allowed to flourish it can also make up for that by continuing to improve through innovation as it already has been for centuries, and by making humankind wealthy enough to endure an ever-expanding range of potential environmental conditions, which will eventually be necessary anyway.
By contrast, there is no good ending to the story of limiting and reducing the ability of the farming industry, possibly humans’ most important industry, to produce food. The less food civilization has, the less possible it will be to adapt to changing climate conditions. And since agriculture will always affect its environment, the goal of minimizing the environmental impact of agriculture and other industrial activities is one that will never be complete until everyone starves.
Ecological change is a constant of biological reality—but humans remaining well fed is certainly not. And that hasn’t changed in modern times, as is demonstrated by the 20th century history of mass starvations caused by central planning in places like China, Cambodia, and the Soviet Union.
The Nobel Prize winning economist Friedrich Hayek once wrote that, “The more the state ‘plans’ the more difficult planning becomes for the individual.” Dutch statists preventing farmers from growing food is a good example of this. It will make planning their budgets, careers, and livelihoods more difficult for the farmers who are being regulated, but it will likely make such planning more difficult for individuals all over the world as well.