This publication is the latest in a series of OECD reports, Environmental Indicators for Agriculture, first published in 1997 (OECD, 1997; 1999; 2001). A key objective for OECD work on agriculture and the environment is to use agri-environmental indicators (AEIs) specifically as a tool to assist policy makers in the design, monitoring and evaluation of policies.

OECD countries are major world food suppliers. While projections (2007-16) indicate that the growth in farm production will be lower in OECD countries than for developing countries, the OECD’s role as a leading world food exporter is projected to continue. The projected increase in OECD cereal, meat and milk production is likely to mainly originate in Australia, Canada, Mexico, New Zealand, Turkey and the United States, while production in the EU15 is projected to grow at a rate slower than in the 1990s, and in Japan the farming sector could further contract.

This chapter reviews the progress of OECD work on agri-environmental indicators (AEIs), especially in a series of OECD Expert Meetings, held over the period 2001-04 (Box 2.1, Background and Scope of the Report, Section II). The indicators described in this chapter are those for which either methodologies and/or data sets are not yet at a stage that allows for representative comparative OECD country coverage, as is the case for those in Chapter 1.

This chapter provides an analysis of the trends of environmental conditions related to agriculture for each of the 30 OECD member countries since 1990, including an overview of the European Union. Valuable input for each country section was provided by member countries, in addition to other sources noted below.

Growth in agricultural production is among the most rapid across the OECD, with the volume of production growing by 23% between 1990-92 to 2000-04 (Figure 3.1.2). However, partly due to deteriorating terms of trade, agriculture’s role in the economy has remained stable over the past 10 years with regard to its contribution to GDP. Agriculture is a vital sector in the Australian economy contributing about 4% to GDP, 4% to employment and accounting for around 25% of merchandise exports (2004) (Figure 3.1.1). Around two-thirds of agricultural production is exported. Australia exports 95% of wool produced, 65-75% of beef, sugar and wheat and 50-60% of sheep meat, wine and dairy [1].

Agriculture’s role in the economy is small and declining, currently accounting for under 2% of GDP and about 4% of employment [1, 2] (Figure 3.2.1). Agricultural productivity has been increasing with a 10% rise in the volume of production from 1990-92 to 2002-04 while the area farmed fell by 3% (Figure 3.2.2). Although there has been some expansion in arable output, much of the increase in production has occurred through growth in livestock output, especially output from milk production. The livestock sector accounts for over 55% of the total value of agricultural output [1, 2].

Agriculture’s contribution to the economy declined over the 1990s, and by 2004 accounted for less than 1% of GDP and represented about 2% of employment [1] (Figure 3.3.1). The overall volume of farm production decreased by around 1% over the period 1990-92 to 2002-04 (Figure 3.3.2), and since 2000 production has decreased most rapidly for livestock but less so for crops. While Walloon accounts for 55% of farmland it generates only half the agricultural value added of Flanders where two-thirds of the intensive farming holdings are situated [1].

Growth in agricultural production was more than double the OECD average between 1990-92 and 2002-04, owing in part to recent strong growth in production and sales in the pig and horticultural sectors (Figure 3.4.2). Farming’s contribution to the economy accounts for around 2% of employment and 1% of GDP, while the whole agriculture and agri-food system accounts for approximately 13% of employment and 8% of GDP [1] (Figure 3.4.1). Canada is a major world exporter of cereals, oilseeds, animals and red meats (around 3% of world farm export value), with nearly 25% of production exported in 2004 [1, 2].

The long term contraction of the agricultural sector continued over the period 1990 to 2004 [1]. The share of agriculture in GDP declined steadily from 7% in 1990 to just over 4% by 2004, while over the same period farming’s share in total employment fell from 10% to 3% [1, 2, 3, 4, 5] (Figure 3.5.1). These changes are reflected in the reduction of 10% in the volume of agricultural production (1993-95-2002-04), one of the largest decreases across OECD countries (Figure 3.5.2). While livestock numbers declined, continuing a longer term trend since 1990, over the more recent period from 2000 to 2005 arable crop production has risen slightly, especially for cereals, oilseeds and sugar beet [6].

The role of primary agriculture in the economy is small and declining, accounting for 2% of GDP and 3% of employment in 2004. About two-thirds of farm production is exported, of which over 60% goes to EU countries with agricultural commodities accounting for 11% of the total value of exports in 2004 [1, 2] (Figure 3.6.1). Over the period 1990-92 to 2002-04 the intensity of farming has diminished with the area farmed declining by nearly 5% and even larger reductions in purchased farm input use: inorganic nitrogen (–47%) and phosphorus (–61%) fertilisers; pesticides (–37%, 1990-92 to 2001-03); and on-farm direct energy consumption (– 24%) (Figure 3.6.2).

Primary agriculture’s contribution to the economy is small and declining, accounting for 1.2% of GDP and 3.9% of employment in 2004 [1] (Figure 3.7.1). Agricultural productivity improved at around 1% annually between 1992 and 2003, with production remaining about stable (reflecting rising crop production largely offset by declining livestock output) and reduced input use [1, 2, 3, 4]. The intensity of farming has diminished with the area farmed over the period 1990-92 to 2002-04 declining by 12%, one of the largest decreases across the OECD, with even larger reductions in purchased farm input use: nitrogen (–20%) and phosphorus (–60%) inorganic fertilisers; pesticides (–9%); and on-farm direct energy consumption fell by 12% (Figure 3.7.2). Finland’s accession to the EU in 1995 brought major price and structural changes to farming [1, 2, 3, 4]. In 1995 while producer prices declined by 40-50%, although for milk the reduction was 15%, the decrease in input prices was less dramatic [1, 3, 4]. Also the average farm size has increased as their number declined, and a third of farmers are full time. The climate limits farm production, and the share of agricultural land is only 7% of the total land area, among the lowest share across the OECD, with crop production largely in the south, whereas livestock farming is concentrated in the central, eastern and northern regions [1, 5]. As agriculture is largely rain-fed, use of total water resources is extremely limited with irrigation, mainly for vegetables, accounting for only 4% of total farmland in 2000 [6, 7].

Agriculture is a significant player in the economy. Agri-food exports accounted for around 13% of total exports, and primary agriculture for nearly 3% of GDP and 3% of employment in 2003 (Figure 3.8.1). The volume of farm production increased slightly by 2% over the period 1990-92 to 2002-04, but purchased farm input use decreased for: pesticides (–10%), although was subject to considerable annual fluctuation; inorganic nitrogen fertilisers (–9%) and phosphate fertilisers (–46%); direct on-farm energy consumption (–9%), and the area farmed declined by nearly 3% (Figures 3.8.2, 3.8.3 and 3.8.4). France has four broad and highly diverse agro-ecosystems. Northern France is typified by large-scale farming, of both crops and livestock; the west and central regions are predominantly mixed farming regions with grassland and cropping; the south is typically characterised by farming methods influenced by the Mediterranean climate; and the Alpine regions combine mountain farming interspersed with semi-natural areas.

Agriculture plays only a minor role in the German economy. The sector currently contributes about 1.1% to GDP and 2.3% to employment (Figure 3.9.1). Overall the volume of farm production declined slightly over the period 1990-92 to 2002-04, with lower livestock production (–6%) but increasing crop output (+13%). The intensity of agricultural production appears to be diminishing with farm input use declining more rapidly than production. There has been a decrease over the period 1990-92 to 2002-04 in the use of inorganic nitrogen (–6%) and phosphate fertilisers (–49%), pesticides (–11%) and direct on-farm energy consumption (–20%) (Figure 3.9.2). Since German reunification in 1990, changes in the farming sectors of the Old Länder (former West Germany) and the New Länder (former East Germany) have significantly differed. In the New Länder farming contracted sharply following unification, with farm employment falling to 20% of its 1989 level by the early 1990s [1]. Old Länder farming is dominated by livestock, raising over 75% of the nation’s cattle, sheep and pigs. Farm size in the Old Länder is about 30 hectares compared to 200 hectares on average in the New Länder. By contrast in the New Länder crops dominate and farming is more capital intensive [2].

Agriculture continues to occupy an important position in the economy, but its contribution is declining. Between the early 1990s and 2004 the share of agriculture in GDP declined from 14% to 7% and the share of farm employment in total employment from 22% to 15% [1, 2]. Farming accounted for two-thirds of total land use and nearly 90% of water use in 2001-03 (Figure 3.10.1). While the overall volume of farm production changed little between 1990-92 and 2002-04, the volume of crop production rose by 2.6% but livestock production declined by 2.1% (Figure 3.10.2). Moreover, the intensity of production increased and agricultural productivity improved [3, 4]. The rise in crop production was mainly accounted for by higher output of notably olives, vines for wine, cotton and some horticultural crops, as overall livestock production declined, although poultry, sheep and goat numbers rose [1]. There was a 2% decrease in the area farmed between 1990-2 and 2002-04 but the use of inputs increased during this period including for pesticides (39%), water (33%) and energy (10%), but inorganic fertiliser use (nitrogen and phosphorus) decreased by around –40%. Small family plots of less than 5 hectares, compared to the EU15 average of over 16 hectares, account for three quarters of farmland, and around 60% of farms are situated on hilly or mountainous terrain [5].

Primary agriculture continues to play an important role in the economy, but there has been a major contraction of the sector over the period since 1990. Agriculture’s share of GDP declined from nearly 14% in 1989 down to just under 3% by 2004, while over the same period farming’s share of employment fell from around 17% to slightly over 5% by 2004 [1, 2, 3] (Figure 3.11.1). These changes are reflected in the –14% reduction in the volume of agricultural production (1990-92 to 2002-04), the largest decrease across OECD countries (Figure 3.11.2). Over the more recent period, from 2000 to 2005, production has increased slightly, especially for cereals, but declined for some livestock products, especially milk production [4]. The transition from a centrally planned to a market economy over the period 1990 to 2005 has had significant implications for agriculture. The fundamental change in political and social institutions as well as economic conditions, with a shift from a centrally planned to market economy, has affected how land use decisions are made, and led to extensive changes in farm ownership patterns, productivity and competitiveness [5, 6, 7, 8, 9, 10]. Overall the sharp fall in the volume of farm production during the early 1990s was induced by a major reduction in agricultural production and input support (see below), a drop in agricultural investment, and rising farm debt levels. Private family farms saw their share of the area farmed rise from around 15% in the early 1990s to over 50% by 2003-04, with a corresponding reduction in the share for large corporate farms (privatised successors of former state and co-operative farms) [11].

Agriculture is a small and proportionally declining sector in the economy, with its share of GDP and total employment at 1.4% and 3.4% respectively in 2005 [1] (Figure 3.12.1). Farming is limited by a combination of climate, the length of the growing season and topography, and accounts for only around 20% of the total land area, which is low by comparison with many other OECD countries [2]. Farming is dominated by livestock production based on forage grazing and silage production. Livestock products account for approximately 75% of agricultural value added. Overall the volume of agricultural production has increased by almost 6% between 1990- 92 and 2002-04, but this has been mainly due to higher yields. Livestock numbers have declined for cattle (including dairy cattle), sheep, and poultry, risen slightly for horses used for recreational purposes, although the pig herd almost doubled in size. The decline in the livestock sector, especially sheep, is in part due to the reduction in market price support and export subsidies in the early 1990s [3, 4, 5]. Crop cultivation involves largely fodder crops (barley, and forage grasses), and a small horticultural sector mainly using greenhouses [6]. Although agriculture’s share in total water use was over 40% in 2001-03, there is no use of irrigation as farming is entirely rain-fed. With the overall decline in livestock numbers and decrease in inorganic fertiliser use by over 20%, but little change in the area farmed between 1990-92 and 2002-04, agricultural production is becoming more extensive (Figure 3.12.2).

Primary agriculture’s contribution to the economy is rapidly declining [1, 2]. Between 1990 and 2005 agriculture’s contribution to GDP and employment more than halved to 2.7% and 5.7% respectively [1, 3] (Figure 3.13.1). The past decade has been characterised by farm families increasing participation in the non-farming activities of the rural economy [4]. Agricultural production is intensifying on a reduced area of land and concentrated on fewer farms [1]. Over the period 1990-92 to 2002-04 the volume of agricultural production rose by over 1%, but the total area farmed declined by 2.6% (Figure 3.13.2). Nearly 45% of farms are less than 20 hectares in area and over 40% of farmers work part-time [1]. Between 1991 and 2003 agricultural productivity (gross value added per employee annual average) grew by 3.2%, compared to 3.4% for the whole economy, partly reflecting the substitution of labour by purchased inputs [5]. The volume of purchased farm inputs rose over the period 1990-92 to 2002-04: inorganic nitrogen fertiliser by +1%; pesticides +5%; and direct on-farm energy consumption by +37%; although inorganic phosphate fertiliser use fell by –31% (Figure 3.13.2).

Agriculture’s role in the economy is small and decreasing, but more important in some regions. Farming contributes just over 2% of GDP, but nearly 5% of employment, although with marked regional differences, contributions rising in the South to over 4% of GDP and nearly 10% of employment [1, 2] (Figure 3.14.1). Horticultural and permanent crops play a dominant role in the farming sector. Horticultural crops; olive groves; and grapes account for nearly 45% of total agricultural value, compared to 11% for cereals and almost 35% for livestock [1]. Horticultural and permanent crop production dominate in the South, with livestock and cereals more prominent in the North. While the total volume of agricultural production declined by 2% over the period 1990-92 to 2002-04, the trend in input use was more varied: pesticides rose by 8%; inorganic nitrogen fertilisers by 5%; and farm energy by 10%; although inorganic phosphorus fertiliser use declined by –26% (Figure 3.14.2). With the area farmed also declining by nearly 14% over this period, this suggests that the intensity of agricultural production has been increasing: both in terms of inputs used per unit volume of output; and per hectare.

Agriculture’s contribution to the economy is small. The agricultural sector currently accounts for about 1% of GDP and 6% of employment [1] (Figure 3.15.1). With a high GDP per capita and one of the most densely populated countries in the OECD, Japan is a major net importer of agricultural products. Rice accounts for 55% of total agricultural land providing 25% of gross farm output value. Horticultural and arable crops account for 68% of farm output value with livestock providing a further 28%. Average farm size is less than 2 hectares, small relative to other OECD countries, and agricultural income accounts for only around 13% of total farm household income [2]. Agriculture makes intensive use of purchased inputs by OECD standards, but the total volume of farm production and farm inputs between 1990-92 to 2002-04 has decreased (Figure 3.15.2). Use of inorganic fertilisers has declined by –18% for nitrogen fertilisers and by –27% for phosphorus fertilisers; pesticide use declined by –27%; on-farm energy use by –5%; water use by –3%, while the volume of farm production also decreased by –11%, mainly due to lower crop production –17%, compared to the reduction in livestock –6% [1].

Despite the rapid growth in agricultural production, the acceleration of the Korean economy as a whole has resulted in a decline in the importance of agriculture [1]. Agriculture now accounts for around 4% of GDP and 9% of employment compared to respective figures of 8% and 16% in 1990, while the country is a growing net importer of agricultural products (Figure 3.16.1). Farming is dominated by rice. The crop accounts for 40% of gross farm receipts and 60% of the total agricultural land area, but livestock, especially pigs and poultry, and fruit and vegetables, are becoming more important [2]. Average farm size is extremely small by OECD standards, less than 1.5 hectares, with a narrow spread around this average. As land and labour are scarce, agriculture makes intensive use of purchased inputs and farm machinery. The use of the latter showed the largest increase, over 180%, across OECD countries between 1990-92 and 2001-03, and has led to a 43% rise in direct on-farm energy consumption (Figure 3.16.2). This compares to an almost 40% reduction in farm employment. There are signs that the intensity of production diminished over the period 1990-92 to 2002-04 with a nearly 7% rise in the volume of farm production: 49% for livestock and 5% for crops. Over the same period the volume of inorganic fertiliser use has declined by –22% for nitrogen fertiliser and –33% for phosphate fertiliser, and pesticide use reduced by –8%, but for water use there was an increase of 7% over this period (Figure 3.16.2).

Agriculture’s contribution to the economy has been small but stable in absolute terms since 1990, such that by 2003-05 the sector contributed 0.5% to GDP and 1.3% of employment, among the lowest shares across OECD countries [1] (Figure 3.17.1). While agricultural value added (annual growth at current prices) remained stable over the period 1990 to 2004 (allowing for temporary fluctuations), in real terms it increased over the period 1986 to 1998, but from 1998 to 2003 it was the only sector in the economy where growth declined by nearly 5% per annum [1, 2]. The area farmed increased by about 1.5% from 1990-92 to 2002-04, now accounting for over 50% of the total land area (Figure 3.17.2). Much of the increase in area cultivated was accounted for by the growth in area under pasture and maize silage, with the area under cereals declining [3, 4]. But some of the apparent expansion in area farmed is, in part, due to improvements in the land registration system linked to changes in agricultural policy. There was an increase in the production of bovine animals (for slaughterings and export of live animals) in the first half of the 1990s, and a slight decrease from 1996 onwards, especially in 2001 due to the BSE crisis. The production of pigs (for slaughtering and export as live animals) increased significantly in the 1990s and went through a cyclic variation from 1999 to 2004 reaching a minimum in 2002. Milk production was remarkably stable over the period 1990 to 2004, due to the EU-wide system of limitation of production. As the milk yield per cow has risen considerably during this period, the number of milk cows has declined [1].

Agriculture plays an important but declining role in the Mexican economy. In 2003 primary agriculture accounted for about 5% of GDP and 16% of employment compared to 8% and 27% respectively in 1990 [1] (Figure 3.18.1). Nevertheless, 25% of Mexico’s 103 million population live and work in rural, largely agricultural, areas. The rural population has increased by nearly 2 million over the past decade [2]. Mexico’s agricultural sector is one of the most rapidly growing among OECD countries. The volume of agricultural production rose by 34% between 1990-92 and 2002-04, with crop production increasing by 26% and livestock 51% (Figures 3.18.2 and 3.18.3). The area farmed rose by 3%; while the volume of inputs also increased by 22% for pesticides, and 21% for direct on-farm energy consumption, although the use of phosphorus fertilisers remained stable, and nitrogen fertiliser use declined (–5%), as did the use of water (–10%) (Figures 3.18.2 and 3.18.4). Production is expanding by improving efficiency and increasing use of capital-intensive technologies. Nevertheless, farming is characterised by diverse structure and production systems. Large commercial arable farms, largely in the north, are capital intensive and rely on irrigation and purchased inputs. There are also range fed cattle and intensive pig and poultry operations in the north. Subsistence farms, mainly in the centre and south, grow staples such as maize and beans. The southern tropical zone has plantations and subsistence producers of coffee, sugarcane and bananas [2, 3].

Overall the agricultural sector has been contracting, with a reduction in the volume of production of nearly –10% and in the area farmed by –3% over the period 1990-92 to 2002-04. As a consequence the share of primary agriculture was around 2% of GDP and 2.5% of employment in 2003 [1] (Figure 3.19.1). However, within this overall decrease there has been an expansion in the horticultural sector, which now contributes around 40% of agricultural gross value added [1]. Agriculture makes intensive use of inputs resulting in high crop and livestock yields in comparison to most other OECD countries [1]. Livestock densities per hectare are among the highest in the OECD [2]. Purchased farm input use has in general declined more rapidly than agricultural production, suggesting that production intensity is diminishing and economic efficiency increasing over the period 1990-92 to 2002-04 (Figure 3.19.2). For example, the volume of inorganic fertiliser use fell by –36% for phosphorus, and –27% for nitrogen, and pesticides fell by over –50%. In contrast, direct on-farm energy consumption rose by 5%, largely reflecting the growth in the horticultural sector.

The agricultural sector is important to the New Zealand economy. It contributes about 4% to GDP and 8% to employment, while farm exports accounted for over 50% of the value of merchandise exports in 2004 [1] (Figure 3.20.1). Agriculture has undergone substantial structural change over the past 20 years, since the government’s commitments to economic liberalisation, including the removal of most agricultural support. The farming sector has responded with further diversification, the area under horticulture and vines rose by over 20% and forestry plantations by 40%; and intensification, with some sectors (dairy) relying on greater use of inputs (e.g. fertilisers) to increase production, and others (horticulture) focusing on raising value and quality [2]. As a result, the volume of agricultural production grew by 38% over the period 1990-92 to 2002-04 on a declining area of farmland (–3%) (Figure 3.20.2). Also the use of purchased farm inputs (volume) grew more rapidly than output, revealing the intensification of production over the same period, with inorganic nitrogen and phosphate fertiliser use rising by around 420% and 100% respectively; direct on-farm energy consumption 22%; but pesticide use by only 4% (Figure 3.20.2) [3, 4, 5, 6]. Overall this has resulted in improvements over 1985 to 2006 compared to 1972 to 1984 (numbers in brackets), in the total output per annum; input productivity; and factor productivity, by 1.7% (1.1%), 1.9% (0.2%), and 3.1% (–0.5%) respectively [7].

Agriculture is a small sector in the economy, with its share of GDP and total employment at under 1% and 4% respectively in 2004 [1] (Figure 3.21.1). While the volume of farm production remained stable between 1990 to 1997, it then declined by about 2% to 2004, largely reflecting a drop in livestock output [2]. Chemical input use has declined more rapidly than farm output suggesting production intensity is diminishing, with the volume of purchased farm input use decreasing between 1990-92 and 2002-04 by around 6% and 17% for nitrogen and phosphate inorganic fertilisers respectively, 26% for pesticides (1990- 2003). Direct on-farm energy consumption rose by over 24% (Figure 3.21.2), however, this number should be used with caution because of uncertainties in the data series. Norway is one of a few OECD countries where the area farmed increased by 4% from 1990-92 to 2002-04. This largely reflects the growth in the area under pasture, partly offset by a reduction in the arable and permanent crop area [1]. Some of the apparent increase in area farmed was due to improved registration and reporting by farmers due to the transition from a farm support system based on production to one based on area. Another reason for the growth in agricultural land is related to stricter requirements with regards to the minimum area for manure spreading [3]. The share of farmland in the total area is the lowest across OECD countries at around 3% in 2002-04, because of limits to cultivation due to topography, climate and the length of the growing season [1]. Cereal production dominates the lowlands in eastern and central areas, while grassland, mainly for dairy, accounts for much of the remaining farmland [3].

Agriculture plays a key role in providing employment in the national economy, but that role has shrunk considerably over the period since 1989. The share of agriculture in total employment was 16.2% in 2005 compared to 26.4% in 1989, but the decline in agriculture’s contribution to GDP has been even more significant from 12.8% in 1989 to 4.1% in 2005 [1, 2, 3, 4, 5] (Figure 3.22.1). The volume of agricultural production decreased by 5% over the period 1990-92 to 2002-04 (Figure 3.22.2), among the largest reductions across OECD countries (Figure 3.22.2). But in the recent period 2000 to 2006 production has begun to stabilise and even increase for some commodities, both in value and volume terms, notably for pig and poultry products [2, 3, 6]. Trends for purchased farm input use (volume terms) over the period 1990-92 to 2002-04, however, have been variable, decreasing for nitrogen (–2%) and phosphorus (–32%) inorganic fertilisers, as well as for agricultural water use (–31%), but increasing for pesticides (52%) and direct on-farm energy consumption (29%) (Figure 3.22.2). Although the use of farm inputs stabilised and even began to rise slightly from the late 1990s, by 2005 they still remained below their peak of the middle to late 1980s [3].

Agriculture’s contribution to the economy remains important but is declining. Farming’s contribution to GDP and employment has halved since 1990, reaching 2.7% of GDP and 9.5% of total employment in 2004, and its share of total export value was around 6% during 2002-04 [1] (Figure 3.23.1). In terms of natural resources farming accounts for over 40% of total land use and 75% of total water use [1, 2]. Agriculture has undergone significant structural change with environmental implications. Overall farm production volume remained near stable between 1990-92 and 2002-04 while the area farmed decreased by 5%, employment in agriculture declined by 53% and the number of farms decreased by 40%. This has led to the substitution of labour by capital and purchased inputs over the period since 1990, with mixed pressures on the environment in view of the diversity of production systems and farm size across the country. Some purchased farm input use increased, including inorganic nitrogen fertilisers (20%), pesticides (26%), and water use (21%), although there was less use of inorganic phosphorus fertilisers (–23%) and on-farm direct energy consumption (–23%) (Figure 3.23.2). Underlying these changes has been a major shift from crop to livestock production, with the volume of livestock production rising by 15% compared to a reduction of almost 5% in crop production between 1990-92 and 2002-04, although for some crops output rose, notably for maize, sugar beet, olives, and horticultural crops.

The long-term contraction of the agricultural sector continued over the period 1990 to 2004. The share of agriculture in GDP declined steadily from 8% in 1990 to slightly under 5% by 2004, while over the same period farming’s share in total employment fell from 12% to 5% [1, 2, 3, 4] (Figure 3.24.1). These changes reflect the reduction of 10% in the volume of agricultural production (1993-95 to 2002-04), among the largest decrease across OECD countries (Figure 3.24.2). While livestock numbers continue to decline, part of a longer term trend since 1990, more recently from 2000 to 2004 arable crop production has recovered and risen slightly, especially for cereals, oilseeds and sugar beet [1]. Transition from a centrally planned to a market economy has impacted significantly on agriculture since the early 1990s. Together with the division of Czechoslovakia into the Slovak and Czech Republic’s in January 1993, this has led to major changes in political and social institutions and economic conditions, had implications for land use, and resulted in extensive changes in farm ownership patterns, productivity and competitiveness [3, 5, 6, 7, 8, 9, 10, 11, 12, 13]. The sharp fall in the volume of farm production during the early 1990s was induced by a major reduction in support (see below), a drop in farm investment, and rising farm debt levels. The use of purchased farm inputs (fertilisers, pesticides, energy and water) decreased sharply in the early 1990s but stabilised and even began to rise slightly from the late 1990s, although by 2005 still remained well below their peak of the late 1980s (Figure 3.24.2) [1, 3, 5].

Growth in agricultural production was among the highest across OECD countries, between 1990-92 and 2002-04 (Figure 3.25.2). But between 1990 and 2003 the share of agriculture in GDP declined from 5% to just over 3% and the share of farm employment in total employment from nearly 10% to 5% [1] (Figure 3.25.1). Agriculture’s use of natural resources is significant and accounted for 59% of total land use (2002-04) and 60% of water use (2001-03) [1, 2]. Agricultural production is intensifying on a smaller area of land and is being concentrated in fewer farms [1]. The total area farmed declined by 3.5% between 1990 and 2004, compared to the average for the EU15 of over 5% [1]. During this time the use of farm inputs rose, resulting in higher agricultural productivity and the substitution of labour by purchased inputs since 1990. The rise in the volume of purchased farm inputs over the period 1990-92 to 2002-04 included: nitrogen (5%) and phosphate inorganic fertilisers (13%), pesticides (11%); on-farm energy use (39%) and water use (9%) (Figure 3.25.2). Underlying these changes has been greater regional specialisation in production [3] and a shift from crop to livestock output, with the volume of livestock production rising by nearly 37% (for all livestock types except dairy cows) compared to an increase of 22% in crop production between 1990-92 and 2002-04. Even so, crop production contributes the major share of the total value of agricultural production (over 60% in 2003), and for some crops output has risen more rapidly than for livestock, especially for irrigated crops including olives, vine and horticultural products [1].

Primary agriculture’s contribution to the economy is small and declining, accounting for 0.5% of GDP and less than 2% of employment in 2004 [1] (Figure 3.26.1). Agricultural production rose slightly by 3% over the period 1990-92 to 2002-04, due to an increase in livestock production (but livestock numbers declined), as overall crop production remained unchanged. While the area farmed declined by 6% between 1990-92 and 2002-04, the intensity of farm input use diminished with reductions in the use of: nitrogen (–11%) and phosphorus (–33%) fertilisers; pesticides (–3%); and on-farm direct energy consumption (–15%) (Figure 3.26.2). Since accession to the EU in 1995 farming has undergone significant structural change [2]. The key developments between 1996 and 2005 include a reduction in the number of farms (–17%), an increase in farm size, and greater specialisation, mainly in dairying, pigs and cereals [1, 2]. Most farms are family owned and farming and forestry are often combined activities. The share of agriculture in the total land area, of about 7%, is among the lowest across the OECD area, because Sweden’s climate and topography limit the growing season in the north. As agriculture is mainly rain-fed its use of water resources is small, accounting for only 4% of total water use in 2000 [3], which also reflects the very limited area irrigated, less than 2% of the total agricultural land area (2002-04), although in dry years the irrigated area can be more than double this share.

Agriculture is a small and contracting sector in the economy, with its contribution to GDP and employment at about 1% and 4% respectively [1, 2] (Figure 3.27.1). Both the volume and value of agricultural production decreased over the period 1990-92 to 2002-04, by around 4% and 30% respectively [3]. Farm labour productivity rose by 1.4% per annum between 1990 and 2004 [3]. The intensity of agricultural production is diminishing, with farm input use falling more sharply than the reduction in the volume of agricultural production (over 4%) and the area farmed (–3%) over the period 1990-92 to 2002-04 (Figure 3.27.2). As a result, agricultural production has become more extensive. From 1990-92 to 2002-04 inorganic fertiliser use fell by over 20% for nitrogen fertiliser and 60% for phosphate fertiliser, pesticide use fell by almost 30%, and direct on-farm energy consumption by nearly 30% (Figure 3.27.2). Farmland accounts for about 37% of the total land area, of which around 25% is arable and permanent cropland, and much of the rest permanent pasture (2002-04). About 60% is summer (mountain) pasture on altitudes up to 3 000 m [3]. With climate and topography favouring grazing, animal production (mainly cattle) account for nearly 70% of the value of final farm output [4].

Agriculture remains the major sector for employment in Turkey, but the sector’s role in the economy is declining. Primary agriculture’s share in employment decreased from 47% in 1990 to 34% in 2004, but the contribution to GDP is smaller declining over the same period from 17% to 11% [1, 2, 3] Figure 3.28.1. The agricultural labour force, about half of which are women who mainly work as unpaid family labour, experience a high incidence of poverty, poor education, and low provision of public services, although this situation is beginning to improve [2, 3]. Agricultural production has grown rapidly since 1990, among the highest rates of growth across OECD countries (Figures 3.28.2 and 3.28.3). Agriculture is becoming more intensive as the expansion in production and use of purchased variable inputs has grown more rapidly since 1990 than the 1% increase in area cultivated from 1990-92 to 2002-04 (Figures 3.28.2 and 3.28.3). The volume of agricultural production rose by 16% between 1990-92 and 2002-04, with crop production increasing by 19% and livestock 11% (mainly poultry, as grazing livestock numbers have fallen) [4]. Over the same period the use of purchased farm inputs also increased for inorganic nitrogen fertilisers by 11%, by 60% for pesticides (1993-2002), 59% for direct on-farm energy consumption, and by 65% for water use, although the use of inorganic phosphate fertilisers declined by –15% (Figures 3.28.2, 3.28.3 and 3.28.4). Arable farming dominates the agricultural sector, accounting for about 75% of output value, with the value share of fruit and vegetables over 40% [3].

Agriculture’s contribution to the economy is small but its environmental impact significant. Between 1990 and 2004 farming’s contribution to GDP and employment almost halved to 0.8% and 1.8% respectively by 2004 (Figure 3.29.1). Farming generates both environmental costs, calculated at approximately GBP 1 450 (EUR 2 100) million annually (2003 prices), and benefits, estimated at about GBP 1 230 (EUR 1 780) million annually, around 0.13% and 0.11% respectively of GDP in 2003 [1, 2, 3]. The agricultural sector has been contracting. The volume of farm production declined by over 8% during the period 1990-92 to 2002-04, together with a reduction in the volume of purchased farm input use, including –6% for pesticides, –13% for inorganic nitrogen fertilisers, –19% for inorganic phosphate fertilisers, and –24% for direct on-farm energy consumption (Figures 3.29.2 and 3.29.3). Grazing livestock is the dominant sub-sector, with livestock farming accounting for two-thirds of agricultural land use, with much of the rest under arable crops, largely concentrated in Central and Eastern England [4, 5].

Agricultural growth has been amongst the most rapid across OECD countries since 1990 (Figure 3.30.2). Nevertheless, agriculture’s contribution to the economy has been declining and currently accounts for less than 1% of GDP and under 3% of employment (Figure 3.30.1). Steady global economic growth and gains in population, particularly in developing countries, have strengthened demand for food and agricultural products, and provided a foundation for gains in world agricultural trade, including US agricultural exports. In addition, large growth of US bioenergy industries is increasing demand in the agricultural sector [1]. About 8% of the 2 million US farms account for 70% of the value of farm production on 30% of agricultural land [2, 3]. However, smaller farms (e.g. retirement, residential and farms where sales are a small share of household income) are important in terms of agri-environmental performance as they operate on 60% of farmland and account for around 60% of agri-environmental payments [4].

Overall agricultural production in the EU15 has changed little over the past decade. Over the period 1990-92 to 2002-04 the volume of production rose by 2%, although the value of production increased by almost 30%, despite a nearly 5% reduction in the area farmed (Figures 3.31.2, 3.31.3 and 3.31.4). Agriculture accounted for around 2% of GDP and over 4% of total employment in the EU15 in 2003, but these averages mask great variation across EU member countries (Figure 3.31.1). There is also great diversity of production and farm structures in the EU agricultural sector, and that diversity has increased with the addition of 10 new member states in 2004 [1]. European agri-environmental trends highlight continuing challenges. The main source of agricultural production growth over the next 20 years is expected to arise from crop yield increases and improvements in livestock productivity, rather than any expansion in the area under cultivation or livestock numbers. Projections of EU15 wheat and coarse grains from 2007 to 2016, for example, suggest yields rising at around 1% per annum while the area cultivated is likely to be stable or slightly reduced [2]. Similarly for milk production, while cow numbers are projected to fall by nearly 1% per annum up to 2016, milk yields are expected to rise by over 0.5% annually [2].

Agri-environmental Indicators (AEIs) can contribute to the needs of policy makers and other users in a number of ways examined in this chapter. A brief overview is provided in Section 4.1 of recent developments in domestic agricultural support; agri-environmental policy measures; and multilateral environmental agreements affecting agriculture, in particular, drawing a link to the material included in the country sections of Chapter 3. Section 4.2 discusses how selected OECD countries and international organisations, including OECD, are using AEIs as part of their toolkit to report on the environmental performance of agriculture. A selective literature review in Section 4.3 examines how AEIs are being used by OECD member governments, the OECD and other international governmental organisations, and other researchers, in analysing the linkages between the effects of agricultural and environmental policies on environment outcomes. Finally, Section 4.4 highlights where key gaps exist in terms of knowledge, methodologies, and data which are limiting the use of AEIs for reporting the state and trends of environmental conditions in agriculture and as a tool in policy analysis.