8. Resilience to animal and plant health risks in the Netherlands

The Dutch agricultural sector is highly productive, innovative and export-oriented (OECD, 2015[1]). The sector’s activities are diverse – livestock and crop sectors deliver almost equal shares of output value, with a large contribution from open field and greenhouse horticulture as well. Although agriculture represents a small proportion of the economy and total employment (roughly 2% of both employment and gross value added) (OECD, 2019[2]), agriculture plays an outsize role in trade – the country is the second largest agricultural exporter in the world – with Dutch agri-food products accounting for roughly 20% of the country’s total export value (European Commission, 2018[3]).

Characteristics of the country’s agricultural sector have implications for the risk profiles of different industries. For livestock, the sector is characterised by a high concentration of intensive farms – an environment that has the potential to facilitate the spread of pests and epidemic diseases (Meadows et al., 2018[4]) that could, in turn, result in major disruptions to production at the farm level and significant spill-over effects on up- and downstream activities (Melyukhina, 2011[5]). The proximity of urban areas, the perception of risk by the general public and the social acceptability of prevention and response measures may thus all have an impact on the kinds of measures chosen to manage disease risks, with wider implications for overall sector resilience. For crops and horticulture, the sector produces a wide variety of plants, which are susceptible to an array of different pests and diseases. The heavy reliance of the sector on exports increases the potential economic consequences of plant disease outbreaks, as one shipment of diseased product could result in disruption of trade for all Dutch suppliers.

Outbreaks result in both direct and indirect costs on producers. Directly, they can result in additional costs to farmers to control and mitigate pest and disease damage, and also lower revenue as a result of production losses and disrupted access to markets. Indirectly, outbreaks may have long lasting consequences on local consumers’ perceptions and preferences, and trade relations may be disrupted well beyond the elimination of the disease. For example, various trading partners imposed import restrictions on EU beef and veal in the wake of the 2001 Bovine spongiform encephalopathy (BSE) outbreak in the European Union. Market access has been regained on a country-by-country basis, with Dutch exports to Korea re-established only recently in September 2019 – nearly 20 years after the initial outbreak.

Given the sector’s intensive production of many internationally-traded, high value crops and livestock products, there are numerous potential pathways for the introduction of plant and animal diseases. At the same time, the sector has actively engaged in limiting the occurrence, extent and consequences of pest and disease outbreaks. This case study focuses on the management of animal and plant disease risks in the Netherlands. After describing the policy landscape relevant to animal and plant disease risks, it will then explore the extent to which the Netherlands’ approach to managing these types of risks exhibits the five dimensions of the OECD risk management framework for agricultural resilience.

National and supranational policy frameworks and multilateral commitments influence the management of animal and plant disease risk in the Netherlands. First, Dutch agriculture operates under the governing framework of the European Union’s Common Agricultural Policy (CAP). Because the CAP is the overarching agricultural policy framework, it includes some measures that affect the incentive structures of producers and their capacity to respond to plant and animal health risks (Box 5.2), but it is not the main instrument under which animal and plant disease are managed in the Netherlands. Rather, specific EU regulations on Animal Health (Regulation 2016/429) and on Plant Health (Regulation 2016/2031)1 provide the legislative framework for animal and plant health. These regulations require Member States to carry out controls that prevent the introduction and spread of organisms harmful to animals and plants and plant products, respectively. Member States have a notification obligation in case of an outbreak. The Plant Health Regulation expands the one-list classification of harmful organisms used up to now2 and identifies “high priority organisms”, causing severe damage, and “Regulated Non-Quarantine Pests” whose presence in plants for planting can cause damage during the subsequent cultivation process. The law also narrowly defines the actions to be undertaken in cases when organisms are present or suspected and their timing.

Controls and inspection activities are foreseen under EU Regulation 2017/625, which ensures the application of food and feed law including on animal health and welfare and plant health. The Regulations also mandate the Standing Committee on Plants, Animals, Food and Feed to oversee phytosanitary and veterinary activities at EU level. The Committee brings together experts from Member States and the Commission to develop eradication and surveillance programmes that are co-financed by the European Union and the Member States.3 Emergency measures are funded by grants and can be implemented immediately so as to minimise damage to plant and animal health and limit trade disruptions.

Domestically, national policies oversee the sector’s compliance with EU regulations and the multilateral system.4 The principal legislative frameworks in this area are the Dutch Animal Health and Welfare Act, and the Dutch Plant Health Act, which are the national implementing regulations for the overarching EU rules. In addition, national policies influence the sector’s preparedness for sanitary and phytosanitary risks and, when such risks materialise, the sector’s response. With a long history of risk exposure, national policies have evolved to mostly focus on consultation and co-operation institutions and processes to monitor and control sanitary and phytosanitary risks and co-ordinate response when necessary. They cover both preventive monitoring and control and compensations for restoration. These activities take place under the oversight of the Ministry of Agriculture, Nature and Food Quality and its independent agency, the Netherlands Food and Consumer Product Safety Authority (NVWA). For animal health, the Ministry contracts some activities to the Animal Health Service.

Prevention and management of plant and animal disease risks cut across risk management layers, with measures, tools, and strategies needed at all levels – producers can reduce their risk exposure through farm management and good agricultural practices (including on-farm biosecurity measures), and they can use on-farm risk management strategies to cope with small reductions in farm income; private sector tools are available to help manage mid-range declines in income; and government policies help farmers to cope with large income declines. General services for the sector, such as national biosecurity systems, monitoring and early warning systems, and investments in research and knowledge transfer, also play a role in disease prevention and management (Figure 8.1).

Dutch producers generally take a proactive approach to the management of disease risks on-farm. Many farms rely on high-technology and intensive production, which helps to limit their exposure to risks from the natural environment (as reflected in the country’s low yield risk profiles) (Melyukhina, 2011[5]). Crop producers employ preventive plant protection methods, relying heavily on the use of fertilisers and plant protection products (75% of the agricultural land is classified as high input per hectare, compared to an overall average of 26% in EU28 as a whole) in conjunction with technological improvements and other strategies as a means of reducing yield risk on-farm, including from damages caused by plant diseases (European Commission, 2018[3]). Horticulture producers in particular rely on preventive protection methods, as production occurs in a controlled environment. Livestock farms follow strict hygiene rules in order to reduce disease risk.

Dutch producers are also generally well positioned to deal with the impacts of pest and disease outbreaks, as they possess many of the characteristics that are associated with the capacities to absorb and adapt or transform in respond to risks. First of all, educational attainment is generally high in the Netherlands, with the agri-food sector boasting a well-educated labour force that actively adopts new innovations (including to manage animal and plant disease risks) (OECD, 2015[1]). In terms of finances, most farms are in a financial position to absorb fluctuations in income, with the proportion of solvent farms rising 4 percentage points to 71% since 2010 (Berkhout, 2019[6]). However, diversification is not widely used as a risk management strategy, mostly due to the high degree of specialisation at the farm level. In 2011, only 12% of Dutch farmers reported using enterprise diversification as a strategy, with crop rotation employed primarily to improve the quality of high value crops and as a means to reduce plant disease risk (Melyukhina, 2011[5]). Income from secondary on-farm activities is limited (around 3% of agricultural output), but has been growing, rising nearly 12% between 2016 and 2018 (DG Agri, 2019[7]). Off-farm income is also of limited relevance for Dutch agriculture – only 18% of respondents had off farm income in 2009 (Melyukhina, 2011[5]).

Market instruments or tools relevant to the management of animal and plant health risks include strict quality standards demanded by production contracts or partners in value chains, unsubsidised market tools to help producers manage the financial losses associated with plant and animal health risk, and joint public-private tools for managing financial losses. Contracted production and vertically-integrated value chains are relevant for many products, and contract terms and purchaser specifications typically require that farms undertake some actions to reduce their disease risk. For example, greater than 90% of livestock production is part of an integrated value chain, and consequently must comply with private standards and farm quality assurance systems. Plant producers are also commonly part of integrated value chains (particularly in the vegetable sector) and must comply with private standards, some of which relate to biosafety measures such as GLOBALG.A.P. (Good Agricultural Practice).

The private sector offers some hail and multi-peril crop insurance products, but few products specific to animal and plant diseases are available (Benninga et al., 2017[8]). These are mostly small non-subsidised mutual insurance schemes specific to a single commodity and a limited range of disease risks. These risks are typically not covered by larger insurers because of information problems related to moral hazard and adverse selection, which can be better addressed by small insurance schemes with good knowledge of members, direct access to clients, and involving members on the governing board of the scheme.

These mutual schemes also encourage on-farm management of plant and animal disease risk, including through premium differentiation. For example, in the livestock sector, the Avipol poultry mutual adapts premium payments to farmers’ liquidity capacities and creates incentives for risk prevention through premium differentiation associated with conditions on farming practices (Bergevoet and van Asseldonk, 2018[9]). In the plant sector, the Potatopol mutual insurance was set up to cover potato brown rot, potato ring rot and PSTVd (Potato Spindle Tuber Viroid). It has achieved an adoption rate of 90% of seed potatoes, 75% of starch potato and 50% of table potatoes. Potatopol encourages on-farm risk prevention through premium differentiation and strict terms and conditions with respect to good farming practices (Chartier et al., 2018[10]). However, not all mutual funds have been successful in attracting a critical mass of contributors. For example, the Porcopol scheme ceased operations in 2012 because of limited participation.

Outside of mutual insurance schemes, there is a limited availability of insurance coverage for consequential losses, but fewer than 10% of producers participate in these insurance schemes. These policies typically offer a basic cover of 10-15% indemnity to producers if their herd is eradicated due to an outbreak of foot and mouth disease (FMD).

One of the challenges to effectively and holistically managing animal and plant disease risk is that the lines defining the responsibility of farmers to manage risk (both using on-farm strategies and with market tools) and the role for government in preventing and responding to outbreaks is often blurred – there are roles for both actors in both disease prevention and response given the potential for substantial negative externalities from the actions of individuals. In the animal health sphere, actors in the Netherlands resolve this ambiguity through a joint public-private partnership that shares the costs and responsibilities for prevention and response among agricultural sector stakeholders and the government through a mechanism called the Animal Health Fund (Box 8.1). This fund acts as an ex ante instrument to discipline ad hoc assistance, by ensuring that the actors themselves are bearing the costs related to periodic outbreaks, with the government only contributing once costs have breached a threshold agreed upon in advance. Farmers participate in the fund by contributing levies that are differentiated by livestock activities, based on the risks of outbreaks and their potential consequences. Each activity (bovine, swine, poultry and small ruminants) is responsible for its own outbreak costs up to a predetermined maximum ceiling over the five-year duration of the Fund. The government covers compensations for catastrophic risk when expenses exceed this ceiling.

Outside of this public-private partnership and general disease management frameworks and processes, there are few government policies explicit to the management of animal and plant diseases. At the same time, incentive structures for production choices and disease management could be affected by other policies available more broadly. With respect to ex ante instruments, these are dominated by CAP measures (Box 8.2), the largest of which are direct payments received under CAP Pillar 1, which represents 81% of the Netherlands’ 2018 CAP expenditures (DG Agri, 2019[7]). The government also provides premium subsidies to multi-peril weather insurance products using Rural Development funds, intended to reach 3.2% of all farmers (European Commission, 2018[3]). In past years, the government sometimes provided start-up capital for sector-specific mutual funds, and also provided reinsurance cover to some products (Melyukhina, 2011[5]).

There are several measures that provide assistance to producers ex post to help them cope with adverse events, including instruments that are triggered ex post and instruments that are decided ex post. With respect to the first category, the first measure relates to government funding responsibilities under the AHF. Although the fund is cost-shared between public and private actors, the cost-sharing only applies up to a given ceiling – above that ceiling, the government covers all costs. These expenditures are provided as under EU State Aid provisions (which may be disbursed in special circumstances provided they comply with EU Competition policy) for the express purposes of controlling and managing animal health risks.5 A maximum total expenditure of EUR 863 million of State Aid has been provisioned for the period from 2015 to 2021. Additionally in the event of a veterinary risk, EU co-financing provides 50% reimbursement to Member States for the costs of compulsory and pre-emptive slaughter and of related operational expenditures (with the coverage is raised to 60 % for FMD) under EU Regulation 652/2014.

Other ex post assistance measures are available to agricultural workers, but these measures are not specific to the agricultural sector. For example, the Dutch social security system offers loans to self-employed workers (including farmers) in financial distress. The assistance is in the form of interest-free loans, which may be provided for one year to cover subsistence needs, or for ten years with interest for working capital. In the agricultural sector specifically, the use of this type of income support for the self-employed is at present mostly limited to entrepreneurs in intensive livestock farming and greenhouse horticulture. Certain tax measures can also be used after the fact to help compensate for losses from disease outbreak events. Although the Dutch tax system does not offer any concessional rates to farmers, it does offer the possibility of tax averaging, as well as a loss set-off facility (where losses can be offset retroactively against income from other years). As with the social security provisions, these tax concessions are available to all businesses and are not unique to agriculture.

With respect to ad hoc measures decided ex post, Dutch law does include a facility for providing assistance related to catastrophic events – the so-called “Law on Disasters and Severe Accidents”– but it has rarely been used for agriculture (twice in 1998 for severe rainfall events), and no specific provisions are made under the law for either epidemic livestock or plant diseases. Ad hoc assistance could be delivered through certain EU provisions, however, subject to EU State Aid rules. For example, EU Regulation 1308/2013 allows the Commission to take exceptional support measures (at the request of Member States) in instances of serious market disturbances related to animal or plant health and disease risks, with the measures co-financed between the EU and the relevant Member State.

No regret policies and public goods are cross-cutting, and play a role in reducing risk exposure and the impact of adverse events across all risk layers. In the area of animal and plant disease risk, the most important policies of this type are regulations and investments to maintain the national biosecurity system infrastructure and services, which help to prevent, control and monitor diseases. Monitoring, surveillance, and early warning for outbreaks are carried out on an ongoing basis by the responsible organisations for the various sectors. The national monitoring and surveillance system for animal health was initiated by the government and the livestock industry, and is carried out by the Animal Health Service. The Animal Health Service oversees the national Animal Health Surveillance System (AHSS), which is an accessible and voluntary system that collects livestock health information from farmers, veterinarians, the processing industry, research institutes and public health authorities and shares information with all stakeholders who may need to take action.6 Monitoring occurs through both reactive (farmer-reported disease incidence, pathology reports, veterinary monitoring of poultry, and veterinarian environmental toxicology) and proactive channels (monitoring and surveillance studies and programmes undertaken by the Animal Health Service). For example, livestock farmers and veterinarians alike can also consult the “Veekijker” telephone help desk service, through which experienced and specialised Animal Health Service veterinarians provide free expert, tailored advice and assistance.

Individual livestock sectors are also actively involved in organising surveillance through sector-specific veterinary services. The Veterinary Monitoring Poultry (VMP) is a co-operative agreement between a number of poultry veterinary practices and the Animal Health Service. Practitioners voluntarily provide digital information on poultry health, including the vaccinations administered and their findings during farm visits, along with registration of any prescribed antibiotics. For the pig sector, pig veterinarians record their findings in the Online Pig Health Monitor following each farm visit, including any animal health problems detected. Surveillance and diagnostics in wild animal populations is carried out by the Dutch Wildlife Health Centre. Their work is particularly important for tracking long-distance migratory bird populations, who may spread avian influenza (AI) to domestic poultry populations (Lycett et al., 2016[14]).

For plants, disease events occurring in either the Netherlands or in neighbouring countries are published on the NVWA website, which feed into farm press website and publications. In crisis or high risk situations, updates are provided frequently.

Research and innovation is a priority in the Dutch strategy for the agri-food sector, and the agricultural innovation system involves numerous actors. The Dutch “golden triangle” innovation model relies on co-operation between businesses (both firms and farmers), government and knowledge institutes to stimulate innovation (OECD, 2015[1]). While there are a variety of knowledge institutes, the Wageningen University and Research Centre is a key actor, including in the areas of plant and animal health, as well as foresighting, economic modelling and analysis to inform future policies and initiatives (OECD, 2015[1]).

At present, the general research agenda for the sector focuses on a variety of topics, including how the sector can be more resilient to future animal and plant health risks. Several of these programmes are financed using RDP funds, with knowledge generation activities responsible for 2.1% of the Dutch RDP budget (European Commission, 2018[3]). In fact, innovation is key component of the plan, as it links environmental objectives with improved sector competitiveness. There are various initiatives targeting the different sectors. In the livestock sector, the Dutch Government funds resilience-enhancing programmes such as the Global One Health initiative. Examples of research devoted to improving resilience against plant diseases include investigations into innovative detection methods and early warning systems.

Knowledge transfer and outreach can play an important role in building farmers’ capacities to manage risk. In the Netherlands, extension services are provided by the private sector, including sector-specific extension consultancy firms (livestock7 and plant8). Stakeholders also utilise study groups (organised by farmers associations, suppliers or processors) as a form of low-cost learning and outreach, with the groups considered an important mechanism for spreading information to stakeholders. Knowledge exchange also proceeds through private networks, which involve specialised extension providers, extension experts from suppliers and processors, farmer and branch organisations, and farmer journals. In the livestock sector specifically, veterinary practitioners have a key role in delivering outreach and education on best practice for risk management during disease outbreaks and new developments in animal health. Veterinarians can take courses for continuing professional development and volunteer to become a member of the Royal Dutch Society of Veterinary Medicine as a means to ensure that they are optimally equipped to provide guidance for related animal health advices.

Although most knowledge transfer is carried out by private actors, there is still a recognition that there is a role for government in the transfer of new innovations in technology and management practices to agricultural stakeholders. For this reason, the Netherlands uses a substantial portion of their Rural Development budget to fund co-operation projects that aim to transfer knowledge between researchers, agriculture sector actors, and other stakeholders – the country’s RDP foresees that 180 co-operation projects will be undertaken, resulting in the training of nearly 18 000 people (European Commission, 2018[3]).

The Dutch Government is also carrying out larger investments in the agricultural sector with a view towards improving sector resilience more generally. For the livestock sector, restructuring has been motivated by economic pressure, welfare regulations, and environmental regulations – all of which have implications for longer-term sector resilience. Livestock sector restructuring priorities in the coming years include a reduction in the number of animals, reduced human health risks, and improved animal living conditions in densely populated livestock areas. The budget for these restructuring initiatives is EUR 200 million total over a period of several years beginning in 2019, with EUR 120 million for reducing the pig population, and EUR 60 million marked for stimulating innovations in the pig, poultry, and dairy goat sectors (Ministry of Agriculture, 2018[15]). In the plant sector, the costs of investments for improving resilience under potential future conditions are in contrast largely borne by growers and the value chain.

Other no regret policies are funded through RDP measures, but their relevance to the sector’s ability to manage animal and plant health risk is less clear. As the main focus of the country’s RDP is to restore, preserve, and enhance ecosystems related to agriculture, a large portion of the Netherlands budget is devoted to supporting investments related to water and soil management (European Commission, 2018[3]). These investments certainly have implications for environmental sustainability, and potentially have positive spillover effects for disease management as well.

The Dutch approach to managing animal and plant health risks relies heavily on prevention as the most cost-effective means of controlling disease outbreaks. Other features of disease management frameworks in the Netherlands also contribute to improved management of these types of risks, including ex ante definition of risk management roles and responsibilities, strong stakeholder collaboration, evaluation of instruments for effectiveness, and adjustment of processes where needed.

Improved resilience against animal and plant disease risk starts with a focus on prevention and mitigation of current risks, combined with dedicated efforts to monitor and adjust to changes in the risk landscape. The current Dutch policy framework for managing animal and plant disease is characterised by strong efforts to anticipate, prevent, and mitigate risks. Only in the case of animal diseases is some ex post compensation provided, but even then assistance is delivered through a previously defined, cost-shared, public-private mechanism. The effectiveness of this proactive approach depends on effective communication and co-operation among stakeholders in anticipation of disease risks. Private and public stakeholders work together in advance of outbreaks to ensure that sufficient response capacity is in place, and good practices to manage animal and plant health risks are well-integrated into the day-to-day operations of Dutch farms.

In the case of animal health risks, this process of prevention and mitigation begins with regular foresight exercises and risk assessments, and the subsequent drafting of contingency plans that clearly outline crisis management roles in advance. This helps to mitigate impacts and allow actors to recover more quickly from disease outbreaks. All of these activities are integrated into the mechanics of the Animal Health Fund. Stakeholders conduct a long-term risk assessment and foresighting exercise every five years in advance of establishing a new Agreement for the Animal Health Fund. During this assessment, stochastic disease spread simulations are carried out to estimate the likely costs of disease outbreaks.9 The disease spread models are also utilised on a more regular basis as requested to evaluate different disease control scenarios, and long-term forecasting exercises consider potential shifts in disease risk due to climate change.10 The results of the long-term foresighting exercise help to determine the contribution ceilings for the different species under the fund, but also inform recommendations on disease prevention and control measures outlined in the Agreement.

Good national biosafety measures provide the foundation for prevention efforts: all animals must be entered into the identification and registration system, and the amount of contact between animals from different farms is limited. Additionally, to better prepare for potential outbreaks, stakeholders from the Ministry and representatives of the livestock sector meet regularly to update contingency plans and conduct response simulation exercises. This emphasis on preparedness also includes pre-positioning for crisis situations, as government actors also contract vital service suppliers to be hired during outbreaks.

With respect to plant disease risks, Pest Risk Assessments and contingency plans are already in place for the list of harmful organisms identified in EU legislation. The NVWA sets priorities for action, response, and intervention based on that list, in co-operation with the EPPO, the Ministry, and the European Union.

Foresighting exercises are also carried out to consider the likelihood of plant and animal diseases that serve as a basis of risk management strategies. NVWA runs these exercises in co-operation with branch organisations representing different stages of the value chain (propagation, production and trade of plants and/or plant products). As for livestock, these exercises consider the likelihood of new pests or disease vectors becoming established in Dutch territory under potential climate change scenarios. Based on the results of these exercises, organism-specific preventive risk management strategies are determined. Responses and contingency plans are also informed by additional scenario analysis. For example, Wageningen Economic Research carried out an analysis of the probability distribution of the cost of plant disease outbreaks at different production stages, accounting for uncertainty in the introduction, transmission, and detection of pests (Benninga et al., 2017[8]). Contingency plans are updated on an as-needed basis – when there are indications that the current risk is underestimated, or when a quarantine organism becomes established in large areas of the European Union, the risk from the organism is reassessed. These plans are formulated at national level under the responsibility of the Ministry and the NVWA, but can be executed locally.

The focus on prevention and mitigation continues with the conducting of monitoring exercises for priority pests and organisms. In both animal and plant disease frameworks, notifications are required for certain diseases or organisms under EU legislation, and monitoring activities are carried out accordingly. For livestock, prevention and monitoring programmes are part of the Animal Health Fund, and the Animal Health Service is responsible for carrying out ongoing disease monitoring exercises. For plants, monitoring and surveillance activities are carried out as needed. Surveillance activities can be particularly crucial to successful eradication campaigns. For example, following the outbreak of Anoplophora glabripennis in 2010, disease control efforts (including cutting infested trees and host plants within 100 meters) were combined with intensive surveillance efforts to eradicate the disease, leading to the Netherlands regaining its pest-free status in 2016.

Where ex post policies are relevant, they are well-defined in advance of outbreaks. For livestock, the costs and responsibilities sharing scheme to prevent and control animal health risks is outlined in the Animal Health Fund Agreement. Furthermore, responses under this system are predictable as it remains in place for five years and, at the same time, it is evaluated and adjusted at the end of the five years cycle to take into account potential future risks before the Agreement is renewed. For plants, there is no compensation for disease impacts,11 so ex ante tools are the most important risk management measure by default. At the same time, actors are exploring means to better link a prevention-driven and incentive-oriented approach to financial aid for control and eradication of plant disease. In this vein, private organisations were asked to draft a proposal for a fund related to plant disease control.

Taken as a whole, the ex ante approach to disease management in the Netherlands has been accompanied by fewer outbreaks of epidemic livestock diseases. Since 2000, the number of farms affected by notifiable diseases has fallen substantially – only AI outbreaks have become more frequent, and even then, the number of infected farms has declined (Van Asseldonk, Bremmer and Bergevoet, 2019[16]). The linked prevention and response mechanism of the AHF may have played a role in this improvement. The clearly elaborated ex ante framework outlining responsibilities and responses under the AHF, combined with the Fund’s cost-sharing mechanism, provide strong incentives for preparedness and prevention. Aside from improved animal health outcomes, the implementation of the AHF has also resulted in reduced costs for the government in combatting animal diseases (Bergevoet, de Lauwere and van Asseldonk, 2019[17]).

The actions of individuals to prevent and control outbreaks have potentially large spillovers on the rest of the sector. For this reason, it is crucial to have the incentives in place that motivate all stakeholders to prevent and control diseases. In the Netherlands, frameworks related to the management of animal and plant diseases do provide such incentives. First, the involvement of the Dutch Government in managing animal and plant health risk is mainly limited to prevention and proactive management activities. Although the Dutch “Law on Disasters and Severe Accidents” provides a facility for ad hoc response to disaster situations, there is no provision under this law for epidemic livestock or plant diseases. Expenditures on ex post activities are limited to cost-sharing for the Animal Health Fund, as well as a few instruments that are not specific to agriculture, and that have limited uptake within the sector (including loans to cover subsistence needs or business working capital for self-employed workers in financial distress). Moreover, even in the case of the Animal Health Fund, response is linked to ex ante preventative measures by means of the levy differentiation of stakeholders.

The Netherlands’ strong focus on ex ante measures also avoids crowding out the development of private solutions that reflect the specific risks faced by individual sectors. For example, the potato sector mutual insurance POTATOPOL provides coverage for losses from three specific potato diseases. Available risk management policies and instruments in the area of animal and plant health do tend to target specific sectors, however, largely because the risk profiles of the sectors vary greatly, and the relevant preventative actions to be taken need to be described on a commodity-specific basis. This leaves some sectors with no market or public mechanism for dealing with financial losses due to disease impacts.

Although Dutch agricultural risk management policies focus on the catastrophic layer, other policies affect farmer incentives to manage risk as well. Most prominently, farmers receive one-fifth of farm receipts from EU direct payments (OECD, 2019[18]). Elsewhere in the European Union, this type of support has been found to actually increase risk-taking behaviour, reduce farmer take up of risk management instruments on offer and impede private risk management approaches (Severini, Tantari and Tommaso, 2017[19]).

While trade-offs at the policy level are focused on prevention over ad hoc response, there is evidence that farms and the sector at large have moved beyond merely having strategies in place to help them absorb or cope with risk, and are instead undertaking adaptation or transformation actions in response to their exposure to animal and plant disease risk. This transformation of the sector to increase long-term resilience to disease is encouraged by plant and animal disease policy frameworks. For example, in response to the 1997 Classical Swine Fever (CSF) outbreak, the pig sector was restructured, establishing corridors and regional compartments. In contrast, changes have been more incremental in the plant sector, as no major shifts in plant health policy have taken place over the past decade.

Effective disease management calls for proactively establishing incentive structures to ensure compliance, because the actions of individuals to prevent and control outbreaks have potentially large spillovers on the rest of the sector, (OECD, 2011[20]). Participatory approaches can be used as a means of outlining the responsibilities of all stakeholders and agreeing on appropriate incentives. The Netherlands’ animal and plant disease risk management frameworks are developed and implemented based on deep and ongoing engagement with all relevant stakeholders to inform disease prevention, control, and response efforts. This engagement occurs in different spheres, including the analysis of the risk landscape, the formulation of policies, and the evaluation of outbreak response and policies. For animal health management, government and livestock sector stakeholders meet regularly (at least biannually) to discuss the animal health situation and develop monitoring plans. Regarding plant health, NVWA meets with stakeholders (including representatives of branch organisations from both the arable farming and horticultural sectors) three to four times per year in order to ensure that all stakeholders are aware of recent developments in plant health risk. Actors discuss the current situation, and use the discussion to inform decision-making and policy development.

Further on from regularly discussing developments in the risk environment, government bodies and actors from the agricultural sector collaborate to develop policy, ensuring that all stakeholders are aware of their responsibilities and are incentivised to take ownership for managing their set of risks. In the animal health space, the most prominent example is the drafting of the Agreement for co-financing the prevention and control of contagious livestock diseases. Farmer contributions are defined by sector and are proportional to expected costs. This collaborative approach to outlining responsibilities gives farmers a chance to express their views on the best means of preventing and controlling outbreaks. The approach also aims to raise awareness among farmers, outline incentives for early disease reporting, and improve support for control measures, since producers acknowledge and understand the necessity for such measures well in advance of outbreaks (Van Asseldonk, Bremmer and Bergevoet, 2019[16]).

The Netherlands also maintains mechanisms for evaluating the effectiveness of responses to disease outbreak events in consultation with the relevant stakeholders. With respect to animal disease, control strategies and costs are evaluated by relevant stakeholders and the Ministry in the wake of small disease outbreaks. Large outbreaks are instead evaluated externally, with four such evaluations conducted since 2000.12 For outbreaks of plant diseases, internal evaluations are conducted for each outbreak event, involving actors from the private sector, the Dutch NPPO, private inspection authorities, and the Ministry.

In addition to evaluating individual disease outbreaks, other policies related to animal and plant health are also reviewed and discussed regularly. Specifically, discussions on the performance of the AHF are held annually between stakeholders and the Ministry. Aside from these annual performance reviews, an independent external evaluation of the Animal Health Fund’s performance over 2000-18 was also carried out in 2018. Although the review determined that there was not sufficient data to objectively evaluate the effectiveness and efficiency of the AHF, stakeholders interviewed during the course of the review indicated that they viewed the AHF as an effective and efficient means of maintaining animal health while also controlling disease outbreak costs (Bergevoet, de Lauwere and van Asseldonk, 2019[17]).

The capacity of the sector to effectively manage animal and plant disease risk relies on individual farmers making effective risk management decisions to collectively manage the risk to the wider sector (OECD, 2017[21]). Dutch farmers on average demonstrate a high capacity to absorb and manage risk, and are supported by a policy framework that provides incentives to develop good on-farm risk management capacities. First and foremost, Dutch farmers operate in an environment that is very much driven by the market, including their integration into vertically integrated global supply chains, where maintaining high quality standards is a requirement. As such, they make their production and risk management decisions given strong market incentives to control disease outbreaks.

Outside of market incentives, disease policy frameworks establish clear responsibilities, incentives, and triggers for needed action. In both the animal and plant health spaces, EU regulatory frameworks define the diseases or the quarantine pests for which control and prevention plans are to be applied, and Member State contingency plans outline the control strategies to be used. In the livestock sector, the Agreement between farmers and government agencies governing the AHF lays out clear responsibilities for disease control measures. Additionally, the levies that producers pay to participate in the fund are differentiated by the farmer’s individual level of risk exposure for some species,13 which incentivises the implementation of autonomous on-farm disease reduction measures. Timely disease reporting is also encouraged by compensation rates that vary according to the health of the animal at the time of veterinary inspections – healthy animals are compensated at a rate of 100%, sick animals at a rate of 50%, and farmers receive no compensation for dead animals. No compensation scheme for livestock losses exists outside of this AHF mechanism. For plant producers, the responsibilities of growers in preventing and responding to disease risks are laid out generally in the EU Plant Health Regulation, but were also detailed more specifically in the grower code of conduct for preventing and reporting phytosanitary risks that was jointly drafted by the private sector and the Dutch Government. The Dutch Government and private stakeholders also co-operated on the development of the “Fyto Compass” tool, which helps to increase producer awareness of plant disease risks and provide recommendations on how such risks can be prevented (Fyto Compass, 2019[22]). No compensation scheme is in place for plant disease losses.

The financial capacity of farmers to respond to or plan for risks is supported through various programmes and tax provisions. The Agricultural Loan Guarantee Fund guarantees investments with insufficient collateral that would normally not be approved by mainstream banks, with loans of up to EUR 600 000 guaranteed at 80% through the fund, while sustainability investments can be guaranteed at 80% up to EUR 2.5 million. The programme provides special options for young farmers, who are eligible for guarantees up to EUR 1.2 million. A 2015 impact assessment of the programme determined that it does fulfil its mandate in providing financing guarantees for young farmers or other holdings with insufficient collateral (Van der Meulen, van der Meer and van Asseldonk, 2015[23]). Some tax measures, including tax averaging and the loss set-off facility, also support financial capacity to absorb risks. However, the efficacy of these instruments to assist farmers in coping with losses from animal and plant disease losses has not been quantified.

Public investments in key services for the agricultural sector and the implementation of no regret policies can contribute to better management of animal and plant disease risks across all risk layers. One of the primary roles of government in this area is the provision of general services, such as knowledge generation and transfer. Research and innovation have long been key components of the Dutch agricultural sector’s competitiveness strategy. These activities are especially important to stay ahead of evolving risks from disease outbreaks. The quantity and quality of research produced by Dutch knowledge institutes is high, and there is close collaboration between the private sector, government actors and researchers (OECD, 2015[1]). The research agenda is heavily influenced by the needs of the private sector, with input from the government and relevant knowledge institutes. In this area, the most relevant initiative is the funding of public private partnerships through the Dutch Rural Development Programme. Programmes delivered through these partnerships aim to develop practical solutions that directly benefit actors in agricultural production chains, while also enhancing the viability and competitiveness of the sector. Current programmes intend to reach 5% of all Dutch farmers (European Commission, 2018[3]). In addition, training will be delivered to 18 000 farmers, and 180 co-operation projects will be supported through the RDP, potentially enhancing the risk management or adaptive capacities of many of the country’s producers.

The Netherland’s systems for notification and early warning of animal and plant diseases seem to be well-integrated with the industry needs. For livestock, the AHSS takes both a proactive and reactive approach to monitoring animal disease outbreaks, and information is conveyed rapidly to relevant stakeholders. For plants, NVWA publishes real time information on phytosanitary notifications and other updates on disease outbreaks on their website.

Another important focus of no regret policies in the Netherlands is on environmental quality. More than half of the Dutch RDP budget is allocated to ecosystems management, with a particular focus on water and soil management (European Commission, 2018[3]). Both of these areas could have positive implications for animal and plant health, as well as long-term sustainability. For instance, improved soil health frequently reduces negative impacts from plant pests [see, for example, (Magdoff, 2001[24])]. Similarly, improved management of effluents from livestock production could have positive implications for animal health as well. At the same time, investments in biodiversity and environmental quality could potentially increase wildlife/farm animal interactions, so care should be taken to monitor health of wild animal populations at this nexus.

Finally, from a general point of view, the management of all types of agricultural risks is aided by an enabling policy environment, including well-functioning and competitive markets, openness to trade and investment, high quality infrastructure, and high quality education systems responsive to business demands to provide a well-skilled labour force. In this vein, the Netherlands ranks highly – the overall policy environment in the Netherlands is one of the most favourable to investment worldwide, including for innovation to increase productivity and sustainability (OECD, 2015[1]).

In their approach to managing animal and plant disease risk, the Netherlands prioritises collaboration and ex ante approaches. The limited availability of publicly funded ex post assistance requires actors to proactively assess their risk exposure and implement strategies for risk prevention and mitigation. This approach has also avoided crowding out the development of private solutions, allowing market tools and public-private partnerships to develop instead. For example, the public-private partnership under the Animal Health Fund ensures adequate funding for disease prevention and control efforts, while the Fund’s cost-sharing mechanism ensures that that government responsibility for assistance is limited to catastrophic outbreak situations. While no comparable, sector-wide mechanism currently exists for catastrophic plant disease situations, the government and relevant stakeholders are currently exploring the feasibility of such a fund. However, policy makers should critically evaluate the costs and benefits of a setting up a fund for plant health, in case existing plant protection and farm management practices are sufficient to manage the risk posed by plant diseases.

One factor that likely contributes to the success of Dutch animal and plant risk governance arrangements is the collaborative process under which the frameworks are developed. All relevant stakeholders are engaged in the risk assessment, monitoring, prevention, evaluation and policymaking processes, which helps to ensure that all actors are aware of their responsibilities for managing animal and plant disease risk and are exposed to strong incentives to do so. This approach has also helped to improve the acceptability of disease control measures in the livestock sector, as actors are informed of potential measures in advance, and are financially incentivised to report suspected outbreaks swiftly.

For both sectors, substantial future challenges to disease management could result from the presence of new disease vectors in Dutch territory as a result of climate change. The sector is taking a proactive approach to these potential future risks, including raising the disease management implications of climate change in regularly-held stakeholder meetings, and considering climate change scenarios in risk assessment models. At the same time, the trade exposure of the sector and the close interactions between urban and rural actors may warrant further engagement of actors outside of agricultural value chains to effectively manage risks of disease transmission, particularly as new disease vectors reach the Netherlands in a changing climate.

The Netherlands also counts on high quality research institutions to help provide information about likely developments in future risks and innovate new methods of confronting those risks. The research agendas of these institutions are typically developed in collaboration with both government and industry stakeholders. While this model ensures that research remains topical and relevant, it may also guide efforts toward initiatives that seek the most immediate market value, at the expense of research that aims to guide adaptation and transformation in the long run. Additionally, while research output remains high, declining public expenditures in this area raises questions about long-term performance and continued capacity to innovate solutions to evolving animal and plant health risks.14 There could be a need for more government co-ordination of an animal and plant health research agenda, which could be aided by more stability in long-term funding (OECD, 2015[1]).

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Notes

← 1. EU Plant Health law (Regulation (EU) 2016/2031 on protective measures against pests of plants): https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016R2031&from=EN, EU Animal Health law: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016R0429&from=EN, Regulation 652/2014 lays down provisions for the management of expenditure relating to the food chain, animal health and animal welfare, and relating to plant health and plant reproductive material allows for partly compensation of costs made by the national government in programmes oriented at eradication, monitoring and surveillance of animal and plant diseases.

← 2. In Council Directive 2000/29/EC.

← 3. EU Regulation 652/2014.

← 4. The European Union and the Netherlands are a party to the World Trade Organization’s (WTO) Sanitary and Phytosanitary measures (SPS) Agreement, which governs the use of measures necessary to protect human, animal or plant life or health so that they do not arbitrarily or unjustifiably discriminate between WTO members. Where they exist, the agreement requires that rules be based on international standards. For animal health, EU measures seek convergence with those of the World Organisation for Animal Health (OIE). For plant health, the global framework is laid down by the International Plant Protection Convention (IPPC).

← 5. One such scheme is a maximum EUR 863 million of State aid for the period 2015-21 to subsidised services for the eradication of animal diseases and compensation of the value of animal slaughter through the Animal Health Fund. Reference SA 39008 reported in https://ec.europa.eu/competition/elojade/isef/index.cfm?clear=1&policy_area_id=3. https://ec.europa.eu/competition/state_aid/cases/254062/254062_1684955_90_2.pdf

← 6. https://www.gdanimalhealth.com/monitoringsurveillance.

← 7. http://www.dlvconsultancy.com/.

← 8. https://delphy.nl/en/.

← 9. For specific applications of these simulations, see (Backer et al., 2009[25]), (Backer et al., 2011[26]), and (Bergevoet et al., 2007[27]).

← 10. Climate change is relevant to both livestock diseases epidemic and plant health, since it can lead to environmental conditions in which pests and diseases vectors that are currently not present in the Netherlands have an increased likelihood of survival and establishment.

← 11. Aside from the existence of a few disease- and plant-specific mutual funds.

← 12. These have been carried out in response to the FMD outbreak in 2001, the AI outbreaks in 2004 and 2015, and the Q-Fever outbreak in 2011.

← 13. In the pig sector, levies are differentiated by animal contact structure, and in the poultry sector, levies are differentiated according to whether or not the production system is indoor or outdoor (with the risk of introduction of AI being higher for outdoor systems).

← 14. Based on PSE calculations.

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