SLI-Report 2004:9

Competitiveness in Swedish agricultural production – the post-EU experience

Authors: Cecilia Hammarlund 

Sweden has been a member of the European Union for ten years. Competition on the agricultural markets has increased and Swedish exporters of food products have faced tougher competition as well as increasing opportunities. In 2005, when the most recent reform of the common agricultural policy was implemented in Sweden, pre-conditions for agricultural production changed. The reform is mainly a change from production subsidies to income support. Farmers will no longer get subsidies for producing certain goods but will be supported anyway. Profits and production levels will increasingly depend on market conditions.

In this report agricultural competitiveness is analysed using trade patterns and trade developments on the EU-market since 1995. Swedish exports are analysed and these exports will mirror company competitiveness in the absence of market imperfections.

The competitiveness of Swedish agriculture is affected by EU farm policy, the possibilities of producing differentiated products and the distance to consumers. This report concludes that almost all Swedish food exports contain varieties of products that are also imported. This makes differentiation important to Swedish producers. The competitiveness of Swedish producers has improved and differentiation in high-quality varieties has become an increasingly important part of Swedish food exports after the country became a member of the EU. Processed foods, such as cereal preparations and mixtures of agricultural products (sauces, soups and chocolate for example) were found to be competitive varieties.

Distance also seemed to matter to Swedish producers of agricultural products. The importance of distance was found to be more important to companies exporting meat, dairy products, cereals and oil-seeds when compared to exports of other food products and also to exports in general.

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