At Leclerc’s vast Trois Frontières hypermarket in Saint Louis, just on the French side of the border with Basel, virtually everything is cheaper than in Switzerland
From books to baguettes, the bargain French prices draw shoppers from Basel and beyond. But nowhere are the queues longer than for meat, with prices for top French viande generally a fraction of their equivalents at Coop or Migros.
Recently, the European Commission highlighted the disparity. It revealed food prices in Switzerland were a mouthwatering 178 percent higher than the European Union average. Swiss consumers pay about CHF 1,000 on average more a year than their neighbours for their sustenance.
That food in Switzerland is costlier than elsewhere has some justification. Mountainous topography and lack of arable land make farming relatively expensive. So too do a harsh climate and high local input and wages costs. Moreover, Swiss farms tend to be small and family run, eliminating the economies of scale of many bigger French and German counterparts.
But protectionism and inefficiency are also culprits. Over the years, Switzerland’s powerful farm lobby has stifled foreign competition through assorted barriers to foreign foods, above all meat.
The world’s most lavish and expensive farm subsidy scheme
Yet despite the egregious price differences, Switzerland’s farmers are unhappier than ever. Their complaints range from steadily declining incomes to rising pressures on their self identified role as guardians of Switzerland’s picture postcard environment. The intense sensitivity of agricultural issues is reflected in the fact that voters faced no less than two separate food referendums this month – and there are more to come in the near future.
In “Farming Policy for the Future: A 10 Point Strategy for Consumers, Taxpayers and Agricultural Entrepreneurs” (German), Avenir Suisse experts Patrick Dümmler and Noémie Roten demonstrate Swiss food doesn’t have to cost so much.
The authors pull no punches about the failings of their system. Switzerland has the world’s most lavish and expensive farm subsidy scheme, they argue. Although official figures reveal just CHF 2.8 bn in annual subsidies – rising to CHF 3.8 bn on the wider definition of federal spending on “food and alimentation”, the numbers are just “the tip of the iceberg”, they say. The total economic costs actually amounts to an eye watering CHF 20 bn a year – despite the fact that agriculture now accounts for just 0.7 percent of Swiss gross domestic product, 3.1 percent of the total workforce, or just over 150,000 people.
The reasons lie largely in the formidable power of Switzerland’s farm lobby, associated primarily with the Swiss People’s party and, to a lesser extent, the centrist Christian Democrats.
Behind the generosity is that farmers represent the biggest single interest group in the federal parliament, with more than 35 MPs either working the land or identified with sector. Over the years, they – and the big domestic supermarket chains – have played on Swiss consumers’ sensitivity to food quality and the environment to restrict foreign competition and maintain high prices.
Yet Swiss farming is barely profitable. No less than 51 percent of farm incomes now stem from subsidies – “a value no other country can afford”, say the authors. Despite such massive transfers, farm debt has been rising.
The authors demonstrate farmers have become “land managing administrators.” They face an estimated 4,000 pages of rules and regulations on how to do business, stifling entrepreneurship. With some 51,000 individual, generally small, farms, much of the transfer payments end up in the hands of big, vertically integrated suppliers, retailers and middlemen, rather than the farmers themselves.
Promoting farmers’ entrepreneurship
To fix things, Avenir Suisse proposes 10 essential reforms. The biggest (and most controversial) involve ending farm protectionism – which would, incidentally, also improve Switzerland’s freedom of manoeuvre in free trade talks with third countries or regional blocs, such as those currently under way with Latin America’s Mercosur.
Their other suggestions include abolishing transfer payments to farmers, reducing the burden for taxpayers, and discouraging agricultural overproduction, along with cutting red tape and promoting farmers’ entrepreneurship, including encouraging mergers.
Implementing the changes could cut costs by some CHF 14.4 bn a year, say the authors. Such suggestions, adds Avenir Suisse director Peter Grünenfelder in his foreword, would not just promote Switzerland’s liberal, business friendly economic principles. They would also help to restore Swiss farmers’ entrepreneurship and perspective for the future.
