A federal review shows Swiss farm subsidies have increased land protection and cattle on summer pastures. But two years after the direct payment system was reformed, the precise effects of subsidies on agricultural production remain unknown.
The Federal Office of Agriculture reported on Friday that lower producer prices were posing big challenges, particularly for the dairy and sugar markets.
The subsidies have had little effect on how farmland gets used: 59% is for permanent grassland; 27% is for open land; 12% is for so-called artificial meadows that require planting and working the land; and 2% is for other land used for crops.
The review said the CHF387 million ($404 million) to promote biodiversity and CHF43 million to conserve natural resources had improved land quality and reduced erosion. These figures had risen by CHF23 million and CHF6 million respectively.
In addition, contributions for alpine and summer grazing increased last year by CHF7 million to CHF230 million.
Crisis in agriculture
Farmers’ incomes, which rely on subsidies, have been shrinking. Smaller producers say Swiss reforms aimed at increasing the services that farmers provide largely benefit bigger and more efficient farms.
Swiss farmers cultivate crops and keep herds of cattle, sheep and goats, but the decline in profitability of traditional small farms reflects a crisis in agriculture.
Just 3% of the Swiss population work in farming, in contrast to 25% before and during the Second World War.
Overall, the Swiss farmers received CHF2.8 billion in direct payments or state subsidies in 2014 and 2015, whether or not they faced competition, according to the review.