It was a shocking illustration of how the economic crisis has hit the food sector and how farmers, at the root of the chain, are paying the price. “The biggest challenge for farmers right now is how to get an income,” says Anne-Marie Vangeenberghe of the largest Flemish farmers’ union, Boerenbond. “This is the first time in a long while that there’s been a crisis in all sectors. It’s hard to see how it could get any worse.”

Prices paid to Belgian dairy farmers are about 5% lower than their French counterparts, partly because Belgium depends more on exports: 40% of the milk produced here is transformed into butter and milk powder for the world market.

This is the crux of the milk problem: it costs farmers 32 eurocents to produce a litre of milk, but earlier this year prices fell, and they could only sell at less than 20 cents a litre. Their protests led to negotiations with food distributors, which committed to pay an extra two cents a litre for six months, bringing the price paid up to 24 cents maximum. “They are still selling below cost price,” says Vangeenberghe. “But there are signs that prices have started rising. The trouble is, we don’t know how far it will get by Christmas.”

“It’s a very bad time to be farming; and milk producers aren’t the only ones suffering. It’s even worse for pig farmers,” says Guy Depraetere, general secretary of farmers’ union ABS. “Prices are too low to cover the costs of dairy farmers, meat producers and potato growers. Many farmers are facing severe financial problems.”

It was easier in the past, says Depraetere. “The EU would intervene and buy the surplus when there was too much produce. That’s not the case any longer, and it’s difficult to sell everything we produce.”

With the changes in the EU’s Common Agricultural Policy (CAP), “farmers are more involved in the market, but they aren’t used to the volatility,” says Joris Relaes, head of cabinet for agriculture in the Flemish region government. “There’s been 40 years’ stability in milk policy, so they are not used to the changes.”

The other major problem, he explains, is that in farming, you can’t stop production if prices fall, like you can in, say, the auto industry. “You have to milk the cows and harvest the apples and pears. Agricultural products are not like other products; they’re living things.” While the Flemish government is generally satisfied with the direction of the EU’s CAP reform, it expects new challenges after 2013, when the current budget period ends.

The Flemish and their European colleagues are not alone. Food prices worldwide have fallen due to the global downturn and the financial crisis, but local farmers are feeling the pinch due to the region’s high volume of exports and the relative strength of the euro compared to other currencies, which makes prices uncompetitive.

It may come as a surprise to some, but this small, densely populated country is one of the world’s major food exporters. Seventy percent of Belgian fruit and vegetables are exported, along with more than 50% of pork products, mainly to neighbouring countries – France, the Netherlands and Germany – but also to Italy, the UK and Russia. Belgium is also the world’s largest exporter of pears.

Indeed, while agriculture represented just 0.75% of GDP in 2007, farm products account for 5% of national exports, rising to 10% when processed food, drink and tobacco are included – 12 times their share relative to their contribution to GDP.

“We are relatively small, but our supply chain is very flexible,” explains Relaes. “And our location means we can quickly supply Germany and the UK.” The country has also turned to its advantage an inglorious episode from its past: the 1999 dioxin scandal, when industrial oils entered the poultry food chain, and eggs and most other animal products were pulled from supermarket shelves. “We now have very high standards of food safety,” says Relaes.

This competitive edge has come at a price. The number of farms in Belgium fell by 4% in 2008, continuing a year-onyear decline: from 76,000 farms in Flanders in 1980, there were fewer than 31,000 last year. At the same time, while the land area available to farming has barely changed, the average farm size has more than doubled in 30 years, from 12.5 hectares to just under 30 hectares. Over the same period, the sector has lost 45% of its workforce.

This decline in farm labour explains the changing face of Flemish food production. Where once the region produced hops, flax, tobacco and endive, these labour-intensive crops have given way to cereal crops and livestock farming.

“Farms are having to get bigger and bigger to compete on the world market,” says Depraetere of ABS, which represents one third of unionised farmers. “We need to find a system that allows medium-sized farms to survive. With the current EU system, we’ll lose all medium-sized farms.”

Depraetere says that, although the Flemish and Belgian governments are “very understanding of our situation,” the big problem is Europe and its desire to let the market decide. “But the market doesn’t solve all the problems; we’ve seen that with the banks.”

At present, the Flemish government is helping to improve farmers’ liquidity by advancing EU subsidies for rural development, to help them invest in measures to make their businesses more competitive. This is not universally welcomed. Flemish environmental organisation Bond Beter Leefmilieu warns that Flanders is putting all its EU rural development funding into boosting farm competitiveness rather than protecting the environment.

“Countries can choose how to use the subsidies; for us, the most effective solution is to invest in environmental measures,” says the organisation’s farming expert, Linn Demez. She points to two major problems that are not being addressed: the ongoing high level of nitrates in groundwater, a result of muckspreading as a means to dispose of the high volumes of manure produced by the region’s meat producers; and soil erosion. “Current livestock numbers are unsustainable and need to be reduced so we can deal with their manure,” she says. “And one of the worst culprits for soil erosion is cultivation of corn, which is linked to the livestock issue, as it is grown largely for animal feed.”

Depraetere thinks the time may have come to restrict supply, but for a different reason. “We think if we produce a little less, we’ll get better prices. In some sectors of the internal market, it is possible to regulate supply.” He cites the case of the United Potato Growers in the US, which formed in 2005 to limit the size of the potato harvest. “We would need an agreement with potato-growers across northwest Europe to produce 5% less crops,” he explains. “It won’t be easy, but in the US it has worked; prices have gone up.”

He also wants the Belgian food industry to adopt a fair-trade system and for large retailers, like Carrefour and Colruyt, to commit to buying Belgian produce. Indeed, while food prices have risen for consumers in recent years, production prices for meat, cereals and potatoes have fallen, with farmers squeezed to produce more for less.

Relaes agrees that there needs to be a fairer balance between the different players in the food processing chain, where a small number of buyers wield immense power. We can’t set prices, but we can look at how prices are set and how this is distributed through the supply chain.”

Looking to the future, he believes farmers will have to take one of two directions: either expansion to very large-scale agriculture able to compete on the world market or specialisation in smaller farms with a range of activities, such as leisure and tourism, organic farming or social care. Flanders already subsidises 400 zorgboerderijen, or “care farms”, which employ mentally disabled adults, many of which have farm shops and provide an organic vegetable service.

Vangeenberghe of the Boerenbond is also trying to see green shoots amid the current crisis. “The world population is growing, and the climate is changing. This part of Europe should have a good climate in the future, which is why it would be a crime if farming disappeared.”

Farming in figures

11.2 million pigs slaughtered in Belgium in 2008

800,000 beef cattle slaughtered in 2008

86,500 farming workforce in 2008

50% share of Belgian land used for agriculture

16% share of household income spent on food in 2008

22% share of household income spent on food in 1978