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Taxes returned to pastoralists may be the key to sustainable agriculture

July 20, 2021

Under the right conditions, revenue from taxes on meat products that are returned to pastoralists by the government can make the livestock sector more sustainable, according to a new study from Wageningen University.

To be effective, it must also use chain devices such as the Beter Leven seal of quality (better life) and sustainable funding.

Good collaboration between government and industry is also crucial. This has been demonstrated in research from Wageningen University and Research, carried out at the request of the Ministry of Agriculture, Nature and Food Quality (LNV).

Research aimed at increasing the sustainability of the meat sector does not always cover all sustainability objectives. Wageningen University has now investigated how to set the price of meat in a way that can lead to economic sustainability (a fair price), social sustainability (public health, animal welfare) and ecological sustainability (decrease in land use, biodiversity). A sustainability goal, such as animal welfare, should not lead to deterioration in a different area, such as a decrease in nitrogen load.

Meat pricing is not a goal, but a means of change. Meat has a greater impact on the environment than other products. Eating too much meat is also bad for your health.

Combination of measures

The tax returned to breeders gets the highest score out of all sustainability goals. However, it is the road to get there that will determine its success. Clear milestones need to be set by government, and goals need to be set with the business community afterwards.

The question is whether the government and the meat industry will be able to agree on the method and recipients of the funding that is returned. If the consultation is insufficient, the risk of failure is great. This can help the process to use the sustainability programs that the pig and poultry sectors put in place in 2019 as a basis. Particular attention needs to be paid to whether the meat producers for the out-of-home catering sector and the overseas market are also joining in. Financing investments in sustainability could be a good incentive and a complement.

For various reasons, there is broad support for using the tax system as a complement to chain schemes such as the Beter Leven quality label. Stakeholders in the livestock sector are in favor of setting up a chain because they want the market to play its role so that consumer demand can be determined from it. But chain arrangements on their own are seldom sufficient. The Beter Leven quality mark has an important impact on consumer behavior in supermarkets, but this does not apply to meat destined for the AHH and export sector. It has an impact on less than 50 percent of meat production. It also has little effect on consumption if meat with a quality label remains more expensive than conventional meat. This is why the NGOs interviewed recommend a combination of measures. Researchers also consider this to be the most successful option.

Meat tax

A breeding tax, a slaughter tax or a consumption tax does not contribute to the motivation of the farmer to increase sustainability. A consumption tax decreases meat consumption, but with a tax for keeping animals, there is a good chance that production and associated emissions will shift overseas. The danger with the consumption tax is that the part that is sold the least will be exported, which means that the impact on production and associated emissions will be limited.

Researchers suggest that a government buyout of livestock companies is easier than a tax for raising animals. If a tax is introduced, less sustainably produced meat would need a higher tax than sustainable meat.