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R 141545Z JAN 10
FM AMEMBASSY BERN
TO SECSTATE WASHDC 6259
INFO EU MEMBER STATES COLLECTIVE
DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS BERN 000015 
 
 
E.O. 12958: N/A 
TAGS: EAGR ECON SZ
SUBJECT: SWISS AGRICULTURE AT THE CROSSROADS 
 
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Summary 
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¶1. (U) During a January 20 roundtable luncheon on Swiss 
agriculture hosted by the Ambassador, representatives of the 
Swiss Government, parliament, and the agricultural media laid 
out their views on the challenges facing Swiss farmers and 
the prospects for an EU-Swiss agricultural free trade 
agreement, which is the Swiss Government's top trade priority 
for 2010.  All agreed that an FTA with the EU, even if it 
provided balanced benefits with regard to market opening, 
would be heavily opposed by many Swiss farmers as well as 
large elements of the Swiss public. Switzerland's 
agricultural lobby is well-organized and effective. 
Furthermore, it would take at least a year to conclude 
negotiations with Brussels, delaying a parliamentary review 
of any text until at least early 2011, an election year.  It 
is thus debatable whether an FTA could make it through the 
Swiss parliament before 2012.  Even then, it would still 
likely have to survive a challenge from a popular referendum, 
which is an established right under Switzerland's 
constitution and routine on controversial questions.  Given 
the above constraints, no participant in the luncheon rated 
the chances for actual enactment of an FTA with the EU at 
greater than 50 Percent. 
 
¶2. (U) Markus Rediger, the director of the Information 
Service for the Agricultural Sector, said that the lack of 
progress of the WTO Doha round had lessened pressure for 
Swiss agriculture to make concessions on market opening. 
However, Swiss farmers would face much stronger demands to 
liberalize if the round started showing signs of progress on 
agriculture.  Swiss farmers know that they face huge 
competitive problems vis a vis their EU counterparts.  Land 
and labor costs are far higher in Switzerland than in the EU, 
and productive farmland is scarcer.  As a result, 
participants see the best hope for Swiss agriculture in high 
quality production and increased cultivation of a "Swiss 
brand."  Strong protection for geographic indicators is thus 
a 'sine quod non' for any trade agreement which would 
significantly open Switzerland's market. 
 
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Switzerland's high cost, high quality farm sector 
--------------------------------------------- ---- 
 
¶3. (U) On January 20, the Ambassador hosted a roundtable 
luncheon for representatives of Switzerland's agricultural 
industry.  Participants included National Councilor Laurent 
Fauvre, a member of the parliamentary Committee on 
Environment Landscape and Energy; Jacques Chavaz, the Vice 
Director of Switzerland's Office of Agriculture; Ruedi 
Hagman, editor of Switzerland's largest agricultural 
newspaper (Bauern Zeitung); Simon Marti, editor of Swiss 
Farmer magazine, and Markus Rediger, Director of the 
Information Service for Swiss Agriculture, an industry 
promotion group. 
 
¶4. (U) Agricultural Office vice Director Chavas provided an 
overview of Switzerland's farm sector.  Chavas said that 
Swiss agriculture is still dealing with the impact of partial 
liberalizations from the past decade.  The agricultural 
market has evolved from one in which the state pays farmers 
to grow crops to one where income support is now de-coupled 
from production.  Furthermore, the market for processed 
agricultural products and cheese is now open, greatly 
increasing competition from EU farmers.  Since May 2009, 
there are no longer any domestic production quotas for milk, 
and more efficient operations are allowed to compete directly 
with those less so.  The result of these changes has been 
increased consolidation in the Swiss farming sector, with 
about 1.4% of Swiss farms now disappearing each year. 
 
¶5. (U) Chavas said that there are about 61,000 farms in 
Switzerland.  The typical Swiss farm is between 10 and 30 
hectares (25-75 acres) in area, though about one-third of 
operations do not even achieve this scale.   The farms are 
almost all family run operations, with only larger commercial 
farms typically employing outside labor.  While entry into 
farming is unrestricted, the high cost of Swiss land and the 
requirement for individuals to have an agricultural education 
in order to take over farmland entitled to government support 
payments, serve as major entry barriers.  Despite the small 
scale of its farming, Switzerland is 60 percent 
self-sufficient in food production. The self-sufficiency 
percentage is about 90 percent for meat and 100 percent for 
milk products (Switzerland is well endowed with dairy farms 
and alpine pasturage), but falls to roughly 45 percent for 
vegetable products.  National Councilor Fauvre said that an 
overall 60 percent self-sufficiency rate is regarded as the 
minimum necessary for the nation's food security, and the 
ratio enjoys strong parliamentary backing.  Market opening 
which leads to a significant drop in this figure would be 
unacceptable. 
 
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Swiss consumers accept higher prices for Swiss products 
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¶6. (U) Agricultural Information Service director Rediger said 
that Swiss consumers are willing to pay somewhat more for 
Swiss farm products because they appreciate the quality and 
the contribution farms make to keeping the Swiss countryside 
looking beautiful.  At present, the Swiss government 
estimates that Swiss consumers pay about 50 percent more than 
those in the EU for food products.  However, when far higher 
Swiss incomes are taken into account, the typical Swiss 
household pays out only about 8 percent of its disposable 
income for food, or somewhat less than the EU average. 
Furthermore, the fact that most of Switzerland's population 
lives within and hour of the border (and EU supermarkets) 
serves to limit the gap. 
 
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The Prospects for Market Liberalization 
--------------------------------------- 
 
7.(U)  With regard to negotiation of an agricultural free 
trade agreement with the EU, the Economics Department's top 
trade priority for 2010, all participants expressed 
skepticism regarding the prospects for early enactment. All 
agreed that an FTA with the EU, even if it provided balanced 
benefits to Swiss agriculture, would be heavily opposed by 
many Swiss farmers as well as large elements of the Swiss 
public, which appreciate Switzerland's garden-like rural 
landscape.  Fauvre said that Switzerland's agricultural lobby 
is well-organized and effective, and has much influence in 
parliament.  Furthermore, it will take at least a year to 
conclude any FTA negotiations with Brussels, delaying Swiss 
parliamentary review of a text until at least 2011, an 
election year.  It is thus debatable whether an FTA could 
make it through the Swiss legislature before 2012.  Even 
then, it would still have to survive a challenge from a 
popular referendum, which is an established right under 
Switzerland's constitution and almost certain on such a 
controversial question.  Given the above constraints, none of 
the Swiss luncheon participants rated the chances of actual 
enactment of an EU-Switzerland FTA in agriculture as higher 
than 50 Percent. 
 
¶8. (U) Nonetheless, the media representatives agreed that 
market liberalization would eventually be forced upon 
Switzerland if real progress is made on agriculture in the 
WTO Doha round.  Swiss farmers need to prepare themselves for 
this more competitive future.  Both Marti and Rediger 
expressed optimism that Switzerland's product strategy of 
innovation and high quality, which it successfully applies in 
other economic sectors, would also be the appropriate 
strategy for agriculture.  Chavas noted that cheese trade 
with the EU had been liberalized and that Swiss farmers were 
competing very successfully, based on perceived higher 
quality.  The key here was the ability to brand a Swiss 
product with a geographic origin, such as Gruyere cheese from 
the Fribourg region.  This had allowed the Swiss to generate 
a trade surplus in cheese with the EU despite having far 
higher production costs.  Fauvre said that Switzerland would 
take a far tougher line on geographical indicators than US 
agricultural negotiators.  The protection of the Swiss brand 
is essential to the competitiveness of Swiss farmers, who 
will never be able to compete on price.  Furthermore, the 
need to reduce the world's carbon footprint means that it 
will be more and more important for food to be grown near 
where it is consumed, thus saving energy consumed in 
transport. 
 
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GMO's 
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¶9. (U) The participants agreed that the Swiss public is still 
highly skeptical of the benefits of GMO's in food production. 
 The firms marketing GMO's had stressed the benefits that 
their products provided farmers.  However, it was less clear 
how use of these seeds benefited consumers.  The Swiss public 
is more relaxed about GMO's in products, such as cotton, that 
are used as industrial raw materials.  However, the 
participants did not think that the public resistance to 
introduction of GMO food varieties was losing strength, 
despite the benefits they could bring in cutting consumption 
of fertilizers and pesticides. 
 
CARTER