Agriculture and direct democracy (Part 3)

The people set the course after the Second World War

by Dr rer publ. W. Wüthrich

At the beginning a short resume of parts 1 and 2 of the series of article (of 18 June and 15 August 2016): The years of hardship during First World War and immediately afterwards made policy and population aware on the issues of agriculture. After several referendums, the conditions were created to support farmers and to better secure the food supply. The Federal Government began to plan and to provide. This development culminated in the “Plan Wahlen” during the Second World War. Switzerland was encircled by hostile minded axis powers and managed to produce enough food on their own ground so that no one had to go hungry.

[Translate to en:] Seit 1899 wird in der Schweiz Zucker aus einheimischen Zuckerrüben produziert. (Bild lid.ch)

Even after the war, the provision was important. In 1947, the sovereign agreed to new economic articles in the Constitution with the important sentence:

If the general interest justifies it, the Federal Government is empowered to legislate if necessary contrary to the freedom of trade,
[…] to maintain a healthy farmer community and a crisis-compatible agriculture, as well as to the strengthening of rural real estate.

In 1952, the Agriculture Act defined the direction for the policy in the following decades. The production should be directed and controlled by a bunch of measures and the farmers receive an adequate income:
Growing premiums should promote agriculture, investment aid facilitate the purchase of machines, the diesel fuel was reduced etc.
The Federal Government decided certain prices for important products such as for example the milk and guaranteed the purchase. The accounting in model plants provided the figures to calculate a fair income for farmers. This was calculated after the model of the “parity wage”. A farmer should generate an income that was comparable with a skilled trade worker in the industry.
The border control with customs duties and import restrictions belonged to this policy, according to the following procedure: The importation of certain products was free, as long as no similar domestic products were available. If domestic products were offered at reasonable prices, but in insufficient quantities, so the import was limited. If the domestic offer covered the full demand, the import was prohibited. This concept was widely supported. So, intensive discussions had taken place between the Swiss farmers Association and the trade associations. Gerhard Winterberger had grown up on a farm and was later director of the Trade and Industry Association. He is referred to as the “father” of the parity wage (Schweizer Monat 1921–2012, p. 121). In the Parliament, the Farm Bill was well accepted. The Government parties, all trade associations and all trade unions formed a joint action committee for the proposal. Something similar happened neither before nor afterwards. Eight “war Federal Councillors” stood up for the law and acknowledged and owed the effort of the peasantry in the war. Even Liberals campaigned – entirely against their attitude – for more agricultural regulations. They had experienced that there are situations where you cannot import anything and everything. The Council of States unanimously agreed. In the National Council, there were only eight votes against – by Gottfried Duttweiler and Ring of Independents. Their supporters formed a Committee “to protect of the interests of consumers” which called for a referendum so that it came to the vote. Despite the unity of supportive organizations, the result was quite close. The federal law on the promotion of agriculture and the preservation of the farm stand (Farm Bill) was adopted the 30 March 1952 with 54 percent of the vote.

Post-war period – first trends for overproduction

The area under cultivation had almost doubled in the years of war due to the “Plan Wahlen”. It was important for the Government after the war to continue to promote agriculture and to prevent a strong reduction of arable land. Already in the 1930s, it had come to an overproduction of milk, and quotas for milk were introduced by emergency law for a few years. But after the war many farmers switched again to milk production and the arable land decreased by 10’000 hectares (about 35 percent) – far more than planned. Various reasons were decisive for that. Dairy industry fits better to the hilly landscape in the Swiss plateau and the mountain slopes in the harsh climate of the Pre-Alps and Alps, while cereal can be better cultivated in large countries. In addition, agriculture is labour-intensive and the workers were becoming increasingly scarce in the boom. Further, dairy farming had the advantage for the farmer’s family that the income accrues continuously. The Federal Council attempted carefully to control this development. In 1954, he reduced the price of milk as a steering measure around 1 centime per litre while at the same time increased the growing premiums for cereals and crops as an incentive. Thus, the farming income as a whole didn’t decrease overall – only in individual cases. A group of farmers from the French part of Switzerland, the Union des producteurs suisse UPS organized the first “March on Berne” on 9 May 1954 where 25,000 farmers took part. There would be more such demonstrations on the Parliament Square in the following decades. In 1961, there were 40,000 farmers who were protesting because the Federal Council set up the milk price only 2 and not as required 4 centimes. There were also consumer protests: When in 1967 the butter and cheese prices once again rose, the consumers of the French-speaking part of Switzerland called for the butter strike. The sales in the shops of Western Switzerland and partly also in the German part of Switzerland went far back (because you could switch to margarine), and the situation was critical. – The media began to speak of a “milk lake” and a “butter mountain” in these years.
Soon after the implementation of the Agricultural Law it became clear that steering the production was not so easy. Also, there were different views on the parity wage. While many farmers rightly understood it as an entitlement for a decent income, it was seen by the staff in the Department of Agriculture also as a tool for their medium-term planning. They tried to reduce the support for the dairy industry (which was inclined to produce abundantly) – and support other areas, however, more, which was not always understood.
After the war, there were more reasons reinforcing the tendency to overproduction. New machines and tractors were introduced on the farms and horses became increasingly rare. Fertilizers have been improved, and one succeeded in breeding cows which produced more milk. In the consolidation of farming meadows and arable land far apart were merged in many areas. Marshy meadows have been drained and the country lanes and roads upgraded. The farms could operate easier and more efficient. In short: the agriculture was more powerful.
Because the Federal Government had committed to the farmers to purchase the milk at a fixed price, it resulted in abundant production. As much as possible was used for making cheese and exported, sticking to a high-quality level as all Swiss products do. The Emmental cheese came to be world renown. Out of the remaining milk mostly butter was produced (which was frozen) or the milk has been processed into milk powder, – often sold at cheapest prices abroad, for example to the Soviet Union, to India and African countries.

Alternatives to dairy farming – cultivation of sugar beets

Admittedly the Federal Council had little success after the war applying his politicy to retain arable land. Switzerland became mostly “green” again. – The planners in Berne could still enter some success in their books – by promoting the cultivation of sugar beet.
The conditions were favourable. Experiences existed already since the beginning of the 20th century. In the Bernese Seeland area sugar beets were grown and processed to home grown sugar at the sugar factory of Aarberg since 1899. The production was, however, small, so that the self-sufficiency rate was only at about 15 percent after the Second World War. It was obvious, to build a sugar factory in the East of Switzerland and to promote the cultivation of sugar beets with federal funds. But after significant initial difficulties and after two referendums this policy should become a success story.
The new sugar factory was supposed to be built in Andelfingen. The planning people in the Department of Agriculture were confident to succeed with their project. National Council and Council of States perceived the project positively and voted in favour with vast majority. The referendum had been taken, and it came to a plebiscite – and to a nasty surprise. On 14 March 1948 the people voted clearly against it with 63.3 percent. The main reasons were more in the psychological field. The whole presentation of the new sugar regime reminded too much of the State-controlled economy during the war, and of which many wanted to get rid. The Federal Council would have prescribed the size of the area under cultivation and the sugar beet prices, organized the production and many things more – as he did during war with all basic foodstuff. To finance all this, the tariffs on imported sugar were supposed to be put up what would have increased the price for consumers. A large majority voted against it. The farmers often returned to more entrepreneurial freedom and wanted to decide themselves what they wanted to grow.

The peoples “No” leads to success

With the “no” of the people the sugar project wasn’t “gone”. Following the principle of subsidiarity, communes, cantons, associations and private companies took the business into their hands. They founded the Swiss Association of Sugar Industry, which, in turn, formed a stock company, the Federal Government was not involved in, but twenty cantonal governments, associations and trading and industrial companies, as well as numerous individuals. They prepared a new sugar submittal “without federal government”, which excluded increasing the price of sugar from the very start. It was unanimously approved in the National Council and in the Council of States – which happens quite rarely. Also, no one within the population came up with the idea of taking a referendum. – This political process as it happened is a prime example of the functioning of federalism and subsidiarity, which deserves to be described in a textbook of Political Science: The “no” to the referendum in 1948 led to a solution that was widely accepted. The population in Frauenfeld agreed to build the new sugar factory, and was also ready to contribute financially. In 1974 and 1985 there were two further federal referenda on the expansion of the sugar factory and the expansion of the cultivation of sugar beet. In 1974, the people voted yes, but in 1985 they voted against a project that was overly large. Today 6,000 farmers grow sugar beets on about 20,000 hectares in Switzerland, which are processed in the two sugar factories at Aarberg and Frauenfeld (whith today 3,000 employees) to approximately 250,000 tonnes of sugar, which corresponds to a self-sufficiency rate of nearly 100 percent. 85 percent went into the food industry and 15 percent to the retailers. Today in autumn many tractors and trailers highly loaded with sugar beet are seen on the access roads to Aarberg and Frauenfeld. A “gentle fragrance” lets the people know that the sugar processing is running at high speed. Nobody bothers, because the factory simply belongs to the region. – The Swiss sugar was and is a successful project, where the people in the initial phase have provided for crucial turnout.
In other areas of the agricultural policy the development was less straightforward compared to the sugar. Are there alternatives to the official, centrally-controlled and planned agricultural policy, asked some citizens who were close to agriculture and were worried. Mind you: This was done on the basis of the Agriculture Act of 1952, which was accepted by the people, with 54 percent. These forward thinkers suggested a change of direction, astonishing from today’s perspective. They also referred to the principle of subsidiarity as the actors in sugar did, according to which the State should take care of things only which the citizens cannot do. And they relied on a tradition that goes far back in the middle ages, when farmers joined together to cooperatives, in order to protect their property.

Community Floors – Possible alternative to the official agricultural policy

“More cooperatives and less state” was the motto of this movement. One of the leaders was Hermann Studler, long-time agricultural director, therefore Government Council in the canton of Aargau. An example of a successful municipal mead corporation is the “Markgenossenschaft”  Schwyz, which has its roots in the Middle Ages. As in all the Germanic settlements, every settler in the “lands of old” Schwyz had his own house and farm. All the rest of the land, however, remained in communion with all the settlers, and thus constituted the common “Mark” or common land, which was used in common. The “Markgenossenschaft Schwyz” still exists today. It has available a large part of the canton’s agricultural land.
Studler was concerned about the unsatisfactory situation of small farms in the fifties, which often did not cover more than five hectares of land. He suggested to them that they should join in local forest and field cooperatives. Today the Swiss farms are much articulately bigger. The following procedure would have been conceivable: small farmers would keep their farm and contribute their land as assets in kind to the cooperative. For this purpose, they would receive one or several shares, which would bear interest, depending on the area. Their income would then be composed of interest and wages as employees of the cooperative. A section from one of the speeches by Government Council Studler:
“From the last report of the Federal Council, it can be concluded that the ideal farm size is between 10 and 20 hectares. However, if one accounts to oneself for the fact that [...] 52 percent of peasant farms are less than 5 hectares and 79 percent are less than 10 hectares, which cannot survive in the long run despite state support. [...] Leaders of farmers pleaded for the preservation of the farms and took a stand for that small farmers could save their existence by getting an additional income. [...] I cannot believe that this is achievable with non-agricultural additional income, but only through the integration of small farms into the agricultural cooperatives in the municipalities. [...]
The small farm is, by itself, hopelessly uneconomical, and whoever has to look for his income mainly outside agriculture is lost to the peasantry. But I also do not believe that the family business of 10 to 20 hectare can compete with the large companies abroad. [...] Only the community corporations would put an end to the speculation of the soil and the ‘sale of the land,’ and the agricultural cooperative would allow a large-scale cultivation of the fields with minimal expenditure on buildings and machinery. What remains to be done by hand can be accomplished by small farmers and paid by the cooperative in such a way that they prefer this work to work in the factory or on the site. [...] Even in mountain areas, where agriculture is no longer possible, many things can be used for the better by means of the corporation’s cooperative and the communal setting one’s hand to the task of the production problems. [...]
Finally yet importantly, the farmer would become a real member of a cooperative. As long as he only purchases his articles of need cooperatively and delivers individual products to the cooperative society, there are hardly more than mathematical considerations involved. It is only when one person understands the other’s worries and tries to help him that the cooperative spirit has entered the peasant village. It will work more wonders than the freedom of the soil and the independence of the individual enterprise.” (Studler, Albert, “Politik als Bürger- und Menschenpflicht” (Politics as Citizenship and Human Duty), Aarau 1961, cited in: König, Paul, “Die Schweiz Unterwegs 1798 bis ?” (Switzerland – On the Go, 1798 to ?), Zurich, 1969)
However, the idea of the municipal corporation as an alternative to official agricultural policy could not prevail. Although the local forest and field cooperatives emerges in many municipalities (for example, in forestry), it is not as broadly as then suggested.
The cooperative farming of alpine meadows is prevalent throughout the completely Alpine region. The alpine cooperative in Törbel (VS) has become famous because it has examined and introduced the American Nobel Prize laureate Elinor Ostrom in her study “The Tragedy of the Commons”.
The idea of a business community has become increasingly widespread more recently. Two, three, or more farmers close together and manage their farms jointly, without joining the properties of the farms resp. being cooperatively combined. Leisure or holidays are more easily to realise.
While some citizens and politicians in Switzerland were thinking about alternatives to official agricultural policy, there were circles abroad, who were concerned about the fact that the Confederation protected the farmers with tariffs and contingents from the cheap products’ competition from abroad and wanted to prevent Switzerland from the accession to GATT.

Australia and New Zealand prevent Switzerland from joining GATT

In 1947, 23 countries founded the General Agreement on Tariffs and Trade (GATT) with the aim of reducing the high trade barriers worldwide. The United States, for example, demanded a 60 percent duty for Swiss watches. The founding members included the highly developed industrialised countries of the West, agrarian countries such as Australia and Brazil, developing countries and a few communist countries such as Yugoslavia. Each member had a vote. The treaties could only be amended if all agreed. There had been seven negotiating sessions to the nineties, in which the duties were gradually reduced.
Switzerland has to import almost all raw materials and exported 40 percent of its products and services abroad in the post-war period – similar to today. Therefore, it was interested in an agreement such as the GATT, which would bring about trade facilitations. Nevertheless, this did not happen. In 1947, the voters had agreed to the new economic articles in the Federal Constitution. They – as already stated above – commissioned the Confederation to take measures to protect a healthy peasantry and an efficient agriculture (Article 31, Paragraphs 1 to 3 of the Federal Constitution [“Bundesverfassung”; BV]). For this purpose, the Agricultural Law (1952) provided protective tariffs and quotas, which restricted or prevented imports of imported products. This made an immediate accession to GATT impossible for the time being.
It was the task of Hans Schaffner, then Director of the Trade Department, to convince each individual member of the GATT of a derogation for Switzerland. In 1958, he was close to his goal. Almost all of the members agreed to include Switzerland with a special statute. Almost all of them – the agrarian states Australia and New Zealand imposed the veto – and Switzerland was only provisionally accepted and had to renounce the right to vote.

Accession to GATT with special arrangements

This did not prevent Hans Schaffner from contributing actively within GATT. As the Federal Council, he chaired the ministerial conference, which organized the Kennedy-negotiations. He succeeded in winning over the Director General of GATT, Arthur Dunkel, to support the full entry of Switzerland with a special arrangement. On 1 April 1966 the time has come: all members of GATT agreed. Hans Schaff­ner described this success in the Federal Gazette, the Swiss Official Gazette, as follows: “That our partners were willing to do so, it was partly due to the fact that a country of the stature of Switzerland, despite its fixed special type, which does not fit any scheme, would not block the way to GATT. […] In this sense, the freedom granted to Switzerland for the continuation of its agricultural policy is in a sense restricted. The limitations arise from the fact that our country does not lead an isolated existence, but is closely connected with its economic environment.” (Federal Gazette 1966, p. 713) Hans Schaffner is an example of a Federal Council who took a stand for the interests of his country, and did not tire of explaining the “fixed special kind” of Switzerland to his foreign colleagues.
A few months later Albert Weitnauer, head of the Swiss negotiating delegation at the GATT, described the events even more precisely at an ambassadorial conference: “The General Agreement is not fully respected by anyone in its wording. In granting exemptions or dispensations from the GATT’s obligation, the organisation has always proceeded according to the principle that the stronger each country’s economy is, the more stringent it proceeds. Developing countries enjoy a special status, which relieves them of the respect of almost all the provisions of the GATT. The highly developed countries, on the other hand, whose balance of payments is in good order, must make some effort to obtain dispensations from GATT’s obligations according to the Accord Générale. Under these circumstances, we recorded it as a success of our trading policy – after contenting ourselves with the status of a provisional member for more than seven years – to achieve  a full membership by a decision of the GATT Contracting Parties of 1 April this year. This happened although the Swiss agricultural policy, with its various import restrictions, is by no means compatible with the GATT Statute.” (Ambassadorial Conference, 1 September 1966, www.dodis.ch/30835)
Today, we miss a Federal Council, who is as committed to the international scene for agriculture and Switzerland, as did Federal Councillor Schaffner and the then negotiating leader at GATT Albert Weitnauer.
The same happened in other areas: in the foundation of the EFTA (European Free Trade Association) from 1960, agriculture was excluded. In 1972, the sovereign agreed with the large free trade agreement between the countries of the EFTA and the countries of the then European Community (EC) with over 70 percent. Here, agriculture was not included, too. This treaty has never been called into question and is still in force.
 (Part 4 and 5 of the series of article highlight the reorientation of agricultural policy, which began in the 1970s and was marked by numerous referenda, popular initiatives, and popular votes).     •

Sources:
Popp, Hans: Das Jahrhundert der Agrarrevolution (The century of the agrarian revolution), Berne 2000
Kölz, Alfred: Neuere schweizerische Verfassungsgeschichte (mit Quellenbuch)(Recent Swiss constitutional history [with source book]), Berne 2004
Linder, W .; Bolliger, C .; Rielle, Y.: Handbuch der eidgenössischen Volksabstimmungen 1848–2007 (Manual of the Federal People’s Ordinances 1848-2007), Berne 2010
Rhinow, René; Schmid, Gerhard; Biaggini, Giovanni; Uhlmann, Felix: Öffentliches Wirtschaftsrecht (Public business law), Basel 2011