Sustainability Indicators for Swiss Dairy Farms and the General Implications for Business/Government Interdependencies
| Date | 01 March 2004 |
| Author | Christian Gazzarin,Stefan Mann |
| DOI | 10.1177/0020852304041234 |
| Published date | 01 March 2004 |
| Subject Matter | Journal Article |
International
Review of
Administrative
Sciences
Sustainability indicators for Swiss dairy farms and the general
implications for business/government interdependencies
Stefan Mann and Christian Gazzarin
Abstract
This article explores the relevance of sustainable business development for society
and the state. Sustainability of enterprises can be defined as demonstrating the
ability to be capable of continuing the same type of business in the lifetime of the
next generation. In the case of Swiss dairy farms, this type of sustainability may also
depend on the willingness of the government and society to make the necessary
financial adjustments. Sustainability indicators for such farms are, therefore, related to
ecological and social benefits rather than simply to economic success. To evaluate the
role of Swiss dairy farms, a system with economic, ecological and social indicators for
measuring their sustainability would be valuable. This approach creates an integration
of sustainability life-cycle assessment factors of enterprises, on the one hand, and
purely economic business indicators, on the other. The approach developed in this
article would be of interest to all sectors that depend on public support.
Introduction
There is a growing sense that good performance by governmental agencies is in the
interest of the private sector. It is also evident that the strong performance of the
private sector intuitively has benefits for the public sector. Vice versa, public support
for big enterprises (Lüchinger, 2001) or particular economic organizations or entities
experiencing financial problems (Steindorff, 1994) is also a key globalization issue
that has an impact on both private enterprises and the public. But, then again, what
Stefan Mann is head of the ‘Forecasting Systems’ Department at the Swiss Federal Research Station
for Agricultural Economics and Engineering. Christian Gazzarin works in the ‘Farm Management’
Department at the Swiss Federal Research Station for Agricultural Economics and Engineering as a
researcher. CDU: 65.012.3(494)
Copyright © 2004 IIAS, SAGE Publications (London, Thousand Oaks, CA and New Delhi)
Vol 70(1):111–121 [DOI:10.1177/0020852304041234]
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112 International Review of Administrative Sciences 70(1)
impact does it have for private enterprises if it is clear that there is a public interest in
their business?
This article aims to answer this question by looking at Swiss milk production.
Mainly as a consequence of border protection, the Swiss price for butter is more than
double that of the world market price. In spite of this, Swiss dairy farmers still gain a
large share of their income from direct payments rather than from farm income, so
there is no doubt that the viability of Swiss dairy farms depends, to a large extent, on
the willingness of society to grant supportive measures.
The article applies the sustainability of farms as a measurement of long-term
viability, defined at the farm level, in the second section. The third section highlights
the demands of the public on dairy farming in Switzerland and outlines the influences
of the state and the market on farm sustainability. An indicator system for the
sustainability of Swiss dairy farms is then developed in the fourth section and the
implications of such an indicator system are discussed in the final section.
Defining sustainability at the farm level
The definition of sustainable development that is commonly applied, and used here,
originates from the Brundtland Report from 1987. According to this definition, sus-
tainable development means: ‘Meeting the needs of the present generation without
compromising the ability of future generations to meet their needs’ (WEDC, 1987).
During the past 15 years, there has been a fruitful discussion about the proper
definition of sustainability in society, which was comprehensively summarized by
Faucheux and Noël in 1995. However, the discussion of the implications of sustain-
ability at the level of a single enterprise has, however, been less enlightening. Most
contributions have failed to make a distinction between the key ways in which
sustainability at the business level can be understood. There are two ways in which
this might be considered:
● the development of an enterprise that contributes to societal sustainability; or
● the development of an enterprise that fulfils the conditions for sustainability for
the enterprise itself.
Many publications about the sustainability of farms (Andreoni and Tellarini, 1999;
Kessler, 2000; Schindler, 2000; Richter et al., 2001) implicitly use the first meaning of
sustainability at the enterprise level. They try to define business practices that enable
a sustainable use of resources at the societal level. By doing so, they are in danger
of overlooking the possibility that an enterprise itself can also be developed in a
sustainable or unsustainable way. The sustainable development of an enterprise,
following the second understanding, would imply that the enterprise is managed in
a way that allows the next generation to take it over. Thus, the definition of sustain-
able development of an enterprise could be as follows.
To manage an enterprise in a way that keeps it profitable for the current generation
and also for the generation 30 years ahead.
This definition does not imply that the farm has, in fact, a successor willing to take
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Mann and Gazzarin Sustainability indicators for Swiss dairy farms 113
over. Intra-family as well as inter-family succession are both dependent on a large
range of factors, including random ones. However, it has been shown that successful
(or sustainable) farms have a higher probability of finding a successor than others
(Koch-Achelpöhler, 1998). Our sustainability definition barely implies that a farm
would be ready for a willing successor to take over.
To follow this definition of sustainability, there is clearly a need for long-term
strategies to keep the enterprise successful. Thus, sustainability on an enterprise level
appears primarily as an economic term, largely following Friedman’s (1970) provoca-
tive article ‘The Social Responsibility of Business is to Increase its Profits’. This applies,
at least, while enterprises act in the free market and so long as a business depends
solely on the demand for its products and services and can meet the cost of their
production factors.
As previously stated, however, there are many enterprises that are not inde-
pendent of governmental and societal intervention. Agriculture, in general, is, in many
countries, subject to massive intervention by the state. In developing countries, this
mainly happens by way of food subsidies and export tariffs (i.e. negative intervention
as far as the farmers are concerned), while farms in industrialized countries usually
enjoy support in the form of increased prices and direct payments. Although the
scope of this support varies over time, the recent decades show that overall support
is only marginally influenced by short-term political decisions. Most countries that
supported their farm sector 30 years ago continue to do so today.
Governmental intervention in...
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