‘Performance-based rewards in agriculture require trust’

Through a series of interviews, young Wageningen researchers Jessie Beirnaert, Roxane Bradaczek and Eline de Kool explored how the core set of KPIs developed at WUR can help achieve environmental goals and circular agriculture. They spoke with dairy farmers, provincial officials, researchers and other stakeholders to assess how the KPI system is perceived in practice.

The KPI system could play a role in the government’s goal-oriented policy, in which farmers’ sustainable performance is assessed and rewarded. But for effective implementation, several steps are still needed in the areas of communication, financial support and securing the system’s long-term viability, the researchers note.

‘Conversations with dairy farmers show that trust in government is a crucial factor for successful implementation of the KPI system,’ says researcher Jessie Beirnaert. ‘That trust is currently largely absent, due to unstable policies, a lack of expertise within government, and the absence of a clear vision. Farmers interviewed now perceive the KPI system as just another additional requirement, which is not motivating and further undermines trust. To restore confidence, clear communication is essential. Provinces that maintain close contact with farmers and work step by step with them prove more successful in building trust than the ministry.’

Another key point is the level of financial reward, Beirnaert stresses. This must be sufficient to cover the costs of sustainable measures, but not so high that farmers become dependent on subsidies. ‘The farmers we spoke to want their main income to come from their products, not subsidies. At the same time, they see long-term guarantees (at least 10 years) as essential to offset the costs of transition. In addition to compensation, solid support and knowledge-sharing are crucial.’

The researchers also emphasise the importance of collaboration between government and other stakeholders. ‘Various parties, such as banks, water boards, nature conservation organisations and dairy processors, can contribute in different ways to rewarding KPI performance. It does not always have to be a premium or subsidy; reductions in water board levies, lease fees and interest rates are also possible forms of reward.’ At the same time, government must ensure that strict Dutch regulations do not drive consumers towards cheaper, less sustainable foreign products. ‘The market must also change in order to support the transition to circular agriculture.’

The researchers also have advice for provinces. Beirnaert: ‘It is important that they work together on an integrated KPI system. Too often provincial officials sit at the table with local stakeholders from within their own domains and interests, which hampers good and effective cooperation.’

It is clear that the KPI system has potential, but much work remains to make it effective in practice. ‘The most important thing is to start taking steps now and make adjustments along the way. At the same time, the long-term goal must be clear, so that all stakeholders know what they are working towards and why.’ 

•  Perspectives on performance-based rewards in circular agriculture

•  Integrated area-based approach: Experiences with regional processes in rural areas