Denmark’s economic policy is close to Sweden and Norway, but the impact of planning economics and government business is somewhat lower. Like the rest of the Nordic countries, liberalization of the economy in Denmark has taken place in recent years, which is linked to the adjustment within the EU. Until the Second World War, agriculture was of the greatest importance to the economy. Agriculture has subsequently declined, and Denmark’s economy is now based on service, industry and financial activities. In 2003, the service industries accounted for 73 per cent of employment and contributed 81 per cent of gross domestic product ( GDP).). Agriculture’s share of employment and GDP has fallen significantly, but Denmark is still a net exporter of agricultural products. Denmark is dependent on importing raw materials into the industry, but via the oil and gas fields in the North Sea (and to a lesser extent through expansion of electric power generation) has become self-sufficient with energy. Denmark has had economic growth rates of 1–3 per cent annually since 1994, and GDP per capita is in the upper part among EU countries. During the same period, unemployment has fallen significantly. Strikes and other conflicts in the labor market have gradually become rare in Denmark, where there is a long tradition of wage earners and employers solving problems through negotiations.
The Danes are known for their delicious pastries, perhaps especially pastry.
Agriculture has traditionally been the backbone of Danish society and throughout history has been crucial for the economy, including the foreign economy. Until the mid-1950s, agricultural commodities were the main source of export earnings. Since then there has been considerable structural rationalization in the industry. From 1951 to 2002, the number of farms dropped from 208,000 to 50,000. The small and medium-sized farms (up to 50 hectares) have been closed down or merged. The decline in agricultural land has therefore been small during the same period; However, EU support for set-aside has since the 1990s meant that many less fertile soils have been taken out of production. Another part of agricultural structuralization is the specialization that has taken place on the individual farms. A typical Danish farm is now either a pig producer, a dairy farmer or a plant breeder, but rarely a combination of these. Some farms have become very large; In particular, there are so-called pig barons, farms with tens of thousands of pigs, which face local criticism because of the strong odor of large manure production.
The development of forms of operation has meant that total agricultural production has increased. For example, pork production increased from 1.3 million tonnes in 1990 to 1.9 million tonnes in 2003. This means that agricultural products are still important for exports and that pork has long remained the most important single commodity in foreign trade. Transition to organic farming is taking place at a steady pace, but only five percent of farmland and five percent of livestock herds are ecologically driven.
The large exports of agricultural products have made Danish meat and dairy products known in a number of countries.
About 60 per cent of the total area is cultivated; this is still the second largest proportion in the European context (after Moldova). Agriculture, forestry and fishing employed 3.6 per cent of the working population in 2002, compared to 21 per cent in 1950.
Most of the land is operated by agricultural associations. Within the agricultural cooperation, Denmark has been a pioneer. The first cooperative dairy was established in 1882 and the first cooperative slaughterhouse in 1887. There are a number of different associations for joint sales of agricultural products, joint procurement of equipment and raw materials and credit and other financial assistance to the farmers.
What products are produced is largely regulated by the EU’s pricing and marketing policy. Grain production’s share of the total agricultural area is in decline, but still accounts for just over 50 per cent of the area. However, grass and fodder crops are growing, accounting for almost 17 per cent of land use in 1994. Wheat has replaced barley as the most important grain, but a lot of rye and oats are also grown. Most of the grain is used for animal feed, while the bread grain has to a large extent be imported. Other important crops include sugar beets, rapeseed, root vegetables and seeds for industrial use. Horticulture is also important, especially in eastern Denmark.
Meadow and pasture cover just under five percent of the land area. Main livestock are cattle, pigs and poultry. Livestock farming is largely focused on the production of milk, butter, cheese and pork. The trend has been towards lower production of butter, while cheese, pork and poultry production has increased. In addition, comes a relatively significant fur farming, mainly of mink.
Animal husbandry is important in Danish agriculture.
Forests cover 14.3 per cent or 615,000 acres of Denmark’s area, and it is a political goal that the forest share should be increased to 20-25 per cent due to the environmental value of the forest. The beech forest dominates in the eastern parts of Denmark, the conifers in the western parts. The state owns about 1 / 3 of the productive forest, including the major nåletreplantningene on flight sands in western Jutland. About 3.4 million m³ are cut annually, and domestic production covers a quarter of the wood consumption in Denmark. Primary forestry employs about 4,000 people, while the wood processing industry employs about 35,000.
In 2004, the Folketing decided on a forest program that over a period will make the operation in the forests more nature-oriented; one seeks to make the forests even more attractive as hiking destinations. Already now the forests near the cities are widely visited.
Denmark is a major fishing nation, and there are a total of 2370 fishing vessels for professional fishermen (2015). The EU’s common fisheries policy forms the framework for Danish fisheries. This applies to both the allocation of quotas and support schemes for scrapping older and smaller fishing boats. The number of fishermen is declining year by year, and several cities that were previously heavily affected by fisheries are experiencing major changes. This applies most conspicuously to Esbjerg, which has long been the country’s largest fishing port, but which in 2004 had only a few (but large) fishing boats. Now there are cities like Skagen, Hanstholm and Hirtshals which has the biggest catches. Due to the opportunities for refrigerated transport, the fishing industry is no longer dependent on being directly at the fishing ports, and they are scattered around the country. An important detail here is also the EU’s rules, as imports of finished products from non-EU countries are charged with far higher customs duties than imports of raw materials. This means that Denmark has a large import of raw fish, especially from Norway, which is exported after processing at Danish factories.
Bornholm has long been known for its smoked herring (smoked bornholmer).
The Danish coastal waters have a rich variety of different fish species. Most of the catches are taken in the North Sea, then in the Skagerrak and the Baltic Sea, however, the latter is in decline both in terms of catch volume and value. The catches in the North Sea consist mostly of cod (about 20 per cent), herring (about 9 per cent) and plaice (about 9.5 per cent) besides industrial fish for the production of fishmeal. Herring in the Baltic Sea has been greatly reduced, but some fishing industries on Bornholm survive through catches from Polish and Baltic fishermen. Trout farming happens in aquaculture at Jutland’s small rivers, and in the Limfjord, which has a large mussel fishery, a promising development work involving oyster farming is underway.
Denmark is fairly self-sufficient with building materials; In particular, there are good reserves of good quality clay, gravel and sand. It is based on deposits from the last ice age. Beyond this, mining is only of very limited and local importance.
Daugbjerg Lime Mines is Denmark’s oldest lime mine, but is no longer in operation. Today the mine is privately owned and developed as a tourist destination. Søby Brunkulslejer was in operation from 1940 to 1970 and was especially important during World War II when there was a shortage of fuel. At most, 1500 people were employed in the mine, which today is a museum with, among other things, a large photo exhibition from the Herning Museum.
Faxe Kalkbrud is one of the few mines still in operation. Lime extraction started at the beginning of the 13th century. The limestone quarry is currently owned by the Belgian Lhoist Group, which specializes in limestone extraction worldwide.
Oil production started in 1972 (the Dan Field), and Denmark is now Western Europe’s third largest oil producer (though far behind the UK and Norway). The Danish Underground Consortium (DUC), formed in 1963, is responsible for most of the exploration and production activities, together with the main partner and operator AP Møller. The current known reserves last for about ten years, but new production fields are constantly being discovered in the North Sea. From 1995 to 2002, oil production doubled; natural gas production is growing slightly. The peak was reached in 2004 with 390,000 barrels of oil per day, while daily production (2012) amounts to about 200,000 barrels.
As a result of oil production were Denmark for the first time self-sufficient in energy in 1997. Self-sufficiency ratio peaked in 2004 with 155 percent, but has since fallen. In 2013, the country was again a net importer of energy. Primary energy consumption in 2016 was 691 peta joule (PJ), with a self-sufficiency of 91 per cent.
The Danish consumption of electrical energy has been relatively stable and has only increased by about 10 per cent since 1980. Per capita, the final consumption is 5 600 kWh. This figure is low compared to other Nordic countries and is because Danish electricity prices are among the highest in the world.
However, the power mix, that is, how the production of electrical energy is composed, has undergone major changes. After the oil crisis in 1973-74, older thermal power plants were replaced by coal-fired power plants, but in the 1990s a new phase-out of the new coal-fired power plants started through an extensive expansion of wind turbines.
In 2002–2003, the world’s two largest offshore wind turbines west of Esbjerg and south of Lolland were inaugurated, each with a maximum output of 160 MW. At the same time as the offshore development, older and less efficient wind turbines are being taken down. Development of wind turbines in Denmark started as a popular project with many local wind turbine pools and local craftsmen. The world’s largest wind turbine manufacturer, Vestas, has its origins in this development. The industrial company Bonus, the world’s second largest wind turbine manufacturer, was also Danish, but has now been acquired by Siemens.
In 2017, electric energy production was 29.3 TWh and net imports were 4.6 TWh. Power produced with renewable energy was 72 per cent, with wind power being the dominant source of energy with a share of 50.5 per cent. Cogeneration accounted for 47 per cent, distributed on coal, 19 per cent, and renewable energy (biomass), 19 per cent, while the contribution from gas power plants was 6 per cent.
Denmark differs from other countries with its high share of wind power, which is the world’s largest. However, wind power is an unstable source of energy that at times leads to either a surplus of power, which must be exported, or a power deficit, which must be covered up by imports. The country is therefore to a large extent dependent on the exchange of power with foreign countries. In 2017, the sum of gross exports and imports was 26 TWh, or 89 per cent of its own production. Interaction with the Norwegian and more flexible hydropower system is important in this regard.
Wind power has been used as an energy source in Denmark for a long time. The Kappel Wind Farm at Nakskov in Lolland was built in the early 1990s.
Danish industry is a typical processing industry, resulting from the country’s lack of raw materials. The industry is highly differentiated and characterized by small and medium-sized businesses, which often produce special goods for a limited market, the so-called niche industry. The level of wages means that the companies cannot cope with price competition in the world market, but must find other competition parameters. It can be design (B&O in Struer (radio and TV)), technology development (two of the world’s largest wind turbine groups (Vestas in Randers and Ringkøbing and Bonus in Brande)), solid traditional quality (Danfoss in Nordborgat Als (valves) and Grundfos in Bjerringbro (pumps)). Industries that have not managed such a trend have declined sharply. This is especially true of the shipyards, of which there is only one major company left, AP Møllers Lindøværft on Funen. The chemical industry is steadily growing. The most important single industry is the pharmaceutical industry. The largest company in the industry is Novo in Bagswaard (northwest of Copenhagen), a major producer of enzymes and insulinto the world market. The food industry is versatile; large industries such as breweries and dairies are characterized by monopolies – Carlsberg and Arla, respectively. In the large slaughter industry, too, a number of mergers of cooperatives have created monopoly-like conditions. This also applies to the few remaining sugar refineries.
Danish industry has undergone considerable relocation in the post-war period. While the Copenhagen area used to have almost half of Denmark’s industrial companies, large parts of the industry have now moved to other parts of Denmark, and especially to rural areas in Jutland. By the mid-1990s was about 2/3 of industrial jobs in Jutland, while Copenhagen is largely without real industrial businesses.
Danish beer is known throughout much of the world. Carlsberg was founded in 1847 and now runs beer production in 40 countries.
Denmark lacks a large domestic market and many important raw materials. Foreign trade therefore plays a major role in the country’s economy. The foreign economy went a long way with deficits, which were covered by large borrowings abroad. Since 1987, the picture has turned around, and Denmark has a surplus in the trade balance. The large costs of the loans raised in the 1980s have charged the balance of payments, but this has been a plus since the 1990s.
Denmark has traditionally had large exports of agricultural products, but the share of agricultural exports has declined. Immediately after World War II, agricultural goods accounted for more than 60 per cent of export value and industry by just under 30 per cent. In the early 1960s, industrial exports exceeded agricultural exports; in 1997, agricultural goods accounted for 22 per cent of the export value, the industry above 70 per cent. The most important single commodity in export has traditionally been pork, especially bacon for the English market. In 2002, another commodity, windmills, pork exports surpassed. More than 70 percent of exports go to EU countries; most important are Germany (22 per cent), Sweden, the UK, the Netherlands and France.
The majority of imports consist of raw materials and semi-finished products for industry. Otherwise, various consumables and transport equipment are imported.