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2014 prospects: Grain farmers’ revenues lowest since 2009



Frédéric Hénin, Editor-in-Chief Terre-net


Article published in Terre-net Média



Very cautiously this year, the French Ministry of Agriculture issued its first revenue forecasts for 2014. The revenues of grain and cattle farmers are lowermost among farming activities.

Without remunerative prices, good yields are undoubtedly no longer generating revenues. The early forecasts issued on December 15, 2014 by the nation’s Agriculture Audit Board show that grain farmer incomes (per self-employed worker1) declined by 44 percent compared to the previous year. The drop is even 73 percent compared to 2012, when incomes exceeded €62,000 per self-employed worker.

Grain and oilseed farmers would have earned €11,500 per self-employed worker, and it is estimated that “general crop” farmers––among whom sugar beets and potatoes producers––would have earned €32,500/self-employed worker.

For the latter, the drop in revenue is sharper (less 47.8 percent) than for grain and oilseed farmers (less 38.9 percent). Compared to 2012, they are the hardest-hit (less 79.3 percent against less 57.5 percent).

Compared to all large- and medium-sized farms included in the 2014 income estimates, the economic conditions of grain farmers are the most degraded. In fact, the income forecast is set at €24,400/self-employed worker––only a five percent drop of over one year––and a 32.2 percent drop compared to 2012. That year, the income of €36,000/self-employed worker in real terms for all types of farmers was driven par grain farmers.


AN INCOME REBOUND FOR DAIRY FARMERS

In 2014, dairy and “mixed dairy/cattle” farmers have experienced an income rebound. They would have earned an income among the highest in the agricultural profession, while grain farmers would form the rear guard along with cattle farming revenues, which are estimated at €14,500 per self-employed worker.

As it is the case every year, agricultural prices explain the varying trends in revenues for the various types of farmers (see graph). The recovery of grain prices is too recent to be included in the Ministry of Agriculture figures.

The year 2014 also shows a decline of approximately nine percent of the CAP first pillar payments. And the declining index of prices for production services and inputs (IPAMPA) was not adequate to offset the deficit.

In November, costs for the “Energy and Lubricants” line item has continued to decline since January 2014. The price of domestic fuel (or non road diesel), which accounts for 50 percent of the line item, retreated by seven percent between October 2013 and October 2014.

Purchase prices for nitrogenous fertilizers fell by three percent, those for phosphate fertilizers by two percent, and those for potash by eight percent between August of 2013 and August of 2014 (according to latest available figures).


PRICE VOLATILITY AT ISSUE

Consequently, the yearly fluctuations of agricultural incomes are reflecting the volatility of commodity prices in global markets, where farmers are selling their output. This volatility is so high that CAP payments are unable to soften its impact, especially regarding plant crops. As noticed, some grain farmers are even subjected to income fluctuations ranging from one to four during some years––and this unlike any other socio-professional activity––at a time when the per-capita national GDP keeps increasing (or at least stagnating since the economic crisis).

In other words, the erratic fluctuation of farming revenues, as it lacks an effective system to soften its impact, contrasts with the steady increase of GDP, i.e. of the wealth generated. And this occurs in individual terms––income fluctuations––as in national terms. In fact, “France’s farm” has lost €10 billion in added value, which did not translate into revenues for farmers.

The variation of agricultural incomes, as compared to the foreign trade balance for agricultural and food products (€7.7 billion over 10 months), also reflects another form of this distortion. It is indeed declining, but prices of exported high-value products are not varying much compared to agricultural incomes linked to global prices of agricultural commodities.


1 The farming income per self-employed worker is the income before compulsory deductions and includes the share of self-investment.


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Paris, 18 December 2018