Taken as a whole, the average farming income has increased in the European Union from 2011 to 2012. However if one considers this income per country, it is clear that the instability of agricultural markets has differently affected national farming income in Western Europe. For instance, in France the growth rate of the agricultural sector is low compared to Germany, whereas in Eastern Europe, farming income is on the increase, boosted by combinable crop production.
In the text below Didier Caraës reviews farming income in the EU within the current economic context, as published in a recent article in the journal ‘Chambres d’agriculture’1
, which we recommend reading. In this article he points out the different dynamics at work in the 27 Member States, soon to include a 28th member when Croatia joins the European Union on the 1st
Regardless of these disparities between Member States, all the countries within the European Union are in need of regulatory mechanisms in order to stabilize farming income at a remunerative level, and implement tools for managing agricultural markets in an efficient way in the face of increased market uncertainty.
The future CAP will have to meet these requirements in order to protect an essential and strategic sector and maintain Europe’s competitive edge. Everything is yet to be won, and as Momagri goes on claiming high and loud: another CAP is possible!
momagri Editorial Board
At the end of December 2012, Eurostat, the European statistics office, published the figures for farming income in the Member States of the European Union. From 2011 to 2012, farm generated income was more or less profitable for farmers in the European Union, with a global increase in average farming income for all sixteen Member States.
Western Europe: a lower growth rate for French agriculture compared to German agriculture
For the sake of simplification, the European Union was divided in fourteen geographical areas: Western Europe, British Isles and Scandinavia, Eastern Europe, Baltic States and Poland, and Mediterranean Europe.
Compared to its neighbours in Western Europe, farming activity in France has remained more or less stable over the last decade. The curve for farming income in France hardly moved up until 2007, after which it began fluctuating as France entered a time of turbulence.
- The amplitude of fluctuations in French farming income over the last few years is less significant than that in other countries (Germany, Belgium, Luxembourg, Netherlands). This raises the following question: does the instability of agricultural markets have the same consequences for all Member States in the European Union? Or have some of these states implemented national policies that help counteract these consequences?
British Isles and Scandinavia: the United Kingdom appears to have been spared by the farming crisis.
- Before the episodes of volatility at the end of 2000, French farming income was in deficit compared to Germany. And this deficit has been widening since 2010.
The average farming income for farmers in the United Kingdom was barely affected by the crisis that hit European agriculture in 2007-2009. Farming income in the UK merely stagnated during this period. If one compares this with the situation in France, taking into consideration all main areas of production, the evolution was similar for both countries.
However, unlike France, Britain very quickly emerged from the 2005-2007 farming crisis (dairy and meat), and resumed a healthy medium term growth rate in these two key sectors of the country’s agricultural economy.
Eastern Europe: a strong growth dynamic
The last decade has been globally positive for Member States in Eastern Europe. In the medium term, farming income has increased, even if the year 2012 curtailed this increase for many.
Economic figures for these Member States show a strong increase in agricultural income tied to combinable crops (cereal crops, oilseed and protein crops, beet), whereas livestock production is globally declining. Perhaps these Member States are going through a phase of change, with ‘combinable crops’ becoming an essential part of their agriculture. Indeed, the good results for Eastern European agriculture are essentially boosted by combinable crop production.
From a demographic perspective, these Member States are in the process of reducing the number of jobs tied to agriculture. A strategy that logically tends to increase average income per capita.
Baltic States and Poland: a medium term increase in farming income
The economic figures for agriculture in the Member States of Eastern Europe show an increase in combinable crop production at the expense of animal production, with the exception of Poland. Indeed, in Poland the growth in agricultural production benefited all the sectors of activity, be it crop or livestock production. In addition to this, the country’s large scale demographic restructuring strategy, confirmed by the 2010 census (from over 2 million farms in 2003, down to 1.4 million in 2010), points to Polish agriculture as a successful example of the European integration process.
Mediterranean Europe: a declining farming income
The last decade saw a decline in the farming income of Member States in Mediterranean Europe.
Italy is an emblematic example of this lagging productivity. In all main agricultural sectors, typical of Mediterranean production (arboriculture, sheep farming, fruit farming, olive farming, viticulture), the value of Italian production has slumped. While at the same time, demographic restructuring drags on (1.9 million farms in 2000 down to 1.6 million in 2010). A situation that is eroding the productivity of Italian agriculture, and which is verified by the decrease in farming income measured by statistical indicators.
This summarized overview of farming income in Europe clearly emphasizes the divide between agriculture in New Member States, which is undergoing a phase of growth and modernization, and agriculture in the EU-15 Member States, which is diversely affected by this context of heightened competition.
1 Follow this link to read the entire article http://www.chambres-agriculture.fr/fileadmin/user_upload/Revue/Article/Revue_1020/Revue1020_conjoncture.pdf