Original publication: October 2017
Authors: Czech University of Life Sciences Prague, Czech Republic: Lukáš Zagata, Jiří Hrabák, Michal Lošťák, Miroslava Bavorová
Technology Centre of the Czech Academy of Science: Tomáš Ratinger
The James Hutton Institute, Scotland UK: Lee-Ann Sutherland, Annie McKee
Short link to this post: http://bit.ly/2zp8ICA
Even though EU assistance has been available to young farmers for more than three decades, the ‘young farmer problem’ seems to remain. This is due, on one side, to the complexity of the problem and, on the other, to the limited effectiveness of policy mechanisms in dealing with it.
Discussion about young farmers and their role in agriculture is related to a wide range of questions, such as restructuring the agricultural sector, ageing farmer population, identification and differentiation of new entrants in agriculture within young farmers and relative potential of policy tools to impact on generational renewal in agriculture. Understanding the problem in its full complexity is crucial for increasing the efficiency of the support addressed to young farmers.
The policy instruments implemented in the current programming period rely on the first and second Pillar of the CAP.
The financial aid for young farmers in terms of the Pillar I is a compulsory scheme. Approximately 4.1% of basic payment applicants benefited from the Young Famers Payment (YFP) in 2015. The YFP per hectare varies between 20 EUR/ha and more than 80 EU/ha.
The support for young farmers is provided within the EU rural development policy (Priority 2: Enhancing farm viability and competitiveness of all type of agriculture (…), subtheme B), which includes five major measures. The weight of a given Priority varies substantially in RDP’s of the regions/Member States. The dominant instrument for addressing the given Priority is Measure 6, providing start-up grants for young farmers. This Measure constitutes more than 90% of the budget allocated to Priority 2B. Some Member States target this support towards very small farms, while most others also consider farms ten and more times larger than the lower threshold. During the installation, period farmers have to demonstrate the viability of the business. The viability conditions are specified differently in the Member States and include deployment of minimal Annual Work Unit (AWU), reaching a specific operational size expressed in Standard Output terms, hectares or number of animals. The actual level of support (on a lump-sum basis) is differentiated according to six criteria (by location, size of the established holding, production specialization, amount of investment, provision of additional jobs and ‘other’).
Due to the absence of secondary data, it has been necessary to generate primary data to evaluate the impacts of the current measures. This primary study was conducted in 7 Member States. Focus groups became the major source of data for the subsequent analysis across the selected countries.
The general evaluation of the existing measures directed at young farmers is consistently positive. However, the major support tool (start-up grants for young farmers) is oversubscribed in several Member States.
Each of the focus groups considered the barriers to young farmers. Access to land was identified as the most important barrier to new entrants due to limited high quality land, land prices, impacts of the CAP direct payments and legislative reforms. New entrants tend to operate smaller farms, and therefore struggle to access inputs at competitive prices. Their businesses are more threatened by price volatility (for both inputs and produce). New entrants also deal with problems with accessing financing through banks or other credit programmes, and are in need of training in entrepreneurial and risk management skills.
The existing Regulation provides Member States with significant flexibility for implementing the support for young farmers starting new businesses. From the stakeholders’ point of view, the focus of the current support is very vague. In some countries it serves as a tool for facilitating farm succession or as a useful incentive for passing the farm from the older generation to a younger successor, whereas in others it is considered rather as start-up aid for new entrants to agriculture.
The measures currently being implemented are addressed to a generally defined group of young farmers. Most of the case study countries identified successors to existing farms as their primary beneficiaries. Despite the fact that the start-up grants do not usually cover the entire investment, they contribute to new business activities in agriculture. The Young Farmer Payment enhances the competitiveness of young farmers’ and new entrants’ farms.
The proposed innovations for improving the support mostly focus on the amount of funding available for applicants, administration of the measures and re-definition of the target groups (young farmers vs. new entrants)
Based on the secondary analysis presented in the study, 14 recommendations are proposed. Key recommendations include:
- The support for young farmers should continue.
- In order to deal with the problem of land access, the report recommends reevaluating the direct payment scheme and creating new incentives for older farmers to pass on their farms.
- New supports could enhance the actions of new innovative initiatives that are supporting new entrants to the agricultural sector
- Supports should further focus on additional barriers, such as access to capital, lack of business skills and insufficient succession plans.
- Support for young farmers should be differentiated from support for new entrants.
The main purpose of this report is to provide Members of the European Parliament with information regarding the state of implementation of the current CAP young farmers’ mechanism.
The objectives of the report are defined as follows:
- Describe and explain how the young farmers’ tools in the latest CAP reform have been implemented on the ground with respect to the specific implementation decisions of the Member States.
- Provide evidence about the main structural results of the implemented measures and identify (a) main challenges faced by newcomers to farming, (b) key factors and indicators for successful young farmer initiatives and (c) possible approaches and instruments to facilitate young people’s entry into the farming business.
- Draw policy conclusions and provide strategic recommendations for how the EP can best learn from the young farmers’ tool implemented by the latest CAP reform.
Link to the full study: http://bit.ly/602-006
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