A widely-accepted justification for subsidising agriculture is that we need to prevent the emergence of the industrialised, mono-cultural agriculture which is the inevitable result of an efficiency-based, cost-oriented farming model by protecting the diversified, environmentally-friendly small farmer in order to maintain the positive environmental benefits of European agriculture. This is part of the philosophy of agrarianism which underpins much discussion of agricultural policy.
Let us leave aside for the moment the fact that the bulk of existing farm subsidies go to larger farmers rather than smaller ones, so that even if the thesis above is valid, current agricultural policy does not support it. My interest is in the evidence for the thesis itself. Is it the case that small farms are better for the environment?
In principle, there are three reasons why this might be the case, even controlling for differences in farming system and underlying natural conditions. The first has to do with the scale differences between small and large farms. Small farms mean more varied field structures, more hedgerows and more patches of uncultivated land. Large farms are more likely to have larger field sizes, and thus fewer hedgerows and fewer niches of unproductive land.
The second argument has to do with production intensity. If larger farms are more intensively managed and use more fertiliser, for example, then they will have less biodiversity and are more likely to cause water pollution.
The third argument has to do with farmers’ attitudes. Small farmers, it is argued, have a more empathetic relationship with their land and nature, whereas larger farmers (who may well be absentee owners) have a more utilitarian, rationalistic attitude. The outcome again will be more environmentally-friendly farming on smaller farms.
There is certainly some empirical evidence in support of this proposition. Belfrage and colleagues at the Swedish University of Agricultural Sciences compared the diversity and abundance of birds as well as butterflies, bumblebees and herbaceous plants between six small farms and six large farms in southeastern Sweden. Two of the large and four of the small farms were organic. More than twice as many bird species and territories, butterflies, and herbaceous plant species, and five times more bumblebees were found on the small compared to the large farms. Differences were also noted between small and large organic farms: 56% more bird species were found on small organic than on large organic farms, although none of these farms used any pesticides.
Levin in a Danish study noted that there exists a strong positive relationship between large farms and mean field size and a strong negative relationship between large farms and densities of uncultivated grass.
Marini and colleagues examined plant, orthopteran (crickets and grasshoppers) and butterfly diversity in 132 hay meadows in a region of the Italian Alps, distinguishing between three farm size groups. They found a negative influence of farm size on species richness of the three taxonomic groups. Large farms were strongly associated with higher production of organic fertilizers and higher soil fertility than small traditional farms, controlling for meadow slope, thus reducing the observed biodiversity.
There are many ways to elicit farmer attitudes to environmental conservation, including their willingness to enrol in agri-environment schemes. Vanslembrouck and colleagues from the Department of Agricultural Economics at Ghent University examined farmers’ willingness to participate in an agri-environment measure in Belgium, namely, to adopt buffer strips or unsprayed field margins. In their analysis, larger farms were more willing to adopt the measure, controlling for other variables.
This evidence is thus not unambiguous but does give credence to the belief that small farms may be more environmentally-friendly. In the Italian study, this led to the policy conclusion that “regional stakeholders should consider measures to prevent or at least to reduce the ongoing structural transformation of farms”.
However, there is a further argument that trying to maintain biodiversity and landscape amenities by subsidising larger numbers of relatively unproductive farms to remain in existence is an expensive way for society to buy these environmental benefits. At least in principle, a targeted scheme where we would pay farmers for desired environmental benefits directly could work out cheaper in the long run.
Directly contracting for environmental benefits would also allow some geographic targeting if (as is likely) it is not possible to prioritise the production of environmental goods over food production in all areas (I assume here, of course, that all farmers are required to observe minimum standards of environmental regulation).
On the other hand, the transactions costs of targeted environmental contracting can be very high, which is why environmental organisations continue to support a low flat-rate payment to all farmers in return for compliance with specific environmental conditions.
It would be interesting to hear of other experiences relevant to this debate.