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The CAP and Europe’s subsistence farmers

When the Commission unveiled its proposals for the health check back in November 2007, the DG Agri spin machine highlighted the proposals to introduce upper limits on the subsidies that are paid to Europe’s largest, wealthiest and most competitive farmers. What got much less attention was the plan to introduce lower limits, at a level of €250 per annum. This could make life even harder for some of Europe’s poorest farmers and shepherds who barely get a look-in when it comes to Brussels handouts.

According to the Commission’s impact assessment, the introduction of the single farm payment and the enlargement of the EU into central and eastern Europe has dramatically increased the number of very small farms claiming subsidy from the CAP. As things stand, 31 per cent of single farm payment recipients receive less than €250. The Commission argues that:

The very large number of small beneficiaries of CAP direct payments reflects more general structural aspects of EU agriculture. For many of these small beneficiaries, agriculture may be only one of several economic activities. These activities may be related more or less directly to agriculture. Consequently, any change in the payment rules would be unlikely to have significant agricultural employment impacts but could remove an alternative income source in rural areas with many small and part-time farmers.

The implication is that it is just part-time or hobby farmers who have entitlements of less than €250 per year, the favoured example being the stockbroker with a pony paddock. There is no doubt that such cases exist, but it is also worth remembering that some parts of Europe have a large number of subsistence or near-subsistence farmers. They are concentrated in the new member states and in particular in Bulgaria, Romania and Poland. The Commission does conced that “lower limits could be criticised in some member states as an unfair treatment of small farmers.”

Romanian shepherdDespite what farm ministers and agriculture commissioners would have us believe, the CAP is neither targeted at helping poor farmers nor at supporting sustainable and high nature value farming practices. If it were, it follows that low-intensity upland grazing in remote mountainous regions where there are high levels of poverty, low levels of literacy and very few other employment options ought to qualify as a high priority area. The irony is that for shepherds in places like the Fagaras mountains in Romania (pictured) the CAP is inaccesible and irrelevant. EU food safety regulations restrict how they can sell their traditional, hand-made cheeses but they get precious little from the EU’s subsidy system. €250 might be crumbs to a cereals farmer in the Paris Basin, but to a Romanian shepherd, it’s a sizeable sum. Introducing lower limits on payments risks further penalising a very hard-pressed and marginal group. There must be ways of addressing the relatively high transaction costs of paying out very small sums of money. Perhaps entitlements could be claimed every other year, so a recipient gets two year’s payments in one go?

The table below shows estimates of the number of subsistence and near-subsistence farms by member state, defined as less than 1 ESU (European Size Unit)*

The Standard Gross Margin may be different from actual margin on a farm because of the wide variation between farms with the same physical composition. A European Size Unit (ESU) is a measure of the economic size of a farm business based on the gross margin imputed from standard coefficients for each commodity on the farm. In concrete terms, 1 ESU is roughly corresponds to:

– either 1.3 hectares of cereals
– or 1 dairy cow
– or 25 ewes

or equivalent combinations of these.

* A European Size Unit (ESU) is a measure of the economic size of a farm business based on the gross margin imputed from standard coefficients for each commodity on the farm. The application of these standard coefficients results in the Standard Gross Margin (SGM) for a farm or group of farms. 1 ESU = 1200 SGM.

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3 Replies to “The CAP and Europe’s subsistence farmers”

  1. It is good to see this issue being brought up. Some of the figures in the table seem very surprising, for example, the high proportion of these micro-farms in UK which contrasts with the apparently low proportion in Spain. We need to bear in mind possible explanations. One is that in Spain (as in Bulgaria, Romania, Bulgaria and no doubt some other countries) many of these small-scale, part-time farmers do not register for CAP support because this implies getting into a whole set of bureaucracy and paying things such as social security and tax that they prefer to avoid. The real number of such subsistence farmers in these countries is therefore higher than these statistics suggest. On the other hand, in England with its regionalised payment system, I believe it is relatively easy for someone with a small patch of eligible land to claim payment, without having to pay social security as a farmer. Another different point is worth mentioning concerning the Commission’s analysis and view of part-time farming: if we are concerned about land abandonment, then the critical thing is for the farming activity to generate an acceptable return on the labour input, whether it is a full-time or part-time activity. We cannot expect part-time farmers to cross-subsidise their farming activity from other income sources, this can only be done by hobby farmers, who certainly are only a minority of the hundreds of thousands of the subsistence farmers in the EU27. For some more information on subsistence farmers in Bulgaria and Romania, see the reports from a recent EFNCP-WWF project in these countries http://www.efncp.org/projects/hnv-bulgaria-romania/.

  2. Guy, thanks for your comment. The figures in the table are in fact derived from the farm business survey type data source, not from subsidy payment data, so I don’t think it’s correct to suggest as you do that just because a farmer doesn’t receive a subsidy he or she will not appear in the farm business survey. I suppose it varies from country to country depending on how the surveys are run.

    I’m not sure I agree with you about farmers and cross-susbidy from non-farm work. If a farmer is only farming part-time then he or she cannot expect to earn a full-time salary, right? So part-time farming may go hand-in-hand with part-time something else, whether that’s an on-farm diversification like agri-tourism or an off-farm job in a nearby town or village.

    Thanks for drawing my attention to the EFNCP-WWF report. It’s emphasis on HNV farming is welcome. Clearly a designation of nature value needs to play a much bigger role in the allocation of CAP support, and it follows from this that measures need to be tailored to be appropriate to the circumstances of the farmers and land managers who are active in HNV areas, and in many cases this will be subsistence farmers for whom the CAP is currently, at best, an irrelevance.

    I am surprised however, that the EFNCP response to the Commission’s LFA consultation was against Option 4, which would have introduced HNV as a core concept in support for farming in marginal lands.

    “We do not support an approach which involves attempting to map and delineate HNV farmland areas, either as a suitable tool for targeting support at HNV farmland, or as a substitute for LFA boundaries. The HNV farming concept is not best applied through delineation of areas, but rather through farm-level criteria.”

  3. I agree with Guy that it’s good to see this issue being raised. For anyone interested, I can add a little more detail to the definition and characterisation of subsistence farmers in Romania.

    For the purposes of the NRDP programming exercise, Romania actually chose to define “subsistence” farms as smaller than 2 ESU. Holdings in this category are estimated to cover 45% of UAA and to account for 91% (3.8 million) of the total number of farms. Most of these units lack legal personality (although there are some exceptions) and the vast majority lie in the farm size range of less than 5 ha farm with an average size of 1.63 ha.

    The current level of SAPS payment (EU funds topped up with the Complementary National Direct Payments) in Romania is currently only 85 EUR/ha so clearly a significant proportion of these holdings (i.e. those less than approximately 3 ha) would be affected by the 250 EUR lower limit.

    Although to be more precise – it would be those holdings from 1-3 ha that would be affected since farmers with less than 1 ha do not meet the basic pre-requisite for being listed in the National Farm Register and do not qualify for SAPS. These smallholdings are estimated to represent 45% (1.9 million) of all farm holdings.

    But of course the disadvantage suffered by small-scale subsistence farmers in Romania is not just restricted to the lack of access to SAPS since the combination of a small land holding and low economic size (especially with the threshold lifted to 2 ESU) also delivers a double whammy whereby subsistence farmers with:

    1. An economic size of less than 2 ESU are excluded from Axis 1 measures:

    * setting up of young farmers
    * modernization of agricultural holdings (unless applying for support as an association of small-holders)
    * supporting semi-subsistence agricultural holdings
    * farm advisory and extension services

    2. Less than 1 hectare are excluded from Axis 2 measures:

    * Less Favoured Areas (mountain and non-mountain)
    * agri-environment payments

    On the other hand, there is a clear tendency within the Romanian NRDP to encourage subsistence farmers to diversify into activities such as crafts, tourism and food processing. Those that are willing to register as micro-enterprises are eligible for two measures under Axis 3:

    * support for the creation and development of micro-enterprises
    * encouragement of tourism activities

    However, the majority will find the conditions – including the establishment and registration of a micro-enterprise, finding security for co-finance etc. – an insurmountable obstacle, at least without a huge amount of support and encouragement. And diversification is a very long way from being any kind of solution…………………….

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