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The CAP and semi-subsistence farmers

One result of the last two enlargements in 2004 and 2007 was to bring millions of small farms into the EU, most of which are either subsistence farms (SFs) or semi-subsistence farms (SSFs). Various definitions of what is a subsistence or semi-subsistence farm exist (see the background paper on this topic by Sophia Davidova and colleagues for the recent seminar in Sibiu, Romania on semi-subsistence farming) including physical area (e.g. less than 5 ha), size of farm business (below a certain ESU threshold) or market orientation (share of production going to own consumption).

According to Eurostat FSS, in 2007 there were 11.1 million small farms (below 8 ESU) within the EU-27. Of these, 6.4 million were below 1 ESU, therefore considered SFs and the remaining 4.7 million were SSFs. The total number of holdings in 2007 in the EU-27 was 13.7 million, so the share of SFs and SSFs was equal to 46.6% and 34.5% of the total number, making them the dominant farm type in Europe. While concentrated in the New Member States, semi-subsistence holdings are also found in Greece, Italy, Portugal and Spain.

Commissioner Ciolos in his speech to the Sibiu seminar confirmed that he is particularly exercised to find ways to support semi-subsistence farmers other than simply saying that the solution is for them to exit farming.

I am convinced that as long as small farms are in a position to market their production and contribute to maintaining landscapes and the vitality of rural areas, then they must be supported.

One of the few specifics in the leaked Commission draft communication on the CAP post-2013 was a proposed objective (under the territorial balance heading) to allow for structural diversity in farming systems, to improve the conditions for small farms and to develop local markets, on the assumption that these farms play a particular role in contributing to the attractiveness and identity of rural regions.

Currently, Member States are allowed in the Rural Development Regulation to make flat rate payments to such farmers for up to five years provided they produce a business plan. In the leaked communication, the Commission seems ready to propose a minimum level of direct payments to small farmers. Particularly for the over 6 million holdings generating less than 1 ESU of agricultural activity, the question must be asked whether these are really farms and whether it would not be more appropriate to address their concerns through social policy rather than agricultural policy (of course, this same question can be asked about income support payments under the CAP more generally).

Following the Health Check process, from 2010 onwards the minimum size of eligible area is now set at 1 ha or a minimum amount for payments of €100, with some discretion for MS to adapt the thresholds in function of their farm structure. It is not clear if the Commission paper will propose that, for farms just above this threshold (the semi-subsistence group) there will be a requirement to make a minimum payment. Such a payment structure would create a massive incentive for farm consolidation for farms just below the payment limit.

Commissioner Ciolos’ speech sets out a menu of other possible measures which could be taken to support semi-subsistence farms. These include rural development measures focusing more on extension advice and transfer of know-how, and projects to develop short market chains and local markets as well as quality policy to help these farmers overcome the disadvantages of small scale by increasing the value added of their production.

The difficulty with these proposals is that the target group is often not very receptive to farm development because of age, risk aversion or lack of access to capital. More important, the evidence suggests that the most effective way of maintaining small farms, if this is desired, is to encourage pluri-activity and off-farm employment rather than on-farm development. This, however, requires rural and regional development that can improve the attractiveness of rural areas to non-farm industries and increase job opportunities.

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