Farm profitability and economic viability is a serious issue in the EU, where farmers' incomes on average amount to just 46.5% of those in other economic sectors.
In this opinion on the farming profession and the profitability challenge, the EESC voices its support for strengthening the role of farmers. The key message is that farmers cannot remain passive and allow other operators in the chain to claim a disproportionate share of profits.
Arnold Puech d'Alissac, rapporteur of the opinion, stressed that "we have to be reasonable and have a positive approach to the problem, supporting farmers to get a fair share of the market profit, making the profession more attractive for next generations".
Depopulation of rural areas and generational renewal
Farming is becoming increasingly unattractive. New generations are being discouraged from taking on their family businesses and instead are abandoning rural areas in favour of big cities. This is in turn endangering a profession that, according to Eurostat 2018, has been in steep decline for many years.
Perhaps unsurprisingly, farmers are typically male and relatively old. In 2016, 71.5% of farmers were male and only one in every ten farm managers (10.6%) was a young farmer under the age of 40.
This situation has a deep impact on the development of the agricultural sector in terms of its overall attractiveness for new generations, newcomers, external actors, investors and bank partners. It also prevents the development of synergies with other economic sectors and intensifies the problem of generational renewal in rural areas.
Young farmers therefore urgently need strong support in facing the difficulties involved in getting started, such as access to land and finance, in order to implement innovative technological solutions on farms. In this regard, the subsidiarity function of the second pillar of the CAP must be preserved and strengthened under the new CAP.
Farmers are one of the groups most vulnerable to climate change. For example, they directly experience its increasing effects, have to adapt harvest times and are often faced with early and late frosts, fires, flooding and drought. Effective adaptation measures are therefore crucial for the long-term viability of farming.
To tackle this global problem, the EU seeks to deliver not only on the objectives of the Lisbon Treaty but also the Paris Climate Agreement and the United Nations' Sustainable Development Goals, setting important targets for the EU agricultural sector that must be reached between 2030 and 2050.
EU farmers are ready to rise to these challenges, provided they are equipped with the right tools.
Research and innovation are key here, as is lifelong education to boost modernisation, including improving the use of new technologies.
New technologies will play a crucial role in:
- producing more and better using fewer resources. This will be necessary in order to overcome one of the biggest challenges of the decades to come, i.e. the need to feed a growing world population. It is estimated that, by 2050, world population will be 9.7 billion and, if the trend continues, cultivation will need to at least double;
- tackling climate change, combining quality with sustainability effectively.
The "toolbox" must therefore include a positive and user-friendly policy framework, new technologies, water management strategies (including for storage and irrigation) and a strong CAP budget that sustains the additional efforts that sustainable and mitigation measures often require.
Income in the agriculture sector
According to the Commission factsheet released in March 2017, the distribution of the value added in the food chain is approximately 25% for the farmer, 25% for food processing and 50% for food retail and food services.
The EU needs a fair, transparent, well-functioning and equitable food supply chain – one that is good for farmers and all stakeholders including processors, retailers and, above all, the 500 million consumers in the EU.
At national level, consideration should be given to a reverse market negotiation approach, establishing value chains that aim to give farmers a monthly income of twice the minimum wage.
Price volatility and emergence of new markets
Unfair trading practices in the food chain should be addressed so that farmers have a better chance of getting the share of the market they deserve. For that reason, it is important to implement a regulatory framework in the EU that protects suppliers.
The family farm system so valued by European consumers needs good policies and fair and reasonable regulation. It also requires strong and effective legislation that will help mitigate against the serious threat of extreme price volatility and the ever-increasing imbalance of power in the supply chain. The markets task force is a step in this direction but needs to be further strengthened.
An ambitious export strategy and balanced trade agreements must also be ensured in order to preserve fair competition. This is important in order to compensate EU farmers – who already adhere to the highest production standards in the world – when they are exposed to much lower prices on imported agricultural commodities produced according to different standards of production.
It is therefore urgent to ensure a stable and simple agricultural policy with long-term measures and a sustainable CAP budget that maintains both the first and second pillars as well as direct payments, thereby ensuring a decent life for farmers and their families.
When it comes to feeding the world, 90% of the food we consume comes from the soil and only 10% from the sea. As such, humanity is totally dependent on agriculture to live. Often, however, this contribution does not receive the reward it deserves.
In Europe alone, the agricultural sector:
- employs around 40 million people, of which one quarter are directly employed by and work in farms and agri-cooperatives, for example growing crops and raising livestock. The sector still remains predominantly a family activity;
- accounted for 1.2% of the EU's GDP in 2017;
- generated gross added value of EUR 188.5 billion, actively contributing to the EU's trade surplus with EUR 137 billion of agricultural exports over the same time period.
Average income in the agricultural sector is only half that of the economy as a whole. Despite this low profitability, the EU agricultural sector plays a crucial role as the driver of rural economies, producing quality food that adheres to the highest standards in the world.