Demise of the small farm

They appear to have listened to, and taken on board, many of the issues raised by farmer protests. In previous articles, I have argued that that the root problem across the European Union is that most small farmers do not get a fair price for their produce. Despite constant tinkering with the Common Agricultural Policy (CAP) over the years, this very basic problem has not been resolved. Obviously, this has had knock-on effects, not least for the agricultural contracting sector, which continues to struggle to get a fair price for its work.

The Commissions review on CAP 2023-27 contains nothing to address the need for a secure and fair income for all farmers. It highlights that the gap between farmers’ incomes and the average EU wage has reduced by 10 percentage points. Wonderful news!

Recently when launching the Strategic Dialogue on the Future of EU Agriculture EU Commission president, Ursula Von der Leyen acknowledged the plight of small farmers by admitting that ‘many of the measures put forward that are intended to help those farms without the scale to earn a decent income, are unlikely to be effective because they fail to recognise the heterogeneity (diversity) of farms’.  Regarding supermarkets, which are usually blamed for squeezing producer prices, she said ‘there are many proposals that, in one way or another, would require supermarkets to pay higher prices. But higher prices will be worth much more to those farms in the economic size classes above €250,000, that produce most of our food, compared to those farms in the economic class below €25,000, which account for over half (52 per cent) of the agricultural labour force. Similar arguments can be made in connection with other proposals to raise farm prices, such as restricting imports’. 
It seems the Commission now acknowledges the problem but not how they plan to deal with it. Certainly, a lot of money is being thrown the famers’ way for environmental compliance, but this has nothing to do with guaranteeing a sustainable farmgate price. 

I fully accept the that the European Commission has a monumental problem. In 2020 there were 9.1 million agricultural holdings in the EU, with over 63 per cent having fewer than five hectares. Further, the EU has also classified 93 per cent of all farms in the union as ‘family farms’, defined as those where 50 per cent or more of its labour force is provided by family members. The small farm problem is exacerbated as more countries joined the European Union.  Maybe a blind eye was turned in the rush to expand the Union.

The Commission has many other problems needing attention, which are highlighted in The future of European competitiveness report by Mario Draghi.

This calls for investment in the region of €750-€800bn annually, to close the gap with the US and China. This, in my view, will put more pressure on the Commission to reduce the CAP allocation of €386bn. We must ask if the EU can continue to fund farming in its present state, even in the short term? Looking into my crystal ball, do I see the EU giving more incentives for a rapid move towards consolidating farms and creating bigger, more economically viable farms that will not be so reliant on subsidies. Will they say this is the only way to attract young people into agriculture?

From all these reports it is clear that additional support for small farmers is not always going to be available. This begs the question; should Irish agriculture bite the bullet right now and seek incentives to consolidate farms, look for derogation on reducing national herd numbers and expand what we do best as livestock specialists (see chart)? This would get us ahead of the posse in any radical review that might be imposed on us by the EU.