Behind the statistics: the changing fortunes of French farming
The Financial Times has reported on new figures from the French government statistical service showing that French farmers are “getting steadily worse off compared with their fellow citizens and their European peers”. Such figures are grist to the mill of those calling for a strong defense of EU farm support from the internal pressure of the EU budget and the external pressure of the WTO’s Doha Round of multilateral trade liberalization negotiations. What such figures fail to show is the changing structure of farming in France as in other European countries and the likelihood that subsidies are actually accentuating inequalities.According to the analysis,
While average French households became richer over the last decade, as incomes rose 1.8 per cent between 1997 and 2003 to €28,410, the income of the average French farming household fell 1.8 per cent to €30,630.
This shows that on average French farm households have higher incomes than the rest of the population, although the gap is narrowing. The FT points out that
“French farmers receive about €9bn ($11.6bn, £6bn) of CAP handouts a year, more than a fifth of European agriculture spending, which in turn accounts for 40 per cent of the EU budget.”
Analysis of official statistics by farmsubsidy.org shows that on average, each French farm receives €15,200 a year in EU support payments under the common agricultural policy (CAP). However, this average can be misleading since the distribution of payments is heavily skewed in favor of the largest farms that have the greatest economies of scale and the most productive land. In 2004, 36 per cent of French farms received less than €5,000. 51 per cent received less than €10,000. The reason for this is that CAP payments reflect output levels. Even now that they are ‘decoupled’ from production, they are based on historic entitlements and yields.
The FT notes that French farm household incomes would have shown an even steeper decline had it not been for farm families taking off-farm employment to supplement income earned from farming. Off-farm income is becoming an ever more important component of farm household income both in Europe and the United States, as farming families struggle with falling commodity prices and rising costs of farm inputs like fuel. Off-farm income is particularly important for smaller farms.
Ultimately, what has been happening in France and other EU member states over the last few years is a ‘hollowing out’ of middle sized farms, as these farmers either decide to go for growth by buying or leasing more land and thereby become larger operations, or alternatively sell up or rent out their land and in doing so reduce their farming activities to a much lower level.
The result is an increasing number of larger farms that benefit from economies of scale and at the same time an increasing number of small hobby or lifestyle farms that are not primarily dependent on farming income for survival. In the US, it is argued that support payments are actually accelerating this trend since the large farms that receive the largest payments are able to use them to buy up their smaller neighbors. Since 80 per cent of CAP payments go to the largest 20 per cent of recipients it is quite feasible that this is happening in Europe too. Last November, GMF published a new study of farm payments in Germany that shows how farm subsidy payments are an important source of inequality in farm profitability.
Farmers have always been an important constituency in French elections and presidential front-runners Ségolène Royal and Nicolas Sarkozy have both declared that if elected they will stand up for French farmers (no surprise there). Yet neither has explained in any detail what this might mean in policy terms, and whether they would depart from the simple Chirac formula of resisting at all costs any changes to the CAP. What is certain is that, regardless of what politicians in Paris or Brussels may do, French farming - like farming across Europe - is experiencing fundamental, wide-ranging and ever-accelerating change. If politicians wish to serve their rural communities, encourage vibrant food sectors and safeguard the beauty of the countryside landscape, then they must face up to the tough realities of rural change, resist the special pleading of sectional interests and look beyond romanticized images of a bygone rural idyll that never actually existed.