Original publication: April 2014
Authors: University of Kent: Ms Sophia DAVIDOVA; University of Aberdeen: Mr Kenneth THOMSON
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This note discusses the definitions, challenges and future prospects of family farming in the EU. Some challenges, such as market volatility and climate change, are general for all EU farm structures, but some are specific to family farmers: their smallness, lack of power within the food chain, and intergenerational farm succession. However, family farming – often by pluriactive and/or diversified households – is likely to continue to dominate EU farm structure in the foreseeable future, despite trends towards larger family and non-family farms. Action at both EU and national policy levels could help towards a more sustainable and resilient family farm sector.

 

Background and objectives

This Briefing Note has been prepared for the European Parliament’s Committee on Agriculture and Rural Development (COMAGRI) in relation to the UN International Year of Family Farming (IYFF), 2014. The note has three main objectives as defined in the technical specification:

  1. Definition of the concepts of family farming and an overview of the main figures available.
  2. Examination of the current and new challenges in economic, demographic, sociological and territorial terms.
  3. Analysis of the future prospects for family farming.

The data used has been derived from the EU’s Farm Structure Survey (FSS) and Farm Accountancy Data Network (FADN). The increase in the minimum FSS holding area threshold after 2007 excluded many small family farms in some Member States (MSs), and impedes the analysis of the sector over time. The FADN samples only commercial holdings, so the very small and semi-subsidence family farms are excluded. This means that the family farm sector in Europe is larger than numbers suggest.

Family farming is undertaken by large, small and very small (e.g. semi-subsistence, or “lifestyle”) farms, run by farmers engaged full- or part-time in agriculture. Some farm alongside other gainful activities and rely on diversified income sources.

Family farming is a key element of the European Model of Agriculture, as identified in the Luxembourg European Council in December 1997. The Model must embrace a diversity of different production types.

Definitions and Importance

“Family farm” and “family farmer” may be defined in several ways, both within the EU, and world-wide. Definitions can be based on share of farm labour, on ownership and control (and thus succession between generations), on legal status (sole holders) or on who bears the business risk.

In 2010, sole-holder family farms accounted for 85 per cent of all EU farms, for 68 per cent of total Utilised Agricultural Area (UAA), and for 71 per cent of total Standard Output (SO). However, their importance varies largely across the EU Member States (MSs). Non-family farms cultivated over half of UAA in Slovakia, the Czech Republic, Bulgaria, France and Estonia, and produced four-fifths of SO in the Czech Republic and Slovakia. Sole-holder family farms are mostly under 5 ha UAA in the EU-15 South and in the NMS-13, but are much more evenly distributed in size (to over 100 ha UAA) in the EU-15 North West. Family farms in Europe are most definitely not all “peasant” farms.

Family labour is a key factor for the flexibility and resilience of family farming, but its share in total labour depends on the size of the farming operation, on the crop/livestock choice, and on whether the farm is organic or conventional.

Family farmers are often part-time, and frequently pluriactive and/or diversified. Thus the importance of farming in total household income varies widely, from being almost the sole source to being only a minor component. Family farmers make multiple contributions to the EU and its rural economy. They are a main contributor to food security, providing an uninterrupted supply of highquality diverse produce; enhance the vitality of the rural economy; have strong interests in long-run environmental care of the land. Non-family farms also contribute in these areas. However, either because of their sheer numbers, or often their smallness, the contribution of family farms is more noticeable.

Challenges to EU Family Farming

The main economic challenges to family farms are access to farming resources such as land and capital, and access to markets, particularly in terms of bargaining power in the food chain. Access to land is restricted by the small proportion of land coming onto the market, by the high price of land, and by the need for suitably located and serviced areas. Access to financial capital, especially via formal channels, is often expensive for small farmers, who are unwilling to risk their land as collateral. Moreover, family farms need to compete not only in terms of productive efficiency (scale, productivity) but also in terms of innovation and entrepreneurship. One of the relatively “new” challenges is climate change, which is increasing the risks of floods, droughts, and diseases. New technology, such as genetically modified crops and livestock, may favour large-scale family or non-family farming. Family farms need to collaborate via various forms of producer organisations, such as cooperatives, in order to gain scale economies and negotiating power on markets and for policy. However, in many NMSs, strong resistance to the entire notion of cooperatives has been noted, and even in the EU-15 there have been cooperative bankruptcies.

The major social challenge for family farmers is inter-generational succession, which can trigger the adoption of new technology, the consolidation/or fragmentation of agricultural land, and the restructuring of farm enterprises. National legislation on family inheritance often makes it difficult to arrange fair and smooth succession. The requirement for both economic viability and environmentally sustainable management creates a complex challenge to family farmers. Sometimes small family farmers cannot bear the management costs; even more frequently, they may lack the information, knowledge and skills needed for modern environmental management. Several challenges to family farming are territorial in nature, for example in mountainous regions remote from markets, or in underdeveloped regions with few alternative jobs.

Future prospects for family farming in the EU

As far as the number of farms is concerned, family farming will continue to dominate EU agriculture. In respect to land use and output, smaller-scale family farming will continue to be the core of agriculture in some but not all regions/locations and for some but not all farm specialisations.

One of the key economic drivers of future changes within the family farming sector – and in contrast to the non-family farming sector- is the differential between farm incomes and incomes in the rest of the economy.

Technological progress and structural change will offset certain disadvantages of some but not all family farms in respect to economic efficiency. More knowledge intensive and innovative management will allow some family farms to grow, capture economies of scale, and maintain/increase their competitiveness in the European and world market.

Processes leading towards larger FFs and the disappearance of some smaller ones are likely to be uneven across the territory of the Union, depending on local economic and biophysical conditions. In more developed rural areas with more job opportunities, family farming can be sustained by pluriactivity and diversification.

In several EU MSs, national land market regulation will continue to protect farming tenants and local owner-occupiers, and to prohibit or control “land grabbing”, i.e. large-scale acquisitions which restrict the amount of land available for future FF growth.

More research and best practice exchange of national policy experiences in respect to land market and inter-generational succession between the MSs could bring considerable benefits.

At the EU level, the CAP, particularly Pillar 1, cannot be analysed so much in terms of family versus non-family farming, but as large versus small farms, which are overwhelmingly in family hands. Insofar as the Pillar 1 payments represent a more secure stream of income, they facilitate access to credit since borrowers can offer greater repayment capacity.

With more certain payments and fewer restrictions, the Small Farmers Scheme is a significant simplification in the support for the smallest farmers, but it will not improve substantially the current uneven distribution of CAP payments.

To reduce rural-urban income differences and encourage pluriactivity and diversification, both CAP Pillar 2 and EU regional development policies with Structural and Cohesion Funds have important roles to play within and outside the farmgate.

As proposed in a recent COMAGRI report on the future of small agricultural holdings, national as well as EU funds and support are needed to promote the interests of small and family farms.

Link to the full study: http://bit.ly/529-047

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