EU wrong on succession

There could be a three to four-fold increase in EU expenditure on young farmers, depending on how agriculture ministers, the Commission, and Parliament resolve their differences over this part of the CAP reform.

The ministers say payments for young farmers should be voluntary for member states; the Commission and Parliament say they should be mandatory.

But are they all making political capital out of the very laudable aim of helping young people, while glossing over the real problem, which is that older farmers are reluctant to retire?

Is that the real reason why Ireland has only 7% of farmers aged under 35, and Germany only 8%. And why does Ireland have more than one in four farmers aged over 65?

CAP expert Alan Matthews suspects the real reason is that there are so many financial incentives for farmers to remain in the industry, and few to encourage them to leave and make way for younger farmers — especially since decoupled direct payments arrived in 2005.

Before then, a farmer had to produce to receive support. Now, he only has to comply with relatively undemanding cross-compliance conditions, in order to collect the Single Payment. Approaching retirement age, he has the option to cut down farming activity to a minimum, whilst still collecting the single payment.

In Ireland, he is entitled to a state pension regardless of means or other income. So, aged 66, he can live in his own home, receive a single farm payment and the state pension. The relevant question is not why they don’t retire but why would they retire, says Alan Matthews. They can remain on and enjoy the rural lifestyle in their home which may have been in the family for many generations.

They overcome the lack of affordable and suitable housing in rural areas.

Matthews says the EU should work to improve the age structure of agriculture by focusing on the real constraints — and it is hard to argue with him.

On the CAP reform negotiating table now for young farmers (under 40) is business start-up aid of up to €70,000; up to two years of better support for investment; priority access for new entrants to national reserves of payment entitlements; and a 25% direct payment top-up.

In Ireland, there is a place for all of these. Some make the argument that if farming is profitable enough to get involved in, there should be no need for start-up incentives. But they would go only a very short way towards the huge and ever increasing sums of money needed for anyone to enter farming without inheriting all the necessary assets.

For those who cannot inherit, the problem is too deep to be solved by what Matthews describes as “throwing money” in top-up payments etc at young farmers.

Early retirement schemes helped to free up land for younger farmers, but were not very successful. Now, even the early retirement has disappeared from the CAP — although a proposed small farmer scheme includes the proposal that small farmers who permanently transfer their entire holding, plus the corresponding payment entitlements, would receive an 120% of their small farmer payment, until 2020.

The near abandonment of early retirement is another sign that the EU is getting farmer succession wrong.

Unfortunately, there is no sign of policy makers going down the road recommended by CAP expert Alan Matthews of removing the distortions caused by current agricultural policies, reviewing incentives for land mobility and tenancy laws, taxation and social welfare arrangements and encouraging earlier succession within farming families through joint ventures, share farming, partnerships or contract operations.


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