Instalarea Tinerilor Fermiei in Limba Engleza

DIRECTORATE-GENERAL FOR INTERNAL POLICIES

POLICY DEPARTMENT B: STRUCTURAL AND COHESION POLICIES

AGRICULTURE AND RURAL DEVELOPMENT

EU MEASURES TO ENCOURAGE AND SUPPORT NEW ENTRANTS

NOTE

This document was requested by the European Parliament's Committee on Agriculture and Rural Development. AUTHOR Autonomous University of Madrid: Mr. Jess G. REGIDOR1 RESPONSIBLE ADMINISTRATOR Mr Albert MASSOT Policy Department B: Structural and Cohesion Policies European Parliament B-1047 Brussels E-mail: [email protected] EDITORIAL ASSISTANCE Ms Catherine MORVAN LINGUISTIC VERSIONS Original: EN ABOUT THE EDITOR To contact the Policy Department B or to subscribe to its monthly newsletter please write to: [email protected] Manuscript completed in September 2012. Brussels, European Union, 2012. This document is available on the Internet at: http://www.europarl.europa.eu/studies DISCLAIMER The opinions expressed in this document are the sole responsibility of the author and do not necessarily represent the official position of the European Parliament. Reproduction and translation for non-commercial purposes are authorized, provided the source is acknowledged and the publisher is given prior notice and sent a copy.

1 With Professor Beatriz Snchez Reyes, Autonomous University of Madrid, statistical assistance.

DIRECTORATE-GENERAL FOR INTERNAL POLICIES

POLICY DEPARTMENT B: STRUCTURAL AND COHESION POLICIES

AGRICULTURE AND RURAL DEVELOPMENT

EU MEASURES TO ENCOURAGE AND SUPPORT NEW ENTRANTS

NOTE

Abstract: The weak number of new entrants into farming in the EU-27 is determined by certain economic and social factors that characterise Union agriculture. The CAP envisages a series of measures to counter this situation, which have been only scantly effective. The new model introduced by the Commission constitutes an insufficient solution to the problem and needs to be redefined if it is to effectively attract new entrants, not only to farming but to any other activity in the countryside. That entails drawing a distinction between agrifood and agri-environmental policies on the one hand and territorial rural policies on the other, to develop a new Rural Policy Framework for the EU.

IP/B/AGRI/CEI/2011-097/E008/SC01 SEPTEMBER 2012 PE 495.830 EN

EU measures to encourage and support new entrants ____________________________________________________________________________________________

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CONTENTS

1. INTRODUCTION: STATE-OF-PLAY AND NEW FARMERS 7 1.1. Present situation and new entry into farming 7 1.1.1. Young farmers present situation 7 1.1.2. Main factors that discourage new entrants 11 1.2. Content and assessment of the present model 15 1.2.1. The current Young Farmer Scheme (YFS) 16 1.2.2. Measures currently implemented: key results 20 2. NEW MODEL TO ENCOURAGE AND SUPPORT NEW ENTRANTS 23 2.1. Proposed model and assessment 23 2.1.1. The new Young Farmer Scheme (new YFS) 23 2.1.2. Assessment and legislative amendments 26 2.2. New farmers and countryside development 30 2.2.1. New model for establishment in rural areas (NRS) 30 2.2.2. Assessment and application of the New Rural Scheme 33 3. SUMMARY AND CONCLUSIONS 39 REFERENCES 43 ANNEX 1 45 ANNEX 2 53 ANNEX 3 61

Policy Department B: Structural and Cohesion Policies ____________________________________________________________________________________________

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LIST OF GRAPHICS Graphic 1 Holding by age of holder 8 Graphic 2 Holding by economic size (%) 10 Graphic 3 Revenues (ESU) by economic size of holdings (%) 11 Graphic 4 Agricultural income per AWU (2007-2009) 15 Graphic 5 Total subsidies excluding investment subsidies by ESU (mean 2007-2009) 18 Graphic 6 Farm subsidies in the EU-15, 1995-2008 27 Graphic 7 Distribution of direct payments and the small farmer scheme 29 LIST OF FIGURES Figure 1 Young farmer scheme 17 Figure 2 New young farmer scheme 24 Figure 3 New rural scheme 31 Figure 4 New NRS and new European Rural Policy 37 LIST OF TABLES Table 1 No. of holdings by age of holder (2003-2007) 9 Table 2 Key variables (holders under 35: % of total) 9 Table 3 Key variables/ No. of holdings (holders under 35) 12 Table 4 AWUs by age and sex (% of total) 13 Table 5 Measure 112: setting up support for young farmers (2007-2009) 20 Table 6 Measure 113: early retirement (2007-2010) 21 Table 7 Measure 121: modernisation of agricultural holdings (number 2007-2009) 21 Table 8 Measure 121: modernisation of agricultural holdings (expenditure 2007-2009) 22 Table 9 Time devoted to farming by family farm managers (% AWU) 34 Table 10 Distribution of the population of 15-24 year-olds by type of region (estimate) 35


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1. INTRODUCTION: STATE-OF-PLAY AND NEW FARMERS The steady decline in the number of holdings and farmers in the EU has traditionally been regarded as an inevitable effect of agricultural modernisation. Driven by technological change, this process has given rise to the more or less intense reconversion of each country's farming sector, depending on its production structures. The outcome has been restructuring (increase in holding size) and employment adjustments (decline in number of farmers). Nonetheless, the situation generated and incentivised by the CAP and its successive reforms gives cause for serious concern, for the Union is now faced with a shortage of new farmers. The present scarcity of new entrants into farming is visible in the form of a dual problem: the scant number of young farmers and the rapid ageing of the farmer population. A critical analysis of the information available reveals the severity of these two problems and shows, above all, that they are a consequence of deeply rooted economic and social factors. This analysis revolves around the two groups of EU-27 countries and is supplemented with country-by-country data. It constitutes the point of departure for this report, set out in item 1.1. The CAP has furthered a number of policies to confront this dual problem, synthesised in a series of measures designed to favour the establishment of young farmers and the early retirement of their older counterparts. The model based on these incentives has proven to be scantly effective, judging from the weakness of the results. An analysis of country indicators shows that youths are not entering farming, older farmers are not retiring early and, generally speaking, the shortage of new farmers has tended to intensify, as discussed in item 1.2. 1.1. Present situation and new entry into farming A review of the present situation of young farmers in the EU-27 based on the most significant indicators of their holdings reveals the existence of a serious problem: young Europeans appear to be eschewing agricultural careers. The concomitant ageing of the farmer population, which compromises the future of this activity, constitutes a reality that merits a closer look. Some of the economic and social features characterising young European farmers, both in the aggregate and by country, are synthesised below. This analysis will help pinpoint the main factors that determine the weakness of new entry into farming, for which a sound explanation definitely exists. The present study aims primarily to identify those factors. 1.1.1. Young farmers present situation The statistical information available (see Graphic 1) shows the scale of the problem: barely 6 % of EU-27 holdings are owned by farmers under 35 (around 5 % in the EU-15 and 7 % in the EU-12). Despite the limitations to the statistical information, the presence of young farmers can be seen to have declined steadily in all countries. Moreover, the prospects for the future may be even bleaker. The flip side of that problem is likewise obvious: over 55 % of EU-27 farm holders are 55 or over, with no significant difference in this percentage between the EU-15 and the EU-12. The forecast in this regard is alarming, given the high average age of farmers in a number of EU countries.


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Graphic 1: Holdings by age of holder2

(*) 2010: Holdings by age of manager. Source: Eurostat (Agriculture database 2003, 2005, 2007, 2010).

Inasmuch as these two inter-related developments vary considerably from one country to another (see Annex 1A), several Member States (MS) were selected for the analysis. Germany, Spain and the United Kingdom were selected to represent the EU-15 and Hungary, Poland and Romania the EU-12. All six nations are large and representative enough of their respective geographic areas. As a rule, youths in most countries have turned their backs on farming, thereby intensifying the ageing of the farming population. The recent trend in number of farms by holder age (see Table 1) shows a very significant decline in the number belonging to young people (-30.1 % from 2003 to 2007) in the EU-27, with similarly steep drops in the EU-15 (-29.9 %) and the EU-12 (-30.2 %). At the same time, an overall albeit more gently sloping decrease was observed in the number of holdings for all age brackets, both in the EU-15 and the EU-12. In the latter, however, the decline was less intense in the 35-44 age group (-7.8 %), no explanation for which can be readily gleaned from the statistical data available.

2 2010: EU-27 data available only for Czech Republic, Germany, Estonia, Spain, Latvia, Lithuania, Malta,

Netherlands, Portugal, Slovenia, Slovakia, Finland and Sweden; EU-15 data available only for Germany, Spain, Netherlands, Portugal, Finland and Sweden; EU-12 data available only for Czech Republic, Estonia, Latvia, Lithuania, Malta, Slovenia and Slovakia.

2003: EU-27 and EU-12: Poland not included.


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Table 1: No. of holdings by age of holder (2003-2007) EU-27 EU-15 EU-12 2003 2007 % 2003 2007 % 2003 2007 % Under 35 1 225 707 856 820 -30.1 428 860 300 800 -29.9 796 847 556 020 -30.2 From 35 to 44 2 428 825 2 121 270 -12.7 1 110 800 906 710 -18.4 1 318 025 1 214 560 -7.8 From 45 to 54 3 429 693 3 129 420 -8.8 1 427 320 1 345 040 -5.8 2 002 773 1 784 380 -10.9 From 55 to 64 3 350 428 3 113 860 -7.1 1 451 840 1 340 770 -7.7 1 898 588 1 773 090 -6.6 65 or over 4 586 755 4 479 070 -2.3 1 820 130 1 769 120 -2.8 2 766 627 2 709 950 -2.0 Total 15 021 410 13 700 440 -8.8 6 238 950 5 662 440 -9.2 8 782 460 8 038 000 -8.5 (*) Poland 2003: age distribution estimated. Source: Eurostat (Agriculture database 2003, 2007). Another approach to defining the relative importance of young farmers (under 35) in European agriculture is to observe several indicators jointly (see Table 2). In addition to the number of holdings, the utilised agricultural area (UAA in ha), annual work unit (AWU), number of live stock units owned (in LSU) and fraction of total revenues (in ESU) were also analysed. Table 2: Key variables (holders under 35: % of total)

EU-27 EU-15 EU-12

2003* 2007 2003 2007 2003* 2007

No. of holdings 7.5 6.3 6.9 5.3 8.0 6.9

UAA: utilised agricultural area (ha) 9.8 8.6 10.7 8.2 6.2 9.7 AWU: annual work unit (labour force directly employed by the holding) 8.0 7.9 9.2 7.3 6.5 8.4

LSU: livestock unit 12.0 9.7 12.7 9.4 7.3 10.8

ESU: economic size unit (1 ESU: 1 200) 10.8 8.8 11.2 8.4 6.7 11.0 (*) 2003 (all variables): Poland not included; 2003 (only ESU): Slovenia not included. Source: Eurostat (Agriculture database 2003, 2005, 2007). For the EU-27 overall, the relative weight of this part of farming varied fairly little (from 8 to 9 % of the total) across the various indicators. A specific pattern of loss of revenue (8.8 % in ESU) emerged in the EU-15. By contrast, young farming grew in importance in the EU-12, inducing a rise in their relative weight in all the indicators, and especially in utilised agricultural area (9.7 % of UAA), livestock (10.8 % of LSU) and revenue (11.0 % of ESU). Here again, this increase is difficult to explain, given the gaps in the statistical information for several of these new MS3. A brief review of these indicators by country (see Annex 1B) shows, especially for the MS selected, that the weight of farming conducted by youths is declining across the EU-15, with substantial downturns in some countries, such as Germany (with 3-4 percentage drops in all indicators). While in the EU-12 as a whole the light weight of the number of holdings owned by youths goes hand-in-hand with an equally scant presence in all other indicators, the numbers are better in countries such as Hungary or are holding steady at significantly high levels in others, such as Poland (17.3 % in LSU and 17.1 % in ESU).

3 One plausible hypothesis would be that a substantial number of holdings would have outcropped statistically

under the expectations deriving from EU accession.


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Of all the indicators mentioned, revenues (ESU) constitute a good focal point, for this parameter can be associated with the mean economic size of holdings and employment (AWU), which is related to the time devoted by holders to their farms. In Europe in general (see Graphic 2), small economic size prevails (81 % under 8 ESU in the EU-27, 60.5 % in the EU-15, and 95.5 % in the EU-12). This holding size structure remained very stable throughout the period considered. Graphic 2: Holdings by economic size (%)

Source: Eurostat (Agriculture database 2003, 2005, 2007).


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Graphic 3: Revenues (ESU) by economic size of holdings (%)

Source: Eurostat (Agriculture database 2003, 2005, 2007). Moreover, revenues are highly concentrated in the larger economic size brackets (see Graphic 3). In the EU-27 as a whole, the largest holdings (>100 ESU, only 2.2 % by number) account for 46.5 % of the revenues. The smallest size bracket (


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In light of the statistical shortcomings in this respect5, an approximate analysis was performed with the data available (see Table 3). The approach adopted was to establish a series of ratios that characterise the mean young farmer in the EU in terms of the basic variables for their holdings. Particularly striking is the difference in mean holding size between the EU-15 (37.85 ESU) and the EU-12 (3.88 ESU). Equivalent differences are observed for area used and livestock units. Table 3: Key variables/ No. of holdings (holders under 35)

EU-27 EU-15 EU-12 2003* 2007 2003 2007 2003* 2007 No. of holdings 1.00 1.00 1.00 1.00 1.00 1.00

UAA: utilised agricultural area (ha) 16.16 17.27 31.43 33.79 3.78 8.33 AWU: annual work unit (labour force directly employed by the holding) 0.94 1.07 1.36 1.37 0.59 0.91

LSU: livestock unit 16.26 15.37 33.31 34.33 2.43 5.12 ESU: economic size unit (1 ESU: 1.200 ) 15.87 15.81 33.68 37.85 1.41 3.88 (*) 2003 (all variables): Poland not included; 2003 (only ESU): Slovenia not included. Source: Eurostat (Agriculture database 2003, 2007). In addition, these indicators, particularly in the MS selected (see Annex 1D), reveal that similar differences are also found in the EU-15 countries, such as between Spain and Germany (with ratios of 2 in LSU and ESU), or between Spain and the United Kingdom (with values of three in UAA and LSU). The differences among the EU-12 countries, such as Hungary and Poland, by contrast, are scantly significant in general, with only a few notable exceptions in certain countries and indicators. All the evidence seems to indicate that the absence of youths in European farming is a highly consolidated structural problem, especially in the EU-15 countries, but also in the EU-12. What might be called the holder replacement rate" (No. of farms with holders under 35/No. of holders over 65, in per cent) yields figures of 17.7 % for the EU-27, 14.7 % for the EU-15 and 20.5 % for the EU-12, using data for 2007. In most countries the severity of the problem mirrored by these data gives cause for major concern (see Annex 1E). The replacement rates observed in the selected EU-15 countries are very small in most cases, with 8.1 % in the United Kingdom and 12.2 % in Spain (in 2007). In Germany, by contrast, replacement appears to be assured (103.5 %), as it is in a short number of other countries (Finland and Austria). The rate is very low as well in EU-12 countries such as Romania (9.5 %) and Hungary (27.3 %), while Poland (75.7 %) is practically the exception that confirms the general rule. Consequently, a first factor that would curb the influx of young entrants to this sector would be their presumably majority presence in a segment comprising economically weak holdings, whose economic viability is scant or doubtful. The economic threshold for successful entry is within reach of a very small number of candidates. Economic viability of the holding is, then, a first conditioning factor for any new entrant. The employment (AWU) generated by holdings managed by youths (see Table 4) accounts for a small fraction (barely 15 % in 2005) of the total. The rates are lower in the EU-15

5 No information that could be used for this analysis is given in the EUROSTAT databases.


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(12.2 %) than in the EU-12 (17 %), while very high proportions of employment are attributed to holdings managed by farmers 55 or older (around 43 % in all countries). The share of employment varies along gender lines. The difference is significant between young males and females (9.5 and 5,5 %, respectively), while the gap is smaller in the over-55 age group. The percentages for young men are similar in the two groups of countries, but differ considerably among young women, whose share is larger in the EU-12 than in the EU-15 countries (7.2 and 3.2 %, respectively). Older men's share is substantially higher in the EU-15 countries. Table 4: AWUs by age and sex (% of total)*

TOTAL MALES FEMALES

Total Under

35 55 or over Total

Under 35

55 or over Total

Under 35

55 or over

EU-27 10 259 770 15.0 43.6 6 274 590 9.5 26.3 4 068 290 5.5 17.3

EU-15 4 324 100 12.2 45.2 2 955 520 9.0 31.0 1 395 710 3.2 14.2

EU-12 5 935 670 17.0 42.4 3 319 070 9.9 22.8 2 672 580 7.2 19.6 *Estimated family labour force. Source: Eurostat (Agriculture database 2005). The indicators by country (see Annex 1F), in particular in the MS selected, reveal scant differences in the employment generated by young farmers across the EU-15 (the small percentages in Germany, Spain and the United Kingdom nearly concur). Nonetheless, considerable differences exist between the youngest and oldest farmers: in Spain and the United Kingdom the latters share is nearly 50 % and close to 35 % in Germany. Young farmers low rates of participation in employment are found in the EU-12 as well, where in the vast majority of countries, with the sole exception of Poland, older farmers account for a high percentage of the employment (around 50 %). No inter-country gender differences are found in the EU-15, where young men's share is much higher than young women's (with essentially the same percentages in countries such as Germany, Spain and United Kingdom). By contrast, older men's shares are larger and vary from country to country, whereas older women's are smaller and similar across the board. In the EU-12, inter-country gender patterns are similar for both younger and older farmers, although in most, Poland being the exception, older women account for a high percentage of workers. Lastly, a question that should be addressed to determine the degree of professional dedication required is whether young farmers own holdings able to generate at least 1 AWU. All that can be deduced from the statistical information available (see Table 3) is that in the EU-27 all holdings taken together generate an average 1.07 AWU (1.37 in the EU-15 and barely 0.97 in the EU-12), suggesting that a substantial proportion of the EU-15 and the vast majority of the EU-12 holdings fail to generate sufficient work for a full-time professional. The results by country (see Annex 1D) are similar to the above, both for the selected MS and the others. Significant inter-country differences can be identified, however, in what might be called the mean economic size by employee (mean number of ESU/mean number of AWU in farms whose holders are under 35). The resulting mean economic size


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(revenues) per employee suggests that young farmers are not readily able to make a living from farming only in any of the EU-12 or in a significant number of EU-15 countries. A second factor, then, that would deter new entrants into this sector would be the difficulty involved in establishing holdings that provide full-time employment. The generation of self-employment, based on the dedication required to run the holding, appears to be insufficiently ensured and in any event to depend on the economic size of the holding. This implies that in a large number of cases, the viability of new entry depends on the possibility of having a second job or other supplementary sources of income. A second conditioning factor for any new entrant, then, is the amount of employment generated by the holding. This lack of appeal is reinforced by the economic results of farming, especially for the holdings of the smallest economic size (see Graphic 4). Thus, the net farming income obtained by European holdings in 2007-2009 shows that in the EU-27, for a mean economic size of under 40 ESU, the monthly income is barely one thousand euros, and even that low figure is unattained in EU-12 holdings. According to this information on economic size, only the EU-15 holdings appear to have access to a mean retribution that affords viability. A closer look at the country-by-country figures (see Annex 1G) shows that mean farm holding income for any given economic size barely differs among the EU-15 (Germany, Spain and United Kingdom have very similar values). In the EU-12, one of the most prominent findings is the low income earned by small holdings (under 8 ESU) in all countries. This situation is, certainly, conditioned not only by the differences in standard of living among countries, but also by the economic size distribution of farms prevailing in each (compare to Annex 1C). Low income holdings account for a substantial portion of the total in most of the EU-27. The conclusion drawn is that, in light of low mean farming income, particularly in EU-12 countries, persistence by young farmers in the sector and, to an even greater degree, the entry of new youths to agriculture, must be highly conditioned by the ability to obtain supplementary Common Agricultural Policy (CAP) income. From this perspective, CAP subsidies, which account for a considerable share of European farm income (30 % on average in the EU-15 and 19 % in the EU-12 in 2009), may be decisive for new entrants.


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Graphic 4: Agricultural income per AWU (2007-2009)

Source: European Commission, Farm Accounting Data Network. Therefore, a third factor, but not least, that discourages youths from undertaking farming is that the expectations of earning a sufficient income are low. This is a particularly important consideration, for entry entails the creation of a small or medium-sized farming enterprise whose viability depends largely on CAP assistance, and especially beginning in 2014, on the possibility of inheriting or acquiring payment entitlements. Consequently, for any new entrant a third conditioning factor is the assurance of earning a sufficient income. These three factors can be regarded as determinants in themselves, as they form the central core of economic and social reasons for founding a company. Nonetheless, although other factors, in particular social factors, are not the object of the present analysis, their dissuasive effect on new entrants everywhere should not be overlooked. Considerations such as the appreciation of the characteristics of the work, the risk and devotion required, the social status of the profession or the need to reside in a rural area may act as deterrents. 1.2. Content and assessment of the present model The CAP envisages a series of measures to counter this situation, which dates back many years. A diagram of the current Young Farmer Scheme (YFS) provides an overview of the relationship between the main deterrents to young new entry, the possible entry channels and the policy measures presently available. This diagram will also serve to analyse the proposals now under discussion for the new CAP. The results attained with the measures in place under the present model, which have apparently had very limited effects, are analysed in the paragraphs that follow. This analysis contributes to the identification of the most notorious weaknesses in the present


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model for encouraging new entry in farming and indicates that the CAP has been scantly effective in this regard. 1.2.1. The current Young Farmer Scheme (YFS) The most prominent measures included in the CAP to encourage youths (under 40 years) to choose a farming career have remained practically unchanged since the nineteen eighties. Essentially, prior to 2013 these measures consist of a lump sum incentive under the Rural Development Policy (RD)6, applied in a number of ways and recently supplemented by the option to apply for payment entitlements as new farmers under the Direct Payment Policy (DP)7. The diagram of the present model (YFS) for furthering farming careers (see Figure 1) shows that the main deterrents to entry may be offset to a greater or lesser degree depending on the type and content of the measures applied. At the same time, eligibility for the various measures is conditioned by the entry channel voluntarily or obligatorily adopted by young farmers. Initially, the three main causes for non-entry identified, i.e., the want of economic viability, the lack of sufficient volume of employment and the inability to earn a livelihood, which are closely inter-related, must be confronted simultaneously. More specifically, new entrants in an EU-15 country, for instance, would need to have access to a holding with an area of at least 34 ha, employment valued at 1.4 AWU and an economic size of 38 ESU. In an EU-12 country the figures would be an area of over 8 ha, employment of at least 0.9 AWU and an economic size of 4 ESU (see Table 3 above). But how can such an objective be reached when the holder replacement rate is just 15 % in the EU-15 and barely 20 % in the EU-12 (see Annex 1E)? The answer lies in the entry channel chosen and consequently in the support measures available under each. Presumably, given the paucity of early retirements awarded in which holdings are transferred to young entrants, the most feasible entry channel is inheritance from an older family member. Ex novo entry is particularly difficult for young farmers. No information has been published on the distribution of entry through the three channels described. Nonetheless, the model obviously envisages different measures for each. The question posed is whether these measures are suitable or sufficient; in other words, their potential scope should be judged on the grounds of their content.

6 Articles 22, 23 and 26, EC Regulation 1698/2005. 7 Article 41, EC Regulation 73/2009.


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Figure 1: Young Farmer Scheme

If inheritance is the channel chosen, the measures applicable (B+C) constitute an incentive package for the heir, who is assured payment entitlements. If access is via another farmer's retirement, the measures applicable (B+C+D) are broader, but eligibility for payment entitlements is subject to the existence of a transferor. Lastly, under ex novo entry, the measures applicable (A+B+C) include the option to apply for payment entitlements from countries' national reserves. Access to payment entitlements, then, is the most significant factor in distinguishing the three channels. In fact, ex novo entry decisions can be assumed to have been heavily influenced by the assignment of payment entitlements from the national reserves8. Given the economic size attributable to young farmers' holdings, this permanent source of revenues indisputably constitutes a substantial portion of their income. As Graphic 5 shows, while the absolute value of subsidies rises with the economic size of holdings, their share of farm

8 Article 41, EC Regulation 73/2009.


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income is inversely proportional to economic size (compare to Annex 1G). Moreover, the amount of subsidies fluctuates widely from one country to another9 (see Annex 2A). Graphic 5: Total subsidies excluding investment subsidies by ESU (mean 2007-2009)

Source: European Commission, Farm Accounting Data Network. Nonetheless, depending on how this measure is applied, eligibility for payment entitlements may be subject to various types of restrictions, primarily financial and administrative. Provisions on the volume of national reserves available for payment entitlements, as well as on the minimum area of land that must be held by beneficiaries to activate their entitlements, constitute substantial constraints. Unless governments take effective action, such provisions may dilute the impact of this measure considerably10. Another measure regarded to have a significant effect is setting up support for young farmers11. This measure consists of aid (presently up to 70 000) in the form of a one-off premium plus a rebate for the interest on possible loans to finance setting up expenses. The determinant in quantifying the effectiveness of this measure, however, is the sum involved, particularly if compared to young farmers' yearly agricultural income. And indeed, according to the estimate of "setting up aid as a percentage of young farmers' income" (see Annex 2B), the sums awarded in the EU-15 in 2007-2009 constituted only a small percentage of young farmers' mean yearly income, i.e., scantly enough to hedge entry risk. In the EU-12 countries, by contrast, such aid appears to be much more appealing, although inter-country differences are sizeable. 9 That the largest economic size holdings have taken such a large share of these subsidies in the EU-12 countries

is particularly surprising, unless the beneficiaries are mostly large cooperatives. 10 Some regional authorities have established "land banks" with the holdings released by retirees to facilitate the

transfer of payment entitlements to new farmers. 11 Article 22, EC Regulation 1698/2005


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National and regional governments also limit the scope of this measure by imposing significant constraints. In addition to generally failing to award the individual subsidy ceilings envisaged, inasmuch as the measure is co-funded by the EU and its MS, they tend to include additional requirements that lower the number of eligible beneficiaries. Most prominently, these requirements include the award of setting up premiums but no subsidised loans, or the establishment of priority for youths who qualify as professional farmers because their holdings generate at least 1 AWU or account for at least 50 % of their income. The measure for modernising farm holdings12, under which special support is provided for young farmers, has been a necessary provision wholly consistent with the preceding measure. In many countries a very high percentage of young entrants have applied for a subsidy to improve their holdings. The impact of this measure may be assessed by the weight of young beneficiaries in the total, although the intensity of the aid received (from 60 to 75 % of the value of the investment, depending on the type of country and zone) must be taken into consideration. More specifically, the question would be whether this measure constitutes decisive encouragement. For want of better information, an approximate answer may be gleaned from a comparison between the number of young entrants and the number of young beneficiaries of the measure. And indeed, an estimate of the "weight of modernisation subsidies in attracting new entrants" (see Annex 2C) affords a glimpse of the situation. Apparently, two groups of countries can be distinguished, irrespectively in the EU-15 or the EU-12: one in which this measure may be having a significant impact and the other where implementation is essentially negligible. These results are indicative only, of course, and their significance in each country is relative to the total number of young farmers. The measure is also tightly conditioned by the specific rules established by national and regional governments. While in some cases the priority may be to support the modernisation of small economic size holdings, in others the measure may be geared to mid-size or large undertakings. Another important factor is that, given the intensity of the aid and the substantial funding required by this measure, many countries or regions tend to favour small individual investments to keep unit expenditure low13. Finally, early farmer or agricultural worker retirement14 is proving to have a nearly negligible impact on new entry. Farmers over the age of 55, whose holdings are both numerous and predominantly responsible for farming employment across the entire EU (see Annexes 1A and 1E), must have sound reasons for not retiring. Most of their reasons have to do with the economics of the issue. More specifically, early retirement would not appear to be cost-effective for 55+ European farmers, whose pension income would be much smaller than the payment entitlements that they can otherwise retain indefinitely15. Moreover, since on average they own much larger economic size holdings than young farmers (compare Annexes 2D and 1D), retirement would also entail waiving substantial occupational earnings.

12 Article 26, EC Regulation 1698/2005. 13 In some countries and zones, priority has been granted to modernisation plans for livestock raising on leased

land. 14 Article 23, EC Regulation 1698/2005. 15 France has considered making these payment entitlements incompatible with retirement benefits to favour land

mobility.


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In conclusion, the current YFS is generally weak and unable to effectively remedy the lack of young entrants. The model comprises a very short number of measures, only a few of which have any significant impact. The stronger measures include young farmer access to payment entitlements, the central core of present and future CAP aid, and support for modernising holdings owned by youths, which reinforces farm viability in terms of employment and income. The other two measures are weaker: the setting up incentive because the sums awarded are clearly insufficient, and early retirement because the number of retirees is negligible. 1.2.2. Measures currently implemented: key results The aggregate results for the EU-27 reveal the extremely limited scope of the young entrant incentive (see Table 5): scantly 38 404 applications were approved in 2007-2009, with public expenditure amounting to 651 million euros and a total induced investment of 4,748 billion euros. Around 66 % of the total went to the EU-15, whereas the EU-12 countries accounted for only 6 % of the total induced investment. Overall, only a token relationship was observed between young entries and early retirement. The weak impact of this measure can be deduced from the scant public expenditure per youth recorded (around 17 700 euros on average in the EU-27, compared to a ceiling of 50-70 000 euros, depending on whether support is awarded before or after the Health Check). Other statistics of interest include the high mean investment required per youth (129 000 euros in the EU-27, compared to only 26 000 in the EU-12) and the heavy dependence in the EU-12 on European public funding (with the EAFDR accounting for 75 % of all public spending). Table 5: Measure 112: setting up support for young farmers (2007-2009)

No. of applications approved

Public expenditure ('000 eur)

No. of young farmers assisted

Early

retirement Other Total EAFDR Total

Total investment ('000 eur) Male Female

EU-27 2 061 36 343 38 404 370 264 651 056 4 748 309 28 309 8 455

EU-15 1 041 25 184 26 225 193 091 415 755 4 455 674 19 798 5 813

EU-12 1 020 11 159 12 179 177 173 235 301 292 636 8 511 2 642 Source: European Commission, European Network for Rural Development. Country by country, application of the measure is generally uneven (see Annex 2E). In the EU-15, it enjoys significant attention in Spain (and France, Italy and Austria), whereas in Germany and the United Kingdom it is scantly noticed. In Poland and Hungary (and a few other EU-12 countries such as Bulgaria and Lithuania), the measure is fairly successful, but largely ignored in the rest. The degree of implementation in each country is not necessarily consistent with the severity of the national problem (compare to Annex 1A). The scant success of setting up support is in line with the results of other related measures. Early retirement, for instance, goes largely unnoticed (see Table 6): in 2007-2010, the number of beneficiaries (some 19 200) and of applications approved (around 19 800) in the EU-27, 80 % of whom were in the EU-12, was negligible. The lands released to other farmers (just over 291 000 ha in the period) and the public expenditure per beneficiary (10 000 euros on average in the EU-27 for the entire period, 19 000 in the EU-15 and 8 000 in the EU-12) were similarly insignificant.


PE 495.830 21

Table 6: Measure 113: early retirement (2007-2010)

Number of beneficiaries Public expenditure (000 eur)

Number of

applications approved 55-64 >64 Total

Number of

hectares released

EAFRD Total

EU-27 19 782 18 910 289 19 199 291 810 129 665 192 131

EU-15 3 566 3 187 63 3 250 120 412 32 437 62 495

EU-12 16 216 15 723 226 15 949 171 398 97 228 129 636 Source: European Commission, European Network for Rural Development. A review of the results by country (see Annex 2F) shows that the early retirement measure is actually implemented in a fairly small number of countries in both the EU-15 (in Spain primarily) and the EU-12 (nearly exclusively in Poland). The inference is that it is by no means an incentive for new entrants. The marginal impact of the measure, in conjunction with its weakness, rules out any other persuasion. The measure geared to modernising agricultural holdings has a much greater impact (see Table 7) In the three-year period 2007-2009, a total of 104 000 holdings were supported in the EU-27; in the EU-15, the vast majority was owned by natural persons (69 %), most of whom were males (79 %). Beneficiary characteristics were similar in the EU-12. One particularly significant factor, for its possible relationship to the measure for the inclusion of new entrants, is the number of beneficiaries under the age of 40 (40.3 % of all natural persons). Table 7: Measure 121: modernisation of agricultural holdings (number 2007-2009)

Number of farm holdings supported

Natural persons

Male Female


PE 495.830 22

considerable investment (some 12,800 billion euros) and a concomitantly high investment per beneficiary: around 123 000 euros in the EU-27 and 185 000 in the EU-12, figures that cast doubts on the possible effect of this measure on new entries. Table 8: Measure 121: modernisation of agricultural holdings (expenditure 2007-2009)

No. of applications approved Public expenditure (000 eur)

Organic

production Conventional production Total EAFRD Total

Total investment (000 eur)

EU-27 6 800 113 440 120 240 1 691 541 2 887 000 12 816 450 EU-15 4 843 74 697 79 540 582 897 1 423 189 6 886 826 EU-12 1 957 38 743 40 700 1 108 644 1 463 811 5 929 624 Source: European Commission, European Network for Rural Development. The key results by country (see Annex 2H) are indicative of several developments. In some EU-15 countries such as Germany, this measure may be reinforcing the economic size of generally viable holdings, whereas in others such as Spain, its primary purpose would be to raise the economic size of scantly or questionably viable holdings (with mean investments per beneficiary of 256 000 and scantly 44 000 euros, respectively). In the EU-12, countries such as Hungary or Romania, with 269 000 and 778 000 euros per beneficiary, respectively, appear to predominate, which may be a sign of the exclusion of the smaller size holdings from the programme. In conclusion, although the programme for encouraging young entrants is very weak in terms of both scope and results, it has inexplicably remained unchanged for several decades. In light of the enormous distance between programme objectives and results, the present model for the inclusion of new farmers is in dire need of redefinition. The new CAP reform underway constitutes an exceptional opportunity in that regard.


PE 495.830 23

2. NEW MODEL TO ENCOURAGE AND SUPPORT NEW

ENTRANTS The revision of the present youth-oriented model for new entrants can be expanded by applying part of the measures to any new farmer. The assumption is that in the context of a severe economic crisis, people from other sectors where unemployment rates are presently high and climbing may wish to become farmers. A diagram of this new model shows, however, that the scope of this proposal is very limited, despite the improvements introduced by a number of European Parliament amendments. These considerations are discussed in item 2.1. The obstacles to new farmer entry, particularly in the case of youths and part-timers, cannot be confronted with agricultural sector measures only. The problem has a territorial dimension which must be broached, acknowledging that new farmers depend essentially on the development possibilities in the rural areas where they live. This entails establishing a new model for rural entry, in which the rural development measures set out in the CAP, the cohesion policy and each country's national policies complement one another. To this end, the EU will have to redefine its rural policy, establishing a new Framework Rural Policy as described in item 2.2. 2.1. Proposed model and assessment This analysis now turns to the content of the proposed new model, which like its predecessor aims to encourage and support new farmers. This new approach is actually a continuation of the model in place which it aspires to improve with a short number of new measures relating primarily to the creation of greater and more permanent support for young farmer start-ups. The assessment of these new measures necessarily draws from both their legislative particulars and their economic and administrative implications. As concluded below, however, the proposals presented by the Commission and the amendments pending approval by the European Parliament, some of which could be applied to any new entrant, constitute an insufficient solution to the problem and fail to remedy the main shortcomings of the present model. 2.1.1. The new Young Farmer Scheme (new YFS) A comparison of the new model (new YFS) shown in Figure 2 to the present model (see Figure 1), reveals that the former is essentially an extension or continuation of the latter. Assuming that the major deterrents to entry are soundly established and that the channels for entry will narrow with the planned elimination of early retirement benefits, the variations introduced by the new model lie primarily in the expansion of existing measures and a single new proposal. More specifically, the measure consisting of assigning payment entitlements from national reserves16 has been enlarged with the creation of a new yearly payment for young farmers17. These two measures (A=A1+A2, Figure 2) are complementary, reinforcing the permanent support received by new farmers, whether heirs or ex novo entrants. The two

16 Article 23, Direct Payment (DP) proposal (EC, 2011a). 17 Article 36, DP proposal.


PE 495.830 24

basic features of such support are the definition of "young farmer" and the amount of the new annual payment entitlement. Figure 2: New Young Farmer Scheme

The definition of young farmer is of particular importance, the number of potential beneficiaries and associated public expenditure vary depending on the specific wording. The main difference between the two definitions proposed18 is that while in the first the young farmers eligible for the new yearly payment are any "who have already set up a holding during the five years preceding", in the second, to be eligible, such new farmers must also "possess adequate occupational skills and competence".

18 Article 36.2 of the DP proposal and Article 2.1 (u) of the RD proposal.


PE 495.830 25

The question arising around the new annual payment entitlement, in turn, calculated by multiplying a figure corresponding to 25 % of the average value of the payment entitlements held by the farmer by the number of entitlements he has activated, subject to a minimum size of 25 hectares or more depending on the MS19, is whether it will constitute a perceptible economic incentive. This additional payment is actually subject to a dual constraint: the assignable volume of payment entitlements may be no more than 3 % of the national reserves (from 2015) and the expenditure may come to no more than 2 % of the national ceiling20. Although business start-up aid, the following measure, would be updated21 under the new scheme, the present 70 000 ceiling is retained. Inasmuch as this measure reinforces the requirement to submit a business plan by establishing a deadline for its application ("implementation of the business plan has to start within six months from the date of the decision granting the aid22), it can be associated with the creation of a farm advisory system23. The synergies between these two measures (B=B1+B2) stem from the fact that assistance may be voluntarily requested from the farm advisory system to prepare and implement a business plan (beneficiaries, whether or not they receive support under the common agricultural policy, including rural development, may use the farm advisory system on a voluntary basis24). This additional support may, then, favour the viability of start-ups. The support for investments in holdings is another measure whose content would be enlarged and updated25 to cover tangible and intangible investments that entail overall holding improvements (C=C1+C2). Of particular interest is the explicit support furnished for land ("access to farm and forest land, land consolidation and improvement26), for land acquisition is a major obstacle for the ex novo entry of young farmers, i.e., youths whose holding is not inherited. Another prominent feature of the new model is the increased intensity of the aid for investments made by young farmers (from 60 to 90 % of the value of the investment, depending on the type of country and zone), which may be regarded as additional financing for business plans. It also reinforces the existing knowledge transfer and information actions27. Although this second type of support entails no special treatment for new entrants, its synergies with investment aid are obvious. Lastly, the proposal includes an innovative small farmer scheme28 which may impact the entry of new farmers29. Briefly, this scheme (D=D1+D2) provides for the voluntary simplification of payments for beneficiaries with very small yearly entitlements (the amount referred shall not be lower than EUR 500 and not be higher than EUR 1 00030). This sum would be raised over the next seven years ("shall be equal to 120 % of the

19 Further to the figure in Article 36.5 of the DP proposal. 20 Articles 23.1 and 37 of the DP proposal. 21 Article 20 of the Rural Development (RD) proposal, (EC, 2011b). 22 Article 20.4 of the RD proposal. 23 Title III of the Horizontal Regulation (HZR) proposal, (EC, 2011c). 24 Article 14 of the HZR proposal. 25 Article 18 of the RD proposal. 26 Article 18.1c of the RD proposal. 27 Article 15 of the RD proposal. 28 Title V of the DP proposal. 29 Article 20.1c of the RD proposal. 30 Article 49.2 of the DP proposal.


PE 495.830 26

annual payment that the beneficiary received under the small farmer scheme31) for beneficiaries who permanently transfer their holdings to other farmers. These two measures are related given that the transferees may be new farmers. The second provision would partially replace the early retirement provisions, which have been dropped from the new YFS. Given the high concentration of beneficiaries with small direct payments, this measure might be expected to have an impact on young entries. The size of the payment provided per holding, however ("an amount corresponding to the national average payment per hectare multiplied by a figure corresponding to the number of hectares with a maximum of three32) greatly reduces the number of holdings eligible for the small farmer scheme that might be transferred to new farmers. 2.1.2. Assessment and legislative amendments While in some respects an improvement on the present model, the new YFS proposal is not free of serious shortcomings. The following discussion attempts to corroborate this perception by assessing the foreseeable impact of the Commission's proposed new measures and the amendments put forward by European Parliament. Following the order set out in the diagram in Figure 2, the analysis begins with the measures to allow new farmers access to payment entitlements and/or raise their remuneration (A measures). The two factors that determine a new entrant's eligibility are the number of accessible payment entitlements and the proportion of the total farming income accounted for by such entitlements. Since access to payment entitlements (measure A1) depends on the availability and due management of national reserves, ex novo entry is bound to be more difficult and result in many fewer entrants. The introduction of an additional annual payment for these entitlements (measure A2) for young farmers may help offset that difficulty, but will favour young farmers who already engage in farming (for the five years previous) after entry by either of the two possible channels, and who have activated entitlements33. Another question that arises is how large the additional payment should be. To have any significant impact, it would have to be greater than proposed. This might be accomplished by raising the percentage of entitlement assignments or the maximum number of hectares with activated entitlements to which the additional payment may be applied34. In any event, new entrants should benefit from positive discrimination with respect to the percentage of entitlement revenues allowed, i.e., the weight of direct payments in the holding's total income. Unsurprisingly, young farmers own small and medium economic size holdings (see Annex 1D), a particularly high proportion of whose total income is accounted for by direct payments. All the foregoing should be viewed against a backdrop in which, as recently pointed out (European Parliament, 2012: 85-87), subsidies as a percentage of farm income

31 Article 20.7 of the RD proposal 32 Article 49.1 of the DP proposal 33 A possible amendment that would make new farmers in general eligible for the improvements envisaged for

young farmers in Article 36 of the DP proposal would mean distributing limited resources among a larger number of potential beneficiaries, as well as the disappearance of an incentive geared specifically to youths, who constitute the core of the problem of the present and future scarcity of farmers.

34 Amendments 88, 89 and 90 proposed in the Capoulas Santos Report to the Committee on Agriculture and Rural Development of European Parliament (2011a) might suffice in this regard, for under those provisions all young farmer entitlements would receive an additional payment in most cases.


PE 495.830 27

have continued to grow after each successive CAP reform and now amount to over 50 % of the total (see Graphic 6). Given the connection between the measures proposed in the two CAP pillars and that the overall aim pursued by YFS is to recruit professional farmers, the elements of the two existing definitions of young farmer35 should logically be combined. One controversial area that these definitions fail to address, however, is the degree of professionalism (time devoted) required, which is one of the criteria generally used by MS to establish priorities when distributing aid. Since the vast majority of holders of small and mid-sized holdings are "part-timers", neither their working hours nor their income are primarily farm-based, a circumstance that should not be overlooked in this context. Graphic 6: Farm subsidies in the EU-15, 1995-2008

Source: EP, 2012: 87. Calculated by authors using EU FADN.

A number of remarks are in order in connection with the measures for supporting young farmer start-ups (B measures). The effectiveness of the start-up premium (measure B1), the existing ceiling for which is retained, may be regarded to be insufficient in practice, given that the sums granted by MS are usually much lower than the upper limit (see Annex 2E). In light of this, would it make sense to raise the start-up ceiling? Would that ensure better results? A possible reply lies in the enhancement of conditions established for the business plan, whose partial financing is associated with the start-up premium. Despite the importance attached to direct payments in highly subsidised European agriculture, the sole way to guarantee larger numbers of new entrants is to provide them with viable, long-lasting and sufficiently funded business plans to consolidate holdings that generate employment and revenues. Linking such business plans to the creation of a farm advisory system (measure B2) therefore makes perfect sense, although the use of the latter should be made mandatory for start-up premium beneficiaries36.

35 This appears to be more reasonable than the provision in amendment 87 in the Capoulas Santos report

(2011a) whereby each MS would be able to establish specific definitions. 36 Article 20.5 of the RD proposal could be amended to establish this requirement.


PE 495.830 28

Nonetheless, successful implementation of business plans may require greater financing for investments. Since rises in start-up premiums are subject to MS budgetary limitations, the synergies between this measure and holding modernisation measures (C measures) need to be reinforced. As some analyses have shown (EC, 2008: 26-27), the budget for holding modernisation, which accounts for 11.1 % of rural development expenditure in the EU-27 (compared to a mere 3 % for start-up premiums), doubled over the period 2007-13, climbing to 30 % of the moneys expended to improve competitiveness (Axis 1). These measures should therefore be more closely interlinked, conditioning the award of a modernisation subsidy for a new entrant (measure C1) to the satisfactory submission of a business plan37. The maximum setting up subsidy for young farmer could also be raised in all types of regions when their investments form part of their business plan38. That would reinforce and ensure financing for the business plan (measure C2), although such a possibility would have to be ratified by MS decisions. In addition, closer ties could be established between these measures and knowledge transfer and information actions39. The final relationship to be assessed in connection with the model proposed is between new entrants and the small farmer scheme (D measures). After the elimination of the early retirement measure, this is the sole measure in the new YFS proposal that relates retirement to new entry. Nonetheless, the primary aim of the small farmer scheme (measure D1) is to simplify the administrative costs associated with direct payments, while offering an additional incentive to abandon this type of holdings. Therefore, this measure is not expected to raise the number of new entrants, young or otherwise, to any significant extent, despite the large number of potential beneficiaries. The data available (see Graphic 7) reveal a high concentration of beneficiaries with direct payments of under 1 000 (around 60 % of the total number of recipients but barely 5 % of the total payments), although only a small fraction would be eligible for this measure (those who receive over 500 and under 1 000 euros). Furthermore, the amount offered to encourage small farmers to exit (measure D2) would appear to be scarcely attractive40.

37 Article 18.3 of the RD proposal could be amended to include the same requirement as in Article 20.5 in

connection with the business plan. 38 This would entail amending Article 18.3 and Annex I of the RD proposal. 39 Article 15 of the RD proposal 40 Amendments 23, 26, 29 and 30, as well as amendments 102, 103 and 104, listed in the Capoulas Santos

report (2011b) would constitute a perceptible improvement, although they would be unlikely to encourage new entry.


PE 495.830 29

Graphic 7: Distribution of direct payments and the small farmer scheme

Source: European Commission: Directorate General of Agriculture and Rural Development.

Indeed, the withdrawal of the early retirement measure in the YFS proposal might be reconsidered, as suggested in a number of amendments41, despite its scant success in the few countries where it has actually been applied (see Annex 2F). That would be unlikely to have a perceptible impact on new farmer entry, however, for a very powerful reason: for older farmers, payment entitlements, collected as direct payments, constitute a considerably larger financial supplement than their retirement pensions. Moreover, most of these payment entitlements are in the hands of older farmers. In conclusion, the new YFS model proposed should not be expected to have much of an impact, for it is in line with the (insufficient and somewhat off-target) basic strategy of creating greater and more permanent public economic support, consistent with what can be expected of the post-2013 CAP. The most prominent measures in this regard are access to and overpayment of entitlements, without which holding viability would appear to be unattainable. Investment measures in connection with the implementation of business plans, in turn, should merit greater attention. But, is this all that can be done? Another approach might be envisaged, more as a complement than as an alternative to the model proposed. In it, the causes underlying the scarcity of farmers, in particular young farmers, would be viewed from the wider perspective of the countryside in general, rather than farming only. This problem actually forms part of a broader issue, the scarcity of young people in the countryside, which is severe in many areas. The inference is that the solution may lie in improving the future of rural areas by enhancing their potential for development and reducing territorial imbalances.

41 Amendments 24 and 27 in the Capoulas Santos (2011b) report provide for recovery and revision of this

measure.


PE 495.830 30

2.2. New farmers and countryside development The difficulties faced by people choosing a farming career, in particular youths, form part of the larger picture of the obstacles confronted by young people in general wishing to live and work in the countryside. In addition to sector-specific deterrents, these youngsters have to deal with other hindrances associated with the retarded development that prevails in many rural areas. A redefinition of the model for inclusion of new entrants, not only to farming but to any other activity, is therefore put forward here. This new approach addresses a variety of multisectoral options and a wide range of measures to further rural development. The need to develop a new model to encourage youths to establish in rural areas is the result of the failure of European rural policy to effectively rise to a dual challenge: to maintain farming activity in many rural areas, not only for economic, but also for social and environmental reasons; and to curb the depopulation of the countryside, in particular as regards the younger members of that society. In the European context, suitably confronting these challenges entails drawing a distinction between agrifood and agri-environmental policies on the one hand and territorial rural policies on the other. 2.2.1. New model for establishment in rural areas (NRS) This new model is justified by the profound change that is taking place in the European countryside. As a number of analyses have shown (Regidor et al. 2008:13-20, EC-DG AGRI, 2010: 39-52), the countryside in general is characterised by its retarded economic and social development, which can be attributed to inter-related economic, social and political factors. Briefly, the economic causes are mirrored, among others, by the decline in farming activity in all manner of rural areas, where it has ceased to constitute the main source of employment and income. The social causes, in turn, are most visible in the scant presence of youth in many rural areas and the huge obstacles that must be overcome to practise a profession in that environment. The political causes are reflected in the relative lack of attention paid to these areas by public authorities and in particular the unsuitability of or the limits to the measures adopted to further their development. In the European Union, after two decades of CAP reform and steady Cohesion Policy growth, rural policy has been relegated to a secondary position. Despite its shortcomings, however, Europe's rural policy is the main source of the applicable measures for MS that lack policies of their own. Against this backdrop, the new model for establishment in rural areas (see Figure 3) aims to provide a more suitable response to Europe's new rural reality, in which even the minority of youths who work on farms do so mostly part-time. These young rurals consequently need to expand their career possibilities in the countryside by seeking employment in other sectors. New entrants to farming need other rural policy measures, just as agriculture depends for its survival on territorial development with a multisectoral perspective. Two essential channels for earning a rural livelihood can therefore be envisaged, as a new farmer or as a young and other rural, although in many cases the two may be complementary. The measures from which youths can draw for a career in farming are discussed in item 2.1.1 and simplified in the figure (measures A, B, C and D). Briefly, they consist of access to reinforced direct payments (measure A), a one-off start-up premium associated with a business plan (measure B), special support for investment in the holding


PE 495.830 31

(measure C) and voluntary access to the small farmer scheme, either maintaining or permanently exiting farming (measure D). Figure 3: New Rural Scheme

New non-youth farmers would qualify only for two types of measures: direct payments (measure A) and the stayer benefits stemming from the small farmer scheme (measure D), i.e., they could enlarge their holdings after other small farmers permanently exit theirs. This schedule of incentives is less advantageous than the measures in place for youths, even though new entrants over the cut-off age are confronted with the same scant options as young ex novo farmers. This approach should not, then, be expected to draw large numbers of such new entrants.


PE 495.830 32

The scant effectiveness of these measures in the consolidation of professional farming among new entrants, i.e., enabling them to acquire economically viable holdings and devote their working hours and obtain their incomes primarily from farming, has prompted the formulation of this model. Its contribution is to surmise that, in light of the aforementioned shortcomings, other measures (measures E, F, G and H)42 may provide more decisive support for the successful establishment of young rural start-ups. Some of these other measures are presently non-existent, while others can be found scattered across the Second Pillar of the CAP, the Cohesion Policy and certain MS's own rural policies. In other words, since youths can hardly make a livelihood in farming, the proposal is to favour their establishment in the countryside as young rurals. To this end, a temporary support measure could be created in the form of a basic annual income for young rurals (under 35) (measure E), to be optionally paid as a one-off subsidy, subject to integration in a rural development project able to create jobs. This measure, similar to the business start-up aid (envisaged in measure B, would constitute an alternative open to all young rurals, adaptable their preferences and opportunities. One particularly important factor to consider is the sum to be granted, which might be defined to be at least equivalent to the present setting up aid for young farmers (10 000 per year over 7 years, for instance). A second consideration would be how to integrate this measure in the proposed legislative framework. The most plausible options would be insertion in the RD proposal or, perhaps more appropriately, in the Common Strategic Framework (CSF) Funds43 proposal, given its close ties to multisectoral development projects. One of the most significant contributions made by this new proposal for a European rural policy is the reinforcement of the use of the LEADER44 method to enhance support for local development by improving coordination among the various structural funds (CSF Funds)45. The first measure proposed, support for investment projects (measure F), will continue to be one of the more prominent options for encouraging rural entrepreneurs to implement job-creating projects. The large number of projects involved, their multisectoral nature and the presence of local action groups (LAGs) in all the Union's rural areas evince the signal importance of this measure, especially in light of its cooperative, innovative and vitalising content. Measure F will maintain a broad territorial presence, given its generous co-financing (from 50 to 90 % depending on the type of region) and the provision for a mandatory minimum expenditure: "at least 5 % of the total EAFRD (European Agricultural Fund for Rural Development) contribution"46. Moreover, if linked to the creation of a basic annual income, this measure would gain specific weight as a requisite equivalent to the business plan required of young farmer start-ups, for it constitutes one of the most readily accessible options for young rural entrepreneurs to set up a business. Extending the LEADER method to the European Regional Development Fund (ERDF) and the European Social Fund (ESF), in addition to its current application to the rural development (EAFRD) and fishing (European Maritime and Fisheries Fund, EMFF) funds, may enable the MS to ensure the coordinated use of all these funds (measure G) in 42 A new farmer of whatever age could also benefit from these measures (measures F, G and H), which may

prove to be determinants for establishment in a rural area. 43 European Commission, 2011d. 44 Articles 42-45, RD proposal. 45 Articles 28-31, CSF Funds proposal.


PE 495.830 33

their territories. Briefly, this measure entails furthering community-led local development focusing on specific sub-regional territories, supported by local action groups whose members represent public and private socio-economic interests, with a view to conducting integrated and multi-sectoral local development strategies (LDS)47. Measure G envisages the possibility of co-financing all manner of public and private investment projects in rural areas delimited as such, in accordance with the objectives laid down in their LDS, by applying an action plan demonstrating how objectives are translated into actions, a description of the management and monitoring arrangements of the strategy and a financial plan of the strategy, including the planned allocation of each of the CSF Funds48. One decisive factor in this regard, which remains outstanding, is the allocations to be made to the various funds and the financial conditions available under each, on which the actual scope of the measure will depend. Finally, a small but growing number of MS have strong national rural policies (measure H), with nationally financed specific actions. Under the umbrella of these policies, hosts of projects are being spawned in the countryside that not only supplement the EU projects, but in some cases have overtaken them in importance. The countless projects initiated under national measures are indispensable in those countries, where they remedy obvious European shortcomings and expand the career opportunities for young people. France, United Kingdom, Germany, Austria, Finland, Ireland, Netherlands and more recently Spain, all EU-15 countries, have rural policies of their own, with extensive legislative backing and innovative programming. Some of the more prominent actions rolled out under these national policies include the furtherance of all manner of economic activity in rural revitalisation zones in support of territorial projects implemented by intercommunity organisations, such as in France; support for the weakest rural zones, favouring rural inhabitants' access to quality public services, such as in the United Kingdom; or the implementation of environmental projects supported by a network of local development agencies, such as in Austria.49 2.2.2. Assessment and application of the New Rural Scheme Most of the shortcomings of the present European rural policy can be traced back to the CAP and Cohesion Policy reforms implemented at the turn of the century. The consolidation of this policy as an exclusive but minority part of the CAP weakened its content and scope, due to the adoption of a narrow approach, predominantly geared to agrifood and agri-environmental activities. The new CAP has consequently been barely able to counter the increasingly concentrated social and territorial impacts generated by the policy itself50. Briefly, as it is neither multisectoral nor territorially applicable, it fails to benefit the entire rural population (except in the minority measures under Axes 3 and 4). While the new proposals for reform contain a number of improvements, such as the reinforced use of the LEADER method and the application of CSF funds to community-led

46 Article 65, RD proposal. 47 A precedent for this measure can be found in the rural development programme in place until 1999 under the

Cohesion Policy for rural areas in the Union's most advanced regions (called region objective 5b). This programme included measures such as allocation for infrastructures, economic diversification, improvement of the rural habitat, protection and conservation of natural resources and human resources and was co-financed by the European structural fund covering the respective area of specialisation.

48 Article 29.1, Funds proposal. 49 See Soto Hardiman, P., 2008, for a full discussion. 50 See 2nd Report on Economic and Social Cohesion, 2001: Part II, 2.4.


PE 495.830 34

local development projects, globally they are much too weak to confront serious challenges such as the shortage of new farmers and the scarcity of youths in the European countryside. Suffice it to say that, of the stated priority aims, territorial and multisectoral rural development ("promoting social inclusion, poverty reduction and economic development in rural areas) has been relegated to sixth place. Hence, Europe is lacking a genuine rural development policy, a shortcoming that only some MS have remedied with national rural policies. A New Rural Scheme is therefore necessary to more suitably integrate agrifood sectoral, multisectoral and territorial measures and to serve as a general reference framework for all countries (Regidor, 2011). The content and implementation of this new NRS would be conditioned by certain determinants, however. Above all, in the context of the scarcity of new farmers, greater importance would need to be attached to "part-time farming". Although the proposals for supporting new entrants do not exclude this formula, their primary aim would appear to be the establishment of professional farmers. A review of the growing prevalence of part-time farming in the EU, however, measured as the percentage of total working time devoted by family farm managers to that activity (see Table 9), is indicative of how unrealistic that aim may be. Table 9: Time devoted to farming by family farm managers (% AWU)

Source: Eurostat (Agriculture database 2003, 2007). In the EU-27, most of the time devoted to farming by family farm managers is part-time work (58 % of the total AWU in the EU-15 and 72.2 % in the EU-12 are worked in hours when less than half of the working time is spent farming). This development goes hand-in-hand with a steep decline in full-time farm work in the EU-27 and especially in the EU-12. A country-by-country review (see Annex 3A) reveals this same pattern across most of the EU-15 (with a few exceptions such as France and Germany) and the entire EU-12, where very high part-time work percentages are recorded for some countries. As some analyses have shown, this development falls within the pattern of a declining share of primary activities, its contribution to GVA and the steady increase of shares of the secondary and tertiary sectors in GVA over the period 2000-2008 (EC, 2012:14-15). The measures designed to favour entry may not be suitably addressing this reality, although hard evidence in this regard specifically referred to young farmers is not presently available51. The vast majority of today's farmers have semi-subsistence or very small economic size holdings (in 2007 81 % owned holdings of under 8 ESU in the EU-27), only 15 % of which belonged to youths. Hence, farming sector measures alone will not suffice to deal with the troublingly low farmer replacement rate, for the vast majority of those concerned are part-time farmers.

51 The information on part-time farming is not broken down by age bracket in the EUROSTAT databases.

2003 2003 2003 2007 2007 2007 Variation 2003-2007

< 50% of full-time hours

50% -< 100% of full-time

hours Full time

< 50% of full-

time hours


hours Full time

< 50% of full-time hours


hours Full time

EU-27 64.3 17.3 17.6 66.5 17.5 15.3 3.3 1.4 -13.3

EU-15 57.6 16.0 24.8 58.0 15.3 25.2 0.7 -4.3 1.5

EU-12 69.0 18.1 12.6 72.2 19.0 8.5 4.7 4.7 -32.5


PE 495.830 35

More specifically, the main core of the proposals (measures A, B and C) may be effective for candidates aspiring to be professional farmers, whereas the new small farmer scheme (measure D) maintains the support and incentivises the elimination of this type of holdings. How, then, can these measures alone counter the paucity of farmers? The answer lies in the support that youths can obtain to set up in the countryside, many as part-time farmers, but engaging primarily in some other type of work. The other measures proposed in the NRS (measures E, F, G and H) are designed to do just that. Consequently, greater attention needs to be paid to the importance and present state of rural youths. As some recent analyses have noted, "most youth policies ignore 'rural' and most rural policies ignore 'youth' and the specific challenges of addressing youth unemployment in rural contexts go unacknowledged. A search of several recent EU policy documents found no mentions of rural youth (EP, 2010: 9-10). In particular, much more political attention has been paid to the entry of young farmers than to the establishment of young rurals. This pattern merits revision, however, for despite the scant information available, some estimates indicate that the relative weight of youths (ages 15 to 24) in predominantly rural (PR) regions continues to be high in the EU-27 (3.1 %), with a particularly high proportion in EU-12 countries (5.9 %) compared to the EU-15 (2.3 %) (see Table 10). The percentage of young people is higher in intermediate (IR) and predominantly urban (PU) regions than in PR in the EU-15, but not in the EU-12. An assessment of the absolute country-by-country data (see Annex 3B) for this type of region shows that, despite the declining number of young rurals, a significant portion of the population still falls under this category and merits substantial political attention. Table 10: Distribution of the population of 15-24 year-olds by type of region (estimate)

15-24 year-olds (% of total

population) 15-24 year-olds (absolute numbers) PR IR PU PR IR PU EU-27 3.1 4.6 5.2 15 602 588 23 134 447 25 750 848 EU-15 2.3 4.2 5.7 9 267 569 16 691 137 22 470 119 EU-12 5.9 5.5 2.7 6 143 479 5 688 549 2 780 386

Source: EUROSTAT database and European Parliament, 2010: Table 1. These estimates would justify the need to further youth self-employment in many rural areas, for which purpose some of the measures proposed may be particularly useful (measures E and F). These measures are inter-related, inasmuch as the existence of a basic annual income (measure E) is subject to participation in a development project, a requirement that greatly lowers the number of eligible beneficiaries. Measure E might in any event be limited to only one type of priority rural zones, which would enhance its financial viability. In that case, the support for rural investment projects (measure F) would have to be greatly reinforced, increasing the number of projects and surmounting some of the obstacles to the application of the measure that have been identified in the successive assessments of the LEADER programmes. If it is not reinforced, the measure will continue to be limited in scope, despite the high rate of co-financing envisaged (50 to 90 %, depending on the type of region), due primarily to the small size of the mandatory minimum EAFRD expenditure provided ("at least 5 % of the total EAFRD contribution).


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The substantial results attained by the 1 460 LAGs spread across the EU, in which truly moderate public expenditure has sufficed to reach a large number of projects and beneficiaries, provide an indication of the yet untapped potential of this measure52. In keeping with the aforementioned link between it and measure E, the public budget for measure F would need to be reinforced to ensure that establishment in rural areas, particularly by young people, is not hindered by a want of funding. The LEADER method, indeed, has always had greater potential than deployed in its successive applications. Another determinant for the content and application of this New Rural Scheme is the characterisation of and importance attached to rural territory. A territorial approach to the problems affecting the countryside is needed to drive integrated rural development strategies to meet territories' multisectoral needs, as well as endogenous rural development strategies to draw value from all manner of presently unused resources. It is especially necessary to implement sustainable rural development strategies that foster economic activity and raise the standard of living while advocating the conservation of natural and cultural resources (Regidor et al., 2008: 26-35). Therefore, regardless of the strategy adopted in rural development, policy measures must be defined territorially and applied in a manner that honours rural diversity. Such territorial zoning has been defined along two distinct lines in the EU: one constitutes the official territorial typology for statistical and socioeconomic analysis53, and the other, a variable zoning system by country and region with a subregional dimension (NUTS 4) for applying the LEADER method. This latter system is bound to play a lead role in the implementation of Europe's new local development policy for rural areas laid down in the Common Strategic Framework Funds proposal. The adoption of a territorial approach, however, inevitably entails zonal characterisation, in accordance with a typology with political and administrative impacts. Like the scheme in place for the Cohesion Policy54, this typology constitutes grounds for prioritising and modulating the level of support for rural areas. While such a characterisation would be necessary to implement any of the measures proposed, it is indispensable to further community-led local development in the European countryside (measure G). Nonetheless, this measure, which can be regarded to be of utmost importance given its possible impact on rural development, is defined as an option, not an obligation. Such voluntary implementation is complex and would call for a substantial improvement in governance between the CE and its MS, as pointed out in previous reports (Ntre Europe, 2011: 19-32). More than that, it needs to be satisfactorily integrated into many countries' national rural policy measures (measure H). That will require additional improvements in those countries' domestic governance, necessarily a medium-term endeavour. In short, as far as young rural and the furtherance of their entry into farming and establishment in the countryside are concerned, this option is a step in the right direction, for it contributes to defining a new Rural Policy Framework for the EU that would include all the measures under the NRS proposed (see Figure 4). In this framework, some European measures would continue to be implemented under the PAC (measures A, B, C and D) and others under the Cohesion Policy (measures E, F, G and H), while national policy (measures H) would be aligned within the new Rural Policy Framework for the EU.

52 See the information given in the European Network for Rural Development. 53 This new EUROSTAT (2010) methodology is an updated version of the OECD method, adapted to NUTS 3 region

indicators. 54 See Articles 82 and 84, CSF Funds proposal.


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Figure 4: New NRS and new European Rural Policy

Policy Department B: Structural and Cohesion Policies ____________________________________________________________________

Documents

Instalarea Tinerilor Fermiei in Limba Engleza