Abbreviations:
CAP - Common Agricultural Policy EU- European Union UK - United Kingdom
LFA - Least Favoured Area SDA - Severely Disadvantaged Area
Today I wanted to shock you and try to show you showcase some result shining a light on some structural problems within UK farming. Most of all looking at it's compared economic performance from the family farm point of view in the light of a challenging context ahead of us.
To do this I am going to use work I participated/did to across 3 years comparing France and the UK (Wales). 3 agricultural areas case studies analysed via an agrarian diagnosis. Giving for each of those modelled landscapes, modelled functioning farm (economical and technical).
The second is in France, in a semi-mountainous area with a warmer and dryer climate but still good cropping and growing land. This area is still considered as a Least Favoured Area (LFA), receiving special subsidies of the 2nd Pillar of the Common Agricultural Policy. EU factsheet on farming in Auvergne.
The third is Bala area in Upland wales, a rougher wetter and colder climate with lots of rough grazing, mountain grazing. This is also considered as a LFA. Though it is not receiving dedicated subsidies anymore.
Farm Agricultural Income and Subsidies, different repartition in different areas.
On the range of modelled farms obtained from fieldwork on each area I would like us to take a look at the spread in terms of agricultural revenue per family worker. All archetypes are on the same foot here, per family worker. We witness a wider spread in the UK, the widest/wildest being the Upland case study area. There are some higher highs but also some much lower lows compared to the French case-study. Part of those lows might be part-time farms. But overall we note that most farm archetype are around the average wage or slightly under. Only a few farm archetypes manage to reach those higher "family" income and they have specific profiles.
On the upland case study area the spread in income is mostly linked to the spread in subsidy received per family worker. This is not as unevenly distributed in other case study areas and income differences depend more on the orientation of the farm enterprise. We note that this uneven distribution has favoured different farms through time through changes in CAP. Today the difference in subsidy share is depending on landholding pattern, the more land you have the more subsidy you get either 1st or 2nd pillar. It's the way acreage payment work.
3 specific comparable farm archetypes to understand specific compared challenges
We are now casting our eyes on 3 specific modelled farm from the 3 study areas aforementioned. All of them feature the same number of workers and family workers 2. And they are all specialised, "simplified"/focused farms that fully implemented the 20th century agricultural revolution. A Pembrokeshire’s low-cost dairy farm 200 Dairy Cows, a 60 Dairy Cows strong farm producing milk for PDO cheese from Cantal and finally an archetype from Bala. Specialised onto beef and sheep. None of this farm has mountain land.
For those 3 modelled farm we can have a look at the total farm output and how it reflects on the farm economic performance. We notice that the French farm has a half of Pembrokeshire low-cost farm output. UK farms presented here have a higher "work productivity". But this is eaten up by Intermediate Consumption (and not so much capital depreciation), rent and interest. Added values are relatively similar in terms of the share of total output between 19% and 25%. But once interests and rents are taken into account the French system retains more of this added value at 16% vs 11% for both UK models. And does this difference has an impact on agricultural incomes?
The answer is not really due to subsidy reliance to constitute farm incomes. The French system benefits from a different regime for 2nd pillar payments that doesn’t pay per outstanding feature but per area of least favoured land. While less than ideal acreage payments are the norm in UK and France though there are some differences in farmers availability to access those and different rates (same rate for whatever your type of land in wales, historic reference payment for France). Those explain income differences between those farms without mountain land. Lowlands at that game are bad and only couple upland farms with mountain land will fully benefit from it.
The dependence on subsidy of UK farming systems is reduced compared to their French counterpart. Though it’s still relatively high. Overall dairy farms tend to depend less on subsidy than beef and sheep but those levels of dependence are high and the resulting incomes not that high for long hours.
The given agriculture income are sensitive to output and input prices volatility. They are buffered by subsidies right now but in the future it won't be the case anymore as direct payments are going to be phased out in the UK, no more direct income support or safety net. If not it would result in difficult levels of income to sustain. Dairy farms, tend to be more fragile to this volatility due to their huge output, relatively high input consumption and low subsidy dependance.
The land problem. (SAFER Cantal, Interviews, Savills)
The output price problem. (Interviews, FranceAgrimer, Hybu Cymru)
Finally, I would like to conclude by highlighting issues witnessed in fieldwork explaining some of those differences and problems. First the price paid for farm outputs to often seen as commodities in the UK. Secondly the land capitalisation has skyrocketed during the 3 last decades across the EU. Yes. But it did so way faster in the UK than in France and farm incomes are a struggling to match the price of land today (either to rent or to buy). It poses a challenges for both existing farms and new entrants into farming.
Théo Lenormand, 22/04/2021
