Friday, April 19, 2024

Some facts about EU farmers

Recent stories

I keep hearing that we should emulate European farmers by driving our tractors through the streets protesting against our Federal government’s attempts to stop farmers from farming.

However, before farmers rush to the tractor, it’s crucial to understand the vast differences between Europe’s agricultural sector and Australia’s.

Farm in Europe

Let’s start with some context. Australia’s land mass is around double the size of the combined European Union (EU), coming in at 7.7 million square kilometres versus their 4.2 million square kilometres. In fact, if you take Western Australia and South Australia out, the EU fits nicely into Tasmania, Victoria, New South Wales and Queensland. Or, to look at it another way, they spread 448 million people plus millions of farms across an area that runs from Melbourne to Cape York while we hug the coast with and accommodate 26 million people with only tens of thousands of farms.

Besides a lot of people jammed into a relatively small area, the other big difference lies in the amount of arable land they have compared to us. Australia has 31 million hectares versus the EU’s 98 million hectares available for some form of crop, plus another 60 million hectares of high rainfall pasture. To farm that land, Europe has 1000 farms for each one of ours or in total numbers we have 85,000 farm businesses versus Europe’s claimed 9.3 million.

Actually, that’s the quoted figure the EU put out, but it’s not really a like-for-like comparison as they have millions of legacy farms which are really nothing more than what we would call lifestyle blocks often comprising a falling down, quaint or grandiose old stone building and barn on a few acres.

Take these out and the numbers drop back to less than a million, but even then the average size of their commercial farms is still small, at under 50 acres versus ours at close to 1000, but they do have a vast number of intensive horticultural and livestock operations which only require small acreage.

Of their claimed 9.3 million farms, 3.3 million have an average gross output of less than EUR2000 and were responsible for under 1 per cent of the EU’s farm production. A further 2.5 million had an output of between EUR2000 and 8000, which means they have a few olive trees or pigs so these can be largely discounted.

Most of these small farms are located in the old Eastern Europe, with Romania having 2.9 million and Poland 1.3 million, many of which look like they are still living in the pre-war days of horse and cart with falling-down stone houses and grandma standing on the front porch.

Of the Western European states, Italy also has a lot of subsistence farms with  1.1 million and Spain 0.9 million small holdings, mostly abandoned as they are too isolated with the owners long since leaving to work elsewhere, coming home to the old family farm only on holidays.

In reality, the number of even the remaining small working farms is collapsing at a rapid rate, with 40 per cent or 5.3 million stopping any form of production between 2005 and 2020 as the eastern European economies cranked up and the exodus to the big cities began in earnest, or simply an aging retired population give up working the fields as the EU social security system kicked in.

Of the bigger full-time farm businesses, less than 7 per cent or 680,000 had an income of over EUR100,000 and just 3.3 per cent, 299,000 were big enough to turn over more than EUR250,000 per year, numbers that pale in comparison to Australia’s larger operators.

In Europe, it’s these larger operations that are responsible for more than half of all production, which includes producing 285 million tons of grain plus enough fresh produce to feed nearly half a billion people and still export to the rest of the world.

Agriculture, despite being a small part of GDP, is still big business in Europe and is close to many people’s hearts as the farms are intertwined with the cities and towns and many people have recent links to the land.

It’s the 2 million or so commercial farmers that drive the politics of agriculture in Europe. They are big enough in numbers and organised enough to be political players.

It’s these farmers that support the massive European farm machinery industry and the huge agri-foods sector, plus employ 9 million farm workers (many illegal workers). They are also the ones marching in the streets.

These farmers are very politically active as they rely on a massive farm subsidy scheme called the Common Agricultural Policy (CAP), which underwrites up to half of their take home income.

Why they get so much support is an ongoing debate; some argue food security, others wartime memories of hunger, but the biggest driver has been the pull of the historic culture of small towns, provincial food and regional jobs.

Post war, when the EU was set up, farmers were paid to produce vast lakes of wine and milk and mountains of grain and butter to help keep food prices down, with the surplus dumped on global markets.

This system slowly changed following long trade fights with the Americans to one of farm income support so that now each year three buckets of funds are dished out to farmers, including the EUR38.2 billion in Farm Income support payments, EUR13.8 billion in Rural Development, and EUR2.4 billion in Market Support.

This is all linked to the EUs relatively new Farm to Fork program announced in 2020, which is a policy of the Green Left to tie farmers into their idea of regenerative agriculture.

For example, one of the stated aims is to cut pesticide use to better protect pollinators and biodiversity, end the use of cages in animal farming, and increase land use for organic farming by 2030.

Taking Irish farmers as an example and the importance of government subsidies, the largest 50 per cent of their farms pick up on average EUR250,000 each year, and top 10 per cent pocketed EUR353,000 a year, which is well over Australian half a million dollars.

Of the farm subsidies available, 30 per cent of all direct payments are directed to some sort of environmental outcomes, including crop diversification, maintaining permanent pastures, and setting aside 4 per cent of the farm for ecological purposes. But for the coin the paperwork is onerous and endless and the penalties for non-compliance are harsh.

Imagine having regular inspections of your farm to ensure you are ticking the box on 100 different regen things you promised to do and every year new rules are issued that make it harder to farm. But once you sign up you are on the drip, you need the money from the government to survive as farms are too small to be viable without the support. 

For almost all Irish farmers, the direct farm payment underpins their viability in 2020, public money made up to 157 per cent of income levels on cattle-rearing farms, 103 per cent on sheep farms, and 79 per cent in tillage while the dairy sector picks up 80 per cent of its income from subsidies.  Which probably explains why they have 16,146 dairy farms with on average 83 cows each and the average sheep farm has 75 ewes and a cattle operation 60 head.

This explains why Ireland, which is almost the same size as Tasmania, has 137,000 farms, with only half of them being full-time commercial operations.

To survive, they can tap into any one of multiple of EU and Irish government programs including Basic Farmer Income Payment, Greening Payment, Young Farmer, the Targeted Agricultural Modernization Scheme, and my favourite the Protein Aid Scheme.

Believe it or not, they get paid €250 per hectare for planting a regen legume crop. Moving to the UK and their 103,000 farmers, of which 54,000 are operating full-time farmers who are all still on the drip even through the UK is out of the EU.  The UK government has simply replaced the CAP payment with a new A$5 billion a year government fund covering 280 different activities that farmers can sign up to for support payments.

So much for the British going it alone and leaving the EU and all its rules and regulations behind. As an example, farmers can be paid £537 a hectare for creating fenland out of lowland peat land (fence it off) and £1,920 a hectare for any land growing organic fruit, £22 a hectare for assessing soils, £22 a hectare for adding organic matter to soil which means having livestock stand in the paddock, or having green cover on at least 70 per cent of land over winter i.e. don’t let it wash away by overstocking.

For a real life example watch ‘Clarkson’s Farm’ about the notable TV personality’s 1000-acre farm in the Cotswolds, ‘Diddly Squat’, makes for amusing watching with his trials and tribulations with dealing with the bureaucracy.

It gives us a taste of what it’s like to farm in the new EU free UK. His property, which is valued at around $17,000 an acre, would be unviable without its subsidies, even with its 7- 9 Ha barley grain yield, if it did not pick up nearly $400,000 a year in government subsidies.

His last round of cheques included £133,733 under the Basic Payment Scheme, which is the UK’s income support payment to farmers, plus £116,352 for the Environmental Stewardship scheme. This is probably why he can afford a Lamborghini tractor.

So, what’s it cost to go farming in Europe with all these subsidies on offer?

Farmland in Ireland last year rose 10 per cent in value to EUR11,758 per hectare with the average sale being 33.4-hectare. Prime cropping land averaged  EUR14,724 which equates to A$10,000 an acre here, not much more expensive than some of Australia’s most expensive cropping land. 

If you wanted to go farming in the UK, grain farms there average $17,000 acre and the average farm sizes are double at 77hectare. For those pining for the old country then A$12m will get you a nice 502 acre grain farm in Oxfordshire, enough to produce 1600 tons of barley. The upside is you can look forward to a couple of hundred thousand dollars each year in government support, but the rules will drive you mad.

While Clarkson may have a big farm and a big 300hp tractor, there are far bigger farms than 500 or 1000 acres in Europe pulling in much more from the EU in farm payments.

Europe’s biggest farm is in Romania covering 57,000 hectares, being an old commune that has been sold off. It was purchased by the UAE investment fund in 2018 for $500m, in part because it has access to the EU market, but it also benefits from picking up millions in subsidies.

Mind you, it does produce 400,000 tons of grain at 7ton/hectare, all of it under irrigation, needing a fleet of 100 Class headers to take it off. But that’s nothing to the big Ukraine farms with the biggest four being over a million acres each, all employing between 7000 and 40,000 people and turning over a billion dollars annually in integrated grain and livestock operations.

You can see why the Europeans are not in a big hurry to have Ukraine join them as part of the EU and having to write them farm support cheques.

As the Europeans regulate their farmers out of business, and the small ones give up and go work in the cities, their governments are increasingly worried about cheap imports of produce from other countries that don’t comply to their rules.

For some reason the average French or German worker seems quite supportive of their farmers continuing to be subsidised at their expense.

Why the European masses are not marching on the streets demanding cheap Australian lamb and Argentinian beef rather than having to prop up uncompetitive Irish beef and sheep farmers who rely on import quotas to keep out competition and EU income support to survive is beyond me.

The one thing that is clear is that the EU has been captured by the Green Left who have dominated their politics over the last 30 years and have now imposed their idea of regenerative farming on landholders.

The end result is they have managed to tie up the productive farmers with endless red and green tape that now includes environmental, biodiversity sustainability, and carbon farming compliance measures that are making them uncompetitive on world markets.

It’s these sorts of laws plus the move to ban an increasing number of ag chemicals and emissions restrictions that is bringing their farmers onto the streets.

The protests have seen governments overturned and the EU begin to back off as it recently withdrew its pesticide reduction law proposal, which was supposed to halve pesticide use in the EU by 2030 and envisioned the total prohibition of pesticides in sensitive nature areas.

The big farmers know this is a recipe for economic suicide, but the march of the Green movement is relentless and it’s only a matter of time before it is reintroduced.

Already 72 ag chemicals are banned in Europe that are allowed to be used in the United States and they want to export these bans to nations that want access to their market. For example, glyphosate only just survived, in part because farmers pushed back forcing the EU to give it another 10 years, but the writing is on the wall.

So, what’s the takeaway? European farming has been captured by the Green Left when they swapped production subsidies for income support which comes with big green strings attached.

In turn, the EU is linking trade access to their market to following their rules on farming systems which are unworkable for countries like Australia.

Eventually one of two things will happen. Either their farmers will convince the EU and their governments to back off, or they will fail and demand ever greater compliance by competitor nations like Australia on following their rules.

This is what happens when farmers get into bed with government and take their coin.  It’s a lesson we should learn.

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