What defines the young farmers of the European Union? The answer, according to the European Commission (CE), is complex. There are few of them, they’re highly qualified, they own few farms and not much land; their income is below average, they invest a lot of money in their farms, their capital stocks are low, as is their debt, and they benefit from a great return on assets.
The information was published by the CE’s Directorate-General for Agriculture and Rural Development in a study that analyses data from 2011-2013.
An aging business
“For each farmer younger than 35 there are 5.6 farmers older than 65 in Europe. These are alarming figures,” the study reads. Of all the farms in the EU, only 5.6% are managed by young farmers. Older farmers, on the other hand, manage over 31%.
However, this data needs to be contextualized. First of all, Romania strongly influences the results, since 45% of EU’s farmers over 65 belong to it. The small number of farmers under 35 is also influenced by how farms are passed on from one generation to the next. Often, a farm is only often officially handed over to a son or daughter from a parent when the latter hits the retirement age, when in reality the former had been running the farm for several years.
The countries with the biggest proportion of older farmers are Chile, Portugal, and Spain. The countries with the largest share of younger farmers are Poland, Austria, and Germany.
The question of farmland
The EU’s young farmers own a small share of farmland – even if they contribute similarly to overall production and their farms are average-sized.
Older farmers also have a small share of land, but their production is similarly small. When you consider that they also own a lot of farms, the picture that emerges is that of a group which tends to own small farms. Thus, the majority of land and production belong to middle-aged farmers.
Younger farmers also have the farmland with the lowest value per hectare, on average (6.931€), while older farmers owned lands with a high value, on average (11,565€).
In most EU countries, younger farmers have the largest share of rented land, while older farmers have the smallest, “supporting the notion that young farmers aim to increase the size of their farms while older farmers are reducing their farming activities.”
A lot of education, but not much income
In 2013, most farm managers (68.2%) had learned the job through practical experience alone. For farmers under 35, the picture is very different: one in five young farmers (19.8%) had completed an agriculture training cycle. Only 4.5% of farmers older than 55 had done the same.
Despite their higher education levels, younger farmers have the smallest income per work unit in the EU. Middle-aged farmers (35-65 years old) have the highest income levels. Older farmers started earning more income than younger farmers in 2009.
High investment, below average capital
Between 2011 and 2013, EU farmers under 35 made the biggest net investment per farm. By contrast, farmers over 65 registered a negative net investment – meaning they didn’t replace their capital stock in line with depreciation.
Despite this, young farmers joined the older ones in the group of EU farmers with the lowest farm capital, on average. Farm capital represents a farm’s crops, equipment, buildings, etc.
But when it comes to return on assets (a ratio which represents the total income generated from the farm, divided by the total assets employed to generate this income), young farmers stand out, with an above-average return on assets. This seems to suggest that they adopt intelligent management practices, using their assets efficiently.
“The low share of young farmers in the EU compromises the future competitiveness of European agriculture and guaranteed food production in the coming decades.”
Challenges and solutions
For the Directorate-General for Agriculture and Rural Development, the low share of young farmers in the EU compromises the “future competitiveness of European agriculture and guaranteed food production in the coming decades.” However, there is “anecdotal evidence” that shows that the number of students in the area of agriculture or similar is growing.
The two greatest challenges for young farmers are access to farmland and access to credit.
Most farmland in Europe is already owned and belongs mostly to middle-aged farmers. Besides, lots of farms are passed from generation to generation, which makes land hard to access if you don’t inherit it. On the other hand, the fact that young farmers have low farm capital and land value means they have less to offer as collateral for loans which would allow them to grow their businesses.
For the European Commission, the credit access problem is the easiest to solve. “There are various ways in which the availability of credit for farmers can be addressed, which would certainly benefit young farmers,” the study concludes.