Analysis: Tough measures may be required to reverse the 'greying' of Irish farming
EU Agriculture Commissioner Phil Hogan was blunt in his speech at the presentation of the Paddy Fitzgerald Memorial Community Award in Limerick recently in stating the importance of generational renewal in agriculture.
"The member states will not get approval for their plans in the future under the Common Agricultural Policy (CAP), and you will not get your money, unless we have a very ambitious programme put forward by the Irish Government in relation to helping young people into agriculture directly or indirectly," he said.
There has been an increasing focus on the greying of Europe's farmers, in part due to successful campaigns by CEJA, the European Council of Young Farmers, in Europe and Macra na Feirme at home - even if the problem is not as severe as the commissioner stated in his speech.
Commissioner Hogan said it was unacceptable that only 6pc of the European Union's farmers are under 40 years of age.
However, the latest Eurostat figures for 2016 show that the proportion under 40 years of age (the official definition of a young farmer) is 11pc on average in the 28 Member States.
At the other end of the scale, 58pc of EU farmers are over 55, while 33pc are over 65.
Ireland has a broadly similar age structure to the EU average. In 2016, just 9pc of Irish farmers were under 40, while 54pc were over 55 and 29pc were over 65.
However, this is not the case for all EU member states. The striking feature about the age structure of farmers in the EU is how different the situation can be from one member state to another.
In Austria and Poland, more than 20pc of farmers are under 40, and in Germany the figure is 15pc. In Austria, only 7pc of farmers are over 65 and in Germany only 8pc.
At the other extreme, Portugal has only 4pc of its farmers under 40, with 52pc over 65.
The UK also has a very low share of young farmers, at 5pc, although its share of farmers over 65 at 34pc is similar to the EU average.
These national differences point to the importance of national regulations around access to land and land mobility, inheritance laws, taxation provisions and pension rules and entitlements rather than CAP policies.
In Germany, for example, its 'Hofabgabeklausel' social security scheme, which requires farmers to relinquish their farm in order to receive their old-age pension, plays a major role in successful generational renewal in the farming sector.
In its June 2018 CAP legislative proposals for the period post-2020, the Commission proposes that member states must spend at least 2pc of their Pillar 1 direct payment national envelopes on assistance for young farmers.
Member states will be given flexibility to decide if they want to use this allocation as a top-up of the basic income support decoupled payment in Pillar 1, or to use it to support an installation aid package for young farmers under Pillar 2.
The maximum amount of installation aid is increased to €100,000 paid as a lump sum and can be combined with financial instruments such as a loan guarantee.
Member states will be allowed to use loan guarantees to assist young farmers in the purchase of land.
The top-up would be like the current Young Farmer Scheme, whereby a farmer under the age of 40 gets a payment of 25pc of the national average basic payment per hectare on a maximum of 50 entitlements for five years after their date of setting up in farming.
It will be up to a member state in future to decide on the size of the top-up and the number of hectares to which it would apply.
Member states will be required to outline their generational renewal strategy in their CAP strategic plans based on a SWOT analysis.
Importantly, they must explain the interplay with national instruments with a view of improving the consistency between EU and national actions in this area.
Providing additional support to young farmers when setting up can make good sense. But just as a young farmer would not expect a bank to lend him or her money without a business plan, the public should also be assured that support of this magnitude will be sensibly used by linking it to a requirement to submit and follow a business plan.
Additional support does not address the key problem in increasing the proportion of younger farmers, which is access to land. Commissioner Hogan in his address suggested the re-introduction of an early retirement scheme to get more younger people involved in farming.
A significant criticism of previous early retirement schemes was that the benefits were essentially short-term. This is supported by the evidence that Ireland has a lower share of young farmers today than the EU average, even though it was one of only a handful of member states that seriously embraced the scheme.
An early retirement scheme would also have to be funded from additional national Exchequer funds as it is not a possible intervention measure permitted under the proposed CAP legislation.
One reason why older farmers remain farming is the easy access to direct payments. If Commissioner Hogan really wants to help new entrants into farming, tapering these payments according to age would be a good place to start.
Alan Matthews is Professor Emeritus of European Agricultural Policy at Trinity College Dublin
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