Euro farmers in a pickle

By PHILIPPA STEVENSON agriculture editor

Want to go farming in France? Get out the rent book and line up before the local commission which decides who can, and cannot, be a farmer.

Want to go farming in Germany? Get out the rent book, but only if your parents are already German farmers.

The relationship between land ownership and farming across Europe is very different from the situation to which New Zealand farmers are accustomed.

In New Zealand, the vast majority of farmers own the land they farm. But in the European Union the proportion of farmer-owned farm land ranges from 31 per cent in Belgium to 86 per cent in Ireland. Averaged across the EU, 59 per cent of farmers own the land they cultivate.

The style of land ownership in Europe is one factor that complicates efforts to make European farms economically viable without the subsidies that make up the biggest component of most farmers' incomes.

In France - where up to 80 per cent of northern farmers rent their land but southern farmers are more likely to own it - owning land does not automatically convey rights of cultivation.

A land owner may own the land - and receive a low rental fixed annually by the Minister of Agriculture - but the "exploitation right" is usually held by the tenant farmer.

Tenant farmers can pass their exploitation rights on to their offspring, with the consent of the land owner, but the final decision on whether the next generation goes farming is decided by a commission of state officials and local farmers.

In Germany, where only 37 per cent of farmers own the land they farm, the sale of farmland is rare. Usually, retiring parents hand over the work to their children but retain ownership to supplement their retirement pension from the rent.

The German agriculture sector has its own social security system funded from individual and Government contributions. Until 1957, incomes were so low that many farmers were forced to farm beyond retirement age. As a result, young people could not go farming and innovation was stifled.

The 1957 expansion of the scheme provided better incomes for the retired, who qualified for the pension only if they transferred the farming of the land to the next generation. The change means Germany has among the youngest farmers in Europe.

But farmer pensions are lower than the rest of the population, so parents' income is often supported by the next generation.

What do such factors mean for agriculture in Europe?

Certainly, that the New Zealand answer to maintaining or increasing farm economic viability - buying more land - is rarely available to many European farmers.

And land ownership is just one factor among many that besets European agriculture.

It is complicated, Europeans will tell you, using a word which often springs to their lips in an environment where bureaucracy, not market demand, is the heart of farm life.

Scaling back one of these complications, the EU's Common Agriculture Policy - which consumes half the EU's $194 billion annual budget - has increasingly become a priority for some members of the EU and European Commission officials.

Efforts are being made to further move support for farmers and rural communities away from direct production payments to promoting rural development, the so-called second pillar of the CAP which recognises the "multifunctionality" of the 80 per cent of Europe which is rural.

In other words, paying farmers to maintain the environment, and do almost anything other than produce too many costly goods, which either force up European food prices - 44 per cent higher than they would be otherwise, by one estimate - or are exported, to the detriment of other countries' producers.

But while trade liberalisers inside and outside Europe favour increasing the rural support component of the CAP, many farmers vehemently oppose the idea, seeing it as an attack on their right to farm.

In France, Loire valley cereal farmer Christophe Duchon was not keen on the rural support payment that cost him €23,000 ($48,811) of subsidy income in a year and forced him to do work on his farm that did nothing for production.

In Germany, Gerd and Jutta Ohlrogge and their son Nils told the Business Herald of 25 years of hard work to build up the biggest dairy farm in Hamburg - 130 cows and 200ha in crops.

Like many young German farmers, Nils Ohlrogge said he would like to be independent of subsidies but the system that had taken years to build up should be taken down slowly to allow farmers to adapt.

Like farmers anywhere, European farmers' major goal is to be better farmers. They are reluctant to be turned into non-producing rural custodians who keep the countryside pretty for city folk and tourists.

"They like to think they are economic farmers but they have to come to understand that they are social beneficiaries," says Bruce Ross, former director-general of the Ministry of Agriculture and Forestry, who regularly travelled to Paris until last September to chair the Organisation for Economic Co-operation and Development agriculture committee.

"They are on social welfare. Until they accept that they would be doing a useful job for the tourist industry by doing things like maintaining the countryside they will resist it."

Propping up old-style farming is "like saying we should have maintained the coach-building industry even when motor cars came in because people were trained at making coaches and didn't want to change," he says.

Part of the problem is "French arrogance", says Ross. "They believe that everything they do is the best but you look at the way our lamb is selling there. Consumers are actually appreciating what we produce."

There may be little will to change, "but you come back to the issue that you don't need to support the very wealthy farmers in the Paris basin [who have] big farms, huge equipment and huge harvests - you don't need a structure that makes them multi-millionaires - in order to preserve this [rural lifestyle]."

While nobody can dictate that Europe cannot have a sector of its economy dependent on the rest, there are ways to do it which do not distort trade, says Ross.

"What the [trade] liberalisers are on about is having support structures within all these countries which are non-trade-distorting, and don't actually impose part of the burden on other countries.

"If a farmer wants to produce in an area, having somebody pay for his stone walls and his cut hedges is a production help but it is not the same incentive as paying him for his product. So it is less trade distortionary.

"The farmers will go fighting and screaming into change but the changes have been pretty substantial already. The rural areas are becoming depopulated, which says people are actually voting with their feet."

While young people are leaving rural areas, 45 to 50-year-olds are returning when their parents retire, says Ross.

They trade 20 years of working elsewhere for a "rather leisurely lifestyle running an uneconomic farm, in semi-retirement."

The German situation is different.

German farmers' income is as low as their French counterparts, but they have more opportunity to work at other jobs during the week, and on the farms at weekends.

For all the practical considerations, and the many arguments mounted for and against support for European farmers, the debate is deeply philosophical.

The divergent views were captured by an American senator who noted the stark differences between the values of American and European diplomats at one round of World Trade Organisation talks.

"The European representatives," he observed "were talking about families and communities, while the Americans talked about markets. If American trade representatives think these European values represent the problem, just what do they think represents the solution? If prosperous rural economies are not a worthy goal, what is?"