Young farmer: Starting out in agriculture is a real challenge

Joris Baecke.jpg

The debate on reforming the Common Agricultural Policy has so far ignored the need for generational renewal of an endangered profession, warns Joris Baecke of the European Council of Young Farmers (CEJA) in an interview with EURACTIV.

Joris Baecke is president of the European Council of Young Farmers (CEJA), the voice of Europe’s next generation of farmers.

He was speaking to EURACTIV's Outi Alapekkala. 

To read a shortened version of this interview, please click here

What is CEJA?

CEJA is a member-based, umbrella organisation of 28 member organisations and one observer member from across Europe. In total we represent over one million young farmers. The national organisations represent young people who are in agriculture or want to start a career in agriculture. Our members look forward to thinking how to develop their businesses and what policies are required to make sure that they are successful.

Who is a young farmer?

From a policy point of view, a farmer is considered a young one until the age of 40 because you can you can apply for funds until you are 40 years old.

You might not consider that young, but at the same time if you see how old the population is getting – being 40 is still young. One third of all EU farmers are over 65 years old.

This definition of young farmers is also about recognising the difficulty in starting up a business. For example, taking over a farm from your employer or your parents can be a very long process, before enough capital is gathered to really take over the business.

What is your relationship with Copa-Cogeca?

Copa-Cogeca is an umbrella organisation, like CEJA, and we have a good relationship with them – but independent. We are speaking on behalf of our members but working closely with Copa-Cogeca on several issues – because in the end we both strive for a healthy agricultural sector that can develop its businesses. But we are taking care of separate ideas and issues. We think about those who want to start up or have just started up, whereas Copa-Cogeca is further down the line.

Your organisation highlights the importance of generational renewal in farming. What are the main challenges in this renewal and what are the main challenges of being a young farmer?

The situation is that the return on capital in agriculture is low and the situation is the same all over the world. At the same time, high quality land on which you can produce something is expensive and it takes long time to win back the investment. So this makes it challenging to start up a farm and a business.

At the same time you need quite some investment on the land and the machinery to reach the high quality level of production you need to provide your products to consumers. But it takes a long time before you earn back the investment.

Do you need loans to start with?

You need loans and you need to acquire land. When you try to start in agriculture, you don’t have capital that can back up any credits. This means you cannot easily get loans. So access to land is difficult and access to credit to buy the land or get the investment is also very difficult.

All this means that it is quite a challenge to really start up your business in agriculture. And the figures show this: a very low proportion – only 6% – of the total agricultural population is people under the age of 35. The rest is older, and as I said, one third is older than 65.

You also need a good education in agriculture, need to be entrepreneurial and have knowledge about what you are producing. The stage where farms are passed from father to son is over – a lot of technology is needed to be able to compete with the other producers. For this reason you need quite some training before you can start.

But with good education you can also get a job elsewhere and have an income with less risk than when starting up in agriculture. Returns on investment are quite low and it is a challenge to get started in agriculture – but if people still opt for doing so it is partly because they love the lifestyle, not just the profession, and they are sure that they can really have success in some way.

Young farmers today are ambitious and passionate about what they are doing.

Are new farms still being created? Or do young entrepreneurs always need to buy an existing farm from someone?

Not all agricultural land is already being cultivated. There are still regions where land could be used. But yes, most of the land is already being used. However, that does not mean that it is being used efficiently.

Structural changes in agricultural land use could still make a big contribution to the increase in production. If you have several small fields separated from each other, you could have one big farm out of it and you would be much more productive.

But yes, land is scarce and prices are going up.

Are scarcity and the high price of the land the main challenges for young farmers?

To be competitive we need a certain level of scale of business. The prices of these businesses and the techniques you need to implement to reach the high level of quality – all these investments you need to do – are a big challenge, considering that it is not in a five-year return. It is a long-term investment and takes some time.

Of course if markets develop in a positive way it can be sooner. But what we’ve seen over the past few years is that this is one of the biggest challenges in agriculture. And then access to the farm is the other one. But they are connected, of course.

How could you increase the low return on investment? With higher food prices?

As you know, the price of agricultural commodities produced by farmers compared to the production cost is quite low – so indeed, there could be improvement here.

As for higher food prices, you would transfer the thing back to the consumers. But in many cases a couple of cents more for any type of agricultural product means a lot to the farmer but does not mean that much to the consumer.

There is only 16 cents of wheat in bread – so if the farmer were to get 20 cents for the wheat per bread – the farmer would receive a fair reward for his effort and investment and would be very happy, and the consumer won’t notice it.

Development of the end consumer price is much more affected by the steps after the farm gate level than by the price the farmer receives. I don’t want a big increase in food prices, but I would like to see an increase in farm gate prices.

Should the big agri-food industry that buys farmers’ products pay them more?

Yes, but the price is also based on global markets.

As long as we get a reasonable and fair – of course you can ask what is fair – price that at least compensates you for your investment and costs and also gives some return on your general investment, then it keeps you farming.

But in the end, prices are also decided by the market and after some time now we are seeing higher prices and we expect higher price levels – but with more volatility. The trend is upwards, but it will be going up and down.

Do you also expect higher gate prices for farmers?

Yes. But at the same time costs are also increasing. The backside of this development is that it is combined with big volatility and that is influencing stability.

Would you recommend a friend of yours to become a farmer, purely from a business angle?

Yes I would, if they have the right skills. Some of the revenues are not paid in euros – but comes through the lifestyle you live.

What are your expectations for CAP reform?

We see that the list of objectives for the future CAP is getting longer and longer. That’s interesting, but in the end it’s the farmers and entrepreneurs who hold the businesses who need to deliver. They have to deliver not only food, but also the environment, landscape, biodiversity, combat climate change and adapt to it.

Every service in rural areas could be delivered by agriculture, but then you need of course farmers who do the delivery of the services. And that means that if you see the age pyramid, which is currently upside down in agriculture, then it’s quite worrying.

Because we’re making a list of objectives, but who’s going to deliver on them? Who will be the ones farming in 20 years’ time or even in 2020 – because if one third is today over 65, in nine years they’ll be 74 or older.

If we are serious and have so much ambition for agriculture – the first priority should be generational renewal and making sure that the people who are motivated are at least supported or encouraged in their first years.

Are you referring to financial support?

First of all, already now we have in the CAP’s second pillar some measures for young farmers. Unfortunately they are not used, or not fully used, in many member states. So this is clearly not responding to the needs – the percentage is declining and still the tools are not being used. Currently only 3% of the budget of the CAP in Pillar II goes to measures for young farmers.

Co-financing is a sensitive issue at the moment, because countries have to look after their budgets. But we would like to see a priority in the second pillar for measures to support young farmers.

Stronger support measures than in the current CAP?

Yes, it is only logical. If you want to be coherent in your policy – if you ask more of the agricultural sector but don’t invest in the future, you lose competitiveness and the continuation of the sector.

Meanwhile, people are very ambitious: it’s like if you want to win a race, but you don’t fix your bike or any other vehicle that has to make you win that race.

The vehicle that has to bring us to our objective is the farmers. And if this vehicle is getting older and older, it should be taken care of. We should be more coherent with our CAP tools. 

You support retaining the two pillars of the CAP. How would you divide the money between the two?

The division of money between the two varies depending on the member state, for historical reasons. Now, we want to move away from the single payment scheme based on historical payments to a more general approach – reimbursing farmers for what they actually do and reimbursing only active farmers.

We’d like to see changes, such as better support in the second pillar and prioritising support measures for young farmers. If you have a lot of objectives, you first need to make sure that those who need to deliver on time are capable of doing so. If you want innovation in this sector, don’t ask the 32% of people who actually should already have retired to do that.

I respect all my colleagues, what the older generations have done and how they have developed EU agriculture following the CAP. But they have already seen so many reforms of the policy that we cannot expect them to deliver on all the new objectives and innovation. That’s what the next generation will do. But we have to make sure that they can enter the sector.

This is why we feel that prioritising support for young farmers in both pillars is needed. In the first pillar prioritising can be done through a change in the level of co-financing that makes clear to member states that this is a priority.

From the current 50-50 co-financing level in the second pillar, we’d like to go to an 80-20 level, with the 80% coming from Brussels. But the 20% member-state payment would equal the same payment as now.

Currently the 50-50 is a maximum of €70,000, with €35,000 for both the EU and the member state. With the new calculation – the member state’s 20% would still be 35,000 and the Commission 80% would amount to 140,000. This would represent much more than doubling of the support for young farmers. But it is about investing in the future of European agriculture.

And what about the first pillar?

Basing payment on historical references does not at all respond to the developments in agriculture – and it discriminates against young farmers, because they don’t have any historical reference.

At the same time it does not support what you’re doing now. It is not targeted at active farmers, so that needs to be changed as well.

What is the ideal distribution of money in the first pillar?

Part of the direct payments is income support that should have a stabilising effect. And we think that it is only logical that there is more fair and equitable distribution of payments among the member states. But we have not taken a detailed position on this – on how many millions of euros should go where.

Meanwhile, it is clear that one euro brings you more in one member state than in another – that’s why it is good to say that it should be fair – but at the same time equitable.

With a European flat rate the CAP would lose its soul completely.

What do you think about linking first-pillar payments to the delivery of eco-system services?

The ambition is to explain better and show more to the general public what agriculture provides as well as food, fibre, flowers, feed and fuel.

Greening the first pillar shows that farmers are delivering more. In that sense we understand the choice of the greening and can go along with that. At the same time we warn about a structure in which farmers are confronted with much more costs for the same budget. So that’s something we wouldn’t like to see. But we are ready to show many measures that can be provided by the farmers to show how green agriculture actually is. Farmers know how important it is to take care of your resources.

So you are ready to deliver on green public services.

We can deliver but it should be kept in mind that it is not against a high extra cost. There are measures that can be adopted by farmers and in some cases these services are already being delivered. But who wants to deliver something without any reimbursement? Nobody wants to work for free.

In many cases we see that farmers actually provide things to society, like the landscape, and there is no direct reimbursement for this.

Of course we say that the CAP and the direct payments reimburse farmers for taking care of the landscape, but there is no direct link. Now, if by greening the first pillar or by appointing measures that are considered greening, we can show these services to society more directly – the budget and payments to farmers are getting more transparent. And we support this approach.

Would you say that young farmers are more sensitive to environmental measures than the older generation?

Young farmers are more vulnerable – financially speaking – to everything. If you just started up you don’t have any buffer to absorb market imperfections or to manage times of low prices.

The farmers we represent are forward-looking, ready to improve their production to make it more sustainable and to use innovation. And this is something we would also like to be supported in the second pillar.

We’d like to see ‘knowledge vouchers’ made available to young farmers to ensure that they can access training on new innovative techniques or on how to diversify your production. Young farmers could apply for these vouchers and use them in research or training institutes for training.

We would also like to see a European exchange programme for people who wish to start a career in agriculture, before they do so. This would give them an opportunity to work abroad on a farm within Europe.

Why abroad?

Exchange is valuable. When you see how things are done elsewhere it makes you better reflect on your own situation and you can bring back some ideas for your own business. Such a programme could also make young farmers better understand the CAP.

What do you think of the planned EU-Mercosur FTA?

I’d support an EU-Mercosur FTA if food/agriculture was discussed at another table.

I heard the Brazilian ambassador to the EU compare the effect that exports of European cars would have on the Brazilian market to that of food. But how can you compare that?

Creating a situation in which you would wipe out some part of the agricultural sector in Europe in return for products coming from abroad is too much and that is not considered enough in these negotiations. 

Is there any chance of EU farmers remaining competitive if the FTA sees the light?

As it looks now, it will affect several sectors greatly. If the beef sector is affected and these farmers have to look for another thing – then what will be the effect on the dairy production if they decide to start producing milk instead? We just had a dairy crisis in 2009 – do we want to repeat it? I don’t think so. This has to be assessed properly and not just traded out with other things.

We have to be coherent. To whom can you explain that we ask for a certain way of production in Europe and at the same time allow products coming from abroad that maybe are ‘similar’ but the type of production of which is not connected to certain rules as it is in Europe. That is a completely incoherent policy and unacceptable.

We will continue farming. But if you want to meet the objectives the society is now setting for agriculture, you should make sure that the sector is able to respond to these objectives. And if there is no money made or if the income is very volatile – you cannot create a competitive sector or a future for your own production.

The CAP has done a lot for EU society and needs to continue this way – producing its own food and contributing to some extent to world food security.         

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