Europe wakes up to higher fuel prices and an aging farm population
Friday, May 6, 2011
Financial worries caused by this year's spiralling fuel prices are just one of the worries that Europe's agricultural sector faces. For many, an even bigger problem is on the horizon: who's going to take over the business?
by NORMAN DUNN
By mid-March farmers here in Europe were learning fast that the apparently far-off Arab uprisings, particularly the one on Libya, were nearer to home after all. Spring cultivations and sowing suddenly became much more expensive as fuel prices shot up.
Farm diesel soared by 12 per cent in just a couple of weeks to the equivalent of C$1.55 a litre or $5.87/gallon. That was in the Netherlands and Germany. In Britain, farm diesel ended up at $3.40 a gallon. The British government treats its farmers a little better than most continental ones when it comes to subsidized tractor fuel. But even there, the latest price hikes mean agricultural diesel is now something like 300 per cent more expensive than eight or nine years ago.
These spiralling fuel prices are having a very interesting effect on farm equipment economics. Some tractor makes are being marketed as more sophisticated than run-of-the-mill plow pullers and this is reflected in their buying price. One brand in particular – we're not advertising, but it's green and begins with an "F" – is said to cost a good bit more but attracts a faithful following amongst farmers here because of its claims of highly sophisticated engines that are powerful, clean-burning and comparatively easy on fuel.
In the current situation, this last attribute is turning the tables on the cheaper models that tended to attract the unconvinced customers who base their tractor purchases mainly on the initial capital investment involved.
"Capital cost for the sophisticated brand is still more," one customer reported in the specialist press. "But now the reduced fuel consumption of the models and their low maintenance bills mean this make of tractor is probably the cheapest to own in terms of cost per acre."
Even six months ago, there weren't too many European farmers worrying much over the price of tractor diesel. Up until now, this has always been a problem looming in the relatively distant future. And lying even further ahead like a giant black cloud over the farming sector is yet another problem which could turn out to be even more disastrous.
This is the question of who's going to run our farms in 20 years' time.
The latest figures for Britain indicate the average age of active farmers there is 55. Of course, that isn't really old these days. But a closer look at the figures, as supplied by a University of Reading survey, indicates a much more disturbing picture. For a start, 25 per cent of all working farmers are reckoned to be over 65 years of age. Even more worrying, the segment of British farmers under 30 years of age is just three per cent!
To be fair, this isn't the story everywhere in Europe. For instance, Denmark's farm inheritance laws encourage most farmers to park their tractors for the last time between ages 50 and 60 and pass the business onto the next generation as quickly as possible.
The German state pension scheme, for those in the agricultural sector there, also encourages would-be pensioners to stop work rather than soldier on. Taking results from one of the biggest states, only five per cent of active farmers are recorded as still working after their 65th birthday. The average age of farmers in Germany is 49. But problems are obviously looming here, too, because only eight per cent of those in charge of their own farms are under 35 years old. Even just 10 years ago, this figure was 18 per cent.
It's a dangerous demographic trend and hasn't gone unnoticed. In Germany, there are a number of long-standing "starter programs" where government capital grants and/or reduced interest loans help young farmers to take over the family farm, or even start up on a new unit – unhappily, not with much effect on the overall figures so far.
Britain may have woken up to the problem a bit later, because it's only in the last few years that programs have been launched with the aim of attracting younger people into the sector. One example is the Young Entrants Support Scheme (YESS) for Wales, now in its second year. A typical starter receives a capital grant and is assigned to an experienced "mentor" farmer who helps with advice in the first few years of farming. A typical starter grant is around C$10,000–$15,000, I am told. Last year, YESS helped 144 young entrants to get started in farming.
One of Britain's biggest farming companies, the 50,000-acre Co-operative Farms, also aims to help get more young folk into the sector through a new apprenticeship scheme. Other areas of the country are following suit with starter programs for the young. But, as one commentator in England noted in March, a lot more action is still needed. It is estimated that agriculture in that country alone needs 60,000 new entrants over the next 10 years. BF