Human Capital in EU Agriculture: Challenges ahead Key questions for the Future. Tassos Haniotis

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1 Human Capital in EU Agriculture: Challenges ahead Key questions for the Future Tassos Haniotis Director Economic analysis, perspectives and evaluation; communication DG Agriculture and Rural Development EXPO Milano 2015 Seminar "New challenges, New generation" Agriculture and Rural Development

2 1. Human capital in the EU: key data 2. The CAP and young farmers, today 3. Elements for reflection 2

3 1. Human capital in the EU: key data 3

4 In 2010, 25 million people worked regularly (but not always full-time) on roughly 12 million farms. Most farm managers were older than 55 years. 35% 30% 25% 20% 15% 16.6% Age of farm managers* 22.8% 23.5% 29.7% 10% 7.5% 5% 0% Less than 35 years years years years 65 years or over *Farm manager: the person responsible for the normal daily financial and production routines of running the farm. 4

5 Old West versus Young East? 5

6 Age structure in farming in the developed countries 100% 90% 80% 70% 60% 50% 40% 65 years or over From 55 to 64 years From 45 to 54 years From 35 to 44 years Less than 35 years* 30% 20% 10% 00% Norway Switzerland EU28 United States Japan Source: EU-28 Eurostat Farmstructures survey; US Bureau of Labour Statistics US Government; Japan Statistical Office Japan 6

7 ha UAA/holding EUR/holding Younger farm managers have bigger farms (Eurostat-FSS) Agricultural area per holding (EU-28, 2010) Standard output per holding (EU-28, 2010) total Less than 35 years years years years 65 years or over 0 total Less than 35 years years years years 65 years or over 7

8 Lower income than other age groups (FADN) Euro < > 65 FNVA/AWU at EU27 level All age classes EU27 Age 8 Source: FADN 2012

9 Agricultural training much room for improvement! 90% Agricultural training of farm managers (EU-28, 2010) 80% 70% 60% 50% 40% 30% Less than 35 years From 35 to 44 years From 45 to 54 years From 55 to 64 years 65 years or over 20% 10% 0% Practical experience only Basic training Full agricultural training 9

10 Who would like to become a farmer? The pull of the cities (population in predominantly urban areas, EU-28) Rural exodus (population in predominantly rural areas, EU-28)

11 2. The CAP and young farmers, today 11

12 The CAP and generational renewal Towards an integrated approach Pillar I: Direct Payments Pillar II: Rural Development Payments New Young Farmer's Scheme (top-up compulsory for the MS) Priority in the national reserve Several support measures Priority/higher aid intensity Financial instruments 12

13 New Rural Development Programmes (in progress of approval) Measure "Start-up aid for Young Farmers" 25 MS implementing it 75% of the Rural Development Programmes 5.3 Billion total public expenditure holdings to be supported 13

14 New Direct Payments New Young Farmer's Scheme Estimate of the share of national ceilings for DP: 1.33% (2015) Diversity among MS in the levels of aid Training as additional criterion (in 8 MS + 3 regions) Appropriate skills as additional criterion (in 6 MS + 2 regions) 14

15 3. Elements for reflection 15

16 Looking ahead Challenges for the agricultural sector Policy context after the last CAP Reform Scarcity of natural resources Food supply Climate change The CAP Subsidiarity Simplification Pressure on CAP budget Jobs, Growth and Investment Free Trade Agreement US Political Guidelines for the Juncker Commission A Resilient energy Union Deeper Internal Market 16

17 Key challenges to young farmers Overcome the barriers to enter the sector Long run resilience Access to land Access to finance Training Changing demands Income Technological change Policy instruments 17

18 CAP reform path and CAP budget, billion EUR (current prices) EU-10 EU-12 EU-15 EU-25 EU-27 actual expenditure EU-28 outlook % 0.7% 0.6% % % % % % 0 0.0% Export subsidies Other market measures Market expenditure Coupled support Decoupled support Direct payments Green payments RD environment/climate Other rural development CAP as share of EU GDP Source: DG AGRI. 18

19 Key questions for the future How to support young farmers to overcome the barriers to the sector? How to enhance the complementarities between jobs and physical capital? How to support young farmers to exploit emerging opportunities? 19

20 Thank you very much 20