E.U. Farms: The Smaller They Are, The Harder They Fall
Due to the nutrition pressures created by World War II, farms in Europe were pushed towards ever-increasing industrialization and scale. These pressures to grow more food, combined with financial incentives to farm as much land as possible, changed the landscape of farming over the last 70 years — literally, demographically, and economically.
Using data from the Farm Accountancy Data Network, which tracks the business activities of farms across the European Union (E.U.), this report analyzes the macroeconomic trends in the E.U. farming landscape that led to the phenomenon of small-scale farms struggling while mega-farms proliferated, often referred to as ‘go big or go bust.’
The report looks at three types of farms:
- Small-scale farms (income between €2,000 and €49,999 a year)
- Medium-to-large farms (income between €50,000 and €249,999 a year)
- Mega-farms (income over €250,000 a year)
When looking only at the number of farms operating in the E.U., it seems that farming is no longer profitable enough to be sustainable as a business. Between 2005 and 2020, there was a 37% decline in the number of farms, with roughly 5.3 million closing down.
This leaves 9.1 million farms remaining. Of these, only 3.6 million are considered commercial farms, meaning they’re large enough to serve as a farmer’s main job and provide sufficient income to support their family. The remaining farms are subsistence farms, where food is consumed on the farm and isn’t the main source of income. These were excluded from the report.
Investigating the data further shows that these financial pressures aren’t experienced equally across the sector, as small-scale farms are hit much harder than mega-farms. There was a 44% decline in the number of small-scale farms between 2007 and 2022, while the number of mega-farms grew by 56%. The largest mega-farms (income over €500,000 a year) experienced the most growth, with their numbers almost doubling to 117,000 now in operation.
These trends reflect the changing economic landscape of farming. In 2022, the top 3% of farms produced nearly 40% of the total economic output of the E.U.’s agricultural production. This consolidation of power is most present in Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, France, Hungary, Luxembourg, the Netherlands, Sweden, and Slovakia.
While the average income of all commercial farms more than doubled between 2007 and 2022, this again isn’t spread equally between farms. Mega-farms experienced increased income of 84%, nearly three times that of small-scale farms (33%) and four times that of medium-to-large farms (22%). The smallest farms — those with less than €15,000 of economic output a year — are in the worst position as they experienced a decline in income.
The financial support available for farms helps explain these discrepancies in income and growth. The primary source of subsidies for European farmers is the E.U.’s Common Agricultural Policy (CAP), which mainly operates through direct payments (more money paid for more land farmed). As mega-farms have more land than small-scale farms, they have disproportionately greater access to these government subsidies. Despite only 8% of farms in the E.U. being mega-farms, they receive 37% of the direct funding available. Only 25% of the funding goes to small-scale farms, which represent over two-thirds of all the farms in the European Union.
Moreover, mega-farms claim the majority of private finance, holding 70% of the total debt in the E.U. farming system. This creates a vicious cycle where mega-farms need to continue scaling up to repay their loans. The report also explains that younger farmers, typically those who want to farm in nature-friendly ways, struggle the most to gain access to private capital.
While the total income of E.U. farms has increased, this hasn’t led to increases in the number of jobs. Between 2007 and 2022, there was a 38% decline in the total number of ‘annual work units’ in E.U. agriculture, mostly on small-scale farms. These farms saw a 58% decrease in total jobs, the equivalent of 3.8 million full-time jobs. Small-scale farms also experienced the largest decline in the unpaid workforce, a key characteristic of family farms, which are the most common type of farm in the European Union. Medium-to-large farms also saw decreases in their workforce, whereas mega-farms saw a slight increase in employment.
E.U. farms have had to ‘go big or go bust,’ with those who are going big seeing the highest reward. However, these rewards often lock farmers in a continuous cycle of needing to scale up to repay loans and gain access to subsidies, leading to industrialized farming that’s harmful to the environment. Smaller-scale farmers, often those who want to farm in more nature-friendly ways, simply can’t afford to continue operating.
The report emphasizes the crucial role that policy will play in the future of farming in the E.U., highlighting key reforms that animal advocates should lobby for. These include:
- Redistributing incomes across the supply chain
- Better enforcement of measures against unfair trading practices
- Shifting towards plant-based diets
- Changing subsidies to finance those who need it most or who are restoring nature
Beyond just their economic struggles, small-scale farms are also finding themselves increasingly under-represented in policy matters, as mega-farms have an outsized influence on defining laws and policies in the E.U. and its member states. Animal advocates might be interested in learning more about how these bigger players are thwarting legislative progress.