Incentivising Generational Renewal – Lessons from Europe?

An image showing James Thompson - Graduate Policy Advisor

Generational renewal is a significant issue in both the UK and the EU. Whilst on placement with BAB, James Thompson (Graduate Policy Advisor) has been taking a closer look at EU young farmer policies.

It is no secret that the age of the average farmer in the UK is rising. This is mirrored in Europe, as old McDonald is joined by old Muller, Garcia, de Boer, and Kamiński. In the UK and EU, fewer than 1 in 6 farmers are under the age of 40. While UK agriculture policy is no longer set by Brussels, the common problem of generational renewal should have policymakers peering back over the channel to see how the Europeans are attempting to tackle the issue.

The challenges of generational renewal

Young farmers face significant challenges. In Europe they are up to three times more likely to have a loan application rejected than farmers aged over 40. They are confronted with high land prices, high rents, and low profitability combined with an uncertain future policy landscape.

How is young farmer support offered in the EU?

Since Brexit, the EU Common Agriculture Policy (CAP) has changed, with the 2023-2027 CAP attempting to tackle the objective of generational renewal by introducing a statutory requirement to spend 3% of direct payments supporting young farmers and new entrants. By contrast, in England only £1 million was committed to the ‘New Entrant Support Scheme’ from a budget of £2.4 billion, a mere 0.0004%. The level of ambition could not be further apart.

The CAP allows EU Member States to offer their chosen blend of income support, lump sum start-up payments, and investment support to help young farmers get into business and stay in business during the tough early years. Member States also have control over who is eligible for support. Criteria vary but can include a level of agriculture education and usually proof that they run the business. In setting (sometimes strict) criteria, Member States seek to ensure that funds go to the most deserving – though young farmers admit it is difficult to find the right balance.  

The EU recognises that CAP payments alone are insufficient without further complementary actions being taken at EU and Member State level. One of the most notable actions has been the European Investment Bank’s loan scheme launched in 2019 where over €100 million was reserved specifically to offer young farmers access to loans with favourable terms such as lower interest rates, long payback terms and grace periods. Another initiative is the Land Mobility Scheme in Ireland, which matches farmers taking a step back with young farmers seeking access to land. The scheme then facilitates a mutually beneficial arrangement, be that leasing, partnerships, or share farming. Since 2015, agreements have been facilitated covering 75,000 acres. Initiatives outside of the CAP, or its UK successors could play an important role.

If we wish to avoid a continually ageing farmer demographic it is important that we find solutions to enable the next generation and new entrants to come through. We could do worse than to learn lessons from Europe.

Read the full report here.

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