Agricultural revenues – Behind the figures

Pierre Boiteau, Editorial Staff Director

Agreste––a division of the French Ministry of Agriculture––estimates that the average farm income reached €36,500 in 2012. But this figure conceals three major information items, and a few truths are worth to be told again!

Sizeable and growing income gaps

The gaps in agricultural incomes between various farm productions are sizeable. For professional farms in 2012, the French Ministry of Agriculture indicates a current before-tax income (EBIT) per self-employed individual ranging from €15,300 for sheep and goat farmers to €74,400 for large-scale crop farmers.

Differences also exist within each production, and income dispersion keeps increasing. Even by taking away 25 percent of the lowest incomes and 25 percent of the highest incomes, Agreste indicates that the income range would reach €33,000 in 2011. It is the highest level since 2000.

French farming is losing prosperity

The prosperity generated by agriculture is eluding farmers, at least as quickly as their number is declining. To put it in a nutshell, the pie is shrinking each year… but there are fewer and fewer people to share it! The result: a zero-sum operation, or almost.

The declining number of active farmers softens the lower incomes in poor years, and intensifies higher incomes during the good ones. The trend of “the declining pie” is not a new one and goes back to the 1960s. The volume of national agricultural production grows, but its value deteriorates in real terms. This shows that lower prices for agricultural products are indeed a concrete fact!

The amount of subsidies (€8.3 billion) remains constant in par value, but drops in real terms. That being said, fewer farmers are sharing nearly the same amount. Some consolation prize!

A subsidy policy is no substitute for profitable prices

In 2012, the net income of French farms totaled €16.1 billion––including 50 percent of subsidies––is not enough to ensure an adequate and fair income to all farmers.

For sheep and beef farming, public support is higher than breeders’ incomes. This amounts to saying that such activity cannot survive without subsidies. Otherwise, agriculture and its core mandate––to feed the people––would be at risk.

Lucrative prices would guarantee the future of agriculture and livestock farming. Based on production costs to improve margins, a price increase would not be too expensive for consumers or for the food processing chain. Agricultural products only represent a few percentage points in household shopping baskets. But it would bring happiness to farmers! Provided that middlemen dot not absorb the margins… A €100/ton wheat price fluctuation only rises the price of a loaf of bread by one or two cents!