Farm Household Incomes and Reforming the CAP

Bruno Henry de Frahan, Tharcisse Nkunzimana, Rembert De Blander, Frédéric Gaspart and Daniel A. Sumner, 2008

Content

• Comparison of farm household income with non-farm household income drawing on national statistics.

Findings

• Average farm household incomes (net disposable income) for the period covered (1973-2004) in the 7 member states analyzed (Finland, France, Germany, Ireland, Italy, Luxembourg and the UK) are generally close to or higher than non-farm household incomes.
• The rate of low incomes (defined as being 50 per cent of the median income of all households) is higher among farm households than among non-farm households.
• Incomes are generally less equally distributed among farm households than non-farm households (Gini concentration).
• 'the econometric analysis confirms that incomes of farm households relative to non-farm households are strongly influenced by the general labour market conditions in the economy and the marketable skills of farm household heads. It also shows that farm household incomes are weakly influenced by farm direct payments and, to an even lesser extent, long term real interest rates. Government programs such as output price support or input price subsidies have on average no impact on the well-being of farm households relative to the other households.’

Comment

• It seems surprising that so little statistics exist for a policy objective on which most of the CAP’s € 55 billion per year are spent (Eurostat stopped collecting farm household income data in 1999). The problem seems to be less technical feasibility than political will: the results would be politically inconvenient.
• The finding that average farm household incomes are not low underlines how unreasonable the across-the-board income support of the Single Farm Payment is.