REPORT FROM THE COMMISSION - Young farmers and the problem of succession in European agriculture
Date: 1996-09-04
Institutions: European Commission
Subjects: family farming, investment aid, rural development, transfer of farms, young farmer

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

Brussels,  04.09.1996 
COM(%) 398 final 

REPORT  FROM  THE COMMISSION 

Young  farmers  and the problem of 
succession  in European  agriculture 

Y o u ng  farmers  and  the  problem  of  succession  in  European  agriculture 

INDEX 

INTRODUCTION 

DIFFICULTIES  AND NEEDS  OF YOUNG  FARMERS 

1. 
2. 

3. 
4. 

Depopulation  and  decline  in  rural  areas 
Protection  of  rural  areas  and  the 
contribution  of  women 
Setting-up  costs 
Sharing income  during the transfer  period 

III. 

COMMUNITY  MEASURES 

Structural  measures  under Objective  5(a) 
1.1 
1.2 

Setting-up  and  investment  aid 
Vocational  training  assistance  for young  farmers 

Accompanying  measures  to  the  reform  of  the  CAP 

Rural  development  policy  in the  context  of  regional  programmes 
3.1 
adjustment  of  less-developed  regions 
3.2 

Objective  1: development  and  structural 

Objective  5(b): development  and  structural 
adjustment  of  rural  areas 
Objective  6: development  and  structural  adjustment 
in  less densely  populated  rural  areas 
Leader  (Links between  actions  for  the development  of the  rural  economy) 
Pilot  projects  and  demonstration  projects 

3.3 

3.4 
3.5 

Market  Organizations 

Other  measures 
5.1 
5.2 
5.3 

Community  training  programmes 
The  new  Community  research  programme 
Information 

IV. 

PROPOSALS  AND  RECOMMENDATIONS 

Community  measures 
Setting-up  aid 
1.1 
Training 
1.2 
Early  retirement  scheme 
1.3 
Market  Organizations 
1.4 

National  measures 
2.1 
2.2 
2.3 
2.4 

Inheritance  law 
Taxation 
Lease 
Preparation  for  transfer:  new forms  of 
partnership between  parent  and  child 
(or other  successor) 
Cover  services 
Setting-up  of young  people  without 
a  rural  background 

2.5 
2.6 

Improving  information 

1. 

2. 

3. 

4. 

5. 

1. 

2. 

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Young  farmers  and  the  problem  of 
succession  in  European  agriculture 

I. 

INTRODUCTION 

This report has been drawn up by the Commission  as a contribution to the debate on the setting-up of 
young  farmers,  and  in particular  in  response to  the  request made  at the  informal  Agriculture  Council 
which  met  in Ioannina. 

At  present  there  are  almost  8.5  million  farms  in  the  European  Union.  According  to the  most  recent 
Eurostat  survey  on  farm  structures  in  the  Community  of  Twelve  (1989/91),  only  8.3%  of  farm 
owners/managers are under thirty-five, while 24.5%, i.e. almost a quarter of all active farmers, are over 
sixty-five.  The  average  age  of  farmers  has  risen  considerably  in  recent  years.  The  most  recent 
information  available  indicates  that  53.6%  of  European  farmers  are  at  least  fifty-five  years  old. 
Although  complete  data  is not  yet  available  for the new  Member  States, the  situation  there  seems  to 
be  similar. 

There  is  enormous  diversity  in  the  data  on  the  current  position  of  young  farmers  in  the  European 
Union, so it is difficult  to make a significant  comparison of the situation  in the various Member States. 
In  addition,  at  a  time  of  major  economic  change,  certain  statistical  data  is  not  available  or  rapidly 
becomes  out  of date, making  a complete  assessment  even  more  difficult. 

The  data available  confirm  that  in general  young  people  manage  farms  the  average  area of which  is 
not only well above the national average, but also the largest for any age group. The European  average 
UAA  managed  by  farmers  under  thirty-five  is  19.4  hectares,  whereas  the  average  for  all  farmers  is 
fifteen hectares. The average area farmed  decreases  steadily for each  age group, falling  to  6.7 hectares 
for  farmers  aged  sixty-five  and  over.  A  similar  pattern  can  be  observed  in  all  the  Member  States, if 
account  is  taken  of  the  diversity  of  average  UAA  farmed  in  each  Member  State  in  absolute  terms, 
which  means that young  farmers  in  one country  may  be farming  areas  more  similar  to those  farmed 
by their elder compatriots than those farmed  by young farmers  in another country. There are also great 
disparities  in the  economic  situation  of farmers  in different  Member  States, but this does not  vary  so 
greatly  between  young  fanners  and  older  farmers  in  a  single  region.  As to  categories  of  production, 
it should be emphasized  that a large number of young farmers are active in the horticultural  sector and 
in dairy  farming. 

Despite this it is still possible to present some fundamental  conclusions about the problems encountered 
by young farmers  in the setting-up  stage, and to identify  useful  initiatives at Community  and  national 
levels.  Community  rules provide an appropriate framework  for action  in many  instances, in particular 
through the Structural Funds, which provide resources enabling Member States and regions to introduce 
specific  measures.  But  it  has  to  be  said  that  there  are  considerable  variations  in  the  steps  taken  by 
different  Member  States to help young farmers, both  through  instruments  of the  Structural  Funds and 
in  market  sectors.  Given  the  overriding  interest  the  European  Union  has  in  promoting  a  dynamic 
agricultural  sector  capable  of  facing  up to the  challenges  of the  future,  the  Commission  has  decided 
to  advance  certain  guidelines  in  this  report  geared  to  promoting  a  minimum  of  consistency  in  the 
facilities accorded to young farmers throughout the Union.  To respect the principle of subsidiarity, this 
approach would continue to leave a considerable margin of manoeuvre to the Member States as regards 
specific  methods  of application  to allow  for the actual  situations  in the  different  areas  concerned. 

i Q L. 

II. 

DIFFICULTIES  AND  NEEDS  OF  YOUNG  FARMERS 

Like workers  in other rapidly  changing  sectors, a large number of farmers  are now  facing  new  socio 
economic situations and a sense of uncertainty  which affect  young farmers  too. Many of the  problems 
encountered  by young farmers, particularly  of an economic nature, are not specific  to agriculture: such 
difficulties  occur  in all  businesses  at the  moment  of  transfer. 

1. 

DEPOPULATION  AND  DECLINE  IN  RURAL  AREAS 

The  most  obvious  problem  on  the  "rural  periphery",  in  regions  dependent  on  agriculture  is 
depopulation.  These  regions  are  characterized  by  low  population  density  and  an  ageing  population. 
This is due first and foremost to natural changes in the agricultural  labour force arising from  the spread 
of more  productive  techniques.  In  a  sector  where  family  farms  predominate,  increased  productivity 
involves  a  reduction  in  the  number  of  farms  and/or  an  increase  in  part-time  work.  Inevitably  then, 
when  a full-time  producer  retires,  his  farm  is  either  incorporated  into  another,  or his  successor  only 
works  on  it part-time. 

In addition, the weakest or most remote regions often  suffer from inadequate infrastructure  and limited 
economic diversification.  The need to develop essential services (notably in health, education,  culture 
and  leisure,  and  public  transport)  is  generally  recognized,  but  tends  to  come  up  against  growing 
pressure to  reduce public  expenditure. 

This  is an extremely  serious problem  which  is constantly  becoming  more acute  and  relates  largely  to 
measures  which  could  be  taken  at  regional  and  national  level.  If  such  measures  are  not  taken,  the 
impact  of efforts  under  EU rural  development  policy  will  be weak,  or even  non-existent. 

2 

PROTECTION  OF  RURAL  AREAS  AND  THE  CONTRIBUTION  OF  WOMEN 

People living  in the  rural areas of the  Union  face a whole series of social problems, including  the risk 
of  losing  their  cultural  identity  as  traditional  lifestyles  are  eroded.  A  sense  of  powerlessness  and 
exclusion from  public life and decisions that concern them is common to all young people.  In deciding 
on  their  future  young  people  are also  very  sensitive  to  the  public  image  of  farming  and  the  fact  that 
its  role  in the  economy  and  in protecting  the environment  does  not seem  to  be fully  appreciated. 

The  important  contribution  of  women  to  the  protection  of  an  enduring  rural  environment,  which 
requires  a  balanced  population  structure,  should  also  be  stressed.  The  reasons  for  the  current 
population  imbalance  in  the  rural  areas  are  well  known:  young  women, who  often  have  a high  level 
of education, have  left  in droves  for the towns and cities.  The result  is an uneven  population  structure 
with  an  abnormally  high  proportion  of elderly  bachelors  and  few  women,  particularly  young  women 
in the 20-39 age range  This phenomenon  tends to impoverish the economic, cultural and social  fabric 
of  rural  societies, and  perpetuate  itself  until  the  countryside  is  abandoned. 

But  it  would  be  wrong  to  consider  the  role of  women  only  in  terms  of  the  companionship  and  extra 
help, however  vital, that they  bring  to  the  life  and  work  of the  farm.  At  present  it  is estimated  that 
only  10%  of  farmers  are  women,  although  women  represent  some  35%  of  agricultural  workers. 
Progress  towards  a  stronger  role  for  women-in  the  management  of  farms  is  inevitable  and  essential. 
There  is every  indication  that  women  have  the ability  and competence  to manage a farm  successfully, 
and with  better training and support  it should  be possible to make real progress. It should also be noted 
that many  of the  imaginative  ideas for diversifying  farming  activities come from  women, and  women 
themselves  are  often  those  best  placed  to  bring  extra  income  -  sometimes  indispensable  -  into  the 
household,  through  employment  outside  of  agriculture,  frequently  from  part-time  jobs,  which  are 
playing  a growing  role  in work  patterns  in  rural  areas. 

3. 

SETTING-UP  COSTS 

The  most  pressing  problem  specific  to  young  farmers  is 
finance.  Because  of  technological 
developments, specialization, and the increase in the economically  viable size of farms, the amount of 
finance required  to get  established  is constantly  rising. 

When  land  is purchased, the cost of the  land plus taxes eats into the limited  financial  resources of the 
young farmer.  Even when the family  farm  is inherited there may be difficulties.  Other heirs may have 
to  be  involved  in  settling  the  estate,  and  the  valuation  and  division  of  property  can  cause 
disagreements.  Another important  point is that the successor has to compensate  the joint  heirs, either 
at  a preferential  price  or at the  market  price.  So much  of the  profits  generated  by  the  business  over 
several  years go to pay the costs of inheritance  and  consequently  cannot  be  reinvested  in the  farm. 

For certain types of production, production rights have acquired a market value.  This further  increases 
the young farmer's need for capital as he must buy not only the land and the means of production, but 
the production rights as well.  Equally, the young farmer is often obliged to restore production  potential 
which  has declined  during the  previous generation's final years  of activity. 

Young  farmers  frequently  have  difficulty  obtaining  loans.  The  banks  are  more  willing  to  lend  to 
already  established  farms  rather than  projects  which  have  not  yet  proved  their  viability,  so  access to 
credit  is selective. 

4. 

SHARING  rNCQME  DURING  THE  TRANSFER  PERIOD 

Where farmers' children take over farms and set themselves up in their turn -the great majority  of cases 
- a smooth  transition  is often  impossible.  Given  the age of the  parents and their possible  continuing 
responsibility  for  young  children,  it  may  turn  out that the  farm  has to  be  run jointly.  So  it  must  be 
capable  of  generating  income  for  two  households  over  a  fairly  long  period  (10-15  years).  In  most 
small  family  farms,  this transition  period  is also characterized  by  heavy  economic  dependence  and  a 
low share of responsibility  on the part of the young  fermer.  These problems become more acute when 
adequate housing for two families cannot be provided because of economic or practical difficulties  (for 
example, it may  be impossible to obtain  a building  permit under planning  regulations). 

III. 

COMMUNITY  MEASURES 

Help  is  currently  available  to  young  farmers  through  a  series  of  provisions.  There  are  several  specific 
instruments under "horizontal" structural  measures with general application, the accompanying  measures 
to  the  CAP  reform,  certain  actions  forming  part  of  rural  development  policy  and  regional  policies,  as 
well  as  the  opportunities  provided  by  the  common  organizations  of  markets. 

1. 

STRUCTURAL  MEASURES  UNDER  OBJECTIVE  5(A) 

1.1 

Setting-up  and  investment  aid 

The  aid  granted  under Articles  10 and  11 of Regulation  (EEC) No  2328/91  on  improving  the  efficiency 
of  agricultural  structures  aims  to  put  young  people  capable  of  adapting  to  the  new  realities  of 
agriculture  in  charge  of  farms.  The  aim  is  to  provide  young  farmers  with  the  resources  to  meet  the 
cost  of  setting  up, notably  the  takeover  of  existing  fixed  and  movable  assets,  and  hence  covering  risks 
linked  to  the  new  responsibilities  of  young  farmers. 

The  aid  is  reserved  for  young  farmers  under  forty  (certain  Member  States  have  set  an  upper  age  limit 
of  thirty-five)  who  are  taking  on  the  legal  responsibility  for  and  management  of  a  farm  requinng  the 
equivalent  of  at  least  one  human  unit  of  labour.  The  young  fanner  must  be  setting  up  for  the  first  time 
as  a full-time  farmer  or  be  moving  into  full-time  farming  after  getting  established  on  a part-time  basis. 
The  measure,  which  was  previously  restricted  to  farmers  gaining  at  least  half  their  income  from 
farming,  has  recently  been  extended  to  multiple  activities,  including  forestry,  work  m tourism  or  crafts. 

According  to the current  rules  aimed  at  promoting  the  setting-up  of competent  young  people, they  must 
be  sufficiently  qualified  in  farming  at  the time  of setting  up. This  involves  having  completed  secondary 
school  and/or  a  university  course  in  agriculture.  If he  does  not  have  any  such  qualification,  the  young 
farmer  must  take  a  preparatory  course  of  at  least  150  hours  prior  to  setting  up. 

The  Community  scheme  for  young  farmers  includes  two  independent  aid  categories: 

Setting-up  aid  as such, comprising  a single grant  of a maximum  amount  of ECU  15  000  which 
can  be  replaced  by  the  Member  State  by  an  equivalent  interest  rebate;  and  an  interest  rebate 
of  5%  for  a  duration  of  15 years  for  loans  contracted  with  a  view  to  covering  charges  arising 
from  setting-up;  its  capitalized  value  may  not  exceed  ECU  15  000;  it  can  be  paid  in  the  form 
of  an  equivalent  subsidy. 

Supplementary  investment  aid  of  25% for  new  investment  provided  for  under  the  Community 
system  of  Material  Improvement  Plans  (M.I.P.),  on  condition  that  the  young  fanner  has  the 
required  professional  qualification  and  presents  the  plan  within  5  years  of  initial  setting-up. 
This  aid  can  be  granted  independently  of  setting-up  aid. 

Application  of  the  scheme  is  optional  for  Member  States,  they  may  apply  it  in  part  or  in  whole,  and 
they  may  also  grant  national  aid  for  which  different  rules  apply  and  the  amounts  are  higher.  Member 
States  are  considered  to  be  best  placed  to  judge  the  extent  to  which  it  is  necessary  to  use  the 
possibilities  available  to  them  and  to  establish  their  priorities  within  the  context  of  their  own  general 
legislation  and  their  needs. 

Because  of very  different  structures  and  traditions, application  of the  system  in different  Member  States 
varies  remarkably.  The  majority  of  the  Member  States,  including  the  three  new  ones,  have  opted  to 
implement  both  setting-up  aid  and  supplementary  aid to  investment.  The Netherlands  ended  the  system 
of  setting-up  aid  in  1992  but  grants  the  investment  aid  supplement.  The  United  Kingdom,  which  was 
not  applying  setting-up  aid,  has  very  recently  chosen  not  to  grant  investment  aid. 

There  are  important  differences  in  the  nature  of  the  aid  granted.  Certain  Member  States  have  set 
supplementary  conditions  for  eligibility.  Some  have  opted  for  a  single  system,  others  for  a  mixed 
system where a grant and an interest subsidy are combined.  The amount of aid is highly variable  from 
one country  to another:  some  limit it to the  maximum  funded  by the  EAGGF, sometimes  less, while 
others top up considerably  from  national  funds. 

In  1994, more  than  23 000  young  farmers  in  Europe  benefited  from  an  setting-up  grant,  and  over 
8  500  received  the  investment  aid  supplement.  Community  financial  participation 
increased 
substantially  reaching  a  total  commitment  of  ECU  183  million  in  1993.  Since  1989,  when  the 
Structural Funds reform  entered into force, an estimated  190 000 young farmers  in the European Union 
have benefited  from  the possibilities  offered  by the  structural  legislation  on  agriculture. 

1.2 

Vocational  training  assistance  for  voung  farmers 

The  vocational  training  assistance  measure,  which  is  based  on  Article  28  of  Regulation  (EEC)  No 
2328/91,  is  intended  to  raise the  level  of  agricultural  training  and  thus  reinforce  the  impact  of  other 
structural  measures under Objective  5(a). The aid relates to attendance at and organization  of complete 
or  additional  training  and  improvement  courses  in  agriculture  for  young  farmers  required  to  take  a 
course of at least  150 hours to achieve the level of training required to obtain  setting-up aid. The level 
of  assistance  is  ECU  10 500  per  person,  of  which  ECU  4 000  is  for  courses  on  the  environment, 
forestry  and  alternative  production. 

The contribution  of the EAGGF to training was ECU 8.7  million  in  1993.  Although  detailed  data are 
not  available,  it  is  estimated  that  the  number  taking  supplementary  training  courses  may  amount  to 
10 000 each  year. 

2. 

ACCOMPANYING  MEASURES  TO  THE  REFORM  OF  THE  CAP 

Among the  accompanying  measures  adopted  as part of the reform of the  CAP, the  Community  early 
retirement  aid  scheme  under  Regulation  (EEC) No  2079/92,  by  providing  a  satisfactory  income  to 
elderly  farmers  who  decide  to  retire,  is  principally  intended  to  promote  renewal,  restructuring  and 
improvement  of  economic  viability  on  the  remaining  farms.  It  can  also  offer  young  farmers  better 
conditions  for  setting  up and  developing  their  farms. 

The  Community  early  retirement  scheme  is  aimed  at  heads  of  farms  aged  55  years  and  over  who 
abandon  farming  permanently  and  transfer  their  farms.  The  aid  is  paid  in  the  form  of  a  single 
retirement grant (a maximum  of ECU 36 225 can be part-financed)  or annual  compensation  payments 
(maximum: ECU  12 075). The incoming farmer undertakes to farm  full-time  for at least five years and 
to protect the environment.  He must also  increase the size of his farm  significantly. 

The  scheme  is optional.  So far,  ten  Member  States have applied  the measure, but generally  speaking 
implementation  has been  very recent. Luxembourg, the Netherlands  and the United  Kingdom  are not 
applying the measure.  Of the new  Member  States, only  Finland  has  introduced  the scheme. 

The  target  for  this  group  of  programmes  is  the  departure  of  some  205  000  farmers,  freeing  up  an 
estimated  area of more than  4.3 million  hectares, of which  5%-10% will  be  used  for  non-agricultural 
purposes  such  as  forestry  and  the  creation  of  nature  reserves.  The  remainder  will  be  transferred  to 
incoming farmers, who will use it to expand their farms or to set up as farmers. Certain Member States 
have  included  conditions  in  their early retirement schemes  which  particularly  favour  young  farmers. 

There  are  two  other  accompanying  measures  in  place:  one  concerning  methods  of  production 
compatible  with  environmental  protection  and  preservation  of  green  spaces  (Regulation  (EEC)  No 
2078/92)  and  an  aid  scheme  to  forestry  measures  in  agriculture  (Regulation  (EEC)  No  2080/92). 
Although  these  measures  do  not  specifically  target  young  farmers,  they  are  of  particular  interest  to 
them:  it  is  they  who  are  actually  the  most  ready  to  adapt  their  production,  for  example  under  the 
measures  concerning  introduction  of  organic  farming  and  training,  in  order  to  grasp  the  new 
opportunities  open  to  agriculture. 

3. 

RURAL  DEVELOPMENT  POLICY  m  THE  CONTEXT  OF  REGIONAL  PROGRAMMES 

The specific measures for young farmers  mentioned earlier are not in themselves an adequate response 
to the needs of young  people who decide to  live and work  in the  countryside.  The Union's  approach 
is  broader  and  includes,  in  particular,  action  undertaken  since  the  reform  of  the  Structural  Funds  in 
rural  areas covered  by  Objectives  1, 5(b) and  6 and the  Leader  initiative. 

3.1 

Objective  1: development  and  structural  adjustment  of less-developed  regions 

With  finance  from  the  three  Structural  Funds  (EAGGF, ERDF, ESF), the  Community  has  been  able 
to  support  diversification  and  reorientation  of  production  in  Objective  1 rural  areas  with  a  view  to 
revitalizing  the  economic  fabric  and  countering  the  rural  exodus. 

Community  aid  is  concentrated  on the  priority  development  priorities  established  in the  Community 
Support  Frameworks  (CSFs),  which  include  agriculture  and  rural  development,  modernization  of 
economic  structures  and  development  of human  resources.  The  July  1993  reform  has  extended  the 
scope of the EAGGF to new areas, such as the improvement of the rural habitat, quality and promotion 
policy, support to applied  research and financial engineering measures.  All these measures can  benefit 
young  farmers  either  directly  or  through  improvements  to  the  rural  environment  resulting  from 
structural  measures  to encourage  a return  to the countryside. 

Objective  1 currently  covers  45.5% of  Union  territory  and  26.6  %  of  the  Community  population. 
Resources available  over the  period  1994-99 amount to  ECU  135 000  million. 

3.2 

Objective  5(b): development  and  structural  adjustment  of rural  areas 

Objective  5(b)  takes  an  integrated  approach  to  the  development  of  rural  areas  covering  both  the 
adjustment  and diversification  of the primary  sector and the development  of other economic  activities 
in the  rural  environment. 

The  development  strategies  are  aimed  at  maintaining  the  level  of  population  in  the  area,  by  raising 
incomes and generally  improving living conditions in rural areas. The special feature of Objective  5(b) 
programmes is multi-sectoral  intervention, always accompanied by a major training drive and  benefiting 
all  the  economic  activities  able  to  contribute  to  rural  development,  i.e.  agriculture,  forestry,  SMEs, 
tourism  and the  environment. 

The  integrated  approach  of these  programmes  involves  active  participation  by  all  the  partners,  local, 
national  and  Community.  There  are  nearly  33  million  inhabitants,  or  8.9%  of  the  Community 
population, living  in the areas eligible for Objective  5(b).  The allocations available for  the Union  of 
Fifteen  amount to  ECU  6  877 million  for the  period  1994-99. 

3.3 

Objective  6: development  and  structural  adjustment  in  less densely  populated  regions 

The  Act  of  Accession  of  the  three  new  Member  States  added  a  new  priority  objective  to  Structural 
Fund  measures,  namely  Objective  6,  which  is  intended  to  promote  the  development  and  structural 
adjustment  of regions with  extremely  low  population  density  in  Finland  and  Sweden.  The  resources 

allocated  to  these regions by the  three  Funds, supplemented  by  the  FIFG, total  ECU  741  million  for 
the  period  1995-99. 

As in Objective  1  regions, the programmes cover all economic activities in the areas concerned. Given 
the  large  part  of these  areas  that  is  rural, the  arrangements  approved  by  the  Commission  provide  for 
the  setting-up  of  integrated  rural  development  packages  to  support  local  initiatives  in  all  sectors  and 
so give  a new  lease  of  life  to the  rural  economy  as a whole. 

3.4 

Leader  (Links between  actions  for  the  development  of the  rural  economy) 

The  Leader  programme  is  a Community  initiative  covering  local  strategies  based  on  proposals  from 
rural  communities  seeking  solutions  to development  problems.  The  purpose  of the programme  is to 
identify  innovative  solutions  to  the  various  problems  of  rural  areas  by  developing  their  endogenous 
resources. 

Leader II, under which  financing  is being  increased  (ECU  1 700 million  for  the three  Funds)  and  the 
principle  of subsidiarity  given  greater weight  for  the  1994-99 programming  period, will  support  four 
types of measure: the acquisition  of skills (drawing up a development strategy on the basis of territorial 
diagnostics, motivating  local  partners  and  setting  up contacts  between  them); carrying  out  innovative 
and transferable  demonstration programmes in all sectors of rural development; exchanging experience 
and transferring  know-how  through  a European  rural  development  network; transnational  cooperation 
projects. 

During  its first stage, Leader financed 217  local  action  groups. This mobilized  Community  financing 
of ECU 445 million and made possible investments totalling ECU  1 155 million jointly  funded  by the 
Community, Member States and  local  sources. This Community  initiative, the first  stage of which  has 
been  very  successful,  is making  it possible  to create a development  momentum  and  thus  establish an 
environment  which  promotes  all  forms  of  initiative  in  the  countryside,  and  particularly  those  of  the 
young. 

3.5 

Pilot  and  demonstration  projects 

In order to reinforce the impact of its measures to promote rural development, the EAGGF is financing 
pilot  projects  relating  to  the  adjustment  of  agricultural  and  forestry  structures  and  demonstration 
products  including  initiatives  relating  to the development  of the economic  potential  of woodland  and 
the processing  and marketing  of agricultural  products. This measure  is intended  to show  the  potential 
of new  systems  and  techniques  and  above  all  to spread  know-how  and  acquired  experience. 

As has already  been  pointed  out,  rural  development  measures whether  under Objectives  1, 5(b) and 6 
and  Leader  or  in  the  form  of  pilot  projects  are  not  exclusively  for  young  farmers.  The  precise  data 
required  to  assess  the  proportion  of  their  participation  in  these  measures  is  not  available.  However, 
contact with  those  involved  during  the  preparation  of operational  programmes  and  the  monitonng  of 
the  various  measures  indicates  that  a large  proportion  of participants  are young  farmers,  and  in  some 
measures, such  as  Leader, they  predominate. 

4. 

MARKET  ORGANIZATIONS 

The  existing  systems  under the  various  common  market  organizations  (CMOs)  can  be  classified  into 
three  categories  in terms  of entry  of new  producers. 

Certain  CMOs  provide  for  individual  "production  rights"  in  order  to  control  production.  The  sector 
most  affected  in this  respect  is the  dairy  sector.  The  following  come  under the  same  type  of  regime: 
rights to suckler cow, sheep and goat, tobacco and dunim wheat premiums.  In the wine sector ceilings 
on  planting  rights  produce  a similar  situation.  As the  individual  reference  quantities  are  in  principle 
based  on  yields  obtained  in  the  past,  these  arrangements  result  in  certain  restrictions  on  the 

opportunities for starting up a new holding. Growers seeking to get established must acquire businesses 
'with  a  quota". 

The arrangements in the dairy sector can be used to illustrate this situation. They arc the subject of new 
rules, applicable since April  1993, based on Council  Regulation  (EEC) No  3950/92, which  sets overall 
national  quantities and  defines  individual reference quantities as the quantity  available on the farm  on 
31  March  1993. These  rules  confirm  the  principle that  a farm's  quantity  is transferred  with  it when  it 
is sold, leased or inherited.  They also introduce flexibility by authorizing, under the control of Member 
States,  transfer  of  quotas  between  producers  without  transfer  of  land  to  support  the  continued  re 
structuring  of the  sector. 

The existence of a national  reserve is fundamental  to  implementing  the  regime by allowing  reference 
quantities  to  be granted  to  priority  producers  selected  according  to  objective  criteria.  This  reserve  is 
fed from  various sources; it is intended to receive reference quantities which are no longer individually 
allocated,  but  it can  also be  supplied  as a  result of a linear  reduction  in the total  reference  quantities 
In  addition,  still  with  a  view  to  restructuring  and  protecting  the 
decided  by  the  Member  State. 
environment,  the  regulation  gives  Member  States  the  option  of  implementing  measures  aimed  at 
voluntary  cessation  of milk  production  and  reallocation  to other producers  of the  reference  quantities 
thus  freed  up. 

As in other sectors, Community  rules  allow  Member  States some  flexibility  of  application  as  regards 
the  allocation  of quantities  put  into the  reserve  or maintained  at  the time  of transfer.  This  flexibility 
can  be  used  to  benefit  young  farmers,  although  there  are  no  rules  or  obligations  imposing  this 
approach. Community legislation  lays down the conditions on which new producers may be considered 
for  inclusion  among  priority  producers, who  receive  additional  reference  quantities,  free  of charge  or 
against  a payment  to  be  established.  Experience  has  shown  that  the  application  of these  rules  varies 
greatly among the Member States. Each Member State thus has the wherewithal  to assist young people 
setting  up as  farmers,  especially  as the  quantity  of the  national  reserves can  be  substantial. 

Under  the  premium  regimes  for  ewes  and  goats  (Regulation  (EEC)  No  3013/89)  and  suckler  cows 
(Regulation  (EEC)  No  805/68),  which  are  also  subject  to  individual  guaranteed  quantities,  it  was 
decided  to  establish  an  initial  national  reserve  set  at  1 to  3% of  total  individual  quantities.  These 
reserves, aimed at satisfying  unexpected applications for premium rights, are virtually exhausted. Under 
both  regimes,  the  national  reserve  is  currently  supplied  from  two  sources. Where  producers  use  less 
than  70% of their rights, the unused  portion  is normally allocated  to the national  reserve.  In addition, 
when  premium  rights  are  permanently  transferred  without  a  farm,  part  of  them  (up  to  15%) may  be 
allocated  to the  reserve. 

There are significant  differences  in the ways  Member States use these  reserves to satisfy  the  needs of 
young farmers.  Some Member States pursue an active policy of recovering as many production rights 
as  possible  for  the  reserve.  Other  Member  States  prefer  to  encourage  redistribution  through  normal 
market  forces. The divergences can also be explained  by the total amount of production rights existing 
in each  Member  State  in comparison  with  the  number of animals  actually  reared. 

In  the  context  of  the  current  CMO  for  wine,  production  is  also  limited  through  the  planting  rights 
mechanism:  new planting  is prohibited.  However, new  planting  can  be authorized  under  exemptions 
provided  for  in  the  legislation, particularly  when  material  improvement  plans  meeting  the  conditions 
defined  in the  Community  regulation  are being  implemented. 

The  second  category  involves  CMOs  with  rules  restricting  production  on  a  collective  basis.  For 
example,  in  the  arable  farming  sector  (cereals, oilseeds  and  protein  crops), per-hectarc  aid  is  limited 
to  a base  area set by  region, and  in the beef  and  veal  sector premiums  for  male  bovine  animals  may 
not exceed a quantity  set for each  region. In these sectors it is less difficult  for a young farmer  to start 
up production  without a reference  quantity  established  in the past. Nevertheless, it must be noted  that 

the compensation  amount  is paid out in full  only up to a regional  maximum  area, for  example; where 
there  is an  overrun, the assistance  is reduced proportionally. 

Finally, there are certain  CMOs in which product prices are protected on the Community  market using 
frontier  protection  measures and  export refunds, within  specified  limits. This applies, for  example, to 
the common organization  of the markets in fruit  and vegetables, pigmeat and poultry. In these  sectors 
it  is  possible  to  start  up  on  a  farm  or  to  transfer  production  capacity  to  these  sectors  without  any 
particular  reference  requirement relating to previous  production. 

5. 

OTHER  MEASURES 

5.1 

Community  training  programmes 

Because of socio-economic  change  and  technological  progress, the  agricultural  workforce,  especially 
young  farmers,  must  have  good  basic  vocational  knowledge  and  be  very  adaptable.  The  European 
Community has adopted  several  education  and training programmes (Yoirthstart, Socrates, Leonardo), 
which  are  not  specifically  addressed  to  young  farmers,  but  can  benefit  young  people  who  are  going 
into farming,  or wish  to take  up other economic  activities  in the  countryside. 

Community action for agricultural training under the existing programmes has already produced results. 
Cooperation  and  mobility  agreements  between  universities  and  agronomy  faculties  under  the 
ERASMUS programme involved more than 2000 students in  1992.  Under COMETT, eight University-
Business Training Associations (UBTA) have developed a strong European technology transfer network 
in  the  field  of  bio-technology.  Finally,  the  PETRA  programme  has  supported  the  creation  of  a vast 
network  of research  centres and  vocational  training  institutes  in  horticulture. 

5.2 

The  new  Community  research  programme 

Under  the  4th  Programme  for  Community  action  for  research,  technological  development  and 
demonstration  for  the  period  1995-98,  the  Council  adopted  a  specific  programme  on  agriculture, 
forestry  and rural development. Its purpose is to provide the scientific basis for planning, implementing 
and  evaluating  Community  policy  in  these sectors. 

Activities under the programme will give rise to developments which will contribute to the application 
of  Community  policies  on  agriculture  and  rural  development,  the  development  of  European  primary 
«roduction,  the  vitality  of  downstream  industries  and  the  satisfaction  of  final  users,  as  well  as  an 
adequate level of employment.  ECU 315 million  is considered necessary to carry out this programme. 

I 3 

Information 

The Commission  has established  close relations with young farmers' organizations in order to provide 
* iem with information  and assist their thinking by means of seminars, meetings and information  visits. 
The  Exchange  Programme  for  Young  Farmers  (EPYF), which  involved  2000  young  people  in  1994, 
should  also  be  mentioned:  it  is  designed  to  encourage  exchanges  of  experience  and  learning  about 
agriculture  in  other countries, on  an  individual  or collective  basis, for  periods  ranging from  3 weeks 
to  several  months, principally  in  the  Member  States of the  European  Union. 

IV. 

PROPOSALS  AND  RECOMMENDATIONS 

1. 

COMMUNITY  MEASURES 

1.1 

Setting-up  aid 

Improvements  to  Community  measures  in  order  to  respond  better  to  the  difficulties  encountered  by 
young  farmers  may  be  envisaged.  However,  such  improvements  need  not  necessarily  mean  adopting 
new  aid  measures  but, above  all  at this  stage, making  full  use  of those  that  are  already  in  place. 

To take account  of current developments  in the conditions for carrying  on an agricultural  activity  and 
the  demand  for greater acceptance  of multiple jobholding,  in  1994 the  Council  decided  to  extend  aid 
to  young  people  who  are  not  full-time  farmers,  but  are  establishing  themselves  under  a  system  of 
multiple jobholding,  including, for  this  purpose, forestry,  tourist  and  craft  activities.  The  conditions 
for granting aid could be reviewed so that it is better adapted to particular local situations (for example, 
mountainous  regions)  and to the growing  phenomenon  of multiple jobs. 

With regard to financing,  it should  be noted that the ceiling for aid eligible for  part-financing  has been 
increased  by  around  20% to  help  young  fanners  to  cope  better  with  the  expense  of  setting  up.  The 
rules  for  granting  aid  in the  form  of  interest  rebates  have also  been  made  more  flexible. 

The  Commission  can  only  encourage  the  Member  States to make full  and  coherent  use of the  various 
Community  instruments  available  to  increase  their  impact  and  adapt  them  to  local  needs.  Where 
measures are applied, national  and regional  authorities should ensure that they have the required  funds 
available  and  the measures  are  implemented  quickly  and  efficiently. 

1.2 

Training 

Training  is  fundamental  if young  farmers  - and this  is especially  true  in the case  of a farmer's  child  -
are to master the technical complexities of farm  management and accounting.  The importance of new 
training  linked  to  the  environment  needs  particular  emphasis,  and  so  does  a  better  integration  of 
environmental  concerns  in  traditional  training  in  order  to  teach  young  people  to  stress  the 
environmental  dimension  in  their  decisions  and  to  become  aware  of  their  role  in the  maintenance  of 
a  qualit>  environment. 

But  there  are  still  wide  disparities  between  training  systems  in  the  different  Member  States  and  the 
levels  required  by  each  of them  for  granting  aid.  The  Commission  therefore  feels  it  is  important  to 
take a closer look  at whether the required  training is adequate to the purpose, and  to reflect  on the best 
way  of adjusting  the existing  programmes.  Young  people and educational  establishments  in the  rural 
areas  of  the  Union  should  also  be  encouraged  to  participate  in  Community  vocational  education  and 
training  programmes,  given  the  results  obtained  so  far,  which  have  often  been  remarkable  and 
innovative. 

1.3 

Early  retirement  scheme 

As  a  complement  to  setting-up  policy,  early  retirement  measures  ought  to  be  better  targeted  on 
rejuvenating  the  sector,  although  young  people  already  have  an  advantage  over  other  potential 
successors  in  that  they  benefit  from  setting-up  aid.  The  Commission  recommends  following  the 
example  of  certain  Member  States  which  implement  the  scheme  so  as  to  prioritize  the  take-over  of 
farms  by young people, for example by granting a higher premium  to farmers  who hand over to young 
farmers,  or by  providing  for  a reserve of freed-up  land  available  for  young farmers.  The  Commission 
is open to ideas about practical methods of strengthening the link between early  retirement and setting-
up 

10 

1.4  Market  Organizations 

The  creation  of  reserves  of  reference  quantities  administered  at  national  level  has  enabled  Member 
States to allocate available production rights to priority categories, including young farmers.  However, 
experience  has  shown  that there  is  a wide  variation  in  the  extent to  which  the  operation  of  national 
reserves has  led  to  a  redistribution  of  production  rights.  Apart  from  factors  influencing  supply  and 
demand  for  rights,  such  variations  are  also  explained  by  different  attitudes  on  the  part  of  Member 
States;  some  actively  seek  to  influence  the  redistribution  of  production  rights,  while  others  tend  to 
favour the  free  operation  of market  forces  which  they  also  see as minimizing  administrative  burdens. 

If,  as the  Commission  believes, the  Community  has an  overriding  interest  in  maintaining  a  dynamic 
agricultural  sector  by  facilitating  a  steady  inflow  of  new,  fully  qualified  farmers,  it  is  essential  to 
explore all  possibilities,  including  measures, which  could  contribute  to  achieving  that  objective. 

The  first  question  that  arises  is  how  special  rights  could  be  made  available  for  allocation  to  young 
farmers  on  a  regular  basis.  It  is  clear that  such  arrangements  must  not  involve  exceeding  the  rights 
currently guaranteed  under the  CAP.  The necessity  of maintaining  a consistent  market and  budgetary 
policy means that the Commission must reject any approach entailing the creation of fresh  entitlements 
over and  above  existing  limits. 

In order to maximize the amounts  potentially  available to young farmers  within  the  limits of existing 
guaranteed  quantities one could, for example, place stricter limitations on the disposal,  including sale, 
lease or transfer, of existing production rights, especially where they are not being fully  utilized  by the 
beneficiary.  The  cessation  of  farming  and  voluntary  abandonment  programmes  could  also  provide 
resources  for  the reserve, and  a  linear  reduction  of the  rights  of established  producers  might  also  be 
envisaged.  It would  be possible, therefore,  through  a combination  of different  measures, to  build  up 
and  maintain  a  reserve  of  sufficient  size  to  meet  the  needs  of  young  farmers  without  impinging 
unreasonably  on  the  expectations  of other  priority  groups. 

At present, the  designation  of priority  categories  is  left  to the  discretion  of  Member  States  acting  on 
the  basis  of  objective  criteria.  Experience  has  shown  that,  when  it  comes  to  the  allocation  of rights 
from  the  national  reserve,  Member  States  arc  reluctant  to  designate  young  farmers  as  the  absolute 
priority, on  the grounds  that  other  farmers,  (those  with  development  plans, small  farmers,  farmers  in 
less-favoured  areas) have an equally  deserving  case.  This suggests a need to find a balanced  solution 
which  favours  young  farmers  but  which  ensures  that other  priority  categories  will  not  feel  excluded. 
This will  undoubtedly  involve  making  difficult  decisions, but they  must  be made. 

Having  considered  all these aspects, the  Commission  believes that  it  should  be possible to take  steps 
to allow young farmers to begin their careers in conditions of economic stability and financial security. 
Established  producers must play their part in this as it is they who benefit most from  the price stability 
and  direct  aids  associated  with  measures  to  limit  supply.  In  practical  terms  the  approach  proposed 
would  require  Member  States  to  make  available  on  a  continual  basis  a  sufficient  quantity  of  rights, 
determined  according  to  the  numbers  of  farmers  belonging  to  designated  priority  categories  and  the 
minimum  level  of  farm  production  considered  necessary  to  constitute  a  viable  unit.  This  pool  of 
production  rights  should  be  drawn  from  existing  reserves.  Of  the  total  quantity  of  rights  to  be 
distributed,  a minimum  proportion  should  be  reserved  for  young  farmers  as an  absolute  priority. 

Some Member States may be disinclined  to provide the administrative resources needed to manage the 
distribution  system  proposed.  This  approach  may  be  influenced  by,  for  example,  the  fact  that  the 
situation  regarding  the  age  structure  of  the  farming  population  and  opportunities  for  setting  up  in 
farming  in  the  sectors  concerned  is  already  satisfactory.  Or  they  may  argue  that  the  existence  of  a 
market  on  which  production  rights  circulate  actively  at  a  reasonable  cost  provides  adequate 
opportunities  for  newly  established  farmers  and  other categories  of farmers  in  difficult  situations. 

11 

The Commission seriously doubts whether the problems of priority categories, including young farmers, 
can  be  dealt  with  satisfactorily  without  applying  in  full  the  system  proposed.  However,  if  it  can  be 
shown that in some sectors the costs of such an approach would substantially  exceed its likely  benefits, 
and  that  the  objectives  could  be  achieved  by  other  means,  for  example,  collective  agreements,  the 
Commission would be ready to consider such possibilities. Community legislation already provides for 
assistance for professional  organizations and this could be used to establish the administrative structures 
necessary  for  such  initiatives. 

2. 

NATIONAL  MEASURES 

2.1 

Inheritance  law 

It  is  important  to  stress  that  decisions  in  some  areas,  which  have  a  considerable  impact  on  the 
setting-up of young  farmers,  fall  within the exclusive competence  of the Member  States. This  look at 
the  problems  encountered  by  young  people  setting  up  as  farmers  shows  that  in general  they  are the 
same  as  those  encountered  by  small  and  medium-sized  businesses  at  the  difficult  moment  of 
succession:  inheritance  law,  taxation,  credit  problems'.  The  analysis  of  these  problems  and  their 
economic  impact shows that  it would  be useful  for the Member States to coordinate certain  aspects of 
their  policy  and  to  consider  adopting  a number  of  fiscal  and  legal  measures  to  facilitate  the  transfer 
of enterprises, and  in particular  of  farms. 

Both  law and family  custom  relating to succession  follow  and  reinforce  different  concepts of  farming. 
In  certain  Member  States  the  strong  patrimonial  concept  of  farming  entails  the  equal  division  of 
agricultural  property  in  kind  at  the  moment  of  succession  which  means  the  farm  is  broken  up. 
Elsewhere,  inheritance  law  supports  the  principle  of keeping  the  farm  intact,  and  in  some  cases  this 
objective  is combined  with  financial  protection  of joint  heirs. 

The Commission recommends that Member States examine possible solutions within their competence 
to the difficulties  encountered by young people when it comes to succession.  For example, where other 
heirs  have to  be compensated,  it would  be preferable  if this  compensation  could  be paid  over several 
years  in  order  to  ensure  continuity  of  farming  without  shortage  of  finance,  or  to  prevent  the  young 
person  actually  giving  up the  farm. 

2.2 

Taxation 

The  fiscal  burden  linked  to transfer  (or to  setting-up  aid)  is proving  to  be one  of the  main  problems 
for  young  people.  There  are  marked  differences  in  the  systems  applying  to  transfer,  both  between 
States  (some  have  a  specific  system  for  agriculture)  and  depending  on  the  method  of  transfer 
(inheritance  or  transfer  during  the  lifetime,  such  as  sale  or  gift).  So  there  are  grounds  for 
recommending  that,  in  formulating  their economic  policy,  Member  States  look  into the possibility  of 
granting  exemptions or tax  reductions on the transfer of farms.  As a condition, the successors may be 
required  to  undertake  to  continue  economic  activity  over a certain  period  of time.  The  survival  of a 
larger  number  of  enterprises  means  fewer  businesses  and jobs  lost  and  a  source  of  tax  receipts  and 
social  security  contributions  preserved. 

In addition, Member States could  recognize the principle of fiscal neutrality  for operations carried  out 
with a view to preparing effectively  for the transfer  of a business: setting up a company, merger, split, 
exchange  of shares, or other  method. 

The  transmission  of  small  and  medium-sized  enterprises  (SME)  was  the  subject  of  a 
Recommendation  of the Commission on 7 December  1994, OJ N*  L 385 of 31.12.94, pages 14 
and following. 

12 

2.3 

Lease 

The role of legislation  on  tenant  farming  as it affects  the  setting-up of young  farmers,  notably  family 
tenancies as a form of progressive transfer of farms, deserves greater attention from  the Member States. 
The  legislation  relating  to  tenant  farming  varies  considerably  within  the  Union; there  are  advantages 
and  disadvantages  in  having  flexible  rules  on  tenant  farming  or,  on  the  contrary,  strictly  regulated 
tenancies.  Under a flexible  system the farmer has less protection  but obtains land to lease more easily, 
while  if  the  farmer  is  better  protected  then  the  landowner  is  disadvantaged  and  discouraged  from 
making his  land  available  to young  farmers. 

2.4 

Preparation  for  transfer  :  new  forms  of  partnership  between  parent  and  child  (or  other 
successor) 

The Commission recommends that Member States consider the appropriateness of introducing into their 
system  legal  forms  of partnership between  parent and child  (or other person).  These make  it possible 
for the parent farmer to involve the intended  successor to the family  farm  in its management, and allow 
the latter to acquire a measure of independence before taking on the management alone. When this type 
of association  is applied  to farms  which  are  large enough  economically,  it provides the  young  person 
with  sufficient  income  and  above  all  a gradual  transfer  of  responsibility  for  the  farm,  so  that  he can 
become  established  without  pressing  financial  problems.  It  ensures  the  progressive  transfer  of  the 
capital  in the business accumulated  by the parents, with the cost being shared  between the two parties. 

2.5 

Cover  services 

The Member States can intervene in relation to other problems the young farmer, once established, will 
have to overcome.  In particular, being able to ensure continuous operation  in case of absence becomes 
a factor to be taken into consideration  when members of the younger generation choose this  profession. 

Member States should encourage the development of cover services, an area in which there is currently 
some growth. One possibility, already  provided for  in some measures  part-financed  under Community 
legislation,  is to grant aid  for the creation of such services.  Another way of promoting  cover is for the 
authorities to introduce  greater flexibility  in various forms  of contractual  relations at work, notably as 
regards the most frequent  types of cover: part-time, casual or seasonal  work, "loaned  labour" on a non-
lucrative  basis, legal  forms  whereby  several  farmers  employ  one  worker. 

2.6 

Setting-up  of young  people  without  a rural  background 

In  order  to  ensure  that  there  are  always  enough  candidates  to  take  over  farms  in  every  region,  it  is 
desirable to open up the profession  to young people from  other backgrounds.  It is true that it is harder 
for young people without a farming  background  to get started:  a young  farmer  who  is not taking over 
from his parents has to invest far more than one who is, while becoming  established  and over the next 
few years, on an equivalent  farm.  Nevertheless, the  results of a few  studies  seem  to  indicate  that this 
type of farmer  ends  up expanding  the  business  and  has the  same  chance  of success. 

A system of contacts between elderly farmers without heirs and young people of non-agricultural  origin 
has  been  successfully  piloted  in  France.  It  relies  on  the  creation  of  departmental  directories  which 
encourage  meetings  between  heads  of  farms  and young  candidates  for  succession.  Since  the  chances 
of success depend  largely on the economic situation  in the area concerned, the initiatives  taken  should 
be consistent  with  the  aim  of encouraging  the development  of sustainable  farms. 

13 

3. 

IMPROVING  INFORMATION 

Finally,  any  measures  providing  information  and  improving  the  image  of  the  farmer  among  young 
people should be encouraged. In some regions of the Union, "setting-up directories" and other measures 
are  already  in  operation  or  being  established  to  bring  out-going  and  in-coming  farmers  together  and 
help young people with appropriate information,  in particular concerning national and Community aid. 
The  Commission  is willing  to consider  possible  accompanying  measures  for  such  initiatives. 

There  is  also  a  lack  of  reciprocal  information  about  the  various  routes  chosen  to  approach  certain 
common  problems  between  Member  States  in  terms  of  their  existing  rules  on  transfer  and  the 
setting-up  of  young  people.  To  improve  this  situation,  the  Commission  is  prepared  to  organize  or 
coordinate information  schemes on this subject and to disseminate information  on "best practice" found 
in  the  legislation  of  Member  States,  through  seminars  allowing  discussion  at  Community  level  of 
results already  obtained 

14 

ISSN 0254-1475 

COM(96) 398 final 

DOCUMENTS 

EN 

03  04 

Catalogue number  : CB-CO-96-393-EN-C 

ISBN 92-78-07633-3 

Office for Official  Publications of the European Communities 

L-2985 Luxembourg 

IS