Commodity market slump hits EU farm incomes

EU farm incomes have dropped by over 12% this year, with almost all member states reporting a significant downturn, as the slump in commodity markets has hit farmers in the pocket.

First estimates from the EU’s statistics agency Eurostat show that real income per farm worker was down in 22 of the 27 member states, as agricultural output fell away faster than the drop in input costs.

Worst hit were farmers in Hungary (-36%), Italy (-25%) and the Czech Republic (-24%), though Ireland, Germany and France also suffered steep income falls, for the second year in a row.

One of the few exceptions was the UK, where income per agricultural worker is put 14% higher than in 2008, and a massive 48% higher than in 2005, as the weakness of sterling softened the impact of price falls and gave a boost to single farm payments.

Commenting on the results, EU farm commissioner Mariann Fischer Boel said that the economic crisis of 2009 had clearly had a very serious effect on farmers, with lower demand and relatively high production costs.

“This situation highlights more clearly than ever the need for a strong, modern and effective common agricultural policy,” she said.

“Direct payments provide a basic level of income for farmers, cushioning them from price fluctuations. They still have a crucial role to play, representing roughly a third of farm income in the EU.

“Market measures can also act as a real safety net in times of difficulty. And rural development measures can also help, particularly when they are linked to restructuring, or promote services like environmental protection which are not remunerated through the market.”

Eurostat said that the drop in 2009 farm incomes was mainly the result of a 13.2% fall in the value of crop production and a 9.7% fall in the value of animal production.

“In crop production, the decrease is almost entirely due to a decline in prices,” said a statement. The same was true of the animal sector, with milk prices down by 20.3%, pigs by 4.2% and cattle by 1.8%.

Input prices were also lower, by about 6% across the whole of EU agriculture, led by a 14% drop in feed prices and a 12% drop in energy prices. Fertiliser use was also 14% down in 2009, according to the Eurostat estimates.

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