Farming Utopia? Almost…

6 July 2001




Farming Utopia? Almost…

Increasing numbers of British farmers are looking overseas

as a way out of their current farming woes. Some have

chosen France, tempted by the promise of cheaper land,

better government support, a more sympathetic public, not

to mention the relaxed way of life. But what is involved and

what is it really like? Europe editor Philip Clarke reports

THE impression many British farmers have of France, reinforced by the media, is that it is something of a farming Utopia.

It is a place where farmers get good prices for their food, extra support from their taxpayers, respect from their fellow citizens and benefit from a government willing to cave in at the first sign of a disgruntled voter.

That is the popular image. And, while it is true you cant believe everything you read in the papers (FW excepted, of course), its not that far from reality.

For example, a recent survey revealed strong urban support for farmers, with 83% saying they were beneficial to the countryside and 77% supporting subsidies. Over 90% thought of farmers as hard-working and courageous.

Undoubtedly there are stronger cultural ties between town and country in France, with about 8% of the population still employed in agriculture, compared with less than 1% in the UK.

When it comes to additional support for farmers, the French reputation is almost legendary.

Look no further than the Stabiporc system of aid for French pig producers. In 1999 this paid out over £70m in state aid in the form of cheap loans, social security subsidies and marketing grants to help that sector through a market crisis – despite being declared illegal by Brussels.

There is also an array of schemes designed to encourage new entrants and young farmers.

These have existed since the early 1960s and include loans, to help finance the purchase of the farm, and grants to help fund the first three years of farming.

The loans are distributed by the commercial banks, such as Crédit Agricole or Crédit Lyonnais, subject to the approval of the local ministry of agriculture.

They are allocated to young farmers to help pay for the acquisition of land and equipment, renovation expenses and the maintenance of machinery.

The amount available depends on the status of the claimant and the quality of the land, (see table, above left), and can be applied for at any stage during the first ten years of farming. A married couple in the less favoured areas can claim up to 1,440,000 francs, to be paid back over 15 years at 2.55%.

As with the loans, the grants also depend on the farmers status and land type. A single young farmer can receive up to 113,400 francs on the plains, up to 146,400 francs in the LFAs and up to 235,400 francs in the mountains.

To qualify for a grant, the applicant must have a diploma in agriculture and have completed a six-month practical training course away from home. They must also be between 21 and 40 years old.

All applications are handled by what is known as the ADASEA – a government quango, which looks after young farmers.

The ADASEA co-ordinates the paperwork and submits it to the local ministry of agriculture. Applicants must follow a 40-hour preparatory course and submit a fully costed farm plan for the holding they are hoping to rent or buy.

This plan, which may be drawn up with the help of a consultant, must give details of the condition of the farm, the applicants financial position, his cash requirements, his planned investments and an expected net farm income for the first three years.

The young farmer must also agree to stay in farming for 10 years, and to submit annual accounts to the local ministry of agriculture. If he quits farming, the grant must be repaid.

If approved, the grant will be paid in two instalments – 70% within the first three months of setting up and the remaining 30% after three years.

This balancing payment is dependent on the young farmer achieving certain income targets.

Other grants are also available, (see panel, below left), including local authority schemes to attract new farmers, regional water authority grants (60%) and the governments PAM scheme.

Young farmers are only charged half the going rate of tax in the first five years of instalment, while social security charges are reduced for the first three years.

They are also exempt from housing and business rates.

In this way, every effort is made in France to encourage the next generation into agriculture.

Loans to help purchase a farm and equipment

Status of farmer Borrowing limit Aggregate loan Interest rate

Plains Other areas

Single or husband

and wife on 620,000 francs 720,000 francs

separate farms

3.8% 2.55%

Husband and wife

on same farm 930,000 francs 1,080,000 francs

12 years 15 years

Husband and wife

in partnership 1,240,000 francs 1,440,000 francs

&#8226 Loans from banks, who claim interest subsidy from state and Brussels

&#8226 To pay for additional land up to 100,000 francs

&#8226 To pay for renovation work up to 200,000 francs

&#8226 To pay for working capital up to 30,000 francs

&#8226 Loans can be claimed up to 10 years after installing

Grants to help fund first three years of farming

Status of farmer Plain areas Less favoured areas Mountain areas

Single or husband

and wife on 52,000 to 67,200 to 108,000 to

separate farms 113,400 francs 146,400 francs 235,400 francs

Husband and wife 52,000 to 67,200 to 108,000 to

on same farm 165,400 francs 213,000 francs 343,400 francs

Husband and wife

in partnership 165,400 francs 213,600 francs 343,400 francs

&#8226 Joint-funded by state and Brussels

&#8226 Must be between 21 and 40 years old with diploma in agriculture

&#8226 Must have done six months practical training away from home

&#8226 Paid in two lump sums – 70% in first three months, 30% three years later

OTHERGRANTSANDLOANSFORFRENCHFARMERS

&#8226 Local authority grants, for example, up to 1450 francs a cow available in the Cher département to encourage new dairy farmers, and 75,000 francs in the Saone-et-Loire département for building construction.

&#8226 Modernisation or diversification loans (the PAM scheme), available to all farmers, but with extra low rates for young farmers. Up to 470,000 francs per unit of labour employed, with a 940,000 francs ceiling, paid back over 20 years.

&#8226 Tax and social security breaks, including a 50% tax allowance every year for the first five years. Social security dues reduced by 50%, 40% and 30% for the first three years.

&#8226 Exemption from housing and business rates for new entrants.

&#8226 State and regional water authority grants for improved slurry handling and storage, up to 60% of the cost.

&#8226 Free quota top-ups readily available for milk and sheep, less so for beef. Can "swap" suckler cow and milk quota at 1SCP/3000 litres.

&#8226 Late entry assistance for the over-40s, including 100,000 francs investment assistance and free agricultural training.

&#8226 Lower interest rates (3%), grants and tax concessions for farmers setting up machinery rings (minimum four farmers).

&#8226 Bankruptcy assistance, including cut price bank loans (2%), free financial health check and three year social security "holiday" for farmers in financial difficulty.

&#8226 State pension top-up of 36,000 francs a year for farmers forced into early retirement due to financial difficulty.


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