The rise in farm incomes: 2010 and the next decade
Farmers and speakers from DG Agri have repeatedly complained about the double squeeze of farm incomes: falling farm gate prices combined with rising costs for inputs, such as energy and fertilizer. The disastrous year of 2009 had wiped out all the gains of the last 15 years, they said. But the upswing of 2010 has been generous with farmers, and future price increases promise further improvements in farm incomes.
This is what DG Agri says in its communication ‘The CAP towards 2020’ from November 2010 (which uses the word ‘income’ 20 times!): ‘the future CAP will operate in the aftermath of an economic crisis that has seriously affected agriculture and rural areas by linking them directly to wider macroeconomic developments affecting its cost of production. After a decade of mere income stagnation, agricultural income dropped substantially in 2009 adding to an already fragile situation of an agricultural income significantly lower (by an estimated 40% per working unit) than that in the rest of the economy, and income per inhabitant in rural areas is considerably lower (by about 50%) than in urban areas.’
This is Eurostat’s December 2010 estimates of this year’s farm incomes:
- EU27 real agricultural income per worker up by 12.3%
- This increase results from a rise in real agricultural income (+9.9%), together with a fall in agricultural labour input (-2.2%).
- Between 2005 and 2010, EU27 real agricultural income per worker is estimated to have increased by 10.0%.
- Real agricultural income per worker in 2010 is estimated to have risen in 21 Member States and to have fallen in six.
Also, agricultural prices are widely expected to rise in the next decade (see e.g. European Commission (2009): Prospects for Agricultural Markets and Income in the European Union 2008-2015. FAPRI (2010): U.S. and World Agricultural Outlook. OECD and FAO (2010): Agricultural Outlook 2010-2019.) This bodes well for agricultural wages, too.
Anyway, what’s the point of emphasizing that agricultural income is lower than average wages? Hairdressers earn far below average, too. And so do construction workers, lorry drivers, assembly-line workers, poets (I guess) and, well, all those who earn below-average wages (that is, far more than half the population, given that the few who earn extremely high salaries bias the mean upwards).
A similar thing can be said about income volatility. Let’s take a city like Berlin that is full of freelancers that often work in the ‘creative industries’. The volatility of their income tends to be extreme, its predictability terribly low and the level just high enough to survive in a cheap city such as Berlin. It’s not just farmers who have to cope with an uncertain economic environment.