Background Economy
Large share of farmers' income from direct payments
Average farm incomes in the EU increased from 2007 to 2018, but still remain low compared to incomes in other sectors. Direct payments from the Common Agricultural Policy account for an average of 28% of European farmers' income.
Data from the European Information Network on Farm Accountancy for Farmers (FADN) shows that the average farm income has grown from €28.800 in 2007 to €35.300 in 2018. The average annual income per worker in 2018 will be €22.500. There are major differences between the different countries and companies. For example, incomes are on average highest in Northwestern Europe and lowest in Eastern Europe. On 5% of the agricultural companies, the annual income per worker is above €70.000, while 50% is below €10.000.
Extensive companies most support
The share of direct payments from CAP in income also varies widely. In Lithuania 70% of income comes from direct payments, while in the Netherlands this is on average 9%. According to the ILB, this is related to the type of farm. Grazing livestock (excluding dairy), mixed and arable farms earn an average of 40% to 54% of income through direct payments, while in horticulture and viticulture it is 2% and 5% respectively. Specifically for the Netherlands, the large number of horticultural, pig and poultry farms is cited as the reason for the relatively small share of direct payments in income.
In October, the Organization for Economic Co-operation and Development (OECD) estimated that in 2019 governments worldwide spent $700 billion to protect and support their own agricultural sector. In their list, the EU is in eighth place between Indonesia and Israel with 19% of gross turnover on agricultural holdings coming from (direct) income support and market protection. The US, as another agricultural superpower, falls just outside the top 10 with a 12,1% share of the government in the turnover of agricultural companies.
Jurphaas Lugtenburg
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