According to the latest data from the European Commission’s department of agriculture, farm incomes rose 3.7 per cent in real terms last year. Although welcome, the increase is slower than 2010’s rise of 10 per cent average across the EU. Coupled with a reduction in labour input, the figure stands at a 6.5 per cent increase overall, according to EU analysts.

Analysis of the data, taken between December 2010 and December 2011, shows producers’ margins increased due to rises in prices and volume of agricultural produce last year. These increased by 5.7 per cent and 1.4 per cent respectively.

However, the results do show variation between member states. Romania and Hungary were shown to have benefitted most in 2011, with rises of 43.7 and 41.8 per cent respectively. Belgium fared worst, seeing a 22.5 per cent reduction in income. The UK was just below average, benefitting from a rise of 4 per cent.

Annus Horribilis for fresh produce sector

Although the value of crop production is estimated to have risen around 7.5 per cent, some crops performed especially well. Some saw dramatic rises in value, as with cereals (18.3 per cent), oilseeds (15.1 per cent), forage plants (12.8 per cent) and protein crops (11.6 per cent), whilst fresh vegetable prices fell -9.7 per cent.

The E.Coli crisis early on in the year saw prices and sales of a variety of vegetables plummet. Mild weather caused Southern and Northern European seasons to overlap for many fresh vegetables, resulting in an overabundance and low prices for producers.

Animal products’ value rose by 7.7 per cent, according to the commission figures. This rise is the result of a one per cent increase in volume and a 6.6 per cent rise in prices. Milk rose by most at 9.2 per cent, followed by poultry (8.5 per cent), then cattle, sheep and pigs. EU forecasts show that, although all sectors except eggs (-4.7 per cent) rose in 2011, the European meat sector will contract from 2012 for all except poultry producers on reduced consumer demand.

The continued strong performance of dairy has led many groups in Europe to consider organising into cooperatives to ensure producers see the benefits of the high prices. In January, delegates at the Oxford Farming Conference heard how collective organisation, which has seen marked success in the dairy sector, allows farmers to stand up to transnational corporations and protect their interests.

French farmers have begun organising into cooperatives ahead of the end of milk quotas in 2014 and European farming union Copa Cogeca declared 2012 the ‘year of the cooperative’

Input costs still denting margins

Although returns rose in most sectors, rises in input costs were shown to increase 9.2 per cent in 2011, almost exclusively on higher prices for fuel, feed and fertiliser. Fears over the inexorable rise of input costs led the European Parliament to commission a report into the impact this is having on farmers last year. Rapporteur José Bové made a series of recommendations to the parliament on how to offset the damages such rises may cause, including moving towards more cooperative organisation.

Rises in production and prices also benefitted EU exporters, with exports totalling €105 billion, 16 per cent higher than 2010 levels. UK exports rose in step with this, and the UK government made the promise towards the end of the year that it would introduce more support for agricultural exporters, enabling them to find new markets in third countries.  

More data, including detailed breakdowns by sector, is available here.

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