A “Young Farmer Problem”? Opportunities and Constraints for Generational Renewal in Farm Management: An Example from Southern Europe

Abstract

The existence of a “young farmer problem” in Europe has been recognized by scientists and policy-makers and is based on the widespread acknowledgement of the poor generational renewal rates in the farming sector and in particular in farmland management across the European Union. Despite existing support policy measures, young farmers (YF) face barriers which hamper the establishment and consolidation of their farming enterprises. Focusing on Alentejo (NUTS II), in Portugal, this paper identifies the difficulties YF face to accessing land, the high investment costs required to set up a farming unit, and the insufficient access to credit as the main reasons why young people are prevented from setting up their farming enterprises. Existing policy support measures targeting YF are widely perceived as inefficient with regard to triggering generational renewal. Hence, our findings suggest that not only is it necessary to pay greater attention to the complex question of land tenure, but that also the impact of policies implemented in the past should be examined in detail in order to develop and implement more effective measures that are sensitive to the different national and regional contexts.

1. Introduction

The existence of a “young farmer (YF) problem” in Europe has been recognized by scientists [1] (and policy-makers and is based on the widespread acknowledgement of poor generational renewal rates in the farming sector across the European Union (EU) [2]. The latest EU Farm Structure Survey indicated that, by 2013, 55.8% of European farmers were over 55 years of age [3] and 31.4% were older than 65 [4]. By contrast, by 2013, only 6% of farmers in the EU were younger than 35 years of age [3].

The “YF problem” has been mainly discussed in the context of debates on the future capacity of European agriculture to remain competitive and guarantee sufficient food production in a globalized agricultural market [5]. It is also perceived to be relevant from a demographic and sociological perspective [1]. This perception is based on the assumption that young farmers have the potential to drive structural change in the management of farmland and overall in the agricultural sector [6]. It may be claimed that the innovative character of YF is a shared characteristic of all new entrants, regardless of age [1,6], but statistical evidence indicates a positive correlation between YF and farm efficiency and innovation [1,5,7]. YF have been described as having a more entrepreneurial approach to agriculture [8,9,10] and being particularly active in establishing new market channels [6]. Additionally, other studies highlight the role of YF in the adoption of sustainable agriculture systems, investing in efficient use of land and resources [11]. Thus, the “YF problem” could be approached as a “YF challenge”, in which more constructive analyses may be implemented that lead to more effective solutions [12].

The acknowledgment by policy makers of the importance of targeting YF has been enacted through specific EU policies aimed at supporting the establishment of new farmers. In this sense, the 2007–2013 Common Agricultural Policy (CAP) reform included measures targeting new entrants and YF, and the 2014–2020 CAP reform has continued to do this. These measures include the YF Payment, under Pillar I, and Start-up Aid for YF, in Pillar II [13]. With a public expenditure of an estimated 2.6 billion Euro for the YF Payment and 6.9 billion Euro to support YF via Pillar II, 176,000 YF are expected to receive CAP funding throughout the 2014–2020 period, mostly through the start-up grant [13].

Despite this, YF face several barriers when trying to establish and sustain their farming businesses. Commonly identified barriers include the high start-up costs, the difficulties in setting up an agricultural enterprise that is economically viable, and limitations in accessing both land and credit [1,14,15]. It is also argued that it is unattractive for young people to engage into a job that entails low income, long and uncertain working hours, few holidays, life in isolated rural areas, and many uncertainties. Furthermore, some authors [14,16] have pointed out the lack of effective public incentives for older farmers to leave agriculture, thus hampering renewal.

These barriers make it clear as to why the most common way of entering farming in Europe is through family succession [1,5,16]. Other alternatives for YF include the establishment of a new business or the acquisition of a holding from a retiring farmer [6,17,18].

Land systems are here understood as a combination of land use, land management, and territorial practices, which will give more complete information about landscape structure than classical land cover classes. This approach considers the landscape as the result of environmental and human components that affect each other through a series of sub-systems, linkages, and interactions [19,20]. Through this lens, there is a set of factors—demographic, economic, technological, policy and institutional, and cultural and environmental—that structure and determine change in land systems [20]. This is a useful approach to understanding how the barriers that YF face vary across European regions, and how the heterogeneity of farming systems is influenced by differences in regional legal and farming structures, available support for new entrants, marketing and technical infrastructures, and contingent biophysical characteristics [21]. There are thus many angles with regard to the renewal of managers of farmland and of farm businesses. The effectiveness of public policy intervention depends to a great extent on the capacity to acknowledge this complexity, as well as the subsequent flexibility that is required to tailor policy tools to the specific challenges in each European region [22].

Focusing on Southern Europe through the example of Portugal and its largest NUTS II region, Alentejo (Figure 1), this paper aims to unravel what YF and those closely involved with them consider to be the barriers preventing the settling of YF and their perception of the role of public policies addressing the “YF challenge” in this particular context of Southern Europe. To achieve this, we engaged with key stakeholders in the region in a process of qualitative enquiry leading to a shared vision of main barriers and problems [23,24].

By “YF” we refer to farmers below 40 years of age who have set up their first farming enterprise within the previous five years. Given this is a case study from Portugal, Portuguese legislation was followed [25].

The next section of the paper explains the methodological approaches and steps in our analysis. Section 3 presents the results obtained and discusses the relevance of these findings to informing public intervention to attain more efficient support measures for YF. The paper concludes by suggesting possible pathways to overcome the main barriers identified.

2. Methods and Materials

2.1. Case Study Description

The Alentejo region comprises 47 municipalities and covers a total area of 31,551 km², a third of continental Portugal (Figure 1). It has a Mediterranean climate, landscape, and culture. Poor and shallow soils dominate a peneplain landscape with rolling hills with old and hard stratigraphic series. The climate is Mediterranean mesothermic with a rainfall rate of 500–600 mm yearly, and dry and warm summers. The population density has been falling over recent decades and was in 2013 22.7 people/km², almost five times lower than the national mean [26]. According to the European regional classification of rural-urban areas [27], Alentejo is a predominantly rural region. Furthermore, and according to the same authors [27], Alentejo is considered a remote rural region with settlement concentrated in villages and towns and a nearly empty countryside. No single town in the region exceeds the 50,000 inhabitant figure of Évora. There are very few industries, apart from some recently installed multinational firms located in Évora and in Beja.

The land property structure in the region is dominated by large family estates (100 to 1000 ha) that often date back to the eighteenth century. The still dominant land system is the Montado (Figure 1), an extensive agro-forestry system with cork and livestock as the main outcome [29]. Other key land systems are olive groves and vineyards, which take place in smaller land units [30]. New olive groves, corresponding to a different land system, have quickly expanded over the past two decades through a process of intensification which has been chiefly supported by the large irrigation network associated with the Alqueva water reservoir [31]. Farmland with access to irrigation is rapidly being transformed into intensive land systems of olive and almond production as well as horticulture. Opportunities for land systems change linked to the Alqueva reservoir are the material expression of the dominant discourse of agricultural modernization and financialization [26,32]. This has attracted new individual farmers and external investors to the region. Conversely, around towns, small farms still dominate in a mosaic land cover of mixed crops. While the larger estates keep their function as production units, these small farms maintain production but mainly act as a residential alternative for urban populations or for tourism development. Consequently, land prices are defined by the real estate market and are far higher that what the production outcome can justify, hampering agricultural activities [33].

The relevance of the region as a case study is due to: (i) its paradigmatic Southern-European ecological, economic, and socio-territorial characteristics and dynamic trends; (ii) its strong agricultural character and dominance of land-based activities; (iii) the transition currently occurring in the area in land systems towards specialized and globalized markets; and (iv) how traditional land systems are acknowledged for their added value, which is linked to multifunctionality and service-based rural businesses. Furthermore, as a result of the recent economic crisis, urban dwellers have been engaging once again in the management of farmland which had previously been abandoned [34]. In Alentejo this has been linked to the arrival of young autonomous farmers who, in the absence of other professional opportunities, are focusing on the use of the land and taking up agriculture [35].

2.2. The Public Policy Framework

In Portugal, the key policies focused on YF are those in Pillars I and II of the CAP (

Table 1. Key European Union (EU) and national policies for young farmers (YF) in Portugal and their main characteristics. Legend: CAP, Common Agricultural Policy; CAJA, YF Monitoring Committee.

CAP regulatory framework	Pilar I	YF Direct Payment	25% top-up of the annual basic payment
	Pilar II	YF Start-up aid	20,000€ non-refundable start-up aid
		Investment Support	10% bonus for YF
		Training and counselling support	Support to private institutions which provide training sessions or advisory services to YF
		YF application bonification within other schemes
National policies	CAJA	Monitor and analyse barriers and policies linked to YF
	Land Bank	Priority given to YF for State owned lands

). In addition, national level initiatives such as the YF Monitoring Committee (CAJA) and the Land Bank (“Bolsa de Terras”) have the potential to support YF.

Within CAP Pillar I (Table 1), the YF direct payment corresponds to a 25% top-up of the annual basic payment (a payment that all farmers are eligible for) during a five years period, starting at the date of the business kick-off. To receive this payment, YF must (a) be not be older than 40 years old by the time the payment request is submitted; (b) have set up their agricultural business within five years prior to the submission of this request; and (c) demonstrate the training skills required.

CAP Pillar II support measures are defined in the Portuguese Rural Development Program (RDP), the PDR 2020, which includes two main types of support: (a) a non-refundable start-up fund of 20,000 Euros for farm holders of 18 to 40 years old, subject to their submission of a five-year business plan including a detailed investment plan of a minimum of 25,000 Euros (excluding VAT (Value-Added-Tax)) (this start-up fund can be increased if investments exceed 100,000 Euros or if the YF dedicates themselves exclusively to farming (occupation and income)); (b) a 10% bonus within the “Investment in Farm Business” scheme, which covers part of a farm holding investment of at least 25,000 Euros. Furthermore, the RDP includes measures targeting training and counseling for YF and also favors YF in the evaluation of their applications to other schemes.

Along with CAP, the CAJA and the Land Bank are relevant (Table 1). The CAJA (created in 2016) aims to identify the main factors influencing young people’s decision to set up an agricultural business, as well as assess existing policy tools, propose measures to resolve constraints, and monitor the farmers who are granted the start-up fund. The Land Bank is intended to facilitate access to land, working as a platform where public and private land available for sale, lease, or any other type of concession can be announced. For state-owned land, priority is given to YF (Table 1).

2.3. Research Design

To analyze why, despite seemingly favorable conditions, a “YF problem” seems to exist in Alentejo, our methodological approach was arranged around four stages of qualitative enquiry [23,24,36] (Figure 2). This approach was designed to assess the perception relevant actors—such as YF, farmer associations, the public sector, or private consultancy companies—have regarding young farmers’ present conditions, problems, and expectations.

Phase 1 consisted of a broad-scope literature review, including both scientific and grey literature addressing the YF challenge in Portugal and Europe. In addition, a discussion internal to the research team was undertaken to explore the main focus of the analysis, leading to the identification of the final research questions to be addressed.

The second phase comprised 10 semi-structured interviews with key informants who represented different categories of stakeholders: regional agriculture administration (delegation of the central government), a national farmers’ confederation, young farmers’ associations, a regional farmers’ association, a farm advisory consultant, a rural savings cooperative, and local development associations. These were selected by a snow-ball process [36] in order to represent the national and regional organizations from both the public and private sectors. All those interviewed were asked about who else to interview, and after four interviews there were cross references to actors already interviewed or mentioned by others. Hence, the interviews carried out covered the most relevant stakeholders. Interviews were designed to grasp the advantages and challenges currently faced by YF in the region. The questions in the semi-structured interview were as follows:

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Do you know the recent evolution of numbers of YF in Portugal? In Alentejo?

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What is the profile of YF usually applying for existing support measures?

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What barriers do YF face when attempting to set up a farm holding?

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What support does your organization provide YF?

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Which public support measures for YF are you aware of?

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What type of technical support is there available for YF? Under what conditions?

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Are the existing support measures appropriate to attract more young people to settle as farmers? Why?

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Do you know the process to access support? How do you assess it?

The third phase consisted of a focus group (FG) which consisted of different types of YF from the region. Ten participants were engaged, including seven YF, one representative from the public sector, one representative from a regional farmers’ association, and one member from a private agro consultancy company. Both large (bigger than 5 ha) and small-scale (smaller than 5 ha) farms were represented, including innovative business models. The issues discussed in the FG were:

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Current YF policy measures:

◦

To what extent have public support schemes and funds (CAP and others) been successful?

◦

Why do you think the Portuguese government has opted for particular policy options?

◦

Discuss differences in the suitability of the measures implemented under the previous RDP.

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YF definition:

◦

Is the current definition of YF appropriate for this country and region? If not, what would you change?

◦

Are there particular types or notable characteristics of YF who are more likely to access supports (e.g. gender, age, successors versus ex novo, individuals versus couples or groups)?

◦

Is there a specific sub-group of YF which does not qualify for funding? If yes, what are the characteristics of this group and what would be an appropriate type of funding scheme for them?

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YF challenges:

◦

What are the main challenges faced by YF?

◦

Which of these challenges are sufficiently addressed by existing funding schemes? Which are not?

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Improving schemes:

◦

Roughly what percentage of eligible farmers do you think are applying for YF supports? Is this a good outcome? Why?

◦

What types of alternative schemes would improve support for YF?

◦

How do you think access to finance can be improved?

◦

How do you think access to land can be improved?

The focus group method enables a co-construction, by all participants, of a joined assessment about a specific question, which in this case covered the barriers faced by YF and the main factors facilitating such barriers [24].

All interviews and the FG discussion were tape-recorded. The empirical components of our analysis were undertaken during the summer of 2017.

The fourth phase comprised the analysis of the data and compilation of findings. Responses were analyzed using thematic coding [37]. The analysis of the results aimed to disentangle the way in which public policies influence the capacity of YF to start their businesses, to identify any gaps, and to provide advice on improving existing policies.

2.4. Limitations and Uncertainties

The research which served as a foundation for the current paper aimed at gathering, on a short-term basis, qualitative information on the “YF problem” in order to explore the perception of relevant actors on existing problems, and possible solutions, mainly through public policy intervention. The results brought forward demonstrate what is at stake in the region under analysis, but should be treated carefully when trying to draw detailed conclusions as to the diversity of young farmers’ situations, or general conclusions regarding the situation at the national level. Furthermore, the study did not focus on an analysis of the conditions and motivations determining older farmers’ decisions to stay active in agriculture, nor did it attempt to focus on possible policy measures or other solutions which might contribute to attracting more young people into farming, despite the central relevance of both topics for the present discussion.

3. Results and Discussion

3.1. Recent Evolution of Portuguese Farming Population

In 2016, 9143 farmers below 40 years of age were registered at the Portuguese national level, a number corresponding to 3.7% of the total farming population [38]. However, 54.6% of active Portuguese farmers were older than 65 years, and the average age of farmers has increased from 63 in 2009 to 65 in 2016 [38]. Figure 3 reveals the imbalanced age distribution of farmers in Portugal.

YF in Portugal are mainly male (75%) and have alternative income sources besides farming (62%). Gender distribution among YF is similar to that of farmers overall, but the percentage of farmers with alternative income sources is much less (24% of farmers). Education is also higher among YF: 50.3% of YF only attended basic school, 31.7% completed high school, and 17.9% completed higher-level education, while the percentages for the overall farming population for these same categories are respectively, 87.7%, 6.5%, and 5.8% [38].

The remote character of Alentejo further aggravates the lack of generational renewal in the farming sector in the region. The increase of the average farmer age in the region between 2013 and 2016, from 64 to 66 years [38], seems to confirm this postulate.

3.2. Barriers to Set-Up

The barriers perceived by YF in Alentejo, as identified in this study, are overall consistent with those pointed out in the existing literature for European YF [1,14,16].

There is first and foremost an issue of land tenure. Access to land has been acknowledged as the most widespread barrier for YF. According to seven of the 10 interviewed, and to the consensus opinion of the FG, the land with the best soil is difficult to access by YF and remains in the hands of family farms. When such land enters the market, prices are extremely high, which is partly driven by competing demand by foreigners and national financial investment groups searching for productive and irrigated land. Urban demand is mainly for small farmland units (for weekend housing) and contributes to further increased prices. These dynamics mean that the most common way for YF to access land is through family succession, similarly to most other European countries [1,5,16].

The investment required to set up a new agricultural business, along with the long period required for a farm to generate investment returns, also limits opportunities for YF. Terms for investment returns are longer for traditional crops and commodities and shorter for irrigated intensive crops [26]. However, the latter types of crops require higher initial investment. Difficulty in accessing credit, described by four of the interviewees and also during the FG, is a further constraint. Credit provided by private financial institutions, under similar conditions as other economic sectors, is deemed unattractive given the specificities of agriculture, such as long return investment periods, volatility of agricultural economic indicators, and dependence on several external and uncontrollable factors like weather and irregular income. Difficulties in covering the costs of setting up a viable farm business in today’s global context aligns with Zagata and Sutherland’s [1] argument of a “structural component to the young farmer problem” and is particularly relevant in the Mediterranean context [40].

The lack of retirement incentives was also identified as a factor hampering the installation of YF. Despite the argument that the existence of a successor increases the likelihood of retirement, the decision to retire from what is considered a “way of life” is often difficult [41].

In this regard, the ability to guarantee retirement income seems to be decisive in encouraging farmers to retire [16]. Poor early retirement schemes [42], along with lack of affordable housing and welfare services in rural areas have been pointed out as some of the reasons why farmers retire at a later age [16]. Moreover, Sottomayor et al. [43] show that the possibility of receiving direct public payments decoupled from production decreases the likelihood of older farmers abandoning farmland, especially when they have no likely successor. This suggests that some of the existing support measures may prove counterproductive to resolving the “YF problem”.

Finally, poor infrastructure and scarce services along with remoteness and isolation were also identified in interviews and the FG as limitations impeding more YF from installing themselves in the studied region. This is consistent with the generalized notion among young Europeans that the lack of services and infrastructure is the critical element rendering rural areas less attractive than urban centers [44].

3.3. Evaluation of Support Measures and Recommendations

It is important to point out that a valid and useful discussion on the effectiveness of YF policy tools is difficult given the lack of expert assessments of the mid- and long-term trajectories of farmers benefiting from these tools. CAJA was created for the purpose of undertaking such analysis but so far has not published any results.

During the various stages of our analysis existing support measures were, overall, considered (

Table 2. Focus group assessment of existing young farmer support measures.

Positive	Public support and funds are vital, allowing for an initial investment that would be inaccessible through private agencies.
	Required business plan contributes to assuring viability of the holding.
	Training requirements provide farmers with a higher level of technical knowledge.
Negative	Insufficient funds:
	- When funds run out, many applications evaluated as positive are excluded from support.
	- Support on investment does not include VAT (Value-Added-Tax).
	- Instalment payments (Pillar II) are insufficient to cover kick-off costs.
	Outdated method used to calculate Pillar I direct payments (based on productivity estimates from 2001–2003).
	Lack of measures supporting access to credit.
	Technically and administratively difficult application process.
	Evaluation method has poor link to farming reality.
	Long and uncertain application process: during this period farmers need to supply money upfront (uncertain of whether it will ever be reimbursed).
	Land listed in the Land Reservoir is insufficient, remote, often expensive, and often with poor soils.
	Existing supports benefit farmers with higher investment capacity:
	- Only YF with access to private funds can get bonification from being dedicated exclusively to farming.
	- Increased support depending on previous investments is, in practical terms, only available to farmers with higher investment capacity.

) insufficient to attract significant numbers of YF and alter the farming age structure. This was the dominant judgement as expressed both in the interviews and the focus group. Criticism mainly referred to the design of the application processes and evaluation criteria, as well as to the insufficient funding. Thus, despite recognizing the relevance of public support for YF, these are perceived as building up so that they primarily benefit those already in a favorable position with which to start a farming business due to family links to farming or high investment capacity (Table 2).

Two broad conclusions can be drawn from this. Firstly, even if we assume that YF support measures are on the whole positive, our findings indicate that by being considered a one-size-fits-all tool, they are perceived by those interested in applying for them as poorly suited to their possibilities and needs. According to this, public policy tools would need to be adapted to the specific context of the application, as the land systems and land management challenges differ greatly between different European regions [15,20,40].

An overall concern relates to access to land; this outlines the evident lack of strong policies focused on the central question of land tenure to facilitate access to land for YF. This seems to indicate a lack of connection between current policy tools and the main barriers identified. As long as access to land is not solved, many other supporting measures only have very limited impact. Furthermore, criticisms raised on the lack of coherence between evaluation criteria for YF and the realities of the land systems in the region, along with the complexity of the application system, could be resolved through more effective and widespread extension services, rather than simply by increasing the funding budget. In addition, the call for an easier access to credit, which should be better adapted to the realities of each land system, points towards the need of policy measures to target not only farmers but also private and public institutions providing services to the farming sector. Such an integral approach, focusing on several of the dimensions which shape land systems, is argued to be crucial to tackling identified constraints and to help create favorable contexts which are able to attract YF into the farm business.

Secondly, our findings also indicate that more innovative institutional arrangements [45] are required. Given the difficulty of YF to cover start-up costs while competing with established farmers and receiving insufficient government support, we argue that increased cooperation and a sharing logic should be implemented among farmers. The current RDP includes measures to support innovation groups and producer organizations (1 and 5), which should be incentivized to help shape favorable settings for new entrants. For Southern European regions such as Alentejo, existing hybrid institutional relations within farming [40] could be explored to set up innovative alliances supporting generation renewal, but the pathways and support measures required to fit this specific context are still to be defined. Elsewhere [46], poor soft skills have been identified as factors hampering farmer cooperation and organization in Alentejo, including mistrust resulting from low technical skills, an historical prejudice against farmer cooperation which is rooted in the experiences that took place following the 1974 revolution or the inadequacy of existing forms of organization regarding new consumer trends.

4. Conclusions

The study serving as a base for the current paper has contributed to assessing the main problems perceived to be felt by young people seeking to set up as farmers, and to understand their comparative relevance, in the context of a Southern European region, this context being Alentejo and its characteristic land systems. It has been found that very few studies have been carried out in Portugal on this particular topic. Although the study was of an exploratory nature and general conclusions should therefore be treated carefully, it has been possible to identify aspects worth exploring in greater depth in future studies.

Access to land and land tenure have been shown to be crucial aspects for the installation of YF. Given that land is a scarce and valuable resource and considering the way this issue is perceived by all those involved in the study, it may be suggested that land tenure should not be considered a purely economic issue and instead one also bearing implications related to social and political power relations [47,48,49]. This is indeed a sensitive issue and is not easily solved, but is one that needs to be tackled effectively if a farming generation renewal is to take place. Innovative and context-adapted institutional arrangements might offer a way to tackle this issue.

Furthermore, our analysis has helped to reveal how public intervention in the domain of YF support is perceived and judged by those involved. It has become clear that the policy cycle is not seen by YF as being able to tackle the complex and context specific challenges and realities of new businesses, despite the formulated intentions of existing tools to deal with this question. This seems to bear strong negative consequences in relation to the dominant trend of an increasingly imbalanced age structure in Portuguese agriculture. Such lack of efficiency is similar to that in Europe, particularly in the South, when dealing with the emerging new challenges in farming transitions in rural areas [22,40]. Especially relevant to the Portuguese contingencies, and reaching beyond our regional case study, is the lack of information on the outcomes of public policy interventions for YF support within the last 20 years. Policy tools cannot be adjusted and better targeted if their outcomes are not subject to impact evaluation and discussion. Thus, a call should be made for further investments in statistical data collection and impact evaluation studies with the ultimate intention of improving our understanding of the policy effects across all dimensions of territorial development [50]. Similarly, studies on innovative and collaborative schemes, both in Portugal and other contexts, should be promoted to assess their enabling factors and potential impact.

It could be said that the situation of YF in Portugal is a neglected (yet most pertinent) issue in the Portuguese farming context and in the formulated strategies for land and resource management of the future. In the known scenarios of climate change, which will affect with particular strength Southern Europe and its land systems, the entrepreneurial and adaptive management of land will be essential, making YF access to land and to farm businesses even more crucial. Expert studies are to a great extent missing and will be essential to gaining a better understanding of the diverse factors driving success or failure for YF, the adequacy and impact of technical support schemes and innovation initiatives, and the role to be played by public intervention. Ultimately, improved knowledge on this will allow for better informed and more effective policies.