Young farmers – a chance for development of commercial medium size farm in Romania Lucian Luca Institute of Agricultural Economics, Bucharest Romanian Academy The project has received funding from the European Union.

Structure of the presentation The challenge of family farm development Two opposite sectors of Romanian agriculture Three questions trying to identify a Romanian position on CAP reform debate CAP subsidies and land concentration Large farms and family farm Productivist vision vs. rural development What chance for generation change? Current structure and the need for young farmers Improving age structure of farmers using CAP and national instruments A new strategic approach for supporting young farmers?

The challenge of family farm development Two extremes don’t make one right. Romania and the Reform of the Common Agricultural Policy of the EU Romanian Center for European Policy (CRPE) www.crpe.ro Recommendations: Reorientation towards supporting middle-scale agriculture Incentive to gather small land into middle-scale farms Limiting subsidies that could be received by very large farms Development of Pillar 2 (rural development)

Romania’s two agricultures

Agricultural holdings of at least 1 ESU 22% of the total recorded holdings 866 700 holdings, out of 3 931 350 recorded 9.4 million ha of utilized agricultural area 11 ha per holding, on average 965 thou. annual work units 1932 thou. persons, out of 6467 thou. persons 392 thou. holders with at least 65 years

Middle level agriculture is underdeveloped

Question nr.1 What effects have and could have CAP subsidies on land concentration? It is hard to imagine that very large farms, over 500 ha, will gradually incorporate the agricultural surface considering that a huge portion of rural population would remain without safety net of subsistence agriculture For 30% of the population involved in agriculture the ideal situation would be that young and enterprising families to concentrate the land into the middle farms where several generations would make a decent income CRPE proposal: a long term vision favorable to middle farms, for both productivity and social reasons

Question nr.2 What is Romania’s position on large farms? We still should debate the question: will very large Romanian farms really need increased subsidies in the coming years? CRPE proposal: Romania ought to be a supporter of progressive modulation with large rates or even the application of an upper limit for direct payment to large farms

Question nr.3 Do we promote a productivist vision or do we prefer rural development? Romania was identified in 2009 more and more with a vision that places first the issue of support for production and somewhat down plays the growing trend of European level to direct CAP toward sustainable utilization of natural resources CRPE recommendation: Romania should move in the group of countries supporting the development of second Pillar

Current structure of labor force and the need for young farmers Farms >1ESU (855 thou. sole holder) 2.9 % of sole holders are under 35 years 45.9% of sole holders of farms >1ESU are over 65 years For all recorded farms (6.39 million persons working in agriculture) 0.76 million persons are under 35 years 2.19 million persons are over 65 years

Holders over 65 years dominate the farm classes under 20 ha

Labour force under 35 years are important for farm classes over 20 ha

A traditional pattern of farm tenure, with old holder over represented

Improving age structure of farmers using CAP and national instruments National Program for Rural Development Measure 112: Setting up of young farmers Complemented measures: Vocational training and diffusion of knowledge (111) Supporting semi-subsistence agricultural holdings (141) Modernization of agricultural holdings (121) Early retirement of farmers and farm workers (113) National instruments “Fermierul”/ “The farmer” program Life annuity program

Measure 112: Setting up of young farmers Financial allocation 2007-2013: 337 million Euro Status at January 15 2010 Two application sessions: Dec 08- Mar 09: 661conform applications, 512 selected, 507 contracted Sep- Nov 09: 2702 conform applications Committed funds: 3.0 % Absorption rate: 1.8 % (6 million Euro)

A new strategic approach for supporting young farmers? Supporting young farmers as part of a strategic program of farm consolidation that could integrate certain measures of NPRD and some national interventions Gains in productivity The key action: a better functioning of agricultural market Prices, contracts, storage facilities Modernization of rural area Transport, social and market infrastructure A benefic complement: a new industrialization program at national level