Helping small farms and keeping Europe beautiful: A critical review of the environmental case for...

This atilele examines the case for supporting small farms on envjronmenta~ grounds and seeks to clarify some of the terms and definitions being used in this important debate. It distinguishes between strong and weaker a~uments in favour of supportIng small farms and concludes that, while there is little evidence to suggest a functional relationship between farm size and environmental sensitivity, small farms may be environmentally sensitive by default or simply by association. Moreover, there is also some support for the idea that the loss and amalgama- tton of small farms in some locations may trigger environmentally damaging land use, landscape and ecological change. As a category, however, the term ‘small farm” is too broad to be useful in targeting public policies. Other, more precise targets must be identlfied if the ‘conservation dividend’ of farm policy reform is to be directed into areas where it will do most good.

The authors are at the invironment: Sec- tion, Wye College, University of London, Wye, Ashford, Kent, TN25 5AH, UK.

The research on which this paper is based was funded by the Royal Society for the Protection of Birds. The authors are grate- ful to Dr Ruth Gasson and Professor Denis Britton for comments on an earlier draft. Any errors which remain are the fault of the authors.

continued on page 268

Helping small farms nd keeping Europe

beautiful

A critical review of the environmental case for supporting the small family farm

Clive Potter and Matt Lobley

The recent agreement to reform the Common Agricultural Policy (CAP) has been hailed as the most radical overhaul of European farm policy since its inception 30 years ago. Combining cuts in price subsidies with compensation to affected farmers, the package agreed by farm ministers in May 1992 shifts the basis of farm support from subsidized prices to direct payments and so begins the process of ‘decoupling’ the CAP that is one of the preconditions for progress in world trade talks under the Uruguay GATT’ Round. In its final form, however, the package differs significantly from the earlier proposals put forward by the European Agriculture Commissioner, Ray Ma&harry, in 1991 .I In particular, the original heavy bias in favour of the European Commun- ity’s (EC’s) many small farmers, based on a ‘modulation’ of compensation payments and producer premiums in favour of farmers with small areas of cereals or small numbers of cows or sheep, has been removed. Compensation for price cuts is now to be widely available, albeit with ceilings on the total payments that individual businesses can receive. modulation based on farm size was quickly challenged by member states like the United Kingdom, which stood to lose given its larger-than- average farm size. But it was also challenged by some environmental groups who had begun to question the increasingly emphatic environmental justification for targeting small farms.’

The point of contention here was Ma&harry’s implicit endorsement of the well-known EC Commission ‘Rural World’ assertion that ‘Suffi- cient numbers of farmers must be kept on the land. There is no other way to preserve the natural environment, traditional landscapes and a model of agriculture based on the family farm as favoured by society generally.‘” This important statement of intent can be read in several different ways. One is that small family farms deserve to be protected because they possess attributes and characteristics which make them

0264-8377/93/040267-13 @ 1993 Butterworth-Heinemann Ltd 267

Helping small farms and keeping Europe beautiful

continued from page 267 ‘CEC, Development and Future of the CAP. COM (91) 258. CEC, Brussels, Bel- gium; 1991.‘ *Royal Society for the Protection of Birds, ‘The development and future of the CAP’, comments ‘prepared for MAFF by the RSPB. Sandv. UK. 1992. %EC,’ The /%ure’of Rural Society, COM (88) 501 final, CEC, Brussels, Belgium, 1988. 4G. Sinclair, How to Help farmers and Keep England Beautiful, CPRE, London, UK, 1985. ‘J. Hunter-Smith, ‘Small-scale farming and its effect on the rural environment’, in A. Korbey, ed, Food Production and Our Ru- ral Environment - The Way Ahead, CAS Paper 17, Reading, UK, 1985. 6. M. McEwen and G. Sinclair, New Life for the /-/i//s, Council for National Parks, Lon- don, UK, 1983. ‘Agra Europe, No 1492, May 1992. ‘C. Potter, ‘Conservation under a Euro- pean farm survival policy’, Journal of Rural Studies, Vol 6, 1990, pp l-7.

268

inherently more sensitive to the environment than their larger brethren. This has long been the position of commentators like Sinclair4 and Hunter-Smith,’ both of whom promote policies that aim to ‘help (small) farms and keep England beautiful’. It is an idea with considerable public appeal, for it combines social and environmental policy, creating a sort of environmental Robin-Hoodism. A weaker but no less potent reading of the Rural World statement is that it is the process of losing small farms which needs to be avoided - because the resulting amalgamation and concentration of land are nearly always linked with environmental 10~s.~ Policy makers are justified in introducing policies to keep small farms on the land because this will slow down structural change and maintain the holding pattern which is thought to be associated, albeit loosely, with an attractive and ecologically diverse landscape.

Critics of the modulation proposals pointed to these underlying assumptions and argued for a re-examination of the environmental case for supporting small farms. The fear of groups like the Royal Society for the Protection of Birds (RSPB) was that by targeting compensation and other direct payments at small farms, policy makers would limit the scope for bringing about the environmental improvement on a wide front which could be achieved by ‘conservation compliance’ - attaching conservation strings and conditions to the payments all farmers receive. In the event, modulation was largely rejected by farm ministers when they met finally to agree a reform package in May 1992. Nevertheless, generous compensation payments did get through, with some conces- sions to smaller producers, particularly under the arable regime, where area payments will be available without a requirement to set land aside.7 There remains a strong residual commitment to keeping farmers on the land, even if the resulting farm survival policy is less focused than it was.’ And there is no guarantee that the modulation issue will not resurface in the future as pressure to target scarce resources intensifies and questions are asked about the public policy justification for farm income support. From an agro-environmental policy perspective, there is a clear need for an objective assessment of the conservation status of small farms and a clarification of the terms being used in this important debate. This article examines both the strong and the weak cases for supporting small farms. It asks whether small farmers are likely to be any more conservation-minded than individuals with larger businesses and to manage their farms in more environmentally sensitive ways. It is also asked whether conservationists and policy makers should be concerned when small farmers give up farming and thus how far policies should be designed to keep them on the land.

What is a small farm?

The debate about small farms is plagued by an imprecise and often inconsistent use of definitions and terms. Most commentators agree that the term ‘family farm’ is too broad brush to be useful in policy terms - while the Smallfarmers’ Association has toyed with various definitions of the small family farm, it has yet to come up with one that is succinct enough to form the basis for a targeting strategy. Farm size itself can be measured in physical and economic terms, and a source of confusion is that, whereas most environmentalists’ references to the small farm are couched in terms of physically small holdings, the argument about the economic vulnerability of small farmers uses economic measures of size,

LAND USE POLICY October 1993

Source: Eurostat, Main Results of 1987 Farm Stfucfufes Survey, Eurostat, Luxembourg, 1991.

‘Eurostat, Main Results of 1987 Farm Sfrucfures Survey, Eurostat, Luxembourg, 1992. ‘OR. Gasson, The economics of Part-Time Farming, Longman, London, UK, 1988. “G. Fumess, ‘The importance, distribution and net incomes of small farm businesses in the UK’, in R. Tranter, ed, Strategies for Family Worked Farms in the UK, CAS, Reading, UK, 1983.

Source: Eurostat, Main Results of f987 Farm Structures Survey, Eurostat, Luxembourg, 1991.

helping small farms and keeping Europe beuufifui

Table 1. Number and importance of small and very small farms (in ESUs) in UK, 1967.

Farm size (EgU)

<4 4-<16 1 CC40 >40 All farms

;ki9, % of all farms

77.8 31.2 53.1 21.3 49.0 19.6 69.4 27.8

249.3 100

Area farmed

(ha)

1 298.2 1 504.5 2 870.5

11 072.8 16 746.0

% of total AA

7.7 9.0

17.1 66.1

100

typically judged by applying standard gross margin estimates to the areas of crops and grass and numbers of livestock on a farm. This discrepancy is not merely a matter of semantics; a farm which is small in area can nevertheless be large economically, for instance, if it is an intensive pig or poultry farm, or vice versa if it is an extensive hill sheep farm. The measure of size used determines the sort of farms being spoken about and therefore the view of their suitability as policy targets. Smallholdings and small farm businesses are subsets of the universe of small farms; they sometimes overlap but do not completely coincide.

In economic terms, the convention is to measure business size by European Size Units (ESUs): small farms are usually defined as between 4 and 16 ESUs, farms less than 4 ESUs being ‘very small’, or in MAFF’s terms ‘insignificant holdings’ unlikely to provide their occupiers with full-time work. Indeed, the EC Structures Survey showed that 35% of farms smaller than 4 ESUs had another gainful activity.” Often managed by people who have come into agriculture from another occupation, the very smallest farms are qualitatively different from full-time small farms, in terms of both farming practice and the outlook and motivation of the individuals running them.‘O As Table 1 shows, there are large numbers of both small and very small farms even in the UK, the member state with the largest average farm size, though the 53 000 small farms and 77 000 very small farms recorded in 1987 compare with the 100 000 and 95 000 in existence just 12 years before (see Table 2). The prevailing structural trend is for decreasing numbers of smatl and medium-sized farms, matched by increases in the largest size groups. As would be expected, the small and very small farms’ share of the total area farmed, at 9.0% and 7.7%, respectively, is slight compared to the 66% of the total crops and grass area found on farms 40 ESUs or more in size.

Agriculturally, small and very small farm businesses share many features. A high proportion have dairy cows or some other livestock enterprise, 65% of very small farms being engaged in cattle and/or sheep production in 1983. Of the total area of permanent pasture, 12% is located on small farms, but only 2.3% of the total arable area.” In terms of geographical distribution, small family farms are widely scattered, but tend to be most concentrated in Scotland, South Wales,

Table 2. The changing farm size structure, 197587.

Farm size 1975 1979180 1983 1905 1987 (ESU) No % No % No % No % No %

<4 95.1 35.3 61.1 24.8 50.5 22.1 67.4 27.1 77.8 31.2 4-<16 100.5 37.4 63.9 25.9 58.4 25.6 56.3 22.5 53.1 21.3 16<40 50.3 18.7 56.6 23.7 53.3 23.3 50.4 20.2 49.0 19.7 4&<100 18.0 6.7 45.1 18.3 46.2 20.2 49.0 19.7 46.0 18.5 >lOO 5.1 1.9 18.1 7.3 20.1 8.8 25.8 10.4 23.4 9.4 Total 269.0 100 246.6 100 228.5 100 248.9 100 249.3 100

LAND USE POLICY October 1993 269

Helping smaI1 farms and keeping Europe beaut~ul

Table 3. Age structure of UK farmers by ESU farm size class, 1987.

Farm size <35 35-<45 46-<55 55-<65 >65 (ESU) No % No % No % No % No %

<4 5.1 28.5 13.6 29.8 15.4 27.1 16.1 25.9 20.6 41.9 4-116 3.8 21.2 9.0 19.7 12.0 21 .l 16.0 25.7 13.2 26.8 1&<40 4.1 22.9 9.1 20,o 12.5 22.0 13.6 21.9 7.4 15.0 4c-Cl00 3.5 19.6 9.8 21.4 11.8 20.7 11.7 18.8 5.7 11.6

Numbers in thousands. >lOO 1.4 7.8 4.2 9.2 5.2 9.1 4.8 7.7 2.3 4.7 Source: Eurostat, Main Results of 1987 Farm Total 17.9 100 45.7 100 56.9 100 62.2 100 49.2 100 Structures Survey, Eurostat, Luxembourg, 1991.

the South West and the North West of England. Many exhibit features which are partly an explanation of their small size and partly an adaptation to it. The fact that a large proportion of small and very small farm businesses are managed by people who are past retirement age (in 1987, 68% of those managing the smallest farms and 26% of those managing small farms were 65 and over, according to the EC Structures Survey, as shown in Table 3) is in some cases due to farmers actively choosing to scale down their operations and retire to smaller farms, but it is also explained by the many elderly farmers with small and marginal businesses who find it difficult to persuade a potential successor to take over the farm. Research based on official statistics suggests that small businesses are much less likely to be passed on to a successor than larger ones, mainly because they are less likely to be able to generate a decent living.12

Conservationist by inclination, default or association?

Research into the environmental sensitivity of different farming systems and situations is still at an early stage. It is already clear, however, that while some farms have co-evolved with wildlife habitats and landscapes and continue to play a vital role in managing and sustaining them, others have a conservation interest that is at best marginal to the main farming

use of the land. As Webster and Feltonr3 point out, ‘farming systems can be arranged on a spectrum according to how far the wildlife resource has been peripheral to the farm economy’. At one end of this spectrum will be found farming systems directly involved in the management of semi-natural vegetation and landscapes - Scottish crofts, upland sheep farms and some mixed farms - at the other, the monocultural arable farm with small habitat fragments segregated from the main farming use of the land. Locating small farms on this spectrum will thus depend on:

whether semi-natural vegetation and distinctive landscape and archaeological features are present (the former perhaps containing rare or threatened species) and the degree to which these are being protected, managed and enhanced; the presence of ‘good wildlife habitat’ (a matrix of small woods, hedgerows, streams, ponds and hedgerow trees) and the degree to which this is being protected, managed and enhanced; the degree to which watercourses and groundwater are protected from pollution from nitrate and other fertilizers, pesticides, silage effluent, slurry and other farm wastes.

‘*R. Fennell, ‘Farm succession in the l

European Community’, Sociologica Rut-a- /is, Voi 21, 1981, pp 19-42. ‘?-Z. Webster and M. Felton, ‘Targeting for nature conservation in agricultural policy’, Land Use Policy. Vol 10, No 1, January More important from an analytical point of view, however, is the nature 1993, pp 67-82. of the relationship between a farm’s size and any conservation interest it

270 LAND USE POLICY October 1993

“G Cox, P. Lowe and M. Winter, The Voluntary Principle in Conservation, Pack- ard Publishing, 1990. ‘%. Potter and R. Gasson, ‘Farmer participation in voluntary land diversion schemes: some predict&s from a survey’, Journal of Rural Studies, Vol 4. 1988. pp 365-375. j6ADAS Wildlife Conservation in Semi- Natural ‘Habitats on Farms: A Survey of Farmer Attitudes and Intentions, HMSO, London, UK, 1976. “R Westmacott and T. Wo~hington, New Ag~~c”lt~~al Landscapes - A Second Look, Count~side Commission, Cheltenham, UK, 1984. “Gasson, op tit, Ref 10. ‘%. Potter, ‘Environmentally sensitive areas in England and Wales: an experi- ment in countryside management’, Land Use Policy, Vol 5, No 4, October 1988, pp 301-313. “01. Brotherton, ‘What limits pa~icipation in ESAs?‘, Journal of Environmental Man- agement, Vol32, 1991, pp 241-249

Helping small farms and keeping Europe beaufiful

might have. If small farms can be shown to be more environmentally sensitive, is this because the people managing them are more conservation-minded or is it because they are conservationist by default - they lack the means to intensify production in the way a larger, more prosperous farmer might? Alternatively, are small farms conservationist by association because they tend to be of a type that is environmentally sensitive or rich in conservation assets anyway? Depending on which of these explanations is favoured, small farmers might be said to be conservationist by inclination, by default or by association. Briefly, the evidence is now examined to test the strong case for supporting small farmers.

The conservation-minded small farmer

Policy makers in the UK have long been anxious to recognize the existence of ‘conservationist farmers’, people who by inclination are strongly committed to carrying out conservation practices on their farms and who could act as examples to others under the voluntary approach to agriculture and conservation.14 Research suggests that these tend to be individuals who are not only more willing to do conservation, but also have the means to carry it through. ” Inevitably this means farmers with larger businesses. In a survey of conservation activity on UK farms, for instance, ADAS found that significantly more money had been spent on conservation projects on farms of more than 300 acres in size than on farms of other sizes.16 Larger farms also seem better placed to take advantage of any conservation grants and advice that might be available, the experience of project officers for the Countryside Com- mission’s New Agricultural Landscapes programme being that it is farmers with larger businesses who are not only more knowledgeable about the grants available but also most willing to take them up.17

Nevertheless, there is also evidence to suggest that, at the other end of the scale, part-time small farmers are among the most environmentally aware members of the farming community, doubtless a reflection of their often different backgrounds compared to their full-time col- leagues. In a survey of part-time farms, Gasson’s discovered that three out of four farmers expressed themselves favourably disposed towards conservation. She also discovered that the highest proportion of pro- conservationists was among people who have moved into farming from another occupation, 54% of these ‘entrants’ being environmentally inclined compared to just 23% of people for whom farming had always been their main occupation. Moreover, with the introduction of new conservation schemes like Environmentally Sensitive Areas (ESAs), increasing numbers of farmers are being brought into conservation for the first time. The guaranteed income payments available under the ESA scheme provide farmers with a significant incentive to join. There are currently over 3000 agreements under the stage 1 and 2 ESA programme, and while data are not available on the farm size dimension of ESA participation, in many cases the designated ESAs effectively capture concentrations of small farms. I’) Having said that, though, there is some evidence that the smallest farms tend to be less likely to join an ESA-type scheme compared to larger ones. The decision about whether or not to participate is partly based on the total expected returns to the farmer, and despite attractive hectarage payments this may not prove sufficient on very small farms.*O



%. Potter, ~Count~side change in low- land England’, PhD thesis, UEA, Norwich, UK, 1985. %AS, Capital for Agriculture, CAS, Read- ing, UK, 1978. 23G. Sinclair, The Uplands Landscape Study, Environment Information Services, Dyfed, UK, 1983. ?, Potter and M. Lobley, ‘The conservation status and potential of elderly farmers: results from a survey in England and Wales’, Journal of Rural Studies, Vol 8, 1992, pp 133-l 43. 25Fennell, op tit, Ref 12.

272

Conservationist by default?

Small farmers may not be especially visible conservationists, but they could still have farms that are rich in the semi-natural vegetation and good wildlife habitat that makes up the resource conservationists are interested in protecting and seeing increased, because they have fewer opportunities to intensify production or reclaim land compared to their larger brethren. Given that many of the larger farmers spending so conspicuously on conservation could be attempting to compensate or offset earlier rationalization and intensification schemes,21 this could be an important argument in their favour. It is likely that individuals managing small farm businesses will find it more difficult to generate or have access to capital for new investment. Furness’s analysis of Farm Management Survey data shows that small farms of all types generated significantly lower net farm incomes compared to medium-sized and large farms. Although the picture is distorted by the greater off-farm income earned by farmers in the smallest size group, it is clear that those managing small farms full time are likely to have much more limited opportunities for self-financed development and modernization. Such small farmers are also likely to find it more difficult to borrow money to finance investment. With low rates of return on capital, small businesses tend to be much less credit-worthy than larger ones. At the same time, the system of capital grants and tax allowances that have been on offer to farmers in the past has discriminated against small farms, and part-time small farms especially.22 All of which suggests that, other things being equal, individuals with small businesses are likely to have found it harder to carry out schemes like the grubbing out of hedges, the draining of wetlands and the clear felling of woodland. Indirect evidence for this is provided by Sinclair’s study of upland landscape change, which found the size of a farm (measured in economic terms) to be the best predictor of landscape change and the form it took on a random sample of 287 farms in upland England and Wales.‘” The larger the farm business the more likely it was that it would be experiencing ‘active’ changes such as the reclamation of rough grazing and the erection of farm buildings.

Unfortunately, there are few studies which have compared objective- ly the type, rate and extent of land use change on farms of different sizes and types. In any event, there would be formidable methodological difficulties in disentangling the effects due to size from other factors. The tenurial status of the farm and the stage reached in the family life-cycle will exert their own influence over decision making, often cutting across any size effect. For instance, research shows that the succession status of a farm strongly influences whether and how much capital investment and land use change takes place, farmers with younger successors having a greater incentive to continue upgrading the farm and intensifying production as retirement approachesZ4 The finding from the EC Structures Survey that small farms are much less likely that larger ones to have successors able or willing to take over the farm2” suggests that it is not possible to be sure that a lack of land use change is due to the small size of the farm or to the absence of a successor, or, more likely, because of both factors acting together. It is perhaps significant that Sinclair thought the rate of landscape change on his sample upland farms was explained as much by the age of the farmer and his family situation as by the physical or economic size of the holding.

LAND USE POLICY October 1993

Helping smaN farm and keeping Europe beautiful

Figure 1. Distribution of the woodland 0

resource in England and Wales by size of farm, 1989.

Source: MAFF census data.

n Woodland area

153 Woodland holdings

i

1 oo- < 200

30- 50- <50 <IO0

HOLDlNG SIZE WIAI

> 200

Small farmers may not set out to be conservationists, but their holdings could still be of interest to conservationists simply because they share certain features in common which make them conservationist by association. The traditional hill sheep farms, with their flock of hill ewes and a few suckler cows, are regarded by many conservationists as an integral part of the upland landscape in England and Wales, while in the lowlands extensive beef rearing and traditional mixed farming play a vital role in managing many marginal wet grasslands, typically in situations where the water table is too high for sheep. A high proportion of such farms tend to be economically small (65% of very small farms were cattle and/or sheep farms in 1987 and 54% of the business activity of livestock farms in ‘less favoured areas’ came from small and very small businesses, according to Eurostatz6), suggesting that many small farms are conservationist by association. In targeting terms it is important to know how far the conservation resource is concentrated on farms of a particular type, regardless of the motives of those who own or manage them.

The example of woodland demonstrates the point. According to O’Connor and Shrubb,27 the absolute density of woodland on a farm is strongly correlated with the number of bird species present, irrespective

26Eurostat, op tit, Ref 9. of any spatial patterning. In 1988 there were 245 (100 hectares of “7R. O’Connor and M. Shrubb, Farming woodland on UK farms distributed between 43 114 holdings.2” As and Birds. Cambridge University Press, Cambridge, UK, 1988.

Figure I, based on an analysis of MAFF census data, indicates, 21% of

“MAFF, Agricu/jure in the UK3 HMSO, holdings less than 20 hectares in size had woodland present compared to London, UK, 1991. 13% of those that were 200 hectares or more in size. Small holdings


Heiping small farms and keeping Europe beautiful

80

70

60

9 50 f

2

g 40 :: j: % $ 30

20

10

0 Figure 2. Type of woodland by size of farm, 1989.

Source: MAFF census data.

29A Woods, J. Taylor, D. Harley, S. Hous- den’ and A. Lance, The Reform of the Common Agficultufal Poky: New Oppor- tunities for Wildlife and the Environment, RSPB, Sandy, UK, 1988.

Source: Potter, Houghton and Robey, ‘The environmental value of farming systems’, report to the Department of the Environment, CEAS, Wye, UK, 1990.

~60

L

63

0 Deciduous

Conifers

Mixed

60420

HOLDING SIZE (HA)

23

>120

were also more likely to have deciduous rather than coniferous woodland present (Figure 2). Inevitably, however, it is the larger holdings that account for the lion’s share of the resource by area, with 13% of larger holdings containing 40% of the total woodland area. This is less true for the area of permanent grassland, another acknowledged indicator of the conservation interest of a farm.29 As Table 4 shows, small farms are more likely than larger ones to be all grassland farms (67% of holdings less than 50 hectares in size have 90% or more of their land under grass compared to just 1% of farms that are 200 hectares or more). They also account for a disproportionate 26% share of the total resource despite managing only 17% of the total area under crops and grass. This is obviously explained by the fact that smaller farms tend to be livestock farms, but it is interesting from a crude targeting point of view.

On the basis of this short review, then, there is little direct evidence to suggest that people managing physically or economically small farms are any more conservation-minded than those with larger farms. Indeed, small farmers as a group emerge as somewhat reluctant or even grudging conservationists, though it is unclear whether this is because

Table 4. Distribution of permanent grassland by size of tarm in England and Wales, 1988.

Farm size (ha)

20-49 50-99 100-199 >200 All farms

% of farms with 90% or more of land under gress

67 27

4 1

100

Yotal area

19078 7 828 1 249

392 28 547



they are unwilling to carry out conservation activities or simply unable. They may, however, be conservationist by default because they lack the funds to carry out the sort of operations - large-scale drainage, hedgerow removal and land improvement - that are usually environmentally damaging. In any event, small farms, because they tend to be livestock based and located in more marginal areas, are of a type that interests conservationists, though whether this justifies policies which mark out farms by virtue of their size alone is much more debatable.

30McEwen and Sinclair, op tit, Ref 6. 3’MAFF, Farm Incomes in the UK, HMSO, London, UK, 1992. 321bid. 33A Harrison and R. Tranter, The Chang- ing ‘Financial Structure of Farming, CAS, Reading, UK, 1990. 34B. Hill, Farm Incomes, Wealth and Agri- cultural Policy, Avebury, UK, 1969.

The supply response of small farmers

The case for channelling more public money into the hands of small farms on strictly environmental grounds is a difficult one to prove without further research. There is, however, still the weaker conservation case for small farms which argues that small farms should be kept in place for fear of something worse. 3” Are the environmental effects of structural change sufficiently damaging to warrant resurrecting the idea of special support for the small, marginal farmer? Three sets of assumptions are being made here:

l first, that small farmers are economically vulnerable; l second, that they will react to price pressure by giving up farming; l third, that the resulting process of structural change will invariably

have environmentally damaging results.

On the first assumption, it is undeniable that small farm businesses tend to suffer significantly lower net farm incomes compared to their larger equivalents. A total of 80% of farms in the 4-7.9 ESU class had a net farm income that was less than f10 000 in 1990,3’ and size-related differences in the incomes of farms of the same type can be very large. Small businesses generate smaller incomes for their occupiers for reasons that are partly circumstantial - small farmers tend to farm poorer quality land in locations where the climate is difficult - but also because they find themselves trapped in a vicious circle of low incomes, leading to depressed investment which in turn prevents them from producing their way out of difficulty. Whether this means that the small farmer is financially more at risk is less clear. Farm businesses most at risk are generally thought to be those with a high and increasing ratio of debts to assets, and small farm businesses do quite well on this score. MAFF’s Assets and Liabilities Survey3* suggests that small farms have

managed to maintain or even improve their net-worth-to-assets ratios throughout the 1980s confirming Harrison and Tranter’s”3 impression that farms best placed to improve their gearing are those already low geared. Moreover, the smallest farmer is also more likely to have another income source to draw on as a cushion against the full rigours of the farming squeeze; by definition, the small farmer’s income from the farm is often much less than the personal incomes of the families who farm them, leading Hill, 34 in a comparison of farm data from various countries employing several measures of size, to remark that ‘almost universally, non-farm income represents a larger share of total income on small farms than on big ones’.

The truly vulnerable small farm is the one too large to allow its occupier to have another full-time job and yet too small to generate a satisfactory income from farming. These are the businesses that are marginal in a long-term, economic sense and liable to disappear over the



35A. Errington and Ft. Tranter, Getting Ouf of Farming? Pati Two: The Farmers, Farm Management Unit, University of Reading, Reading, UK, 1991. 36Gass&, op tit, Ref 10. 37Errington and Tranter, op cif, Ref 35. 38P. Duchene, E. Szczepanik and W. Legg, New Limits on European Agriculture, Croom Helm, London, UK, 1985.

next few decades. Yet even here a decision to get out of farming is by no means the automatic response to price pressure. Indeed, in the short term the ‘supply response’ of the marginal small farmer may be little different from that of the person with the larger business. Evidence for this comes from a recent survey of the farm-level response to price pressure among a sample of over 800 farms in England and Wales.” This shows farmers staying with the tried and tested strategy of cutting costs while trying to increase output from the farm enterprises they already have. A striking finding was the lack of any real difference, in either perception of financial stress or the strategies being followed, between farms of different sizes, types or with other ‘situational characteristics’. The most that could be said was that small farmers were least likely to be experiencing income losses and also least likely to be planning a response. Errington and Tranter speculate that this could reflect the greater sense of financial control possessed by larger producers which allows them to bend with the financial wind more easily and flexibly.“’

On any objective assessment, however, the small farmer without any other income source has many fewer options than someone running a larger business. Diversification is much harder for the small business- man who may lack access to capital and have little spare labour or expertise.36 Taking up another gainful activity is similarly difficult for the small farmer who has always been a small farmer, especially if he is old, lacks experience of work other than agriculture or lives in an area with poor labour markets - which rules out quite a large proportion of full-time small farmers. This leaves the time-honoured reaction of small farmers in times of depression, which is simply to ‘tighten the belt’. Commentators ignore this at their peril when it comes to predicting the future restructuring of the farming industry. In fact, many small farmers may find they cannot afford to give up farming due to the low salvage value of their assets, including their own farming skills and expertise. In these circumstances, getting out of farming could mean incurring serious financial losses. Low transfer earnings and the prospects of a net capital loss on liquidated assets force the small farmer to stay on his farm, even until death if he lacks a successor. Support for this hypothesis again comes from the Reading survey, which suggests that respondents had an ingrained resistance to the ideal of selling up, even when they are old and in the last throes of their farming careers.s’

Even so, there is a limit to the endurance of even the most frugal small farmer. Significant numbers of small farmers must leave the industry in coming years because substantial numbers of them are elderly and lacking successors - because they have never married, have married but have no children or have children who are unable or unwilling to take over the farm. Structural change may be delayed, but it is inevitable in the long run. As Duchene et ~1”s put it, ‘one of the few prospects for the next two decades that is reasonably certain is that the numbers of farmers can hardly avoid continuing to fall. The age structure of the industry today is such that, barring unprecedented levels of return to the land, one can assume a continued drift out of farming.’

The likely environmental implications of the resulting structural change are little debated, still less researched. There are many im- ponderables, beginning with the conservation interest of the farms that are given up, who takes them over and what they then do with the land itself. The previous discussion suggests that many small farms may well



contain conservation assets that deserve to be protected and properly managed, especially on the sort of farms likely to be given up first, namely small upland farms managed by elderly farmers without successors. Here, the running down of the farm in old age may well have enriched the farm environment, resulting perhaps in wide hedges and headlands, grassland left unimproved and unreclaimed or reverted rough grazing (though, equally, the quality of semi-natural vegetation on such farms could suffer because of under-stocking, lack of vegetation management and poor repair and maintenance of landscape features such as hedges and walls). These are associations that need to be investigated through field research, but taken with the general countryside management function of many small livestock farmers in the hills and uplands particularly, they suggest that conservationists have some grounds for being concerned about the disappearance of some small farms.

Much depends on who subsequently takes over the land and what they do with it. It is hard to imagine a situation in which the land would be abandoned, though a much more extensive ranching of upland grassland is conceivable (see below). There is a real possibility that some upland farms on poorer land will be bought up by private forestry companies who would plant the land with trees, something that would not always be welcome to conservationists. A more positive outcome would be the sale or bequest of small farms to conservation bodies and agencies.“’ Much the most likely movement of land will be into the hands of medium-sized and larger n~ighbouring farmers, anxious to realize further economies of scale and to spread fixed costs. Such a systematic transfer of land out of the hands of less viable small farmers and into those of more expansionist ones with a different complement of machinery needing, in the case of IowIand farms, bigger farms and perhaps with a different system of farming could result in a net loss of conservation assets even if it also means a shift to more extensive use of the land that is farmed.

There is empirical support for the idea that changes of occupancy trigger landscape change. Westmacott and Worthington~~ comment that ‘when traditionally farmed land changes hands, t’le incoming occupier will often adopt a more progessive system with the almost inevitable removal of landscape features’. Munton and TV, usden4’ confirm this from their own survey work, discovering an unml itakable link between ‘occupancy events’ and landscape change. How Far this tendency will continue as farming becomes steadily less profitable is debatable. removing hedges, trees and other features to facilitate an efficient or easier use of farm machinery will probably be just as attractive to a cereal farmer in ten years’ time as it is today (environmental controls notwithstanding).

In any case, the sale and transfer of entire farms rather than simply

? Hodge, ‘Property institutions and en- pieces of !and could result in quite different patterns. It is likely, for

vironmental improvement’, Journal of Agri- instance, that many small units will be taken up by incoming part-time cultural Economics, Vol39, 1988, pp 36Q- farmers rather than be amalgamated with existing main occupation 375. 4oWestmaco~ and Wo~hington, op tit, Ref

farmers, at least in some areas. Arguably this is a transfer of manage-

17. ment control that is good, not bad, for conservation. Together with the 4’R. Munton and T. Marsden, ‘Occupancv growing number of full-time small farms that are managed Dart time change and the farmed landscape: an analysis of farm level trends, 1970-85,

ifter s&cession has taken place, the future could see i re’markable

Environment and Planning A, Vol 23, stability in the number of small farms, even if the land does not remain 1991, pp 49Q-510. in the hands of existing small farming families.

LAND USE POLICY October i993 277

Helping stall farm and keeping Europe ~eaui~ul

Contrary to popular belief, not all small farms are financially vulnerable and liable to disappear as a matter of course. Indeed, the smallest farms with another major income source could well be better cushioned than many larger farms more dependent on their farming enterprises. Small farmers are renowned for their resilience and ability to survive, though it is unclear whether this is by choice or force of circumstance; many small farmers are trapped in the industry because of the low salvage value of their capital assets. Even so, the facts of demography - many smaller farms, particularly in more remote locations, are currently managed by elderly farmers who lack successors - dictate that land and farms will eventually be given up unless government intervenes. The environmental effects of this restructuring are hard to predict; there is now a clear need for more precise thinking about which farm structures need to be preserved if the conservation resource is to be maintained in its present form.

Conclusions

The continued willingness of policy makers to maintain Europe’s small farmers, albeit under a farm survival policy that is now less targeted than once seemed likely, is based on a series of hypotheses about the environmental and social importance of small farmers which have yet to be tested through empirical research. The weak hypothesis behind the original MacSharry reform package, for instance, is that the transfer of land out of the hands of small farmers, particularly in remote countryside, is undesirable environmentally as well as socially and is a process that should be slowed down through government action. A stronger hypothesis is that small farmers are inherently environmentally sensitive - and so deserve government support. Few attempts have been made to test these hypotheses with anything like the rigour they deserve, and information about the conservation status and significance of small farms in a UK context, still less Europe-wide, is still sadly lacking. This article has reviewed some of the available evidence for the UK, though its authors are aware of the need for a cross-country assessment if the results are to be truly policy relevant.

The main conclusion from this review of the admittedly still very fragmentary evidence is that there is little evidence supporting a ‘functional’ relationship between the economic or physical size of a farm and its environmental sensitivity, though it is probably true that certain small farms contain conservation assets that deserve to be protected - either because the farmers managing them have had fewer opportunities than those with larger businesses to intensify production and remove landscape features, or because they simply tend to be of a farming type that makes them environmentally interesting anyway. Equally, there is support for the idea that the disappearance of certain types of small farms in particular locations, by removing traditional systems and transferring land into the hands of farmers with quite different farming systems, triggers damaging environmental changes. Elderly farmers without successors in upland locations are a case in point. Whether all this means that small farmers should be targeted in the exclusive way some have suggested is, however, more debatable.

There is a good case for recruiting many more small and very small farmers into government conservation schemes, and the design and delivery of incentives may have to be adjusted accordingly. This is in

278 LAND USE POLlCY October 1993


line with current thinking about extending environmental management payments to as wide a constituency of land managers as possible, including those on the economic margins of the farming industry.42 As a category, however, the term ‘small farm’ is probably too broad brush to be helpful to policy makers. The apparent absence of any causal link between size and conservation interest means that each small farm

“*Countryside Commission, kenfives for needs to be considered on its merits - and many will say that it is more

a Beautiful Countryside, Countryside Com- efficient to target the conservation resource directly or the farming mission, Cheltenham, UK, 1993. systems that underpin it.


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