Long-term Trends in Agricultural Incomes in the “Old” EU

Abstract

The aim of the paper is to present methodological problems linked with distinguishing long-term trends in agricultural incomes, and selected results of empirical research concerning this phenomenon in the European Union in the shape before the eastern enlargement. According to the European Commission’s guidelines, income is defined as a maximum amount of money that can be consumed by a beneficiary in a given period of time without diminishing the volume of a beneficiary’s assets. The paper analyses the three basic aggregates of agricultural income: net value added, net operating surplus and net entrepreneurial income. It also describes the impact of the existence of various production structures on the methodology of estimating agricultural income. The empirical part of the paper presents the evolution of agricultural incomes in EU-15 and in the principal member-states (Germany, France, Italy, the United Kingdom, the Netherlands) during 15-35 years, depending on the availability of source data. The following indices are used: real income of production factors in agriculture per annual work unit, real net entrepreneurial income in agriculture per unpaid annual work unit, and net entrepreneurial income in agriculture. A slightly growing long-term dynamics of agricultural income in the EU was observed, with significant fluctuations and temporary falls recorded in some member-states. There is a shortage of reliable data on the income situation of farming families, which could be used in comparisons with other socio-economic groups. The use of various definitions of a farmer and of an agricultural holding across the member-states renders difficult international comparisons of agricultural income.