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Farmers & winegrowers: an industry mobilizes its strengths to face up to future challenges

(July 2021) French agriculture is currently in the throes of far-reaching change. By drawing on a survey conducted in February/March 2021 involving 1,359 farmers and winegrowers, BPCE L'Observatoire provides a deeper analysis of these trends and explains how changes in agricultural models are giving shape to the agricultural practices of the future.

BPCE L'Observatoire

The paradoxical impact of the health crisis

The first observation is that the health crisis has had a paradoxical impact on the French farming industry. While French agriculture is emerging relatively unscathed from the crisis from a macroeconomic viewpoint, 51% of farmers believe that the sector has been negatively impacted overall (15% see things in a positive light). This discrepancy can be explained to a large extent by differences in exposure to the consequences of the crisis. While certain sectors, such as cereal production or wine growing, have been penalized by the disruption of international trade or labor issues, others have been able to maintain – or even to expand – their activities, notably in areas capable of benefitting from short supply circuits.

Agriculture at the heart of current societal issues

Beyond challenges of an economic nature, farmers and winegrowers are also faced with societal issues that highlight the growing prominence of agriculture in public debate regarding its role as a key factor in environmental protection but also as a critical lever for food independence, the significance of which clearly emerged during the health crisis. Farmers and winegrowers appear sensitive to societal preoccupations and are acutely aware of the issues themselves: 67% say they are already taking account of climate change in their choice of production systems, and 10% plan to do so within the next five years. Among stock farmers, 70% take account of “societal pressure regarding animal welfare” and 37% respond to “the decline in meat consumption.” The issues raised by the government's “protein plan” enjoy widespread support (around 60%) in the sectors most concerned, namely mixed farming and vegetable producers.

Four types of farm transformation

In the face of these challenges, a majority of farms are currently taking steps to transform their operations. This transformation assumes four principal forms:
•    Expansion. The phenomenon of farm concentration, a trend noted over the past several decades, is continuing: the number of individual farms is decreasing while their average size is increasing. According to the survey, the proportion of corporate farms now stands at 49%, up 3 percentage points from 2019. Veritable large-scale “farm businesses” are emerging that include in their capital more people from outside the family and individuals working the farm: 18% of farmers in a corporate farming structure are willing to accept a minority investor to help with major investments, or 9% of farmers overall. What is more, 24% plan to invest in the purchase, or the lease, of new land or vineyards within the next two years.

•    Agroecology. Like in 2019, 51% of farmers and winegrowers say they are committed to the principles of agroecology but a great many still say that they require support to invest in equipment (45%) or that they need technical assistance or greater knowledge (45%). Among the methods used in agroecology, the number of farms converted to organic farming has increased by 2 points to 13% but the adoption of environmental certification systems (High Environmental Value, Agriconfiance label, etc.) is much more widespread and has increased significantly. Soil conservation is another common practice (38% of respondents). Against this background of a wider awareness of the challenges of sustainable agriculture, payments for ecosystem services (a mechanism that allows farmers to be paid for the environmental services they provide) constitute an additional lever offering significant future potential: 51% of farmers have heard about it, and 63% find this system interesting for their own farm (36%) or for other farms (27%).

•    Diversification. 45% of farmers overall have at least one other on- or off-farm activity, a figure up 3 percentage points since 2019. Direct sales are the most common activity, concerning about a quarter of all farms, mainly in viticulture and market gardening. However, the development of these activities – or the processing of agricultural products, agritourism, and the practice of a second profession outside the farm – is not, or only marginally, increasing. On the other hand, energy production (photovoltaic, biomass, biogas, etc.) is the area enjoying the highest future growth potential (20% of farmers are considering it) and, with an adoption rate of 14%, has increased vs. 2019.

•    Pooling of resources. Agriculture is a sector in which cooperative structures are historically well established: 88% of farmers or winegrowers are members of a supply or marketing cooperative (+4pts vs. 2019) and 54% are members of a cooperative for the use of agricultural equipment (+2pts vs. 2019). Despite the success of cooperative solutions, only 36% of farmers or winegrowers say they swap ideas with their peers in local groups or clubs, in their professional sector or via social networks, and 32% say they rely primarily on themselves for ideas about the future development of their activity. One related point: 15% of farmers would consider making an investment in the next two years in partnership with other farmers.

Faced with the need to transform their activities, there exist three types of farmers

The following typology compiled from the answers to the survey shows that the transformation strategies adopted are implemented in different ways. There emerge three distinct groups: 
•    The first group covers just over 40% of farmers; they are predominantly older and generate sales of less than 100,000 euros per year; they favor stability and have little intention of changing their practices. 
•    The second group – a little more than a third of the farmers (often younger and possessing more sophisticated production tools) – is, on the contrary, driven by a shared ethos focused on growth, the achievement of a critical size, and investment. 
•    The third group concerns a little more than 20% of the respondents who are more focused on a diversification strategy with an acute awareness of agroecology either in direct sales, processing or tourism. 
However, the growth strategies pursued in terms of size and agro-ecological diversification are not mutually exclusive and seem based on a common pursuit of sustainable practices (soil conservation, certification, energy production, etc.) adopted simultaneously in the second and third groups. 

The challenge of renewing the farming industry

These transformations remain dependent on the success of the ongoing demographic transition. According to the BPCE-BVA survey, 22% of farmers are not sure they will be working on their farms in the next 5 years and nearly one in two farmers is more than 55 years old, an aging trend that intensified between 2019 and 2021. It is expected, therefore, that a considerable number of farmers will be retiring from the profession in the next 5 to 10 years.
This demographic structure largely explains the ranking of farmers' and winegrowers' concerns: preparation for retirement and transfer of ownership are among farmers’ three uppermost concerns (43% and 35% respectively), coming ahead of the financing of investments or cash flow issues (28%), or the question of expansion or agroecology.

Beyond the individual issues related to retirement, the age of active farmers is also a major issue for the competitiveness of French agriculture. On the one hand, as highlighted in the typology described above, farmers under the age of 55 are in all respects more actively involved in a dynamic of transformation and diversification and are actively developing a production and governance model more suited to the environmental, economic and human challenges facing agriculture. The demographic transition consequently provides an opportunity for a gradual and orderly transformation of the productive fabric. 
On the other hand, 64% of farmers over the age of 55 who have adopted a farm transfer plan intend to invest in the next two years, while only 36% of farmers who think that nobody will be taking over their farm have plans for any investments. However, only 45% of farmers or winegrowers over the age of 55 believe that the transfer of their farm is guaranteed. For farmers of the same age, the anticipation of a future transfer helps to lengthen their horizons, allowing them to plan investments beyond the date of their own retirement. This anticipation has two positive impacts: at an individual level, it preserves the value of the production equipment and, at a collective level, it helps to preserve the average competitiveness of French farms. 
Improving the conditions under which farms are transferred from one generation to the next and facilitating the demographic transition over time therefore emerge as the central issues for the future of French agriculture and its ability to adapt to a wider environment that farmers themselves fully appreciate is no longer what it used to be…

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