Employment effects of ecological farming at the farm level

This deliverable investigates the employment effects of ecological farming by analysing both the differences in the intensity of labour use and rewards to skills. It contributes to one of the main outcomes/achievements of the LIFT project, i.e. to “identify the sources of performance and sustainability differences between farms of different types, size and output complexity as observed in the landscape of the European Union (EU)”. It is based on collaborative research on Task 3.5 ‘Employment effects of ecological farming at the farm level’ of LIFT between UNIKENT (England) (Task Leader), INRAE (France), DEMETER (Greece), MTA KRTK (Hungary) and IRWiR PAN (Poland).

The analyses reported consider the differences between farms on a scale from the most conventional farming systems to the most ecological as measured by the intensities of use of external inputs and labour, the receipt of agri-environmental payments (AEP), capital and involvement in organic production. This approach was used since, at the time of working on the deliverable the LIFT typology protocol on how to classify farms according to the different degrees of adoption of ecological approaches to farming has not been completed. The approach nevertheless makes use of the LIFT conceptual typology in Deliverable 1.1 (Rega et al., 2018). In the analysis, intensity of labour use is studied as a function of farming inputs (fuel, fertiliser, crop protection chemicals), capital and AEP. Dependent and independent variables have been standardised by dividing them by the output value and the resulting ratios named intensities of use. The standardisation by dividing by the overall output value was done to remove the effect of different farm sizes and to focus the discussion on the way output is produced, rather than how land is used. In order to reduce the impact of quality differences in the inputs, we make use of monetary value of input used to take account of quality differences that would be reflected in price differentials. Five EU Member States (MSs) are analysed in this deliverable, i.e. those involved in Task 3.5 – Greece, France, Hungary, Poland and England or the United Kingdom (all data collected refer to when the UK was a MS).  

Two types of data are employed in the deliverable - secondary, i.e. data from the Farm Accountancy Data Network (FADN) for the period 2004-2015 and primary, i.e. data from the LIFT cross-sectional large-scale farmer survey carried out in 2019-2020 and referring to the year 2018. The literature review is a summary of LIFT Milestone 16 (Davidova et al., 2019), which included a structured literature review as part of Task 3.5, expanded by additional sources. This deliverable also uses a qualitative method, the Delphi exercise, to give further insights and supplement the literature.

This approach is also related to Task 3.2 ‘Assessment of farm technical-economic performance’. Labour use is analysed relative to productivity and profitability within the intensities. A lower intensity of input use relative to output indicates an ecologically less intensive farm, but it is also a farm that is potentially more productive and profitable.

The analysis of the impact on the labour share of output shows a consistent picture across analysed EU MSs. Low intensities of external inputs and capital, which proxies farms employing ecological approaches, increases the intensity of labour use when external input and capital input intensities decrease. As farms become less intensive in their use of purchased inputs, the intensity of total labour (or labour’s share of output) falls and this is primarily driven by a lower intensity in the use of family labour. However, after a certain threshold of input and capital intensities there is a switch to a substitution effect. Therefore, conventional farming, not defined here as non-organic or any other defined system of farming but characterised here by intensive use of externally purchased inputs and highly capitalised farms, drops in labour intensity as the intensity of purchased inputs increase.

Returns to skills in ecological farming have been estimated based on the data from the LIFT large-scale farmer survey and this analysis has only covered LIFT case study areas. The explorative picture based on the survey data has been expanded by a common econometric analysis of the case study areas in France and England. The comparative study raised questions about the educational systems in the two countries which could influence the innovative capacity to employ new farming technologies.

The data sources did not allow for a systematic analysis of gender effects through adoption of ecological farming approaches, but some insights were taken from the literature review and Delphi exercise. Gender becomes more and more important from the point of view of employment, division of labour within the farm households and pay. However, the studies are on developing countries where customary traditions and norms are much stronger. This literature review shows that the impacts of introducing ecological practices in agriculture in developing countries does not have a clear-cut gendered effect on labour. The effect depends on on-farm labour division and on intra-household time allocation.

Several conclusions and policy implications have been formulated on the basis of the deliverable:

• There is no theory that can guide researchers to a priori expectations about the effect of different farming practices on labour demand in quantitative terms and qualitative ones (skills).
• Farms which use ecological farming practices may decrease their intensity of labour use as their intensity of use of purchased inputs and capital is lower. Therefore, policies which support the adoption of ecological farming approaches may have as a by-product increased (maintained) farm, and consequently, rural employment.
• AEP and the increased complexity of output, proxied by the number of enterprises (activities) on a farm, which is expected to be present in the farms using ecological farming practices, also result in higher labour intensity.
• Ecological approaches to farming will mainly increase the use of hired labour strengthening the existing trend of substitution of hired to family labour.
• Cost minimising farmers might be reluctant to adopt ecological farming practices trying to minimise labour costs. Policy incentives might be necessary to stimulate the adoption of ecological farming practices, e.g. agroecology, since the latter has a high potential to provide important environmental and social non-product benefits.
• Government policies, concerning labour market, should be re-orientated towards a decrease of transaction costs for a farmer hiring/firing farm labour to allow more flexible adjustments of hired labour in view of wider adoption of ecological farming practices.
• Agricultural education should provide a broad skill set necessary for the implementation of ecological approaches to farming, thus encouraging a successful adoption of ecological technologies and a positive economic return from their adoption.

Further research should focus on a comparative study of best practice in the EU: i) in the area of employment law concerning agriculture to provide policy insights on how to build more flexibility in the market for hired farm labour and ii) in the area of agricultural education and practical training.