Direct Payments Bolster Family Employment on the Farm

Employment in the agricultural sector is declining in many European countries, especially in livestock farming. Direct payments can counter this trend and lead to the employment of more – especially female – family members on the farm.

Direct payments are viewed as a possible measure for strengthening rural areas, since they support the income of farming families. Against the backdrop of structural change, which is also characterised by a decrease in the numbers employed in the agricultural sector, this theory is gaining traction.

How do direct payments affect family employment on dairy farms?

An empirical study was therefore conducted to determine whether and how direct payments affect farm employment. The focus here was on specialised and combined dairy farms, since they are considered to be particularly labour-intensive and affected by structural change. The analysis was conducted for the years 2014 to 2016. A distinction was drawn between male and female family employees to allow the depiction of gender-specific employment patterns. Farm managers of either sex count as members of the family labour force.

To allow the effect of the direct payments to be identified, farms located in the hill zone were compared with farms in the valley zone. This approach is based on the assumption that farms on either side of a boundary between different agricultural zones are very similar, but differ in terms of direct payments received, in particular the direct payments for cultural landscape preservation. In fact, an average farm in the hill zone lying directly on the border between zones receives a total of CHF 3,000 more in direct payments than an analogous farm in the valley zone.

Direct payments lead to more females in the farm family workforce

The findings show that although direct payments have no effect on the number of males in the family workforce, there are slightly more females employed on farms in the hill zone: if direct payments go up by CHF 50,000, this leads to one additional female in the family workforce. This amount corresponds to ten times the direct payments for agricultural landscape preservation in the hill zone, or around 80 per cent of the average remuneration of a family labour unit. Although the results apply to hill farms near the zone boundary, there can be similar or greater effects for areas in which other employment opportunities are scarce.

Since a clear majority of farm managers are men, the additional employment potential generally applies to their female partners. In sociopolitical terms this is a mixed result, since members of the family workforce are often unwaged, and hence lack adequate social security cover. On the other hand, finding suitable employment outside of the farm may be an issue in rural areas. The study shows that direct payments can contribute to agricultural policy objectives by bolstering employment in rural areas.