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Written by: Angelo Donato Berloco
Organizations: Istituto di Servizi per il Mercato Agricolo Alimentare (ISMEA)
Type of document: Paper / Document for wide distribution
1. REFERENCE SCENARIO
The following picture describes rural structures in Europe and highlights the same structural problems as mentioned above that distinguish several areas in a negative manner. The great structural criticality of numerous Italian areas emerges from an analysis of the picture, with particular reference to the Southern regions.
Similarly to provisions regarding other production sectors, also for the agricultural sector it should be extremely useful to provide for a specific action directed to facilitate a structuring of agricultural holdings so as to contribute in real terms to the widest objective of rural development.
Moreover, the European agricultural model, based on the concept of multi-functionality, environmental compatibility, economic sustainability, food safety, is a cultural model rather than a technical, economic and social one which requires to expand on the analysis of the structural evolution and of the composition of land assets and human resources in the agricultural sector with a view to identifying instruments that allow prospects of development for young people up to the new demands of society, with greater reason in a phase of general reconsideration of the CAP.
Therefore, if the human factor is the element that characterizes the development potential of the agriculture on the new scenarios, the need to encourage the installation of young farmers is one of the prerequisites. It is therefore necessary to create the proper conditions to make the installation of young people in agriculture “interesting”.
In this context it appears crucial for young farmers to overcome the difficulty in obtaining the purchase of agricultural lands, because of the high costs and the non-availability of land to rent.
The difficulties connected to the application in Italy of the benefits deriving from early retirement in agriculture, must be traced primarily to the fact that, besides the cessation of commercial farming activities, farmers had to carry out the transfer of the real estate.
It is therefore necessary to identify those procedures that may allow to facilitate the cessation of commercial farming activities, thus contextually encouraging the generational turnover in the agricultural sector, and making agricultural areas available by using all existing instruments (purchase, tenancy, and so on).
The critical aspect regarding the inadequate presence of young people in agriculture has been evaluated at European level by taking into account the rate of generational turnover that shows exactly the ratio between farmers who are less than 35 and farmers who are more than 55 years old.
In the following picture Italy is reported as having vast areas of criticality.
2. THE IMPORTANCE OF AN AID SCHEME FOR LAND REPARCELLING IN ITALY
With respect to the above-mentioned elements of criticality, a series of measures has been developed, at national and Community level, with a view to encouraging:
an increase in the average size of agricultural holdings, connected to the decrease of the parcelling and fragmentation of agricultural holdings;
the generation turnover with the entry of young people into the agricultural sector;
the access to medium- and long-term credit for young farmers.
In particular, at domestic level, the application of Ismea’s aid scheme no. 110/2001 allowed, by making use of leaseback contracts:
a. to assure certified and objective land estimates (performed through the application of technical-evaluative transparent and harmonized assessing procedures – with UNI EN ISO 9001:2000 certification), being therefore of non-speculative type and exclusively connected to land productivity and to the profit-making capacity of agricultural holdings, rather than to other extra-agricultural factors;
b. to encourage land assets ownership, in particular by young farmers, through long-term loans. This allowed to encourage the generation turnover and the setting-up or enlargement of efficient agricultural holdings, directed to the improvement of the firm’s structural efficiency and the growth of its competitiveness;
c. to grant the maintenance of the admission requirements and therefore the efficiency of the intervention for at least a minimum term (for instance, contractual obligations: 5-year tenancy; 15-year indivisibility);
d. to improve the transparency of real estate market, thus representing a useful reference point with respect to land price quotations (“price-control effect”).
3. TASKS, AIMS AND CONTACT DATA OF ISMEA
ISMEA (Istituto di servizi per il mercato agricolo alimentare), is an Italian public economics body which was reformed in 2000 whit the unification of the Fund for the consolidation of the farm land property by the Institute for agricultural market analyses, research and information.
In accordance with Presidential Decree n° 200 of 31 March 2001, Ismea works in this sectors:
Land reform, as national land organisation and in harmony with Regional programming;
Agro-food market analyses, research and information;
Commercial promotion of agro-food products on domestic and foreign markets;
New insurance and financial instruments and services for farmers and farming associations.
Throughout Italy, ISMEA is involved in land reform in compliance with regional programming objects regarding agricultural and agro-environmental policies.
Through land reform programmes and new instruments targeted at the establishment and consolidation of efficient farming businesses – in compliance with domestic regulations and the EU regulations incorporated by the regions in their Regional Operational Programmes - Ismea carries out specific activities aimed at encouraging (Ismea land management support approved by EU Commission, n. 110/2001/Italia):
generational exchange in the agricultural sector;
development of farming businesses and their continuous structural improvement;
transparency and mobility of the rural land market.
In order to implement land aims subject to the opinion of the relevant regional body, Ismea purchases land suitable for reform, development and expansion of farming property, carries out the division into lots and, if required, puts into effect or promotes the required land reform and sells the land to individual farmers or to members of farm lease-hold cooperatives, with subsidised loans, six-monthly repayments over a 30-year period, tax relief and conditional right of domain.
In addition, Ismea provides assistance for the improvement of independently-established businesses through:
extraordinary financing (granting of direct loans) and by guaranteeing structural improvement loans;
technical and financial help for initiatives, with particular reference to technological innovation, crop orientation and conversion to alternative products and enhancement of the environment; in order to implement these aims, it participates in activities promoted by organisations that provide services for farming businesses.
Ismea, to encourage the privatisation of public land suitable for farming, acts as an advisor. Specifically, when appointed by the administrations involved, it evaluates the land and takes direct action in its purchase and sale. It also produces a land reform project based on the typical criteria of the activities involved.
The object of the land intervention programme envisaged by the regions in Regional Operational Programmes, is the development of the territory through the business training. Maximum support limits for interventions of this kind are established by the EU. Within this context, Ismea acts as an institute at the service of the regions, operating in the area of regional programming through special meetings with the individual regions in order to define operational methods based on the various territorial situations.
Ismea land management support
Land organisation aims
Increase the average size of farming businesses; encourage young people to enter farming; innovate production processes and products; increase competitiveness;
Single farmers (small farmers etc.);
Priority criteria to obtain support under forty farmers. Other priority criteria to be defined in accordance with programs envisaged by regions (attenments, income level, environnement respect etc., market analysis).
Up to 750.000,00 Euro for each “single farmer”.
Up to 2.000.000,00 Euro for co-operative farms.
Minimum investment: 150.000,00 €
Help for the land sector
Sale with thirty-year leasing contracts, annual or six-monthly repayments, and special interest rates (3,0% fixed annual interest);
tax relief (reduction of contract registration duty).
Sources of the National Land Authority’s funds
Ismea revolving fund (annual payments made by assignees).
mortgages granted by the deposit and loan bank (State bank).
Land sector general data
35.000 businesses created;
7.000 businesses with amortisation in progress;
29,0 hectares actual average size (2006);
80% assignees under forty;
average investment per farm 375.000,00 Euro.
Benefits and contractual obligations
Assignment of land with conditional right of domain (property leasing); the main benefits are: Repayment at special interest rates (in 2007: 3,0%);
repayment in max 30 years;
tax relief on purchase;
post-assignment technical and financial assistance.
Repayment of the capital invested, plus costs and interest;
the land cannot be divided for at least 15 years;
minimum redemption time of at least 5 years;
data must be provided for monitoring the business;
intervention on behalf of farming businesses.
Technical assistance (in-house monitoring and assistance);
financial assistance (Extraordinary funding);
guarantees (Legal guarantee can reach 4/5 of the farm value after investments).
Ismea’s technical staff is formed by 40 units:
Real estate contract experts
The principal elements for the evaluation of projects are:
Technological and innovation contents
Respect of the standards for environmental protection