According to estimations by the INSEE (French National Institute of statistics and economic studies), farmers’ incomes increased by 15% in 2006. This increase however must be set against the backdrop of a global downward trend that has existed since 1998, the net income of farmers having decreased by nearly 30%, due particularly to an increase of more than 30% in oil prices between 2004 and 2006.
This increase in the price of oil directly affects farmers’ incomes because apart from the increase in transport costs, it leads to a rise in the cost of ag-supplies (fertilizers, soil amendments, plastic film).
A segmental study devoted to milk production in Western France has shown that the rise of oil prices in the last two years has led to an increase of nearly 26% in production costs. The seriousness of the situation can be understood if we say that 125 litres of oil are needed to produce 1,000 litres of milk!
In view of these difficulties, farmers have done their utmost, from the 1980s, to stabilize the volume of energy products they use while achieving – during this same period – an increase in productivity of 25%. But despite this performance, farmers remain strongly dependent on energy prices. During a press conference organized last November, the FNSEA (National Federation of Farmers’ Unions) and the Young farmers asked the Government to pay – via the introduction of energy cheques – half of the additional costs incurred by the excessive rise in the price of oil.
But beyond short-term answers, it is essential to be aware of the impact of energy variables in agricultural production, which none of the models traditionally used during international negotiations currently take into account. This approach, adopted by WOAgri through the development of its economic model, will effectively enable us first to understand agriculture in all its complexity, and second, to base national and international policies on realistic foundations.
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