Revealed: the growing income gap between Europe’s biggest and smallest farms

The income gap between the biggest and smallest farms in Europe has doubled in the past 15 years and hit record levels at the same time as the number of small farms has collapsed, a Guardian analysis of agricultural income data has found.

Figures from the European Commission’s Farming Accountancy Data Network (FADN) and Eurostat suggest farmers across the continent raked in record profits when the war in Ukraine sent food prices soaring, boosting a long-running trend of rising average incomes that has outstripped inflation.

But big farms continue to reap the bulk of the rewards, while razor-thin margins on small farms have put some farmers through financial hell and forced others out of business.

The analysis comes as a radical new set of proposals to support struggling farmers and cut pollution has been put forward by a coalition of farmers, retailers and environmentalists, convened by Ursula von der Leyen, the president of the European Commission. The shared vision calls for urgent change, including an overhaul of controversial subsidies.

But it also comes as Europe shifts politically to the right, with some populist governments attacking environment rules and drawing significant support from depressed rural regions – where in many cases small farms have closed down or been bought up, and from which young people are moving to cities, leaving behind societies that the historian Geert Mak describes as “more traditional, conservative and anxious”.

The number of farms smaller than 30 hectares (75 acres) fell by a quarter in the 2010s, figures from Eurostat show.

Thomas Waitz, a Green MEP and farmer from Austria, said the findings “resonate deeply” with struggling communities. “It’s no surprise that farming families are increasingly voicing their frustration and protesting against an unfair competitive environment dominated by big agribusiness.”

The rise in average incomes challenges the narrative that farming as a whole is a low-paid sector being squeezed ever tighter by selfish supermarkets, callous customers and expensive environmental rules.

But hiding behind the sector’s rising prosperity is a wealth of inequality. The per-worker income ratio between farms with an economic size of between €2,000 and€8,000 (£1,700 and £6,750) and those greater than €500,000 reached its highest or second-highest levels in 2022, depending on how that income is estimated.

The income gap rose from tenfold in 2007 to twentyfold in 2022 when measured by net value added per agricultural work unit, a proxy for income that is suited to comparing holdings across the sector, and from thirtyfold to sixtyfold when measured by farm family income, which only counts farms with unpaid labour.

When comparing small farms with the second-biggest class of farms in the dataset, those with an economic size of €50,000-€100,000, the income gap rose by 43% on the first measure and 71% on the second measure.

The findings partly reflect regional income disparities and the way the data, which is incomplete for 2022, is compiled. A measure of income inequality known as the Gini coefficient shows overall inequality in the sector has fallen slightly, as the smallest and poorest farms have been forced to grow or close.

Sini Eräjää, an ecosystems campaigner at Greenpeace EU, said small farms were struggling. Greenpeace came to similar conclusions in an analysis last month that found EU farmers faced pressure to “go big or go bust”.

Politicians needed to focus on fundamental issues “rather than scapegoating environmental rules”, Eräjää said.

Farmer protests at the start of the year nearly sank a law to restore nature and pushed politicians to put fewer green strings on farm subsidies after lobbyists argued the EU’s environmental agenda placed too big a burden on the sector.

However, small farmers complained that big farmers presented themselves to politicians as the voice of the protests despite representing very different concerns.

“If we talk of farmers protesting against the crisis in agriculture, this garners sympathy from the public,” said Antonio Onorati, a farmer from the grassroots peasant farmer association Via Campesina. “They imagine rows of women and men bent over the fields harvesting vegetables. They imagine a disappearing culture.”

This has little to do with the protests of the tractor drivers, he said. “In truth, women and men bent over the fields are there to pick tomatoes for the Sunday sauce, but they are not represented in Brussels because they are often ‘invisible’, illegal and without rights.”

Studies have shown that farming households in the lowest quartile of the income distribution are worse off than their non-farming counterparts, when controlling for demographic factors, such as age and education, but farm households in the highest quartile are better off than their non-farming counterparts.

Agricultural economists attribute the rising income gap mainly to rapid technological advances, the cost of which is spread out on big farms over more land and livestock.

Krijn Poppe, a retired agricultural economist and member of the Dutch Council for the Environment and Infrastructure, said rising labour costs since the second world war had encouraged farmers to employ fewer people and invest in capital. “Horses went out, tractors came in, machinery became bigger and bigger,” he said.

“My father had a combine harvester in the 1960s that was 3 metres broad,” he added. “My nephews run a big farm in eastern Germany and they have machines that are 13 metres broad. They want to have one of 15 metres so they can go from four staff members to three.”

The advances in technology are at the heart of a long-running trend in which the number of farmers across Europe has shrunk as big farms have gobbled up small ones and replaced workers with machines.

Sebastian Lakner, an agricultural economist at the University of Rostock, said productivity gains had long been higher in farming than in other established industries, creating a “technological treadmill” on which small farms struggled to keep up.

“You need to grow,” said Lakner. “Those farms who cannot grow – and who cannot afford the big tractors, the innovative technologies – they need to drop out.”

In September, a report backed by the European Commission called for an overhaul of farming subsidies, the establishment of a “just transition fund” to help farmers adopt sustainable practices, and targeted financial support for those who need it most.

“We have substantial misery in agriculture,” said Lakner, “and we need to support those farms in a very specific manner.”