How accurate is EU farm income support? An evaluation of farmers’ incomes and resilience under the Swedish 2023-2027 CSP

This evaluation, conducted by the AgriFood Economics Centre on behalf of the evaluation secretariat of the Swedish Board of Agriculture, contributes to the assessment of Sweden's 2023-2027 CAP Strategic Plan. It focuses on Specific Objective 1, which aims to ensure viable agricultural income and strengthen economic resilience within Sweden’s farming sector. Four income support instruments are examined: the single payment, the bovine payment, the compensatory payment and the redistributive payment. The evaluation seeks to understand their role in farmers’ income development and resilience.

Two evaluation questions are addressed: to what extent income support contributes to a living agricultural income, and to what extent it contributes to farmers’ resilience to changing circumstances. These questions are linked to EU‑defined elements to be assessed and to the PMEF impact indicators used in the evaluation: reducing income inequality (I.2), reducing fluctuations in farm income (I.3), supporting viable farm income (I.4), contributing to territorial balance (I.5), and ensuring a fairer distribution of CAP support (I.26). Because all Swedish farmers receive income support, it is not possible to estimate causal effects through counterfactual methods. The analysis therefore relies on descriptive approaches, including trend analysis, group comparisons and econometric estimation of survival probability and value added.

The evaluation is based on register data from Statistics Sweden (2010-2021) and the Swedish Board of Agriculture. Income analysis draws on the individual database LISA (Longitudinal Integrated Database for Health Insurance and Labour Market Studies), allowing differentiation between earned, capital, non-agricultural and disposable income. Resilience is assessed using linked business‑level data from the company database, business finance and FRIDA (company and individual database), combined with the farm register and support statistics. Two dimensions are considered: general resilience, measured by survival probability (2016-2021) and economic resilience, measured by value added excluding support. Both are estimated relative to expected values based on structural characteristics such as land area and livestock units.

The results show that agricultural incomes in Sweden increased between 2010 and 2021 and are now comparable to income levels in the wider economy. Entrepreneurs whose main activity is agriculture have incomes at or above the national average once capital income is included. Capital income plays a significant role in the overall income. Employees in agriculture remain around 20% below the national average. Older farmers (65+) have substantially higher capital incomes (on average 134% higher) than younger ones (20-64), resulting in higher disposable incomes (about 25% higher) despite lower earned income from active farming. Regional and demographic disparities remain: incomes are lowest in Norrland and among female farmers, and highest in the lowland agricultural regions.

The impact of income support on income levels cannot be determined. However, variations in support do not appear to have been reflected in corresponding changes in income. Evidence suggests that long‑term effects are likely smaller than nominal support levels due to behavioural and market responses, such as land price increases, slower innovation and delayed structural change. Income support primarily functions as a basic income safety net rather than a driver of long-term income growth.

Resilience varies significantly across sectors and groups. Milk and beef farms show high overall survival and high support levels but low economic resilience. By contrast, cereal, pig, egg and poultry producers show an opposite pattern. In geographic terms, both general and economic resilience are lowest in Upper and Lower Norrland, where support levels are highest, indicating compensatory intentions. Female farmers exhibit lower survival probabilities (2.3 % lower), higher value added (4.4 % higher), and significantly lower support levels (37% lower) than male farmers. Young farmers (under 40), in contrast, receive higher support (nearly 17% more) despite higher survival rates (6.7% higher). Limited liability companies show the highest overall and economic resilience (with value added nearly 70% higher than average), whereas sole proprietorships and general partnerships perform significantly less well.

Overall, income support provides a basic level of income security but does not fully address structural differences across regions, sectors or demographic groups. The distribution of payments does not consistently align with resilience needs, and some groups, particularly women, appear disadvantaged. Income support also appears to maintain part‑time farming, potentially slowing structural change and generational renewal, though reductions could negatively affect land management and biodiversity in low‑productivity regions.

Key recommendations include a stronger use of register‑based income data in designing future income support; further analysis of agricultural capital income; examination of the influence of income support on part‑time farming and structural change; assessment of support distribution with specific attention to gender equality and territorial balance; evaluation of the redistributive payment’s effects on smaller farms; and consideration of reallocating part of income support towards agricultural research, innovation and long‑term productivity.