Quarter of farming households' below poverty line'

A quarter of farming households live below the poverty line, the Government's rural watchdog said today as it urged ministers to help farmers access benefits and develop their businesses.

The poorest 25% of farms have a household income of less than £20,000 a year, and a third of those failed to make a profit over the past three years, the Commission for Rural Communities (CRC) said.

The CRC said many farmers in the UK had diversified or found ways to earn money away from the farm to survive, with 17% of farms making more money from their additional enterprises than from traditional farming activities.

But some do not have the skills or opportunity to branch into new businesses such as farm shops, producing food or letting out farm buildings.

Struggling farmers are more likely to be older people grazing livestock in upland areas including the South Pennines, the South West moors such as Exmoor and Dartmoor, the North Pennines, the Borders and the Lake District.

The problems are particularly acute for tenant farmers, because they do not own their land, can be prevented from diversifying under the terms of their tenancy or find it difficult to access the capital to set up new ventures as the banks view them as having no collateral.

A report by the CRC also said that while farmers are able - like anyone else - to claim benefits when times are tough, the take-up of welfare payments was lower in rural areas than in towns.

Around 11% of working-age adults in rural districts claim out-of-work benefits, compared with 16% in towns, the report said.

Just 23 of the 601 Jobcentre Plus offices are in rural areas and the lack of information, transport and internet access makes it hard for people in the countryside to make the most of welfare services.

Many farmers feel reluctant to take benefits because they are independent and there is a social stigma attached, the report said.

In addition, some households find it hard to provide up-to-date accounts and tenant farmers struggle to access housing benefit because their tenancy agreements do not separate the rental costs of their home from the land.

The CRC called for the Department for Work and Pensions to actively promote the take-up of benefits for farming households and for the Department for Business Innovation and Skills to support farmers to develop their businesses.

CRC chairman Dr Stuart Burgess said: "While many farming households have successfully increased production, resilience and farm incomes, one in four are living in poverty.

"These struggling farms are likely to have grazing livestock and be located in upland areas. Many are left trapped in poverty without the resources or support to earn a living wage.

"Tackling poverty among farming households is long overdue. The Government should actively promote farm business support and the take-up of income-related benefits to eligible farming households."

The report said that in 2008/2009, the total income from diversifying into new activities by farms was £300 million.

But while more than half of farms have expanded into new ventures, funding for projects is hard to secure from banks and many have relied on grants to push ahead with their plans.

The difficulty of application forms and a lack of knowledge about which grants are available means many farmers do not take advantage of them, while planning regulations can also be a barrier if schemes require permissions such as changes to farm buildings.

For some farmers, for example those who are retiring, are ill or whose business has failed, there is no choice but to leave farming but even then they face problems such as a lack of affordable housing in rural areas and inadequate pension provision.

The Government should invest in the supply of affordable housing in rural areas, the report urged.

National Farmers' Union head of economics and international affairs Tom Hind said the report reflected the picture for farmers up and down the country.

"While there are many farmers that are managing to drive their businesses forward, a good many others are struggling to make ends meet.

"Were it not for the support farmers receive from the Common Agricultural Policy (CAP), many more would fall below the poverty line.

"These issues may be most apparent among grazing livestock and tenant farmers, but businesses in all sectors face income challenges."

But he said that, while the NFU supported many of the recommendations, the report had failed to recognise farmers were proud individuals who do not want to live on handouts, particularly in the current climate.

"Instead, farmers want to earn their living from the food they grow and the livestock they raise.

"For this we need to see markets that function properly and a fair and transparent supply chain.

"The challenge for the UK Government and EU institutions that are now debating the reform of the CAP is to help farmers become less dependent on public support by addressing the fundamental failures that exist in markets."

A spokeswoman for the Department for Environment, Food and Rural Affairs said: "We want to see a farming industry that is profitable and competitive - that's why we're calling for ambitious reform of the Common Agricultural Policy, introducing the grocery code adjudicator to ensure that everyone in the food supply chain is getting a fair deal, providing funding that improves the industry's competitiveness and cutting red tape for farmers.

"The CRC's report makes some interesting observations on farm business profitability and lifestyle, which will provide evidence for future policy."