Americans accept and respect entrepreneurs: some business failures are expected and they are considered a normal part of the process. It is especially striking that US women much better versed in how to make money, and are very active in entrepreneurship, being responsible for more than a third of all start-up efforts.
In the past apprenticeship has been predominantly a male programme and the participation of women has been traditionally very low. However, companies who have employed women apprentices have praised their attitude, commitment and performance.
Not only is there today greater awareness of the need to promote more job opportunities for women but, more importantly, there is increasing realisation that efforts should be directed at breaking down patterns of occupational segregation by encouraging increased levels of participation by women in sectors of the labour market traditionally dominated by men.
In Ireland, for example, FÁS’ (Ireland’s training authority) Action Programme for Women – Women in Focus –provides opportunities for women to broaden their career options into new and non-traditional areas of work. To promote the entry of women into apprenticeships FÁS provides Preparatory Training Courses which help prepare women to train and work in a traditionally male environment. To employers, FÁS offers a bursary to encourage an increased level of recruitment by employers of women apprentices.
The bursary is a grant to private sector employers. The aim of the bursary is to provide an incentive to employers to train and employ women apprentices. It provides a total grant of £2,400 (inclusive of £300 tool kit allowance) to each employer who recruits a woman apprentice. The grant is a contribution towards wage costs of £75 per week over the first 28 weeks of on-the-job phases of the apprenticeship.
Women were well represented on FÁS Programmes and over 50,000 women complete either a FÁS Training or Employment Programme annually. These figures clearly demonstrate that there continues to be a gradual and significant growth in the proportion of women to men participating in FÁS Programmes overall.
By taking on board the principles behind this Irish initiative, and by also focusing on the success of the American economy in fostering such a substantial amount of female entrepreneurs, we would be in a better position to utilise a huge resource which has yet to be tapped into fully. By forming training packages specifically geared towards the female population, we may gradually see a much needed erosion of the status quo where females occupy positions subordinate to those occupied by men.
Recognising and calling for the formation of policies to combat this long-standing imbalance in employment should be a task worthy of attention. It would not only broaden the individual’s horizons, but would also provide businesses with a potentially larger, well-trained workforce, and the UK with a bigger army of entrepreneurs.
Wednesday 20 February 2008
Thursday 14 February 2008
The Importance Of Making Money
The Global Economic Monitor concludes that as much as one-third of the differences in national economic growth may be due to differences in entrepreneurial activity. In America, as many as 8.4 out of every 100 US adults are right now trying to start businesses of their own. Looking at a business birth-rate strategy in the UK should be a priority for Government.
The fact is that small businesses create the majority of new jobs – 1.6 million (or 64 per cent) of the 2.5 million new jobs created in the U.S in 1996, for example. Since 1980, Fortune 500 companies have cut more than five million jobs while the rest of the economy has added 34 million new jobs.
These statistics are very impressive, but when compared with such statistics for the UK, it can be deduced that the British economy gains considerably more from the small business community. For instance, small businesses account for over 50 per cent of employment outside the public sector, and contributes half the GDP of UK Plc. It follows logically from this, therefore, that small businesses and their ability to create such wealth and employment should be focused on more favourably by our government.
Education in entrepreneurial skills is virtually non-existent in UK primary and secondary schools, as is economic knowledge in general: as a whole we lack a strong understanding of basic economics. But what should we do to address this? The best place to start is to look across the pond at the bastion of entrepreneurial activity: America.
Hundreds of US colleges and more than 90 university-based centres of entrepreneurship now offer entrepreneurship training. Twenty years ago, only a handful of colleges even offered entrepreneurship courses. Today, education in this arena is proliferating across the country.
The National Council on Economic Education has focussed on the teaching of complex entrepreneurship skills such as opportunity recognition, utilising resources in pursuit of opportunity, and mastering long-term vision.
Mini-Society is one of the programmes designed by the Kauffman Centre for Entrepreneurial Leadership to teach entrepreneurship to elementary and secondary school children. The programme is an experience-based approach directed at children ages 8 to 12. Through Mini-Society, children design and develop their own society and identify tasks for which they can earn money.
Ultimately, the children identify opportunities and establish their own businesses to provide goods and services to their fellow citizens. Throughout the 10-week programme, the instructor or course leader conducts in-depth briefings with each student to introduce and explain the concepts underlying the learning experiences. More than 3,500 teachers and youth leaders across the country have been trained to teach Mini-Society. Furthermore, the National Foundation for teaching Entrepreneurship (NFTE) has designed programmes (e.g. summer camps) to teach low-income teens how to start their own businesses.
There are also programmes that are attempting to bridge the gap between the science and business communities (e.g. Stanford University; University of Chicago; University of Colorado-Boulder; University of Iowa; University of Texas-Austin etc). Such programmes will serve as future role models for encouraging the integration of entrepreneurship and technical skills-based education.
A great example of American entrepreneurship can be seen in my following economic tip courtesy of my company Entrepreneur Secrets. Ink is known as ‘black gold’: at printer market leaders Hewlett-Packard, ink and toner supplies make up more than 50% of their annual profits, although they bring in less than a quarter of the company’s $80 billion in sales. At $34 an ounce, it is more expensive that Chanel No.5 eau de Parfum, Dom Perignon 1990 vintage champagne, and 22-year-old Rosebank single malt whisky.
But a new breed of fast-growing upstarts is out to crash the profit party. Across America, retail stores are cropping up in strip malls among the Gaps and Wal-Marts where consumers and small business owners can go to have empty printer and toner cartridges refilled – usually for half of what it costs to buy a new one.
The largest of these outfits, Cartridge World, based in Australia, just passed 1,000 stores worldwide, and its North America affiliate has opened 275 stores in the US. The company is signing up a new US franchisee daily and plans to top 3,000 stores in the country by early next decade, a phenomenal achievement.
There have been ways to reduce printing costs for years for shoppers willing to deal with messy do-it-yourself refill kits or buy from online outfits with iffy-quality products. But the new retail chains will make re-use an option for millions of mainstream PC owners. Customers can either wait for a few minutes for their cartridge to be refilled, or pick up a ‘pre-filled’ one in stock. Most refill franchisees also have their own vans to do pickups and deliveries to local businesses, usually at no extra charge.
The fact is that small businesses create the majority of new jobs – 1.6 million (or 64 per cent) of the 2.5 million new jobs created in the U.S in 1996, for example. Since 1980, Fortune 500 companies have cut more than five million jobs while the rest of the economy has added 34 million new jobs.
These statistics are very impressive, but when compared with such statistics for the UK, it can be deduced that the British economy gains considerably more from the small business community. For instance, small businesses account for over 50 per cent of employment outside the public sector, and contributes half the GDP of UK Plc. It follows logically from this, therefore, that small businesses and their ability to create such wealth and employment should be focused on more favourably by our government.
Education in entrepreneurial skills is virtually non-existent in UK primary and secondary schools, as is economic knowledge in general: as a whole we lack a strong understanding of basic economics. But what should we do to address this? The best place to start is to look across the pond at the bastion of entrepreneurial activity: America.
Hundreds of US colleges and more than 90 university-based centres of entrepreneurship now offer entrepreneurship training. Twenty years ago, only a handful of colleges even offered entrepreneurship courses. Today, education in this arena is proliferating across the country.
The National Council on Economic Education has focussed on the teaching of complex entrepreneurship skills such as opportunity recognition, utilising resources in pursuit of opportunity, and mastering long-term vision.
Mini-Society is one of the programmes designed by the Kauffman Centre for Entrepreneurial Leadership to teach entrepreneurship to elementary and secondary school children. The programme is an experience-based approach directed at children ages 8 to 12. Through Mini-Society, children design and develop their own society and identify tasks for which they can earn money.
Ultimately, the children identify opportunities and establish their own businesses to provide goods and services to their fellow citizens. Throughout the 10-week programme, the instructor or course leader conducts in-depth briefings with each student to introduce and explain the concepts underlying the learning experiences. More than 3,500 teachers and youth leaders across the country have been trained to teach Mini-Society. Furthermore, the National Foundation for teaching Entrepreneurship (NFTE) has designed programmes (e.g. summer camps) to teach low-income teens how to start their own businesses.
There are also programmes that are attempting to bridge the gap between the science and business communities (e.g. Stanford University; University of Chicago; University of Colorado-Boulder; University of Iowa; University of Texas-Austin etc). Such programmes will serve as future role models for encouraging the integration of entrepreneurship and technical skills-based education.
A great example of American entrepreneurship can be seen in my following economic tip courtesy of my company Entrepreneur Secrets. Ink is known as ‘black gold’: at printer market leaders Hewlett-Packard, ink and toner supplies make up more than 50% of their annual profits, although they bring in less than a quarter of the company’s $80 billion in sales. At $34 an ounce, it is more expensive that Chanel No.5 eau de Parfum, Dom Perignon 1990 vintage champagne, and 22-year-old Rosebank single malt whisky.
But a new breed of fast-growing upstarts is out to crash the profit party. Across America, retail stores are cropping up in strip malls among the Gaps and Wal-Marts where consumers and small business owners can go to have empty printer and toner cartridges refilled – usually for half of what it costs to buy a new one.
The largest of these outfits, Cartridge World, based in Australia, just passed 1,000 stores worldwide, and its North America affiliate has opened 275 stores in the US. The company is signing up a new US franchisee daily and plans to top 3,000 stores in the country by early next decade, a phenomenal achievement.
There have been ways to reduce printing costs for years for shoppers willing to deal with messy do-it-yourself refill kits or buy from online outfits with iffy-quality products. But the new retail chains will make re-use an option for millions of mainstream PC owners. Customers can either wait for a few minutes for their cartridge to be refilled, or pick up a ‘pre-filled’ one in stock. Most refill franchisees also have their own vans to do pickups and deliveries to local businesses, usually at no extra charge.
Thursday 7 February 2008
How To Create Niche Businesses To Make Money
In order to gain a better understanding of economic growth and how to make money, various models have been created by economists – all of which aim to measure such growth, how the growth process operates and what factors determine it. They range from descriptive models, some of which focus on the stages of growth or development through which an economy evolves, to formal models, which emphasise factors that are either external to the economic system (e.g. technological sophistication) or internal (e.g. the level of savings).
Although different in many respects, these approaches do share certain common characteristics. First and foremost, they concentrate on large, established firms rather than SMEs. Second, they assume that large firms constitute the real locomotive of economic growth. Third, they are preoccupied with the link between national conditions (e.g. legal institutions) and the impact these have on the performance of firms.
When we focus on the conventional model for national economic growth, we are immediately prompted to ask – why is entrepreneurship absent from this model? Alarmingly, it is because it is accorded a role as part of the secondary economy in the micro-, small- and medium-sized firm sector. These firms are considered to provide a supporting role as suppliers of goods and services to the established firms in the primary economic sector. This is essentially a subordinate role.
Clearly therefore, little understanding is provided by the model with regards to the specific contribution entrepreneurship makes to economic growth and little guidance is given on how to enhance the level of entrepreneurial activity.
We need to begin with the assumption that the role of entrepreneurship is critical to economic growth, and recognise that:
· Entrepreneurial activity is shaped by Entrepreneurial Framework Conditions – to include training in entrepreneurship and the availability of start-up financing.
· The level of entrepreneurial activity is a function of the degree to which individuals recognise the entrepreneurial opportunities available and that they have the capacity, motivation and skill to exploit them.
· The interaction between perceived entrepreneurial opportunities and the entrepreneurial capacity to pursue them will lead to a greater number of start-up efforts, new businesses set up and more jobs. As more firms and jobs are created, there may subsequently be greater business failures and job losses, i.e. business dynamics which usually accompanies economic growth.
· Economic growth is partly determined by the intensity of business dynamics.
Instead of focussing on large, established businesses and the associated secondary role of smaller businesses, we need to look at the entrepreneurial sector itself, and the conditions that shape it and its direct economic consequences. If we are to properly understand economic growth, both perspectives should be looked upon, as:
· it would reflect the contributions of both large established and new entrepreneurial firms;
· it makes clear that existing firms can be a significant source of start-ups;
· it presents the context in which the entrepreneurial sector operates.
The point about small businesses is that entrepreneurs can move quickly in the market and set up niche businesses. These type of firms – which offer a product or service focusing on one specific aspect or customer base within an industry – are growing at a rate of 20 per cent to 25 per cent a year. Some popular niches these days include specialised pet products, beauty salons/spas, travel agencies, back-office services, technical/online support and business coaching.
Niche startups are good in that they offer entrepreneurs a chance to focus all their branding and marketing in one area and expand on those core customers as the business grows. After all, when you try to be everything to everybody, you wind up being nothing to anybody – and that’s the problem with ventures that are too broad.
In addition, the advantage of starting a niche business is the ease of identifying your potential customer base, since you are targeting only certain buyers. In fact, niche ventures have a 25 per cent better chance of surviving over 10 years than more general types of companies.
Niche businesses are easy to start and easy to defend from competitors. By finding a niche where you can build your own unique stronghold, you can attract and maintain customers who will pay top dollar for your goods and services.
A niche is just not a small market. For example, a niche is not just serving a small community: a niche requires a commonality of needs among customers. So, a niche would be selling to the boat owners in a small community, not selling general products to that small community. Thus, a niche has more easily identifiable customers.
Obtaining financing for niche ventures can also be easier. Compared to more general businesses, there is less competition to deal with, which makes you a more attractive candidate when seeking investors.
My company, Entrepreneur Secrets, was started to help people explore niche businesses that have found their comfortable home in other countries around the world, but have yet to be transferred and taken advantage of in the UK.
Although different in many respects, these approaches do share certain common characteristics. First and foremost, they concentrate on large, established firms rather than SMEs. Second, they assume that large firms constitute the real locomotive of economic growth. Third, they are preoccupied with the link between national conditions (e.g. legal institutions) and the impact these have on the performance of firms.
When we focus on the conventional model for national economic growth, we are immediately prompted to ask – why is entrepreneurship absent from this model? Alarmingly, it is because it is accorded a role as part of the secondary economy in the micro-, small- and medium-sized firm sector. These firms are considered to provide a supporting role as suppliers of goods and services to the established firms in the primary economic sector. This is essentially a subordinate role.
Clearly therefore, little understanding is provided by the model with regards to the specific contribution entrepreneurship makes to economic growth and little guidance is given on how to enhance the level of entrepreneurial activity.
We need to begin with the assumption that the role of entrepreneurship is critical to economic growth, and recognise that:
· Entrepreneurial activity is shaped by Entrepreneurial Framework Conditions – to include training in entrepreneurship and the availability of start-up financing.
· The level of entrepreneurial activity is a function of the degree to which individuals recognise the entrepreneurial opportunities available and that they have the capacity, motivation and skill to exploit them.
· The interaction between perceived entrepreneurial opportunities and the entrepreneurial capacity to pursue them will lead to a greater number of start-up efforts, new businesses set up and more jobs. As more firms and jobs are created, there may subsequently be greater business failures and job losses, i.e. business dynamics which usually accompanies economic growth.
· Economic growth is partly determined by the intensity of business dynamics.
Instead of focussing on large, established businesses and the associated secondary role of smaller businesses, we need to look at the entrepreneurial sector itself, and the conditions that shape it and its direct economic consequences. If we are to properly understand economic growth, both perspectives should be looked upon, as:
· it would reflect the contributions of both large established and new entrepreneurial firms;
· it makes clear that existing firms can be a significant source of start-ups;
· it presents the context in which the entrepreneurial sector operates.
The point about small businesses is that entrepreneurs can move quickly in the market and set up niche businesses. These type of firms – which offer a product or service focusing on one specific aspect or customer base within an industry – are growing at a rate of 20 per cent to 25 per cent a year. Some popular niches these days include specialised pet products, beauty salons/spas, travel agencies, back-office services, technical/online support and business coaching.
Niche startups are good in that they offer entrepreneurs a chance to focus all their branding and marketing in one area and expand on those core customers as the business grows. After all, when you try to be everything to everybody, you wind up being nothing to anybody – and that’s the problem with ventures that are too broad.
In addition, the advantage of starting a niche business is the ease of identifying your potential customer base, since you are targeting only certain buyers. In fact, niche ventures have a 25 per cent better chance of surviving over 10 years than more general types of companies.
Niche businesses are easy to start and easy to defend from competitors. By finding a niche where you can build your own unique stronghold, you can attract and maintain customers who will pay top dollar for your goods and services.
A niche is just not a small market. For example, a niche is not just serving a small community: a niche requires a commonality of needs among customers. So, a niche would be selling to the boat owners in a small community, not selling general products to that small community. Thus, a niche has more easily identifiable customers.
Obtaining financing for niche ventures can also be easier. Compared to more general businesses, there is less competition to deal with, which makes you a more attractive candidate when seeking investors.
My company, Entrepreneur Secrets, was started to help people explore niche businesses that have found their comfortable home in other countries around the world, but have yet to be transferred and taken advantage of in the UK.
Friday 1 February 2008
What Is Entrepreneurship?
There is no universally accepted definition of entrepreneurship, but a definition supplied by Eugene Luczkiw, Director of the Institute of Enterprise Education, aptly describes enterprise and its link with education:
"to facilitate development of enterprising individuals who possess a positive, flexible and adaptable disposition towards change seeing it as normal and an opportunity rather than a problem. To see change in this way an enterprising individual has a security borne of self-confidence and is at ease when dealing with insecurity, risks, difficulties and the unknown.
An enterprising individual has the capacity to initiate creative ideas, develop them, and see them through into action in a determined way. An enterprising individual is able, even anxious to take responsibility, and is an effective communicator, negotiator, influencer, planner and organiser. They are active, confident, purposeful: not passive, uncertain and dependent."
Entrepreneurship and the extent of entrepreneurial activity within the UK has only just started to command attention over recent years. With regards to employment and the workforce at large, the emphasis had been on assigning much resources to attracting inward investment –large companies with the capability of employing a vast amount of people at one time.
Repetitive failures on behalf of government to successfully secure foreign investors over the past few years (let's face it, who can compete with the tiny wages paid in the Far East and Eastern Europe) has only served to confirm doubts about the viability and the 'economic sense' in attaching as much importance to achieving inward investment.
I have long argued for a substantial re-addressing of the existing balance between: resources awarded to encouraging the growth and development of indigenous businesses; and resources awarded to attracting employers from overseas to invest in our infrastructure and, more specifically, our workforce.
The prime argument behind this is that the latter is essentially a short-term solution to the problems of the UK economy. It is also damaging as it often proves insensitive to the culture and environment of the local area, and eventually causes a severe unemployment situation – this is particularly dire when the vast majority of the working population of the area were employed by the company who had set up in the area only a few years ago.
Early indications show that the former is increasingly 'catching up' with the latter, if only in the 'discussion' sense for the time being.
The future of entrepreneurship lies with our young population. If a strong and sustainable entrepreneurial culture is to exist, it is essential that it is fostered at the earliest possible stage. If more emphasis is placed on teaching the basic principles of entrepreneurship, thereby encouraging people to develop commercial awareness and attaching a more outward-looking view, we would be in a better position to encourage a greater percentage of business start-ups and expansions.
So in the strong tradition of my company, Entrepreneur Secrets, what would I advise would-be entrepreneurs to do? This is where I come into my own –to give people ideas to just 'go out and do'. And here is a great example that I've actually been working on since 2006! It involves the biggest industry in the world – the food industry – and the fact that it has been on the threshold of a great change for two years, in Europe at least. And with it will bring great opportunities for those who will be ready for these changes.
Agriculture has been one of the flagship areas of European collaboration since the early days of the European Community. In negotiations on the creation of a Common Market, France insisted on a system of agricultural subsidies as its price for agreeing to free trade in industrial goods. The Common Agricultural Policy began operating in 1962, with the Community intervening to buy farm output when the market price fell below an agreed target level.
This helped reduce Europe's reliance on imported food but led before long to over-production, and the creation of 'mountains' and 'lakes' of surplus food and drink. The Community also taxed imports and (from the 1970s onward) subsidised agricultural exports. These policies have been damaging for foreign farmers, and made Europe's food prices some of the highest in the world. European leaders were alarmed at the high cost of the CAP as early as 1967, but, despite this, radical reform began only in the 1990s.
The aim has been to break the link between subsidies and production, to diversify the rural economy and to respond to consumer demands for safe food, and high standards of animal welfare and environmental protection. There are some French arguments for saving the CAP which sound respectable. Jacques Delors, a former head of the European Commission, put it best when he said he would not sacrifice the French countryside on the altar of world trade. The beauty of France and the glories of its food and wine are indeed splendid, and help make the country the world's most popular tourist destination.
But the idea that the CAP is all about helping rustic smallholders to keep making rare cheeses has very little to do with reality. In fact, 80% of the EU's farm subsidies go to the 20% of the Union's farmers with the biggest farms. Because EU subsidies are linked to production, they encourage ugly, intensive, industrial farming. The people the CAP helps most are big businessmen with vast fields of sugar beet in northern France or miles of bright-yellow oil-seed rape in southern England.
The key reform proposed by the European Commission is to cut the link between farm subsidies and production. The same amount of taxpayers' money would continue to pour into the European countryside, but under the Commission's proposals it would increasingly be directed towards environmental protection and rural development, and away from intensive farming.
Those who think farming is dead and that there is no money in it need to think again. The almost mass exodus from the countryside means that farms are now exchanging hands for relatively little money but, if run properly, could soon turn into goldmines under the new subsidy regime. Farms which concentrate early on goals that ordinary people genuinely support, such as beautifying the countryside, will do particularly well. This is because more money would be spent on these activities as the Commission caps the amount that the largest farms receive, so ending the anomaly of the wealthiest landholders, such as England's Prince Charles, doing particularly well out of the CAP.
In addition, biofuels could provide a major income for Britain’s arable farmers. Even without demand for the 'green' fuel, recent falls in output – thanks to drought and low stocks – will keep prices high. Prices will rise by between 20% and 50% by 2016. Production in the US, which mainly uses domestic corn, is expected to jump by 50% in 2007 – and to double by 2016. Meanwhile in Brazil, currently the world's fastest growing ethanol producer, biofuel output is set to hit 44bn litres over the next 10 years, 145% more than in 2006.
The idea of picking up a cheap farm which prices are still low is an attractive proposition, and one that should be considered carefully before farm prices go the same way as house prices over a ten-year period.
"to facilitate development of enterprising individuals who possess a positive, flexible and adaptable disposition towards change seeing it as normal and an opportunity rather than a problem. To see change in this way an enterprising individual has a security borne of self-confidence and is at ease when dealing with insecurity, risks, difficulties and the unknown.
An enterprising individual has the capacity to initiate creative ideas, develop them, and see them through into action in a determined way. An enterprising individual is able, even anxious to take responsibility, and is an effective communicator, negotiator, influencer, planner and organiser. They are active, confident, purposeful: not passive, uncertain and dependent."
Entrepreneurship and the extent of entrepreneurial activity within the UK has only just started to command attention over recent years. With regards to employment and the workforce at large, the emphasis had been on assigning much resources to attracting inward investment –large companies with the capability of employing a vast amount of people at one time.
Repetitive failures on behalf of government to successfully secure foreign investors over the past few years (let's face it, who can compete with the tiny wages paid in the Far East and Eastern Europe) has only served to confirm doubts about the viability and the 'economic sense' in attaching as much importance to achieving inward investment.
I have long argued for a substantial re-addressing of the existing balance between: resources awarded to encouraging the growth and development of indigenous businesses; and resources awarded to attracting employers from overseas to invest in our infrastructure and, more specifically, our workforce.
The prime argument behind this is that the latter is essentially a short-term solution to the problems of the UK economy. It is also damaging as it often proves insensitive to the culture and environment of the local area, and eventually causes a severe unemployment situation – this is particularly dire when the vast majority of the working population of the area were employed by the company who had set up in the area only a few years ago.
Early indications show that the former is increasingly 'catching up' with the latter, if only in the 'discussion' sense for the time being.
The future of entrepreneurship lies with our young population. If a strong and sustainable entrepreneurial culture is to exist, it is essential that it is fostered at the earliest possible stage. If more emphasis is placed on teaching the basic principles of entrepreneurship, thereby encouraging people to develop commercial awareness and attaching a more outward-looking view, we would be in a better position to encourage a greater percentage of business start-ups and expansions.
So in the strong tradition of my company, Entrepreneur Secrets, what would I advise would-be entrepreneurs to do? This is where I come into my own –to give people ideas to just 'go out and do'. And here is a great example that I've actually been working on since 2006! It involves the biggest industry in the world – the food industry – and the fact that it has been on the threshold of a great change for two years, in Europe at least. And with it will bring great opportunities for those who will be ready for these changes.
Agriculture has been one of the flagship areas of European collaboration since the early days of the European Community. In negotiations on the creation of a Common Market, France insisted on a system of agricultural subsidies as its price for agreeing to free trade in industrial goods. The Common Agricultural Policy began operating in 1962, with the Community intervening to buy farm output when the market price fell below an agreed target level.
This helped reduce Europe's reliance on imported food but led before long to over-production, and the creation of 'mountains' and 'lakes' of surplus food and drink. The Community also taxed imports and (from the 1970s onward) subsidised agricultural exports. These policies have been damaging for foreign farmers, and made Europe's food prices some of the highest in the world. European leaders were alarmed at the high cost of the CAP as early as 1967, but, despite this, radical reform began only in the 1990s.
The aim has been to break the link between subsidies and production, to diversify the rural economy and to respond to consumer demands for safe food, and high standards of animal welfare and environmental protection. There are some French arguments for saving the CAP which sound respectable. Jacques Delors, a former head of the European Commission, put it best when he said he would not sacrifice the French countryside on the altar of world trade. The beauty of France and the glories of its food and wine are indeed splendid, and help make the country the world's most popular tourist destination.
But the idea that the CAP is all about helping rustic smallholders to keep making rare cheeses has very little to do with reality. In fact, 80% of the EU's farm subsidies go to the 20% of the Union's farmers with the biggest farms. Because EU subsidies are linked to production, they encourage ugly, intensive, industrial farming. The people the CAP helps most are big businessmen with vast fields of sugar beet in northern France or miles of bright-yellow oil-seed rape in southern England.
The key reform proposed by the European Commission is to cut the link between farm subsidies and production. The same amount of taxpayers' money would continue to pour into the European countryside, but under the Commission's proposals it would increasingly be directed towards environmental protection and rural development, and away from intensive farming.
Those who think farming is dead and that there is no money in it need to think again. The almost mass exodus from the countryside means that farms are now exchanging hands for relatively little money but, if run properly, could soon turn into goldmines under the new subsidy regime. Farms which concentrate early on goals that ordinary people genuinely support, such as beautifying the countryside, will do particularly well. This is because more money would be spent on these activities as the Commission caps the amount that the largest farms receive, so ending the anomaly of the wealthiest landholders, such as England's Prince Charles, doing particularly well out of the CAP.
In addition, biofuels could provide a major income for Britain’s arable farmers. Even without demand for the 'green' fuel, recent falls in output – thanks to drought and low stocks – will keep prices high. Prices will rise by between 20% and 50% by 2016. Production in the US, which mainly uses domestic corn, is expected to jump by 50% in 2007 – and to double by 2016. Meanwhile in Brazil, currently the world's fastest growing ethanol producer, biofuel output is set to hit 44bn litres over the next 10 years, 145% more than in 2006.
The idea of picking up a cheap farm which prices are still low is an attractive proposition, and one that should be considered carefully before farm prices go the same way as house prices over a ten-year period.
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