Your correspondent has been traveling in Italy and Slovenia and has been looking at how their countryside is being developed.
The three big things which you see in both countries are:
- Big companies are missing in small villages and in the tourist, farm (dairy, meat & wine) and retail sectors.
- Families in these villages are running much of these sectors and retail business and are working long hours every day except for the “free day”
- They only employ the family members and, if the labor market is tight, a few low cost foreigners! There is a great tradition of neighbours helping one another when needed for special cases.
One interesting and common example is to be found in the Italian mountains where we came across called “AgriTourism”. This is a vey special sector with generous financial support from the government.
Let’s have a look at an actual example – the names are fictional to protect the identity of the people.
Marco is married to Maria,. Both are in their late 20’s with the first child on the way. Marco’s mother is living in the family’s massive and very old farmhouse with this couple. She is now 76 years old and a widower.
They have 10 hectares of grass fields and 50 hectares of mature forests on the side of the mountain 1500m high above a small village in South Tyrol. They have a few chickens, 2 goats and 4 sheep and 20 cows. The cows spend summer on the “Alm” (the high pastures) on top of the mountains, in the winter they are packed with the rest of the animals in a huge barn next to the old house.
Maria is a ski instructor and Marco works on the farm in the weekends and evenings and has a full time job delivering drinks (wine, beer and soft drinks) to hotels, restaurants, B&B places, bars and Hutte during the day.
Maria decided one year ago that a building a new house for “AgriTourism” next to the old house would be a “great investment”. Why did she think this because building any house on the side of the mountain is expensive and difficult? The land slopes at 20%, they get 3 to 5 meters of snow in the winter, and water runs down from the other 2000 meters above their plot with just a narrow road of 4 kilometres winding up the mountain with 10 sharp hairpin curves!
They successfully estimated the cost of the house to be €900 000 when ready. They had their own home on the ground floor, and 5 apartments for tourists from whom they could charge around €1000 a week for each apartment for 5 to 6 months each year – 3 months in summer and 2 to 3 months in winter. This they calculated would give them a gross income of at least €100 000 with basic assumptions, and more if they can keep high levels of occupancy which should not be a problem. They do not use www.booking.com or other similar booking sites because so far their excellent website has been more than enough – thus saving a huge expense. These booking companies want 20% to 30% for their services.
The couple had managed to save almost €100 000 with some help from their parents and after talking with Marco’s mother they sold hundreds of big spruce and larch trees from their forest and this netted another €100 000. Because this was an active farm, they were eligible for a €200 000 AgriTourism grant from the government, leaving them with 2% fixed rate loan for €500 000 to be repaid over 18 years meaning that they have annual loan repayments of some €35 000… The annual net income alone from rent easily covers these costs, and they still have the husband’s wage. Maria’s mother helps with the cleaning… it is all within the family!
We know that they opened at the end of June 2019 and are fully booked to the end of September!
The house is a beautiful and was built using local, wood, steel, concrete and other materials. The tax impact is positive because nearly all the contractors and workers were from the area where they all paid their taxes. Having 5 tourist families coming into the region for some 6 months is surely positive – the villages here take care of tourists with many traditional fairs and events.
Finally, it is worth noting that young people have every reason to stay in the village with this type of solution. Grandmother gets to keep her old house, her son gets an exciting new project, and marries the girl of his dreams, while she gets a job worth millions! The agriculture sector is enriched and farmer Marco and Maria now become valued land-owners with future work guaranteed for their children.
Now that solution makes sense in so many ways!
