Similar footwear may be misleading: “The” farmer does not exist.
Foto: Photocase/Addictive Stock
It has often been said in recent days that the recent farmers’ protests are no longer about the current cuts. The dissatisfaction and anger of farmers is much deeper. A look at the past decades of agricultural policy shows: The lack of political will to implement measures in a reliable manner has brought more and more agricultural businesses into sometimes hopeless situations. This is what unites the farmers. There is disagreement about which path should be taken. This also applies to the question of subsidies – because social requirements have changed.
Agriculture in Germany, like the rest of the European Union, is heavily subsidized; at around 60 billion euros, the EU agricultural budget makes up around 40 percent of the total budget. On the one hand, the industry fulfills an important social task – nutrition. At the same time, it is about companies that also produce for the global market and face fierce competition here. Today a third of Germany’s agricultural products are exported.
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Companies receive tax money from the EU, the federal government and the states – this also sets the political framework. “The basic principle is that the large windfall is first distributed and then a lot of conditions are linked to these subsidies,” the president of the federally owned Thünen Institute, Folkhard Isermeyer, recently explained in the Tagesschau. And adds: “We have now reached a level of regulation that is overwhelming both the individual farms and sometimes the authorities who have to implement the whole thing.”
Businesses die and grow
According to the Federal Statistical Office, the number of agricultural businesses in Germany has shrunk by around 7,800 since 2020. In 2023 there were still 255,000 companies, three percent fewer than three years earlier. “Grow or soften”: The structural change towards fewer but larger companies continues. At the same time, fewer and fewer people are working in the industry. The number of workers fell by seven percent from 2020 to 2023 to a total of 876,000. Of these, 242,800 were seasonal workers. On average, a company employed 3.4 workers.
The companies are very different. Many farmers can barely cover their costs despite extensive subsidies, while others can achieve good to very good yields and profits based on their operational and local conditions. This depends on numerous factors: What products are produced? How is the floor? What is the logistical connection to trading structures? »For an agricultural and food transition that is sustainable and environmentally and climate-friendly, farmers need fair remuneration for their work and fair prices for the food they produce. Since other structures have been supported for decades, a financing concept for the change itself is also necessary,” says Beate Richter, scientific advisor for agricultural policy at the Ecological-Social Market Economy Forum. »Environmentally friendly production methods must become profitable for agricultural businesses. To make the transition, farmers need support – financially, systemically and with appreciation for their contribution to society.«
At EU level, the direction of the Common Agricultural Policy (CAP) has been a contentious issue for years. Essentially, it’s about the equipment of the two pillars: The direct payments subsidize the area that a company cultivates. The bigger the farm, the more money. New in the current funding period, the share for ecological measures in the first pillar is 25 percent and amounts to more than one billion euros annually.
The second pillar promotes environmental measures and rural development. CAP payments are not linked to the number of jobs. In Germany, for example, farmers can create flowering areas and strips of old grass or forgo pesticides in order to get additional money. Last year, however, almost 40 percent of the budget for these so-called eco-rules was not used. The federal government also subsidizes farmers’ statutory old-age and health insurance.
Direct payments in particular are increasingly being criticized. They were introduced in the early 1990s. Before that, there were price compensation payments because companies could not compete with the world market due to high costs. However, these state-guaranteed prices had led to overproduction.
The problem with direct payments
If there were calls today to phase out direct payments, that would be particularly painful for large companies with a lot of workers. This is one of the reasons why this proposal is particularly criticized in the east of the country. Others have long been calling for at least an upper limit. “A greater breadth and diversity of businesses in Germany would benefit financially from a redistribution of these funds,” says the rural agriculture working group. For the new CAP funding period from 2027, it demands that environmental services must also be relevant to income. So far there are bonuses for this. These are currently designed in such a way that they only compensate for lost income. “If the premiums were increased to such an extent that part of the payment was contributed to the farm as a profit contribution, farmers would finally have the opportunity to generate income through environmental services,” says the recently presented six-point plan. The German Farmers’ Association also now sees the need to replace direct payments with other services. Important for the farmers’ association: Competitiveness must be treated equally; there should be no priority for nature and environmental protection measures.
It is not the case that farmers support the subsidy system itself. It would be better if they achieved prices that would allow them to make a living from their work. But it’s not that simple, because farmers can’t pass on the higher costs to consumers. In addition, rising prices are socially problematic. This can be clearly seen using the example of animal husbandry. The number of companies here fell by 7,100 to 161,700 within three years. Although it is socially desirable to keep farm animals in good conditions, the additional costs are not covered.
Animal welfare and climate protection
At the same time, from a nutritional policy perspective and because of the consequences of climate change, there are calls to reduce meat consumption. In February 2020, the livestock farming competence network, the so-called Borchert Commission, presented a concept for converting the entire German livestock farming system to a significantly higher level of animal welfare. The recommendations were negotiated between conventional and organic agriculture, environmental associations and scientists. Hardly anything has happened since then. The Ministry of Agriculture, which has been run by the Greens for two years, has taken the first steps, for example with an animal husbandry label on meat packaging. However, the question of financing an animal welfare tax has not been clarified. When Federal Agriculture Minister Cem Özdemir now calls in the media for action to finally be taken, then he is probably making the appeal to his own house.
The animal welfare tax means a surcharge on all animal products. The income can be used to support farmers in converting their stables. However, it is unclear how this tax should be collected; various models are on the table. One possibility would be an increased VAT on meat products, but it is unclear how this will benefit farmers. After all, Özdemir announced on Thursday that his department could make one billion euros available for the restructuring of pig farming, with other areas to follow.
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