Farmers’ anger in the “climate laboratory”: “Farmers should please behave like entrepreneurs”

Thousands of farmers block the streets in Berlin with their tractors. Your anger is directed against the traffic light and the planned one Reduction in agricultural diesel reimbursement. But politics is the wrong addressee for many problems in agriculture, he says Sebastian Lanker from the University of Rostock. Neither agricultural diesel nor a rising minimum wage should be a problem for well-run businesses, emphasizes the agricultural economist “Climate Laboratory” by ntv. The death of farms is also bitter for hard-working farmers, but has nothing to do with failed agricultural policy: “This is technological progress,” says Lanker – which Germany should use to its advantage. Because of the tough competition, many farmers are well positioned, well equipped and offer their employees modern working conditions. Other EU states, on the other hand, keep unprofitable businesses artificially alive.

ntv.de: How would you describe the state of agriculture in Germany in one word?

Sebastian Lakner: Challenging. Especially mentally. These challenges are not trivial, but overall the agricultural sector is well positioned. That sounds surprising, but I’m happy to explain it.

Absolutely. Are the farmers’ protests excessive?

It’s not my job to evaluate that. Everyone has the right to draw attention to their own situation, and there are certainly points of criticism that I can understand. But if you look at the hard facts, the situation in German agriculture is not as bad as portrayed.

The facts in the last two years were as follows: There were very good profitsbut only because food prices rose sharply due to the war in Ukraine.

You have to start somewhere else: very committed and well-trained farmers work on the farms. This is the most important prerequisite for being able to successfully deal with social challenges on the market. Professional competence and management skills are high, the machine equipment is very good. Part of German agriculture is very modern and competitive.

However, many farmers complain that they can no longer find staff.

You have to differentiate. Sometimes that’s a problem, but if there’s a lack of staff, it depends on what I offer. Some people got it. They know that they have to offer a tractor driver more than just a low wage. Of course, not every company can pay top wages, but again: part of German agriculture is very successful.

And well-positioned personnel?

Yes. It’s not all great, but we visited companies where employees reported great solutions to problems. But that requires strategy, optimism and of course better politics.

However, many farmers complain that even the minimum wage is already eating up profits. Doesn’t that suggest that you can’t offer anything?

That speaks of problems in the industry, but who is complaining? Especially companies with a lot of manual work, i.e. areas such as fruit and vegetable growing. If you look at the key figures of an average company, the minimum wage shouldn’t actually be an issue. The question is also: Have I perhaps underestimated the problem of “remuneration”, paid my employees too poorly for years, systematically undervalued the “work” factor – and now it’s falling on me?

Are companies in business demand at this point?

Yes. The farmers’ association says farmers are strong entrepreneurs. Then please behave like that. And if we look at it from the employee’s point of view: It’s a hard job, you have to work a lot. And the companies don’t even offer the minimum wage? But hello! Everyone will then consider whether he or she has other options.

If staff isn’t a problem, where is the problem?

A point that many farmers could be annoyed about: We have taken a very market-liberal course in agricultural policy since 2005. Unlike other European countries, Germany has refrained from subsidies and small helpers – under the aegis of the CDU and CSU. As an economist, I know the advantages of this strategy, but it was very hard for many companies. At the same time, they have benefited from this boost in competition.

Do other EU states support domestic agriculture more with state aid?

No. Other countries use a support program within European agricultural policy that promotes certain business sectors. There are the so-called coupled payments, which are linked to a specific production: There are payments for dairy farms per animal. The German government never did that. In other EU member states, dairy farming is specifically subsidized in this way, and non-competitive farms are kept alive. The result is that we have too much milk on the European market and German farms are suffering from low prices. We have allowed these payments and supported them politically since 2009.

At EU level?

Exactly, under the responsibility of the CDU and CSU. But neither Ms. Aigner nor Ms. Klöckner or other predecessors of Cem Özdemir in the Ministry of Agriculture criticized the decision. Neither does Mr. Rukwied or the farmers’ association. Of course, it will now be difficult to abolish payments that have been around for a long time because 26 out of 27 EU governments are in favor of it. If the German Farmers’ Association complains about distortion of competition, it should address the coupled payments in the European Farmers’ Association, but nothing happens. Instead, the status quo is being lobbied in Germany.

However, the farmers’ accusation is correct when they say: We are at a disadvantage compared to European competitors.

In certain places. If you look at the European picture, you see a lot of countries that pay agricultural diesel reimbursement – albeit at very different levels. Without it, we wouldn’t be alone: ​​Poland doesn’t pay, the Netherlands doesn’t, France pays much less. Austria has reduced the reimbursement. This is a mixed field, but overall criticism is justified: for fair competition, there should be the same conditions for everyone on the European market. However, Mr. Rukwied doesn’t do enough to achieve that. Instead, with agricultural diesel, he is bringing out a backward subsidy instrument that other EU governments could also abolish in the medium term because everyone must meet the climate targets and decarbonize their economies.

So is it the right traffic light decision to no longer subsidize agricultural diesel?

I and many colleagues largely agree that this is an environmentally harmful subsidy. The problem in this case is that it disappears in the very short term and farmers cannot adapt. There is no electric tractor or combine. A lot of development work still needs to be done in this area in the next few years. It would have been more sensible to abolish the subsidy in the long term and combine it with an alternative offer.

But then the anger of the farmers is understandable, because ultimately the only thing left is: They should pay the bill for a budget deficit that the traffic lights themselves caused. That was the last straw, as the saying goes.

However, companies basically have to face constant competition and see how they survive. This phenomenon of “structural change” is not something that is controlled politically. We observe this in all industrialized nations.

Structural change means social changes?

No, the agricultural sector is getting smaller and smaller. This started in the Second World War. Historians even go back to the Middle Ages with the phenomenon of “structural change”: there are fewer and fewer companies and they are getting bigger and bigger. After the Second World War, 25 percent of the population worked in agriculture; in Italy it was 40 percent. Currently around 1.5 percent of the population works in agriculture. If you look at the time series, you won’t find any structural breaks. This is a continuous process that agricultural policy cannot influence. Many politicians didn’t understand this: It’s fruitless to blame your political opponent for the farms dying out.

This is technological progress?

The death of the farm is technological progress, exactly. Farms give up every year. It’s bitter when you’ve worked there all your life and in the end the business goes out of business. But this must be clear to all aspiring farmers: I work hard every day, even longer than other professional groups, on weekends, I have to constantly stay on the ball, improve myself technologically in order to survive – and maybe it’s still not enough.

And in the end, the most important asset of our society – our food – will be secured by an ever smaller population group?

Yes. And this is not an “evil agricultural industry,” as it is often said, but rather well-organized, highly modern companies. That’s what prospective farmers want, too, because the image of the small business where everything is romantically done by hand is an illusion and a structure that doesn’t allow for a vacation. I have great respect for small businesses, but modern agriculture works differently. And as I said: Many companies turn these harsh conditions to their advantage.

Because they have modern equipment such as combine harvesters, some of which are already automated, and work more efficiently than their competitors abroad?

Exactly. And so far without a consistent and clearly structured agricultural policy, because we have only been changing things in the homeopathic area for many years. The traffic light must say where it wants to go in terms of agricultural policy and how it wants to achieve this goal. It can be economically rational to continue to subsidize future tasks if you want to implement certain goals such as greater animal welfare in animal husbandry. But there are currently no incentives to invest because the FDP doesn’t want to finance it.

Clara Pfeffer and Christian Herrmann spoke to Sebastian Lakner. The conversation has been shortened and smoothed for better clarity. You can watch the entire conversation in the podcast “Climate Laboratory” listen.