More difficult business situation
Farmers have to expect significantly less profit
May 21, 2024, 9:49 p.m
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The financial situation of many farms had recently stabilized significantly – farmers have benefited from high prices in recent years. But now they have to prepare for falling profits again. The farmers’ association expects a drop in profits of up to 50 percent.
Farmers’ business is deteriorating after recent good profits. “Our businesses have once again found themselves in economically difficult waters,” said farmers’ president Joachim Rukwied. For the current 2023/24 financial year, which runs until the end of June, a drop in profits of between 30 and 50 percent can be expected compared to the previous year – at that time the results had increased significantly thanks to higher prices. Federal Agriculture Minister Cem Özdemir is now also expecting lower incomes due to falling prices and wants to continue to create more stable conditions for the industry. In the previous financial year 2022/23, company results rose to a record level.
According to official data that Özdemir presented in Berlin, the average profit rose to 113,900 euros, 39 percent higher than the previous year. According to the ministry, the main reason for this was a sharp increase in prices for almost all products, which accelerated as a result of Russia’s war of aggression against Ukraine. As a result, most farms would have been able to more than compensate for significant increases in energy, feed and fertilizer costs.
According to its own data, the farmers’ association had already determined an average profit of 115,400 euros for the past financial year. However, investments still have to be paid for, among other things. In general, the farms have to deal with sometimes strong fluctuations, for example due to the weather or the development of prices, which have long been largely determined by international markets.
Rukwied said producer prices for most major crop and animal products are now significantly lower. Özdemir explained that the fluctuations were like a “roller coaster ride” for the companies. The fact that many farms were recently able to achieve strong operating results for the second time is good news. “But we must not lull ourselves into a false sense of security.” For politicians, it is therefore about reliability and the ability to plan for the hard work of farmers.
Facilitation of bureaucratic requirements
After nationwide farmers’ protests over the cancellation of agricultural diesel benefits at the beginning of the year, the traffic light coalition has promised the industry other relief – including relief in bureaucratic requirements and tax regulations, which are to be implemented before the summer. Özdemir reiterated that there should be permanent financing for converting animal husbandry to higher standards so that farms are not left with the additional costs. This cannot be achieved from the current retail prices.
The minister again promoted proposals for a higher VAT or an animal welfare cent on animal products. None of the three coalition partners have clearly taken this off the table at the top level and the talks will continue. In the coalition, the FDP in particular had raised objections. Özdemir said that the way of German agriculture is to “make the difference on the market with quality.” The federal government has initially reserved one billion euros for better conditions in the stables, but this is only intended for pig farmers.