Sharpening the pitchforks
The German Review is funded entirely by its readers. If you would like to support this project’s future - and receive an extra newsletter every week - sign up by clicking/tapping the button below!
Dear Reader,
The wonderful thing about the Brandenburg Gate is that it is not just Germany’s most popular tourist attraction, it is also the country’s central place of protest.
Thus, tourists hoping for an obligatory holiday snap unwittingly find themselves in the middle of an anti-war march or find their picture being ruined by eco-warriors armed with fire hydrants.
On Monday, any tourist bold enough to venture into the dank Berlin winter will have been confronted by the whiff of manure wafting through the Gate from the direction of the Tiergarten park. Upon arrival, they may have believed they had chanced upon a country fare.
Some 3,000 tractors clogged up Straße des 17. Juni, the lofty boulevard leading up to the Brandenburg Gate from the city west on Monday afternoon. Some had brought steaming piles of manure with them, which they then tipped onto the street.
But this wasn’t countyfolk making themselves at home on a trip to the big city. The farmers had come in anger. And the dung was meant to symbolise what they think of the current government.
The object of their ire was a decision by Olaf Scholz and his two top ministers to cut a billion euros-worth of farm subsidies, more or less overnight.
The cuts are part of a €17 billion austerity package that has been forced upon Scholz by Germany’s top court, which ruled last month that he is no longer allowed to use sneaky financial tricks to get around Germany’s tight budgetary rules.
The federal belt-tightening will hit farmers hardest. Starting next year, they will have to start paying tax on diesel for their farm vehicles. And they will also have to start paying road tax on their tractors and combine harvesters - a cheeky move given that these aren’t exactly road vehicles.
The tough news comes at a time when farmers are already deeply suspicious of Berlin’s political class. Whether it be the return of the wolf to Germany’s forests, tighter limits on pesticide use, or competition from Ukrainian grain, farmers have been grumbling a lot lately.
They charge that the government is killing off small farms by imposing too many rules on them. The farmers’ union doesn’t tire of warning about a Höfesterben (death of farmhouses). Likewise, protesters at Monday’s demonstration held up signs that warned gloomily that “without farmers there is no future.”
As ever though, there is another side to this story.
The so-called Höfesterben is nothing new - it has been going on for at least half a century. Whereas in 1970 there were over a million farms in West Germany alone, there are only 260,000 in the whole country today.
The slow death of this way of life is arguably sad for the families involved (although part of the problem is that farmers’ offspring don’t want to take over).
Whether it’s a bad thing for society is a different matter.
The Höfesterben doesn’t seem to have affected productivity. On the contrary, German wheat yields per hectare have more than doubled since the 1970s. And, as farming becomes more sophisticated, it seems inevitable that businesses will have to grow to survive.
Our neighbours in the Netherlands are showing what’s possible when large sums of money are poured into agricultural research and development.
Dutch farmers use vast greenhouses, LED lighting, and drones to maximise efficiency; their companies are pioneering robotic milking and harvesting. These advancements are expensive, but they also bring big rewards: the Netherlands is second only to the US in the value of its agricultural exports, despite being the size of the small state of Maryland.
In Germany too, agriculture is increasingly run by conglomerates.
Supermarket Aldi Nord, insurance firm MunichRE and pharma giant Merkle all own large farming subsidiaries. Some 3,700 German farms are owned by holding companies. That might account for less than two percent of all farms, but they manage 10 percent of the land.
Perversely, these conglomerates are some of the biggest beneficiaries of the subsidy pot. Aldi Nord’s farming subsidiary, for example, receives around €3 million in annual handouts from the EU’s CAP subsidies - and gets the German ones on top.
Even among the farms that are still in family hands, a small number are increasingly dominant. Government statistics show that 14 percent of farms now control 62 percent of the land.
It is reasonable to ask whether these companies would really be threatened by having to pay tax on their diesel. The left-wing daily die Tageszeitung reports that a mid-sized farm with a turnover of €480,000 will now face additional costs of €2,900 for the diesel tax. “That hardly matters for these businesses,” the paper concludes.
Meanwhile, the example of New Zealand, which cut all farm subsidies in the 1980s, shows that it is more than possible to remain an agricultural powerhouse without state aid.
The political fallout though, has been predictably partisan.
The centre-right Christian Democrats (CDU), having spent the past 18 months complaining about how Scholz spraying money around mit der Gießkanne on energy subsidies, now accuse the chancellor of “punching farmers in the stomach.”
The response of the far-Right Alternative for Germany (AfD), meanwhile, showed a lack of self-awareness that was impressive even by their standards.
AfD politicians froth at the mouth at the mere mention of the Letzte Generation, the eco-warriors who glue themselves to the street to annoy car drivers. The activists are Klimaterroristen who should be banged up in jail, AfD politicians constantly tell us. But the farmers, who have blocked autobahns with their tractors and even dumped dung in front of politicians' offices, are “rebels against our mad government!”
Caught off guard by the size of the protest, the government already appears to be on the point of caving in.
Agriculture minister Cem Özdemir (Greens) insists that the cuts had nothing to do with him (his party has been calling for an end to the diesel subsidy for years). He joined the protesters at the Brandenburg Gate on Monday but it didn’t help. When he took to the stage to speak, he was greeted with boos and whistles.
Meanwhile, Scholz’ jittery three-way coalition are all trying to blame each other for coming up with the idea.
With the Bauern threatening full-on revolt in January, it seems like a question of if, not when this weak government buckles. That's a shame given that they've just found a billion euros that could be saved without any great cost to society.
Agree or disagree? I’m always glad to hear the thoughts and insights of readers in the comment section here:
I live in a small village (2500 people) that has 4 farms, 2 are milk producing including 1 is a bio-gas producer and 2 are only grain, hay and straw producers. Between those 4 farms are 11 large tractors with various sized trailers attached. Those tractors drive on all the state and local highways with no regard for speed limits or load capacity. I have little empathy for these farmers, they are a long way from being poor!
Great article explaining both the current protest and the history of it. I don't disagree that subsidies should be phased out, but there are three nuanced points to observe here, which I would like to point out.
(1) Normally subsidies are phased out over time with a longer time horizon, since purchasing more fuel-efficient tractors and agricultural equipment requires a significant investment of capital and the manufacturers need to scale up production so that such equipment is available (and manufacturers need to know that it will be required, so the required design changes. can be made, tested, and implemented, along with the capital investments). As an example, the change to Euro 7 standards for automobiles was announced years in advance, and everyone knew what was coming. Combustion engine automobile phase-outs are announced 12 years in advance.
(2) Many subsidies are indexed to income, business size, etc. Subsidies to small or family farms (which could be defined in terms of turnover, hectare size, or ownership structure, or some combination) might be more politically acceptable, and could also serve as an interim bridge with a time-announced phase out, since these cuts disproportionally effect smaller operations.
(3) Since Germany has announced policy goals that emphasize rapid scale-up of biogas production, and many farms have implemented it, an alternative would be to rapidly implement subsidies for conversion of agricultural machinery and tractors to run on biogas. This has already been done in some parts of Europe, and some farms operate all their equipment and (even electricity) from own biogas production. That would be a one-time charge which would then reduce forward operating costs for those operations and would allow easier removal of the subsidies.