Agriculture in crisis: degression forces companies to divide!

Agriculture in crisis: degression forces companies to divide!

Agriculture in Germany is facing major changes, particularly affecting financial support from the CAP. Degression, i.e. the gradual reduction in premiums per hectare, is already having its first effects: many farms are forced to share their areas in order to achieve higher premium entitlement. MDR reports, that this strategy is particularly relevant for larger companies such as Friedrich Baumgärtel's arable farm, which cultivates 600 hectares and states that degression does not make sense because all companies have to meet the same environmental requirements, regardless of their size.

The obligation to implement environmental measures has been a central point for receiving the full bonus since 2023. These requirements could be challenging in times of inflation and rising prices. But Baumgärtel sees little chance of higher consumer prices, as these are often set in markets like Chicago or Paris. At the same time, Prof. Dr. Thomas Herzfeld has concerns about the bargaining power of food retailers in this regard.

Political changes in agricultural policy

But what does it look like on the political stage? The seating positions for the new agriculture department were recently changed in the Bundestag, but the colors of the new government have not yet been decided. The new agriculture minister is not expected until mid-December, which creates a certain vacuum for action in agricultural policy. Hearth and farm informed that voices for a reversal in the attitude towards degression and capping of direct payments are becoming louder. The Saxon Agriculture Minister Thomas Schmidt warned of one-sided burdens on eastern companies as a result of the planned cuts, which points to increasing tensions between East and West.

Schmidt is in favor of leaving funds in the respective federal state and preventing an outflow of financial resources. Meanwhile, the President of the German Farmers' Association, Karl-Henning Klamroth, supports the capping and degression, in view of the fact that legal entities in agriculture only make half as much profit as GbR and individual companies. This raises the question of how sustainable the current agricultural policy really is.

Future requirements and financial support

Another important point are the reforms already planned for 2028, which will involve national co-financing of at least 30 percent. Agrar Today takes a look on new income support measures to support small farmers and disadvantaged areas. These measures could help promote important investments and risk management. This means that, for the first time, support services can be promoted among farmers to relieve the burden on families and employees.

Small businesses also expect flat-rate income support of up to 3,000 euros, which is provided instead of area bonuses. All of these developments cast a shadow on agriculture, which must reorient itself in order to meet the challenges of the future.