German farms register record year amid Ukraine war

German farms did better in the 2021-2022 financial year than in the past decade, according to new data, though the country’s agriculture ministry points out that the good performance does not mean the sector profited from the Ukraine war crisis.

Read the original German article here.

After being relatively stagnant, incomes in agriculture developed “clearly positively” in the 2021-2022 financial year, the latest projection of the Agriculture Ministry reads.

The income per worker rose by almost a third to around €43,500 for the year compared to the previous one – by far the highest result in the last 10 years.

The main reason for the increase was the ‘strong rise’ in producer prices that farmers could achieve for many agricultural products, which even compensated for the cost increase for inputs like fertilisers and animal feed, according to the report.

“This is really good news in these times of crisis,” emphasised Ophelia Nick, the Ministry’s Parliamentary State Secretary, as she presented the figures on Monday (17 April).

Following a decade of fluctuating profit margins due to the various crises, it was good “farms could also take a deep breath for a year”, said Nick.

For example, dairy and other forage farms made about 60% more profit, while arable farms recorded an average increase of just under 40%.

Profit despite or due to the crisis?

Russia’s war in Ukraine, which disrupted the country’s exports, drove up market prices for many agricultural products, including in Germany.

Overall, producer prices for agricultural products in Germany rose by around one-fifth between when the war started in February 2022 to February 2023, according to the Federal Statistical Office.

The price increase was particularly noticeable for products exported in large quantities by Ukraine until before the war, including cereals such as wheat and barley, as well as oilseeds such as rape or sunflowers.

For all these products, the farms increased their turnover in the past business year due to higher producer prices with stable crop yields, Nick explained.

On the flip side, costs for agricultural inputs such as fertiliser, feed or energy also saw a price increase following Russia’s war of aggression, though the ministry again noted that this was more than compensated for due to the higher turnover.

Similar findings were made in the economic barometer of the German Farmers’ Association (DBV), which last measured the mood among farms in January.

The survey found farmers to be more optimistic about their economic situation for the first time in a long while due to the development of producer prices for products such as milk, wheat and rapeseed.

Regardless of this boost coinciding with the war in Ukraine, Nick does not believe the sector is profiting from the crisis. On the contrary, a lot has been done on the farms to defy the adverse conditions, she stressed.

The Green politician said one should be proud that the farms had “made adjustments” – for example, by saving on the use of artificial fertiliser – and had thus “managed well despite these times of crisis”.

Favourable weather conditions also contributed to good yields, she added – hence the high profits.

Big business profits

The financial year was particularly successful for large enterprises, according to the ministry’s data.

“This certainly always has to do with economies of scale, which, for example, make the purchase of inputs cheaper for large farms,” Nick said.

This shows that in the future design of the Common Agricultural Policy (CAP), attention must be paid to strengthening small farms and thus maintaining diversity in the agricultural structure, she stressed.

[Edited by Gerardo Fortuna/Nathalie Weatherald]

Source: Ε

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