German farmers are maintaining their rallies across the nation this week, despite a partial retraction of subsidy reductions. The farming community began their demonstrations in late December in response to the government's plans to eliminate diesel subsidies and tax exemptions for agricultural vehicles. Despite Berlin's decision to phase out fuel subsidies over two years and continue tax breaks for tractors, the farmers remain unsatisfied.
Recent increases in food prices have been advantageous for German farmers. The German Farmers' Association (DBV) reported that the average full-time farm yielded a profit of €115,000 ($125,000) in the 2022/23 fiscal year, marking a 45% surge within two years. However, the DBV notes that these earnings are not particularly high compared to other sectors such as butchery or bakery. Furthermore, many farms employ unpaid family members, but even when accounting for this, the profits seem healthy compared to the average wage in Germany.
According to Karsten Hansen of the German Dairy Farmers Association (BDM), the protests are about more than just diesel and vehicle tax breaks. The announcement of subsidy cuts was simply the last straw. The reality of German agriculture is more complex than it appears on the surface, with profits varying greatly based on the type of farm, the region, and the size of the farm. Over the past decade, the number of farms in Germany has been decreasing by over 1% annually, with most of the losses being small farms, while the number of larger farms is on the rise.
As the German government attempts to fill a €17 billion ($18.6 billion) deficit in its 2024 budget, farmers feel they are being unfairly targeted. The DBV insists that the government should abandon its plans to completely remove diesel subsidies by 2026. Joachim Rukwied, head of the DBV, warned that this could lead to a slow decline of German agriculture. Norbert Lins, a European Parliament member, argued that ending agricultural fuel subsidies poses a threat to farmers' competitiveness. However, the situation remains complicated.
Source: www.dw.com