Recently, German farmers have been sending their complaints to the government about price pressure that has been imposed by retailers. Farmers have also stated their fears related to the EU–Mercosur agreement and its potential effect on German agriculture. According to an economic study focusing on the agricultural industry in Germany, small- and medium-sized farms are closing at a rapid rate. This is primarily due to domestic supply chains for milk, meat, and vegetables being dominated by the four largest retail chains, which dictate prices. These prices are pushing independent farmers out of the market.
The head of the German Farmers’ Association, Joachim Rukwied, has stated that the price situation in agricultural markets is disastrous. The price for a kilogram of pork has dropped to €1.68, while the estimated price for wheat has fallen below early 1980s levels. Furthermore, prices for sugar and potatoes have also declined, and the wine-growing sector is facing a crisis not seen in decades. The president of the Farmers’ Association has said that the government needs to act and reduce costs across the entire industry.
Industry leaders and experts believe that red tape hindering production should be removed, alongside specific policy actions that could reduce labour costs. Another key issue is that Germany’s minimum wage currently stands at €13.90 per hour, which is nearly twice as high as wages paid to farm workers in countries such as Spain and Poland.
There are several other reasons behind constant price pressures, including the fragility of global agricultural supply chains. This fragility has been exposed by the COVID-19 pandemic and the war between Russia and Ukraine. For example, since 2020 there has been an estimated 35 percent increase in food prices, but this rise has not been matched by an increase in farmers’ incomes.
Industry specialists have also observed a trend in which the number of farms in the eastern German states has risen, while in traditionally agricultural states such as Bavaria the number has fallen dramatically. The reason behind this trend lies in differences in agricultural practices between the two regions. The eastern states, which were once part of the German Democratic Republic, implemented policies of collectivisation that helped develop large agricultural enterprises. This structural difference has resulted in large-scale farms in the modern eastern states, in contrast to the smaller farms that dominate the western states.
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