analysis
Shortly before the start of the Farmers’ Day today, the SPD, Greens and FDP agreed on an agricultural package. They have thus fulfilled their promise. But the Farmers’ President is not satisfied.
Loud boos, whistles and angry shouting: This is how Cem Özdemir was received at the central rally in front of the Brandenburg Gate in Berlin during the farmers’ protests. That was six months ago.
Although tempers have cooled down since then, farmers are still deeply frustrated by the cuts in agricultural diesel. The Federal Minister of Agriculture should therefore not expect a particularly warm reception when he speaks at the German Farmers’ Day in Cottbus on Thursday.
The traffic light coalition has kept its promise just in time for the industry’s important annual meeting. Originally announced for the spring, the SPD, Greens and FDP agreed on a so-called agricultural package on Tuesday. It is intended to ease the burden on farmers and compensate at least part of what farmers now have less in their pockets due to the abolition of the tax refund on agricultural diesel – and that is almost half a billion euros annually for the entire industry.
Package or parcel?
In fact, the package of measures initially sounds like a really good idea, as FDP parliamentary group leader Christian Dürr describes it: more flexible taxation of income, reduction of bureaucratic hurdles, additional support for grazing livestock farming, strengthening farmers in the value chain and a renewed suspension of land set-aside. But are these measures really enough for “future-proof agriculture”, as the SPD, Greens and FDP claim in their joint press release?
The verdict of the farmers’ president is devastating. Joachim Rukwied speaks of a small package rather than a package. “Long overdue, but light years away from the relief we as farmers need,” he says. His reaction shows that the farmers still expect equivalent compensation for the cancellation of agricultural diesel.
But if the traffic light coalition in Berlin were willing to do this, they could have saved themselves all this trouble. After all, the goal was to save money, not just to reallocate resources.
Tariff smoothing as a consolation prize
This is also evident when we take a closer look at the relief measures that have now been decided. Farmers will be able to spread their profits and losses over a period of three years in order to compensate for tax disadvantages. According to calculations by the Ministry of Finance, this so-called income tax rate smoothing will cost the federal and state governments 150 million euros spread over three years – so overall it is more of a consolation prize compared to what the tax authorities have gained from agricultural diesel.
That is why the farmers would also have liked a tax-free risk compensation reserve. This would have allowed them to put money aside in a kind of extra account for bad times, for example if crops fail, as was the case with the flood in the Ahr Valley.
Only five years ago, the Liberals had called for such a reserve in opposition, justifying this by saying that real risk provision does not begin in the crisis, but before it. In times of difficult budget negotiations, however, the FDP finance minister now finds it too expensive and the risk compensation reserve is now history.
Reducing bureaucracy is patient
It would be better to start where it costs little but is of great benefit to both sides – with bureaucracy. The federal and state governments have compiled almost 200 candidates for elimination of unnecessary proof, information and documentation requirements. Less time at the desk means more time in the field for the farmer, which in turn means higher yields. At the same time, the burden on federal and state administration is reduced.
What sounds like a good deal in theory, however, often has to be proven in practice. The Federal Ministry of Agriculture is currently unable to predict what specific financial benefits the removal of bureaucratic hurdles will bring farmers.
Especially since it is not yet clear how much will actually be cut, or whether new bureaucracy will be added elsewhere due to new or amended laws, such as the Animal Welfare Act.
Dispute over Direct payments
Even the additional support for grazing livestock farming raises questions. At the request of the Greens, the Federal Minister of Agriculture wanted to support ecological measures such as keeping cows or sheep on green meadows.
To this end, Özdemir wanted to distribute European agricultural subsidies differently. Specifically, he had planned to cut the so-called basic premium and increase the eco-premium. This would mean that farmers would receive less money for their land and more for providing ecological services. The minister calls this “public money for public services”.
But the farmers’ president protested against this plan. “The direct payments must not be touched,” said Rukwied at a press conference a few days ago, clearly finding supporters in the ranks of the traffic light coalition. Özdemir’s plan is on hold for the time being. The additional funds for grazing livestock farming are to come from elsewhere. The SPD, Greens and FDP still want to clarify how this is to be achieved without having to make savings elsewhere in the agricultural budget.
Little to count on in the end
The farmers’ disappointment therefore seems justified. But only because the traffic light coalition itself raised expectations that it could probably never live up to given the difficult budget situation.
After the farmers’ protests in the winter, the SPD, Greens and FDP promised that they would show agriculture a real future perspective. The result is an agricultural package that ultimately leaves little to be desired.