In many places, farmers are protesting against cuts. What do the canceled subsidies mean in numbers for agricultural businesses in Germany? And what subsidies continue to flow?
On Thursday, angry farmers demonstrated in Kassel. Before Christmas there were marches in Berlin and traffic blockades in several other cities. This has led to discussions in the governing parties about the meaning of the planned end to two agricultural subsidies.
Discussions are not enough for the German Farmers’ Association. He calls for the subsidies to be maintained in full as before. “Anyone who offends an entire industry and rural areas so massively should not be surprised by escalating resistance,” explains association president Joachim Rukwied. Further protests have been announced for mid-January. You come from an industry whose profits are increasing and which receives a lot of government subsidies.
Car tax in agriculture
The current discussion revolves around agricultural diesel and the car tax. Anyone who burns diesel in agricultural machinery gets part of the energy tax back: 21.48 cents per liter. This amounts to an average of just under 2,900 euros per company per year. This is shown by the official situation report from the Federal Ministry of Agriculture.
Car tax is more complicated. So far, tractors and combine harvesters are exempt from tax. For private cars, the car tax is not particularly significant. Agricultural vehicles are something completely different: the engines easily have a displacement of twelve liters and bring 500 hp to the field. Vehicles often weigh significantly more than ten tons. The tax calculator from the Ministry of Finance shows: With regular taxation, car tax would quickly add up to 1,200 euros per year.
What does that mean for the individual company?
How many agricultural vehicles does a company have? The Federal Motor Transport Authority lists almost 450,000 vehicles for agriculture, of which 340,000 are tractors. Not all vehicles are tax-free. If the agricultural company has a car, it also pays car tax.
The data also refers not only to farmers, but also to foresters and fishermen. The majority of the vehicles are likely to be in the barns of agricultural companies. There are around 260,000 of them. From this it can be calculated that the average company operates one or two tax-exempt vehicles itself.
A subsidy of 40,000 euros should remain
If the subsidies for agricultural diesel and car tax are eliminated, this will result in an annual burden of 4,000 to 5,000 euros per average business. The farmers’ association does not publish any figures itself. Its president, Rukwied, called the plans “unreasonable proposals.”
In the 2021/22 financial year, agricultural companies received an average of almost 48,000 euros in subsidies. Of this, around 5,000 euros are likely to be attributable to Corona aid, which does not flow permanently. Subsidies that help companies without going into their coffers are not included. The state pays a subsidy of 100 million euros annually to agricultural accident insurance, which reduces companies’ contributions.
If you put all of this data together, it turns out that after the planned subsidy cuts, agricultural companies will still be subsidized by around 40,000 euros in the long term.
Profits are bubbling
Despite strong fluctuations, the profit situation in German agriculture has been improving for years. While 42,000 euros remained 20 years ago, ten years ago it was 56,000 euros and 82,000 euros in the 2021/22 financial year.
On the one hand, this is thanks to a good market for producers. The costs for feed, fertilizer and other inputs have recently risen dramatically. But agriculture was able to pass this on to its customers – and also increase prices: According to calculations by the Ministry of Agriculture, the essential products milk, grain and beef left the farm a quarter more expensive in the past marketing year than in the 2020/21 season.
Larger companies
On the other hand, livestock and agricultural entrepreneurs are doing better and better. The area used has been the same size for years. However, it is being processed by fewer and fewer companies. According to the Federal Statistical Office, there were almost 440,000 companies 20 years ago compared to 260,000 in 2020.
The official survey shows that farms with 50 or more hectares can use machines, buildings and personnel much more economically than small and medium-sized farmers.