AEven at the end of the German farmers' protest week, the debate is largely dominated by clichés. On the one hand there is the “rich farmer” who just complains despite high business assets and considerable profits, on the other hand there is the small farmer who works up to 70 hours a week and for whom the money is barely enough to survive. Neither picture does justice to reality. There is no such thing as “the” farmer.
The differences between the individual companies are immense. How well or poorly the farmers are doing also depends on whether they farm, forage or horticulture or keep dairy cattle and how well the year went in terms of market prices or weather. It depends on whether it is a small business with a few hectares or one of the farms with more than 1000 hectares, which are particularly common in eastern Germany. The size of East German companies is more of a historical factor and goes back to the large companies in the former GDR.
Fewer farms that are getting bigger
Overall, the structure of the farms has changed. There are fewer farms, but they have become larger. According to statistics from the Federal Ministry of Agriculture, the number of farms with an area between 20 and 50 hectares fell by 20 percent from 2010 to 2020, while the number of farms between 200 and 500 hectares increased by 30 percent.
There are big regional differences. On average, farms in Mecklenburg-Western Pomerania are more than 280 hectares in size, while in North Rhine-Westphalia they are only 44 hectares in size. The much-cited death of farms particularly affects small ones. In total, there were currently around 255,000 companies in Germany. In 2009 there were 360,000. Nevertheless, the decline has slowed over the past decade and a half.
In the period from 1975 to 2009 – even in times when farmers were doing much better overall – the number of farms fell even more sharply every year. DZ Bank industry expert Claus Niegsch estimates that the number of farms will fall to around 100,000 by 2040. If the agricultural area remains roughly the same, the average size of a farm is expected to increase from 64.8 hectares to 160 hectares in 2040.
The reasons for this development include increased competition and dependence on world market prices. As a result, many small part-time farms have gradually developed into medium-sized businesses. When it comes to corporate management, modern agricultural businesses no longer differ so much from companies in other segments of the manufacturing industry.
Companies in other countries are larger
Despite the trend towards larger farms, farms in other countries, especially in the Czech Republic and Slovakia, but also France, are still significantly larger on average. Parallel to this structural change, the proportion of farms that are managed by partnerships is increasing. 87 percent of farmers are still sole proprietors. However, less than half (43 percent) of them are full-time farmers. In the future, the industry will increasingly be dominated by owner-managed, but large, capital-intensive and economically organized agricultural companies.
How big the differences are between the companies is shown above all in the income of unpaid (family) workers. According to the Thünen Institute, the average for all types of business was 46,000 euros in the three financial years 2019/20 to 2021/22. The record year 2022/23 is not yet included. Because of the war in Ukraine, it is only partially representative. Food prices rose significantly this year, as did producer prices for agricultural products.
In the long term, however, producer prices developed less dynamically than consumer prices for food. In addition, the prices for inputs such as fertilizer have increased. Price-adjusted value creation in agriculture has tended to move sideways for decades. This is one of the reasons why around half of all agricultural businesses now have sources of income outside of agriculture, for example from renting out holiday apartments or generating energy.
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