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Global Economy

Why East German farmers are losing land

The story of farmer Peter Hase from Quedlinburg could be an East German success story. Shortly after reunification, the 77-year-old founded an agricultural business with three other partners, Moorhof GbR. With 18 employees, they farmed almost 1,600 hectares of farmland at the time, he reports.

Today the farmer can only employ eight people. This is related to the farmland that was gradually being lost. Because of the rising property prices, he could only lease land. But because of the federal government's new procurement guidelines, that will no longer be possible in the future either: "It is a bitter development that as a local farmer who has been farming here for decades, you no longer have a chance of getting farmland."

Privatization of arable land stopped

After three decades of privatization, the federal government has stopped selling its remaining farmland in eastern Germany. Instead, the land is only to be leased. SPD, Greens and FDP had already announced in their coalition agreement that they would end the previous privatization. The aim is to slow down speculation in farmland and the rise in land prices.

This is actually good news for the farmers in Quedlinburg: in recent decades, farmland in East Germany has become an object of speculation. Local farmers like the Hase family competed with large agrarian corporations, but also with investors who speculated on farmland. A third of farms in East Germany fell into the hands of foreign investors. The ARD magazine Plusminus reported about it again and again.

251 million euros surplus

The fact that land prices have risen so sharply in recent years is also due to the federally owned land utilization and administration GmbH (BVVG), a successor organization to the Treuhand. The local farmers criticize that they have the task of selling land for the federal government as profitably as possible. According to its own statements, the company generated a surplus of 251 million euros in 2021.

It was the farmers who suffered from this development. Since the prices had increased fivefold in some cases, they could no longer keep up in the fight for farmland. The Hase family lost a total of 120 hectares of farmland in recent years as a result of the sale of BVVG. It was a heavy loss for the company. According to Peter Hase, arable land is the livelihood of every farming activity.

His son-in-law Andreas Frommert, with whom he runs the business, is also pessimistic about the future: "For us, the question arises as to whether, under these circumstances, the younger generation is still encouraged to continue the business."

Only organic farms involved in tenders

And indeed, the family will lose even more farmland in the future. Because the federal government's new regulation has a catch for many of those affected: New tenders for leasing are only made to organically managed companies. The farmers in Quedlinburg who are not organic farmers will now inevitably lose all arable land whose leases are expiring. This also includes a field that borders directly on their farm and which they have been cultivating for 28 years, reports the Hase family:

And the company in Quedlinburg is no exception, as Martin Dippe from the farmers' association knows. In Saxony-Anhalt, he primarily represents family farms and is familiar with other cases. One farm was even willing to switch to organic farming because of the new tender criteria. Nevertheless, he was not allowed to participate in the tender. Justification of the BVVG: You operate as a conventional company, the bid cannot be taken into account.

The family lost over 100 hectares of farmland that they had farmed for many years. "Then the existence of this company is in danger," says Dippe. From the farmers' point of view, care should be taken to ensure that the land is leased to companies in the region – and not to investors from outside. Many conventionally working companies are firmly rooted in the area, are important employers and also make a significant contribution to landscape maintenance. You can't just leave them out when leasing, says Dippe.

Sustainability should be evaluated

Bernhard Krüsken from the German Farmers' Association even sees the current regulation as a violation of the principle of equal treatment. And: "It violates the coalition agreement because it clearly stipulates that not only organic farms, but also companies that operate sustainably should get these areas." But that is exactly what is not being implemented.

In fact, the coalition agreement states that the areas are not only to be leased to ecological but also to sustainably managed companies. But this presupposes that sustainable management is clearly defined and also evaluated. Then farmers like the Hase family, who have been farming under resource-saving conditions for decades, would also have a chance. But that's exactly what seems to be lacking at the moment.

No agreement between the departments

The BVVG did not want to comment on the request and refers to the responsible Federal Ministry of Finance. This means that the new leasing principles have not yet been decided. Further votes are still required and the final agreement is not yet available.

In plain language: There is still no new public procurement law. The Ministry of Finance did not want to comment on why the BVVG still issues all new tenders only for organically managed companies. Apparently, the Ministry of Agriculture could not prevail. A spokesman said: As long as there is no definition of sustainability, one has advocated an unbureaucratic extension of existing leases by one year. However, this was rejected.

As long as the responsible departments do not agree on what exactly should be considered sustainable, regional farmers like the Hase family will lose their leased land – even though they have been cultivating it for decades.

Organic farmers are also losing land

Organic farmers like Jürgen Hayessen are among the losers of the new regulation. They, too, are getting fewer and fewer opportunities, although they should actually benefit from the new regulation. In the past he also wanted to buy fields from BVVG, but could not afford the high prices. That's why he had to lease it. The contract expired this year and was re-tendered by the BVVG. He offered 611 euros per hectare – around 200 euros more than the average rent paid in the region.

Nevertheless, he lost the land that his family had farmed for 27 years. The contract was awarded to another organic farmer who, although not local, offered a significantly higher price. "Of course, this contradicts the idea of using the land for more ecological and climate-friendly management. From an ecological point of view, the award makes less sense," says Hayessen.

The goal of slowing down the rise in land prices was missed. Now the arable land would no longer be sold at high prices, but leased at inflated prices. Is the responsible Federal Ministry of Finance still concerned with cashing in on the federally owned arable land? Conversely, this could mean that local farmers can no longer afford farmland and lose their livelihoods.

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