The recent protests by German farmers against the government’s plans to cut subsidies for agricultural diesel took place against a backdrop of rising concerns about the environment from within the industry.
Earlier this month, a week of protests was staged in Berlin, with farmers and tractors filling the streets to protest planned cuts in fuel subsidies for the agricultural sector.
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That followed a protest in December when German farmers filled the streets of Berlin with manure, ultimately causing the government to ease its plans to cut subsidies. But, farmers want the plans fully scrapped.
The aim of the subsidy cuts is to help fill a hole in the German budget after a court ruling last November that the government’s decision to fund its green transition by reallocating €60bn ($64.74bn) in unused debt taken on during the Covid-19 pandemic was unconstitutional. The cuts would also work towards reducing the sector’s environmental impact. However, off the back of energy price hikes and the pandemic, farmers argue they should be penalised for the use of diesel in vital machinery. They cite a lack of viable alternatives to running their operations with fossil-fuel-based machinery.
The proposed changes are in line with a shift towards ‘ESG 2.0‘, which is defined in a report by Power Technology’s parent company GlobalData as the second era of focus on environmental, social and governance (ESG). Here, legislation changes from “a voluntary regime to a mandatory one, driven by government mandates rather than consumer pressure”.
According to the EU, agriculture contributes more than 10% of its total greenhouse gas emissions and has a significant role to play in climate change mitigation. In 2023, the European Commission published a report exploring how the polluter pays principle should be applied to the agriculture industry and how farmers can be rewarded for long-term carbon removals.
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By GlobalDataESG and environmental concerns in agriculture
GlobalData data suggests that the environment is a priority for German agribusinesses.
ESG and environment are the most-mentioned themes in company filings in the German agribusiness sector. Indeed, they have been increasing steadily since at least 2016 before becoming the top two themes about which the sector is concerned in 2023.
Despite this, farmers say the cost of the proposed cuts is too great. While the plan is for them to be phased in – diesel subsidies are to be reduced by 40% in 2024, a further 30% in 2025 and to be ceased altogether in 2026 – many farmers still argue that they would have to halt operations.
“For a farm like mine, I would lose about €10,000 ($10,900). For our businesses, it's a catastrophe,” Reuters quoted Ralf Huber, a farmer from Bavaria, as saying.
Food and drink impact of German farmers' protests
With the potential for farm closures as a result of the proposed changes, farmers have pointed to the potential impact on the food and drink industry as a supporting factor for their cause.
This was pressed home by a slogan seen at the demonstrations that read: “Ohne Bauern, kein Bier!”, meaning “Without farmers, no beer.”
Nina Gollinger, a press officer at the German Brewers’ Association, told Power Technology's sister publication Energy Monitor: “With this message, farmers are emphasising that they not only make a significant contribution to food production but also to beer production. With an annual production of 8.8 billion litres of beer, Germany is the largest producer of beer in Europe.“
“The cultivation of hops, barley and wheat in Germany is vital for the production of beer in our breweries. We, therefore, support the call for German and European politicians to ensure fair competitive conditions for farmers and to preserve regional structures in rural agriculture.“
