Country Focus: Germany

by Mindy Dake
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The nature of Germany's agriculture, as with its other economic sectors, varies depending on location, east or west.

Western farms are small, averaging 19 hectares, while eastern farms average nearly 300 ha. Western farming is intensive, with chemicals and modern equipment producing high yields; eastern farm yields have increased since reunification, but investment and working capital remains inadequate to upgrade equipment and improve production practices.

Prior to reunification, state cooperatives in the east farmed some 87% of all agricultural land. In 1991, a fourth of the cooperatives were dissolved, with the land returned to its former owners. The remaining state farms were converted to new private enterprises of various types.

AGRICULTURAL POLICY. As a member of the European Union, Germany's policies conform to the E.U.'s Common Agricultural Policy. Germany's national agricultural goals include environmental conservation, maintaining the family farm structure and protecting consumer health.

WHEAT AND FLOUR MARKETING. Wheat and flour markets are dominated by the private sector. Prices are established in the free market, within the parameters of the CAP's price support and intervention programs.

In the west, commercial wheat storage and handling facilities tend to be modern, and a substantial amount of on-farm storage also exists. The marketing system is well-organized, to the extent that different qualities and even different varieties can be segregated and delivered to buyers.

Wheat is transported by barge, truck and train. Barge transport is cost effective because of the sophisticated inland waterway system, and the trucking industry also is competitive. Rail transport is least used, mostly because state-owned railway freight rates are high. Most flour is shipped in bulk trucks.

FLOUR MILLING AND CONSUMPTION. The precise number of mills in unified Germany is difficult to ascertain, not only because of the traditional lack of information from the east, but because of the large number of very small mills.

Private-sector rationalization is steadily reducing the numbers. Still, most observers note excess capacity persists in Germany as a whole.

One recent estimate put the mill total, in both east and west, at about 650. In 1988, the former East Germany had 382 mills; in 1989/90 the west counted 585 mills, a figure that did not include mills with annual capacities of fewer than 250 tonnes.

About 100 of Germany's mills each have a capacity of more than 10,000 tonnes annually, and most of these are owned by a handful of large milling companies. Wheat flour production in 1990, the last year information is available, was about 2.6 million tonnes.

Many of the country's mills also grind rye, and about 15% of total annual flour production typically has consisted of rye flour. This situation gradually is changing, as darker wheat flours are replacing rye in bread-making.

In the west, small bakeries are predominant, although industrial baking is common around the cities. The situation is reversed in the east; industrial baking has dominated, but more small bakeries have opened since reunification, a trend that is continuing.

The majority of flour is consumed as wheat/rye mixed bread, with 12% consumed as whole wheat bread and only 11% as white bread. Some 20% of flour is used for pastries.

In 1991, Germany's per capita bread consumption, at 76 kg, was the highest in Europe.

FEED INDUSTRY. The economic strains of reunification and the reorganization of the eastern economy pressured the German feed industry in the early 1990s. Declining livestock numbers and reduced meat demand led to a drop in compound feed output in the last few years, culiminating in a 10% decline in 1991-92 from the previous year to 19.3 million tonnes.

Indications are that the declines may have ended, as production in 1992-93 increased by 1.4% from 1991-92. Yet, feed production remained 9% lower than in 1990-91, and few expect a quick rebound.

Another trend in feeding could be fueled by lower grain prices resulting from CAP reform, which should encourage more grain use in commercial feeds and more on-farm feeding. The proportion of grain use in mixed feeds declined for two consecutive years, but officials expect a 4% increase in 1993-94 to 18.5 million tonnes.

TRADE ISSUES. Germany's grain trade is primarily with E.U. and other European countries, and its shipments generally originate from German intervention stocks. Grain imports from outside the E.U. are subject to import levies.

Since the Single Market took effect in 1993, goods may move freely across national borders within the E.U. This has stimulated heavy competition between German flour millers and their counterparts elsewhere.