Focus on Germany

by Chris Lyddon
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Germany is one of the world’s greatest manufacturing and exporting countries. It also has a large agricultural sector and is a major grain producer, with a farm sector ranging from small part-time operations to large-scale farms left over from the communist past of its eastern part.

As the U.S. Department of Agriculture (USDA) attaché noted in a guide for U.S. food exporters recently, “Germany has 82 million of the world’s wealthiest consumers and is by far the most populous and economically powerful of the European Union’s 27 member-states.”

The world view of the German voter overshadows the grain sector in Germany. The environment is a vote winner in Germany perhaps more than anywhere else in the world, which is why Germany has been one of the first countries to move into biofuels, while it has also been one of the keenest to insist on legal constraints to make sure biofuels are produced on a sustainable basis.

German consumers have been among the most anti-biotech in the world and the most pro-organic.

Although the German market is wealthy, it is also desires a bargain. “German consumers expect high quality for their food and beverage products,” the attaché said. “However, German consumers are also very price sensitive. In fact, to a large extent, price is often considered the main criteria for purchasing decisions, and this is reflected by the dominance of retail food discounters in the market.”

According to the International Grains Council (IGC), total German grain production in 2011-12 is 41.4 million tonnes, down from 44.2 million the year before. That production level makes it second only to France in the E.U. in terms of grain output.

German wheat production for 2011-12 is put at 22.5 million tonnes, compared with 24 million the year before. The estimate for maize production is 4.7 million tonnes, up from 4.1 million. The barley figure is 8.8 million tonnes, down from 10.4 million. Germany is one of the world’s biggest rye producers at 2.5 million tonnes in 2011-12, down from 2.8 million. This production figure is only beaten Russia and Poland in the IGC’s statistics.

The sharp falls were because of the weather. “In agriculture almost everything depends on the weather,” Agriculture Minister Ilse Aigner said in Berlin. “This year it has hit farmers especially hard. First of all, difficult planting conditions in autumn, then too little rain in the spring, heavy late frosts in May and heavy rain at harvest made farmers’ work difficult.”

The figures compiled by Germany’s own statistics office give total German grain imports, including products, at 9.1 million tonnes in 2009, with wheat making up 4.5 million tonnes of that. Almost all of Germany’s grain imports come from the rest of the E.U. Most of the rest is accounted for by 154,000 tonnes of Canadian wheat.

German grain exports the same year were 14 million tonnes with 7.4 million coming from the E.U. Of that total, 10.7 million tonnes was wheat, with 4.7 of it from the E.U.

However, the figures need to be viewed with great care. Much of Germany’s trade is through the Port of Rotterdam in the Netherlands, so they exaggerate the apparent significance of the Netherlands.

According to the millers’ organization Verband Deutscher Muehlen (VDM), there are a total of 580 flour mills in Germany, employing more than 6,000 people with a wages bill of some €200 million.

They mill 7.7 million tonnes of grain a year, 900,000 tonnes of which is rye. Between 7% and 15% of the flour they produce is exported.

BIOFUEL GROWTH

Germany has been Europe’s leading adopter of biodiesel, with a total capacity of 5.2 million tonnes a year by 2009, according to the oilseeds promotion body UFOP. The European Biodiesel Board puts actual biodiesel production in Germany in 2010 at 2.861 million tonnes, the largest in the E.U.

Germany was second to France in European ethanol production in 2009, with production of 750 million liters, according to the European ethanol body ePURE. The Verband Deutscher Muehlen has attacked the increasing use of grain for fuel.

“The supply of valuable cereal products for people should not be put at risk by putting an ever increasing proportion of the harvest in the tank instead of on the plate,” VDM leader Manfred Weizbauer said in a statement, noting sharp rises in world grain prices.

He pointed out that 98% of the grain milled by German flour mills is produced in Germany.

“The partnership between German agriculture and milling is threatened unless the current trend to energy is slowed,” he said.

About 16% of the arable land of Germany is used for producing energy crops, and the trend is up. “There are currently a billion people suffering from hunger and chronic malnutrition,” he said. “The economic crisis, the results of climate change, and the fall in the global availability of agricultural land will all make the situation worse, according to the federal agriculture ministry.

“Germany has just 12 million hectares of arable land, 60% of which is used for cereals. A lasting solution of the energy problem for the future cannot be achieved at the expense of a secure food supply for the population.”

CAP REFORM

Since Germany is part of the E.U., German agriculture comes under the E.U.’s Common Agricultural Policy (CAP). Despite the popularity of green measures in Germany, the recently announced plan by European Commissioner Dacian Ciolos to make the policy greener has met with mixed reactions in Germany.

Farm Minister Ilse Aigner said Germany supports the basic direction of the plan.

“The aim of the E.U., to increase the environmental contribution of agriculture, is right,” she said. “However, there must be real value added for the environment and nature, and it must be practical. It must also make sure that the current 100-hectare-a-day loss of agricultural land in Germany is not made worse.

“The production of food and renewable energy needs productive area that is being farmed sustainably. Germany is already at the forefront of the modernization and environmentalization of the countryside.”

The millers’ organization VDM pronounced itself skeptical, particularly about plans to switch land into environmental projects. It cited figures from the farmers union Bauernverband, which estimated that the plan would take 600,000 hectares out of production and called the plan “irresponsible.” It will, according to the VDM, limit the potential of agriculture and make grain prices more volatile. VDM said, in view of talk before the proposal’s announcement of cutting bureaucracy, it is disappointing and will create new bureaucracy.

“This is the last thing the E.U. needs,” said Manfred Weizbauer of the VDM, rejecting the proposal on behalf of the millers.

The Bauernverband welcomed the aim but reckoned the proposal would not achieve it. “They would deprive the consumer of a secure supply of home-produced food,” Bauernverband President Gerd Sonnleitner said.

STRONG ORGANICE MARKET

Germany is one of the most committed markets for organic food. “Organic food products have long since achieved mainstream status in Germany,” the attaché’s guide for exporters said. “More and more consumers are seeking to improve their sense of well-being, health and even their performance levels through the consumption of functional food products.”

An increasingly fast-paced society and the rising number of single households are driving demand for convenience food including ready-to-eat meals, frozen foods, desserts and baked goods.

Other trends include sales of fair trade products, such as coffee and fruit juices, and the frequent use of product sustainability as a marketing tool.
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