Land speculation squeezes out young farmers in East Germany

According to the official figures of the state government, the cost of one hectare of land in Brandenburg averaged €2,500 in 2004. But by 2017, the figure had risen to over €11,000. [das kooperativ e.V.]

This article is part of our special report Generational renewal in agriculture.

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In East Germany, young farmers are finding it increasingly difficult to purchase land because major investors are not acquiring land for agricultural purposes and because former GDR  cooperatives are being privatised. EURACTIV Germany reports. 

It is not a high-quality land on which the farmers of the Bienenwerder farm in East Berlin are growing vegetables. Not only is the soil in East Brandenburg sandy, but the two previous summers also brought drought.

And yet Julia Bar-Tal is proud of what she and the farm collective have created in this area. They now cultivate ecological vegetables across 45.5 hectares and sell over 40 different crops to shops in Berlin.

There is a great deal of work involved at the organic farm, where the farmers work the soil with horses and ponies instead of tractors to preserve it.

The fact that Bar-Tal even owns 45 hectares is due to her ancestry. Her grandmother owned land in the northwest of Brandenburg, which was expropriated in the GDR.

This gave her granddaughter a right of first refusal, enabling her to acquire most of her arable land at a preferential price.

“This was just family luck. For many other young farmers, there simply is no chance of obtaining land, no matter how educated they are,” explained Bar-Tal.

This is because the land prices have exploded in the last 15 years. According to the official figures of the state government, the cost of one hectare of land in Brandenburg averaged €2,500 in 2004.

But by 2017, the figure had risen to over €11,000. The reason for this is a price spiral that began a few years after German reunification.

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The number of young people who want to work in agriculture is shrinking. Those who choose farming in Germany have to put up with high acquisition costs, complicated bureaucratic requirements and a modest income. EURACTIV Germany reports.

Expensive land

With the end of the GDR, the large, state-owned agricultural production cooperatives were dismantled and privatised piece by piece. To this day, the federal Bodenverwertungs- und Verwaltungs-GmbH (BVVG), which is Germany’s soil processing and administration company, is responsible for this.

The sale of large areas of land soon attracted supra-regional investors with no agricultural background but speculated on rising land prices.

The price per hectare has now reached astronomical heights. A glance at the BVVG database shows purchases of over €26,000 per hectare in the region where the Bienenwerder farm is located.

“Land prices here have increasingly been dissociated from what can be generated from agriculture,” Julia Bar-Tal said.

As a result, farms are eventually out of business, meaning it automatically goes into an area where people with non-agricultural capital invest. “It is a virtual increase in value that no longer corresponds to reality,” she added.

Immediately after the reunification, land could still be leased at affordable prices, which was mainly done by large agricultural cooperatives.

Nowadays, however, lease periods are shorter, and extremely substantial capital is required when establishing a farm.

Since the land is the basis for any investment in the future, the establishment of a farm represents an enormous risk if it is not secured in the long term.

“If you want to start a farm, you need a high willingness to take risks, as well as insane idealism,” said Bar-Tal.

Young people and women in EU farming

The EU farming sector is faced with an ageing population. In 2016 only 11% of farm managers in the EU were young farmers under the age of 40 years, according to Eurostat.

The problem of public tenders

The trained organic farmer is very concerned with the BVVG’s land allocation practice because land plots are awarded in public tenders in which anyone can submit a single bid. And no one knows who else is bidding or the value of the other bids.

“If these are areas on which your livelihood depends and you don’t know who else is bidding, then, of course, you are bidding high,” she said.

According to the BVVG, this system is as transparent as possible. If the bids were made public, then the prices would rise even higher.

Besides, there are so-called limited invitations to tender, which are explicitly aimed at young or organic farmers to promote them. And 80% of the land allocated by the BVVG goes to regional farmers.

But the big investors don’t even buy land directly.

Instead, they buy up agricultural cooperatives and thus legally become regional farmers who are allowed to participate in the tenders.

Benjamin Meise has first-hand experience when it comes to the uselessness of the limited tenders for younger farmers. Meise runs a conventional farm near the Bienenwerder farm, of which 1,500 of 3,500 hectares are leased from the BVVG.

When 350 hectares were released for a limited tender, he wanted to bid but the minimum price quoted was far too high. As the land was excellent, the farmer kept 70 hectares of it at “supra-regional prices”, he said.

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Droughts, Brexit and reduced direct EU payments

“But as a result, we had to part with employees and sell machines. Because of the droughts, Brexit and possibly falling direct payments from the EU, however, Meise expects land prices to fall again.

“They have reached their peak,” he added.

Because they do not want to wait for this to happen by itself, trainees and young farmers in the region have been organising themselves in the “Bündnis Junge Landwirtschaft” for several years.

By protesting, they may bring these ‘land-grabbing’ practices, which large investors commit to, to the attention of the public and force the current land assignment practice to change. Julia Bar-Tal is also part of it.

At the very least, she would like to see a discussion on whether Brandenburg’s land should be sold at all. Alternatively, she could imagine a capping of the purchase and lease amounts, as is the case in France.

“Then the deal would become much less attractive for investors,” she said.

Young farmers: CAP progress is 'still not enough'

In an interview with EURACTIV’s partner EFE, the president of the European Council of Young Farmers (CEJA), Alan Jagoe, called for more aid for people new to the industry and criticised national governments for doing more for veteran farmers than their younger counterparts.

[Edited by Gerardo Fortuna]

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