A Summer of Discontent for Eastern German Farmers

Helmut Richter paces the dirt tracks covering the perimeter of his farm in an Audi station wagon. He's checking in on hundreds of workers who are overseeing the mechanical milking of cows and the watering of fields of carrots, asparagus and cucumbers using a newly installed sprinkler system that saves the farm water and money.

Richter is the manager of the Unterspreewald farming cooperative in the idyllic town of Dürrenhofe in the eastern German state of Brandenburg. He's long prided himself on Unterspreewald's environmentally progressive techniques: The farm uses expensive, ecologically friendly fertilizers and an irrigation system that radically cuts back on the amount of water needed to produce crops.

But Richter faces new hurdles these days that have shifted his concentration from the coming October harvest to agricultural reforms being debated hundreds of kilometers away in Brussels.

If reforms approved by the European Commission earlier this month are ratified by the European Union's 15 member countries, Richter fears, Unterspreewald may have to revert to the kinds of industrial farming techniques that both German politicans and European policy-makers are pushing to abandon in the wake of food scares ranging from mad cow- to foot-and-mouth disease.

The Commission's proposed reforms to the Common Agricultural Policy (CAP) would starkly reduce the amount of government aid his farm gets. EU Agricultural Commissioner Franz Fischler wants to cap the current direct subsidy payments to farms over 1,000 hectares (2,500 acres) in size at 300,000 euro ($300,150) per year. In the past, German farms received annual payments from Brussels that often surpassed the million euro mark.

Another key reform component is the uncoupling of subsidies from crops that are grown. In the past, for example, the EU has provided the equivalent of income insurance for the producers of agricultural products -- from wheat to beef -- in order to provide farmers with protection from cheaper imports.

The Commission says it now wants to divert the funds toward rural development programs that promote sustainable farming and environmentally friendly production methods.

Many parts of the reforms are still in draft form, but one aspect is crystal clear: The reforms will handicap large-scale and industrial farms, like the 2,400 hectare operation Richter runs with six other associates, and instead focus on smaller family run and organic farms. Agricultural industry organizations estimate that 90 percent of the planned cuts would be directed at eastern German farming operations.

Next Page: "We will have to eliminate environmentally friendly farming methods"

The Unterspreewald cooperative currently receives 600,000 euro each year in subsidies from Brussels. It employs 80 people year-round and 300 seasonal workers during harvest, mostly from surrounding Brandenburg towns, where unemployment levels are among Germany's highest.

Ironically, Richter notes, the farm uses a good portion of its subsidies to deploy environmentally sound farming techniques -- many of the same procedures the EU is asking farmers to use.

"Without subsidies, we could no longer afford environmentally friendly methods and would have to resort to conventional fertilizers, which cost less and lead to lower-quality products," Richter says.

In many respects, Richter is getting off lucky. The reforms will cut deeper into the pockets of other farms in the region.

"Agriculture is a big employment factor here in the east," he says. "It's one of the only things that's working, and they want to destroy that."

After German reunification in 1990, a rapid de-industrialization took place in the six German states that comprised the former East Germany. Countless businesses built on the foundations of the East German communist regime's controlled economy foundered, and unemployed workers began flooding into the western states seeking better prospects.

Agriculture proved to be the exception to the rule, however. In the eastern German states, 9 percent of all jobs are in the agricultural sector according to the Brandenburg Farmers Association.

Now, they're in serious trouble. Between 270 and 300 farms in Brandenburg are expected to be among the hardest hit by the reforms, says spokesman Holger Brantsch. He forecasts losses as high as 70-90 million euro a year from subsidy cuts alone and says as many as 11,000, or 40 percent of the state's farm workers, could be laid off as a result.

"We would be hit very hard," says Brigitte Meier, manager of the Neuzelle Agricultural Cooperative in Brandenburg. "It would mean the end of our operation, and we would have to let our 120 employees go."

Under the new rules, Meier's farm would receive only 50 percent of its current subsidies, which are doled out based on the agriculture she produces -- like grains, rape, dairy products and the farm's 2,500 cattle and 6,000 pigs.

Meier says the cuts would have a trickle-down effect, since the farm uses some of its grain crops as feed for its cows and other livestock.

But it's difficult for the EU to defend continued subsidies for products that largely wind up getting stockpiled in warehouses without buyers. The EU is currently sitting on a mountain of 4.4 million tons of unsold grains, including 3.5 million tons of rye that have mostly been grown in Germany. It's the kind of image that makes the EU's €40 billion CAP budget seem at times grotesquely large -- both in and outside of Europe. It's also one of the reasons the German government largely supports the shift away from such product-based subsidies.

Next Page: "Subsidies must not lead to an artificial system"

To many critics, the system of subsidies has kept an artificial industry alive for too long already – a school of thought that served as a major impetus for Commissioner Fischler's proposal.

"It's okay to subsidize difficult products to an extent, but it must not lead to an artificial system where the product totally loses any connection to the market," says Andreas Schultz, spokesman for the Federal Ministry of Consumer Protection, Food and Agriculture.

The World Trade Organization has long demanded that Europe reform its agricultural policies and abandon product-related subsidies because they shut developing countries out of the European market.

But farmers say that in a world of falling prices for food subsidies are essential for their very survival.

Edgar Coim manages the Agrarprodukte Dedelow Society farm, which is one of the main employers in Brandenburg's sparsely populated Uckermark region. He employs a staff of 100, along with 10 trainees, to work his farm, which is famous for its large-scale milk production.

Coim blames the need for subsidies on a market that is hostile to prices that reflect a farmer's production costs. He says that food prices have fallen drastically in recent decades and argues that the only way for farmers to break even has been to receive government subsidies for certain products.

The problem is compounded by the fact that poor soil conditions in many parts of eastern Germany require that more fields be used to grow crops, thus increasing the size of the average farm. The tradition of large-scale farming goes back hundreds of years in Brandenburg. And since rye grows much easier on poor soil, there is an overabundance of the crop in the east.

With history and the laws of nature against them, eastern German farmers are increasingly worried about their fate.

The EU has promised to divert money taken from direct subsidies toward regional development programs that could help farmers who untertake measures to make their farms more ecologically sound, but many farmers fear that money won't be seen in Germany.

"We here in Germany already have high standards" in environmental farming techniques, says Brantsch of the Brandenburg Farmers Association. "The money would first go to countries that still have to catch up."

Farmers aren't concerned without reason: Germany currently pays 9.9 billion euro a year to CAP (nearly 25 percent of the EU's overall agricultural budget), but only 5.6 billion euro flows back into the country. The rest is invested outside.

But a spokesman for the Federal Ministry of Consumer Protection says the diverted money will remain in Germany. "Of course the money will be spent in Germany. You can't take money away in one place and spend it somewhere else," Schulze says.

Renate Künast, the federal minister for consumer protection, food and agriculture, recently said that although she supports fundamental reforms to CAPS, she will oppose the subsidy cuts aimed directly at eastern Germans.

But that provides little comfort back at Unterspreewald, where Richter seems discouraged by what Brussels is planning for his future.

"Many jobs are going to be lost, and families' livelihoods will be threatened," he cautions. "It's not like we couldn't go on without the money, but we'll have to change things and adapt," he says.