Why are German farmers taking to the streets? The ‘Crime and Punishment’ of agricultural subsidies
During the peak of the protests in mid-January, more than 30,000 farmers drove over 5,000 tractors from across Germany to demonstrate in Berlin. The immediate trigger was the German government’s announcement at the end of 2023 to scrap tax rebates on agricultural diesel.
Similarly, under the dual pressure of the energy crisis caused by the Russia-Ukraine war and the European Green Deal’s agenda to “reduce fossil fuel subsidies”, Greece and France also announced the removal of diesel subsidies at the start of the year. However, they quickly softened their stance in the face of massive farmer protests, announcing that the cuts would be delayed or shelved.
These concessions did not satisfy European farmers. Their anger over the diesel subsidy cuts quickly ignited fury towards other agri-food policies: cheap food imports from non-EU countries, the Green Deal’s target to halve pesticide use by 2030, and the requirement to leave 4% of agricultural land fallow…
Opposing transition and green development while demanding subsidies and protection—in some media reports, European farmers have once again been labelled as “conservative” or “radical right-wing”. Yet, this simplified narrative masks the complex reasons behind their discontent.
Why did the cutting of diesel subsidies spark such outrage among European farmers? And how does dissatisfaction with specific policies point to systemic injustice? Let us begin with Germany, the birthplace of the protests.
I. Agricultural Subsidies: Easy to Introduce, Hard to Phase Out
Included in the same agenda as the diesel subsidy cuts was the abolition of the agricultural machinery tax exemption—a policy dating back to the 1920s which exempted farm machinery from vehicle taxes. If abolished, each piece of machinery would incur an average vehicle tax of 2,500 euros.
As key levers for promoting food self-sufficiency and agricultural modernisation in post-war Germany, these two policies combined have a “long history” spanning over 170 years of cumulative application, costing the German federal government an average of 920 million euros (approx. 7.187 billion yuan) annually. It is easy to imagine the pressure caused by such an abrupt shift in policy.
Under pressure from the large-scale farmer protests, the German government has already conceded, retaining the vehicle tax exemption and establishing a three-year grace period for the reduction of diesel subsidies. Friedrich Heinemann, a professor of economics at Heidelberg University, expressed his regret regarding this during a public hearing in the German parliament in January.
Heinemann believes that diesel subsidies should be abolished. He argues that subsidy policies encourage the use of diesel and diesel-powered machinery through strong price incentives, which means that farm management practices that could reduce diesel consumption have not been fully explored, and machinery manufacturers lack the incentive to develop equipment with higher energy efficiency or alternative energy sources.
Nevertheless, this policy did achieve its original goal of increasing the competitiveness of German agriculture. With stable machinery and energy subsidies, alongside complementary land consolidation policies, German agriculture successfully transitioned towards mechanisation and modernisation.
By the 1970s, agriculture in the Democratic Republic of Germany had largely achieved mechanisation, with the average number of agricultural tractors per thousand hectares ranking first in Europe. Today, Germany is one of the world’s largest exporters of agricultural machinery. In its official agricultural white paper, the German government proudly declares that “one German farmer can feed 140 Germans”.
However, behind this high level of mechanisation is a steady climb in the energy consumption of food production and a deep entanglement of the agri-food system with fossil fuels.
The Netherlands, another European agricultural powerhouse, provides a parallel example. Professor Jan Douwe van der Ploeg, author of *The New Peasantry*, cited research by Smit on energy consumption in Dutch food production: in 1950, Dutch farms required only 81 kilojoules of fossil energy to produce 100 kilojoules of food; by 2015, this figure had risen to 225 kilojoules—nearly a threefold increase in energy consumption to produce the same amount of food energy.
Professor van der Ploeg explains that the structural shift towards high-yield, high-energy food production—and the transition of traditional small-scale farming into “entrepreneurial agriculture”—has been accompanied by the displacement of labour by capital. In other words, labour has been replaced by high-energy agricultural technologies and the agricultural loans that encourage farmers to use them.
In crop production, the increase in energy consumption primarily stems from fertiliser inputs and the use of diesel machinery. A study of European open-field cultivation shows that these two factors account for 50% and 30% of average total production energy consumption, respectively. In livestock farming, the increase is reflected in the use of non-local high-yield breeds, high-protein concentrated feed, and accompanying indoor housing machinery and automated facilities. Constantly iterating technology and growing fixed investments bind farmers deeply to the mainstream market system.
II. Why the Protests? Large Farms Fight for Profit, Small Farms for Survival
Statistics show that a medium-sized German farm using more than 8,000 litres of diesel per year could receive 1,700 euros (approx. 13,183.2 yuan) in diesel subsidies annually.
Considering that the average annual income of a full-time German farmer is as high as 82,000 euros (approx. 640,000 yuan), several economists have pointed out that the increased costs resulting from the subsidy cuts will not have a substantial impact on farm production. Moreover, half of a German farmer’s income comes from public subsidies provided by the EU and the German government.
However, it is well known that most agricultural subsidies are linked to the number of hectares a farm occupies. Up to four-fifths of the subsidies from the EU’s “Common Agricultural Policy” (CAP) end up in the pockets of large farms and corporations. They are the vested interests of the current system, striving to extract every penny of available profit. Those facing a genuine crisis are the smaller family farms that are highly dependent on machinery and energy inputs.
Rather than saying small farmers are angry simply because of the diesel subsidy cuts, it is more accurate to say that amidst a series of cost crises, they are feeling the acute failings of an industrialised agriculture that is overly dependent on energy inputs.
Thirty-seven-year-old German farmer Marc Bernhardt is a case in point. In the Saxony region of eastern Germany, Bernhardt runs an ancestral family farm with his father, tending to around 100 dairy cows and growing grain and maize for fodder.
Though the farm is modest in size, it is fully automated: cows find their way to the milking machines without human guidance, and the regular cleaning of the sheds is handled by robotic cleaners rather than manual labour.
Speaking to the German media outlet *The Local*, Bernhardt explained that if diesel subsidies were cut, their income from these subsidies would drop by 10-15%. This is only a small part of the cost crisis of recent years; since the start of the Russia-Ukraine war, overall production costs on the farm have risen by 40%, with electricity prices alone soaring by 50%. Recently, the prices of many German agricultural products, including fresh milk, have begun to fall.
“We are producing the same amount of food, yet our income is decreasing; it’s unfair,” Bernhardt said. To weather the crisis, he is having to find other ways to diversify his income.
Although the German government claims that farm profits grew by 45% year-on-year for the 2022/2023 period, Martin Odening, a professor of agricultural economics at Humboldt University, believes that the average short-term profit growth is not particularly telling: “For some farms, especially small ones, profit growth does not necessarily offset the increase in costs.”
Fluctuations in energy and food prices, along with yield losses caused by extreme weather, can have a massive impact on farm earnings. Together, these factors act as the final straws that break the backs of small farms.
For small farms, there are only two ways to survive: either expand production to achieve economies of scale, or exit the market.
Fewer farms, but larger plots—this has been the defining characteristic of German agriculture over the past half-century. Data shows that between 1970 and 2016, the average German farm size expanded from 11.1 hectares to 60.5 hectares, while the number of farms plummeted from 1.1469 million to 275,400.
As small farms that struggle to remain profitable disappear, the remaining farms continue to increase their investment in machinery and energy, meaning more labour will shift away from the agricultural sector.
Over the past twenty years, the number of full-time farmers in the EU has decreased by a third—equivalent to five million agricultural jobs lost, with 160,000 of those in Germany.
This has left 26-year-old German farmer Nathalie Diebow feeling uncertain and pessimistic, questioning the purpose of small farms in the modern world. As part of the next generation of German agriculture, she joined the farmers’ protests in the eastern city of Cottbus.
III. The Future of Agriculture
Recently, the European non-profit organisation Alliance for Rural and Agricultural Action (ARC) defended the protesting farmers in a commentary titled “Blame the System, Not the Farmers!”: “European farmers are by no means exclusionist nationalists. On the contrary, they feel betrayed by the system. This system first pushed them towards expansion, industrialisation, and multiple dependencies, and is now demanding that they pay the price for the system’s own failures.”
Almost simultaneous to the German farmers’ tractor protests, nearly ten thousand conventional and organic farmers, hospitality professionals, consumers, and activists gathered on the streets of Berlin on 15 and 20 January to launch the 2024 “Wir haben es satt!” (We’ve had enough!) demonstration.
Responding to the cancellation of diesel subsidies, the demonstrators called for “the cutting of harmful subsidies without destroying farms,” emphasising the need to support the long-term development of German family farms by guaranteeing fair prices and introducing land transaction taxes. Furthermore, opposing the deregulation of GMOs by the EU and supporting the reduction of pesticides were core demands aimed at fundamentally driving the climate transition and food justice.
Both of the above responses attempt to understand the protests within a more holistic and complex picture. However, there is also a narrative that reduces the subsidy cuts merely to a matter of technical feasibility, arguing that current alternatives are insufficient—biofuels, biodiesel, and vegetable oils are too costly, while electric machinery struggles to fully replace diesel-powered farm equipment due to limited battery capacity.
These technical difficulties are, of course, well-founded, but they presume the validity of the current agricultural model. It is akin to asking: how can large-scale agricultural machinery function without diesel power? Yet it fails to consider that agricultural production models using less energy are not only feasible but are already gradually demonstrating their own advantages.
Lars feeds his flock more expensive organic feed, and his poultry products are sold mainly to the catering industry and private clients, ensuring all the added value remains on the farm. Although the farm’s current balance sheet shows less than 100,000 euros, he faces no economic pressure because he avoids the fixed investments in technology and housing, as well as the corresponding energy demands, associated with conventional farming. Consequently, he has no incentive to take to the streets in protest.
In Lars’s view, the real targets of farmers’ protests should be the four German supermarket giants: Edeka, Aldi, Schwarz, and Rewe. Over the past few decades, farmers have received an ever-shrinking share of the profits under the dominance of supermarket hegemony.
He also suggests that the German government should reform its subsidy policies, tilting them towards more sustainable production methods and small-scale family farms. He argues that marketing should be more closely linked to the farms themselves, allowing the added value to return to the producers. In the longer term, he believes the goal should be to minimise farmers’ reliance on subsidies and increase their production autonomy.
According to Sebastian Abis, an agricultural expert at the French think tank IRIS, long-term successful transition requires more than just the government creating new incentive mechanisms for farmers; it also requires the participation of consumers and citizens: “European consumers must be logical: supporting European agriculture means consuming European agricultural products and paying a fair price for them.”
It is foreseeable that the removal of diesel subsidies across European countries is merely the beginning of a long transition for energy and food systems. A more sustainable future will inevitably necessitate fundamental changes in every sense, and no one can remain an outsider.
[2]https://www.instagram.com/p/C11-mdGsIwd/
[3]https://www.thelocal.de/20240116/german-family-farm-struggles-fuel-protest-discontent
[4]https://www.sciencedirect.com/science/article/pii/S1364032122000284
[8]https://www.arc2020.eu/blame-the-system-not-the-farmers/
[9]https://www.ft.com/content/cd2cd90f-9161-4ae1-96a2-c563dee6c60d
[11]https://foreignpolicy.com/2024/01/18/germany-farmers-protest-subsidies-cuts-populism/
[14]https://www.tandfonline.com/doi/full/10.1080/03066150.2020.1725490
Editor: Carrie