"Our future grows in the country"

Date:

02.07.09 10:00 AM

Location:

Stuttgart

Speaker:

Federal Minister Ilse Aigner

Federal Minister Ilse Aigner speaking at the German Farmers’ Day 2009, Source: German Farmers’ Union

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Mr. Sonnleitner, Minister-President Oettinger, Mr. Hiestand, Farmers, Ladies and Gentlemen, thank you very much for your warm welcome.

Every two years the Farmers' Day is an opportunity for your sector to demonstrate its self-confidence and crucial relevance to our everyday lives, something which you always manage to do very impressively. You can count on my support.

Mr. Sonnleitner, I would like first of all to congratulate you warmly once again on your re-election. Your election was an impressive sign of the trust placed in you. This strengthens the German Farmers' Union as the key stakeholder body for German farmers. I look forward to continued good cooperation with you.

Mr. President, you just gave a number of examples and made some demands regarding how we can enable further progress to be made in the agricultural sector in Germany.

I was listening carefully.

You may rest assured that I will continue in the future to champion the cause of German farmers in Berlin and Brussels just as I have done in the past few months.

In your role as farmers you are key achievers for our economy and society in Germany.

I wish to say candidly that I too, Mr. Sonnleitner, was very irritated by some press reports over the past few weeks concerning the publication of EU payments.

I would like to say in this respect that those who resort to that type of discussion and deliberately arouse people’s envy are not keeping up with the times! We have already initiated major changes. We know that:

The state's market regulation policy is already a system of the past.

You as farmers are today in the midst of a reform project taking place on a huge scale.

When we discuss European agricultural policy after 2013, we are also talking about the future prospects in this sector.

I have a clear goal in mind that we must achieve: My aim is to integrate the agricultural sector into the social market economy.

This goal is based on five important pillars:

• ensuring that the agricultural sector is orientated towards the market and conceived by the market;
• safeguarding the core values we share, notably the protection of intellectual property and the strengthening of small and medium-sized enterprises;
• maintaining and further developing our proven agricultural social security system;
• being open to new technologies and innovation and making use of them;
• and last, but not least: rewarding the services rendered by agriculture in line with their actual importance in providing the necessities of life for our society: this includes a secure supply of food, conservation of cultural landscapes and, more recently, the contributions to energy supply and climate protection.

I know that this calls for us to reconsider our ideas in some areas. The foundations of the social market economy in Germany have been guarantors of success in our country for the past sixty years. This is not the only role they should fulfil: they should also be the cornerstones of a modern agricultural policy in Germany and Europe. Even if we are currently very busy with the problems on market at the moment, we should not lose sight of this guiding principle.

Social policy in agriculture

Mr. Sonnleitner, You gave an accurate description of the situation in the agricultural sector. I believe that we have done a really good job and I can present an excellent record today. You acknowledged this and in my opinion rightly so. You have no idea how much praise one can bear before it starts to hurt the soul.

Allow me just to point out one more specific aspect: yesterday, the members of the agricultural health insurance funds benefited from an average drop in contributions of ten percent.

• We have provided for free health insurance for children in agricultural health insurance as well;
• We have ensured the inclusion of agricultural health insurance in the Federal Government’s economic stimulus package.

We have provided fresh opportunities for social policy in agriculture and restored its financial priority. Accident insurance, in particular, has been placed on a new footing. I secured an additional amount of 40 million Euro in the draft budget for 2010.

Ladies and Gentlemen, Our policies will not, and are not intended to, tell you how to conduct your farming operations: whether you would like to engage in arable farming or livestock rearing, or would prefer to invest in a biogas plant. Our policies also do not focus on the farm size and legal form. This is solely your business decision and this is incidentally also one of the basic rules of the social market economy.
Our policy is clearly committed to the ownership of farmers.

"Freedom" and "property" are vital for our civil society. We demonstrated this once again in our handling of the inheritance tax reform. We made sure that farmers were able to continue in most cases, as before, to transfer their holdings to their successors without paying inheritance tax.
This outcome was anything but a matter of course. There have been a number of very different proposals, for instance that farmland should be subject to taxation at its commercial value.

To provide you with an example of this scenario: this would mean that a 50-hectare holding without debts would, based on a tax assessment at commercial value, even if the exemption rule were to be applied, mean that the holding would have to pay inheritance tax amounting to around 23,500 Euro. Under the now legally enacted regime, no inheritance tax charge would be imposed.

Just in the nick of time we also managed to have leased land and farms added to the list of tax-favoured assets. The exemption rules will thus apply to them as well. The same holds true for the tax exemption of residential buildings if they are used by family members. This leaves sufficient leeway for the development of farms when they are handed over from one generation to the next.

Drastic changes

Ladies and Gentlemen, I know that passing a farm on from one generation to the next often does not run smoothly. In agricultural policy we are faced with a comparable transition regarding the underlying framework, a transition which is no less difficult.

We are confronted with drastic changes. On the one hand there is the favourable long-term prognosis: the demand for agricultural products is set to increase worldwide. The world population continues to grow by approx. 80 million people annually. This roughly corresponds to the populationof Germany. The World Food Organisation estimates that the demand caused by this growth is expected to rise by 40 percent at least by 2030. Moreover, the demand for energy is set to rise substantially in the decades to come.

On the other hand, there might be stronger price fluctuations on agricultural markets in the future. Globalisation offers opportunities here, but there are also risks involved.

Last, but not least: there will be a new European agricultural budget in 2014. It will be a whole new ball-game. The fighting over distribution has already started and will if anything become more intense rather than less so. The debate on the publication of direct payments testifies to this.
We must set the course today to face all of these challenges. We need to be aware that competition is becoming increasingly global. Agriculture will also have to focus on opening up new business segments.

We will support you in this. We will not take away your freedom of choice.

Priorities of our future work

I would like to point out several priorities of our future work by way of example. As you know I used to work in research policy. My Ministry has the fourth largest research budget within the Federal Government. The following rule also applies to agriculture: we should always stay one step ahead of our competitors on the world markets. Knowledge provides a competitive edge.

And if I may say so: The innovative potential of a country cannot be reduced to the issue of MON 810 cultivation.

• I am also thinking of the further development and promotion of regional value-added chains. We have to reinforce cooperation between production and processing. This, too, is innovation, and is a success factor in other business sectors.
• We can use our strength for exports as well. This is illustrated by the development over the past few years.

We will therefore continue to support the industry in opening up growth markets and in setting up a streamlined replacement organisation for export promotion.

We are meeting in Berlin this very evening for a round of negotiations. I have two key elements in mind:

• a contact partner for the food sector
• and the inclusion of large-scale enterprises and of small and medium-sized enterprises especially.
• I believe that we must counteract the sustained land take that is taking place at the expense of the German farming sector in a resolute and innovative manner.

We do not need a further development of industrial estates on greenfield sites. We need to put existing settlement areas to intelligent use. This also includes reviving village centres.

• We must secure the future viability of Germany as a location for processing.
  I am thinking, for example, of drawing up a protein strategy to safeguard the supply of animal feed.
• We must further develop the bioenergy sector, taking due account of the competition that exists between food and fuel.
  We need innovation to this end in order to put residual materials and waste from biomass to better use for energy production and to achieve cascade use.

All of these fields need fresh ideas and people to implement them. These are undeniably attributes that characterize our farmers.

Ladies and Gentlemen, With the three-pronged approach of promoting the opening-up of new business segments, forcing the pace of research and innovation and further expanding our agricultural exports, we can achieve a great deal for the competitive and future-oriented focus of the German agricultural sector.

But one thing is also for sure: we will see stronger price and market fluctuations in the agricultural sector in future than in the other sectors.
Even if forecasts tell us that we are heading for more stable agricultural markets in the medium to long term, unforeseen events can always occur. We cannot afford to do without a safety net in the future as well. We will therefore devote greater attention after the federal elections to the subject of the introduction of risk equalisation reserves. However, we will still have a lot of convincing to do together.

Situation of the dairy farmers

With respect to price and market fluctuations, the difficult situation facing dairy farmers inevitably catches our eye, of course. Even though I know that many other sectors have already faced similar situations.

This issue has been on my mind ever since I assumed this office. Views on this issue and approaches to the problem are, in part, diametrically opposed here in Germany. Politics starts when we face up to realities. The phasing out of the quota system in 2015 has been decided. There is no majority to change this, either in Germany or at European level.

It remains our common aim, however, to shape the time until then:

• I therefore pushed through the dairy fund and a twofold market analysis in the negotiations held in Brussels in November;
• at our initiative, the European Economic Recovery Plan was opened up to the dairy industry;
• due to the Federal Chancellor's intervention, the Commission's market analysis will be brought forward to 22 July.

But this alone is not enough, the Council must take action. I therefore call for:

1. the Agriculture Council to deal with this as soon as possible;
2. the intervention instruments to be extended beyond 31 August; and
3. early signals to be given for the suspension of further quota increases.

At national level, too, we are called upon to tackle the situation together. I consider it inappropriate in the current situation to engage in finger-pointing.

Germany is the Number One production location for milk in Europe and we should do our utmost to ensure that things stay that way.
Our concern now is to find viable solutions in cooperation with all members along the food chain in order to:

• increase the turnover at home and abroad and
• foster investments in the future.

We are happy to play our part here. The industry is called upon, in the first place, to re-position itself with an eye to the future.

But we also have to bear in mind that land-related dairy industry is the only alternative in some regions. It is indispensable for the upkeep and conservation of our nature and the shaping of our cultural landscapes.

The compensatory allowance and the pasture premium are therefore not subsidies; they constitute financial compensation for concrete services that farming renders to our society.

Future of the Common Agricultural Policy after 2013

Ladies and Gentlemen, When I declare the road towards the social market economy as a guiding vision for our farming sector, it places us right in the middle of the discussions on the future of the Common Agricultural Policy after 2013.

At European level, our colleagues from Scandinavia and Great Britain would prefer to cancel the direct payments and introduce the free market economy You can read in the election manifestos what the parties in Germany have to say on that.

I am sure you listened carefully yesterday and registered to what extent the party chairpersons put their concept proposals for the future of EU agricultural policy on the table.

There is no question in my mind: We will continue to follow the course towards market orientation and market opening that we embarked on with the agricultural reform. For a greater opening of the market also means more opportunities for farm operators.

Added to this is the fact that: today we already export 40 percent of our agricultural products abroad and we cannot afford to cut ourselves off for this reason either. One out of every four jobs here depends on exports.

On the other hand, we demand standards from them that third countries do not meet. These standards are demanded by our consumers, particularly those in Germany. Realistically, however, these extra costs will not be covered by the price. That is precisely why we need adequate compensation for this via the first pillar.

As a second element alongside the direct payments, I therefore aim to strengthen rural areas at the same time. This ranges from investment promotion to improving the infrastructure such as broadband cabling. It will therefore be our chief concern to establish a second pillar that is as strong as possible.

Our farmers will profit as well. The two pillars of agricultural policy therefore do not compete with each other in my view. I will throw my weight behind ensuring a two-pillar model in the post-2013 budget as well.

Agriculture creates quality of life

Ladies and Gentlemen, Analysts are already advising investors once again to invest more money in agricultural funds. Things are looking up again after the crisis we have experienced recently. The agricultural sector can thus be confident about its future.

Agriculture creates quality of life, and not just for rural areas. It is our society's quality of life for which we are campaigning, you and I. We need a threefold approach to future developments:

1. orientation towards the market,
2. assistance by agricultural social policy, and
3. rewarding the services rendered to the general public.

I am firmly convinced of that.

I call out to the advocates of liberal approaches: Our farming industry is nothing like a mobile phone company that can close one plant overnight and reopen a new one abroad.

The security of our supplies in Germany is a matter of providing the necessities of life. I reply to those who believe that farming is not a relevant factor by saying that farming also has nothing to do with mining, an industry that we had to wind up in Germany, including cushioning the social hardship that resulted from this.

We were able to replace mining with other technologies and ways of ensuring our energy supply. However, we cannot replace independent food production that works to the highest standards in environmental and nature conservation and animal welfare.

Policy framework and socio-political ideas are one thing. But you are the most important success factor for the way forward. You must go down this path. As farmers and as people from the country and for the country.

You guarantee the good development of rural areas. We guarantee a reliable policy. We are both responsible. Because: our future grows in the country.