Conflict over land allocation: East German farmers’ associations hope for Lindner

Dhe agriculture is one of the few sectors in which East German companies work on average much more economically than their counterparts in the West. This is partly due to the fact that the size of the companies in the east is many times larger than in the west because of the LPG foundations in the GDR and the structures were essentially preserved after reunification.

Nevertheless, after 1989 the federal government took over large agricultural and forest areas that had once been declared “state-owned”, which it has sold or leased over the past few years via the federally owned Bodenverwertungs- und -verwaltungs GmbH (BVVG), a successor company to the Treuhand.

In recent years, farmers’ associations and East German politicians have already criticized the federal practice of selling land as profitably as possible or leasing it to the highest bidder, which has led to steadily rising land and lease prices and also made speculation possible. In the meantime, of the almost 900,000 hectares in total, only a good 90,000 are federally owned, and a fierce dispute has now broken out over them.

Privatization was initially stopped

With the takeover of government in Berlin a year ago, Federal Finance Minister Christian Lindner (FDP) initially stopped further privatization and leasing of these areas. The coalition partners had different views on how to proceed. For example, the Greens urged both to stop selling and to no longer automatically lease to the highest bidder.

It took almost a year for the finance, agriculture and environment ministries in Berlin to come to an agreement: in mid-November they announced that they would basically end the sale of the remaining 90,000 hectares. According to the BVVG, in the next two years only a maximum of 2,000 hectares will be sold to meet the claims of previous owners and almost 8,000 hectares will go to the “National Natural Heritage” initiative as areas valuable for nature conservation. The majority of the rest, on the other hand, is to be leased primarily to ecologically or sustainably managed farms, as agreed in the coalition agreement.

And it is precisely against this that the eastern farmers’ associations are up in arms. Because the rules of what is meant by ecological and sustainable are still unclear. “The question ‘What does the federal government mean by sustainable?’ has not yet been answered,” says Manfred Uhlemann, General Manager of the Saxon State Farmers’ Association. According to him, the federal government, via the BVVG, gave preference to organically managed companies this year. “There is no basis for that,” says Uhlemann. “We want sustainable companies to have the same rights here.”

“End discrimination against conventional farms”

In fact, in 2022 the BVVG leased 79 percent of a total of 17,400 hectares of arable and grassland to organic farms, the company announced on request. 2022 is a “year of transition, since all areas are leased to ensure the food situation”. However, the leases for organic farms in the “transition year” were concluded for six years, while all other farms that were only awarded the contract in a further round of tenders, if no organic farm submitted an offer, were only given leases for one year.

Conventional farms in particular see themselves at a serious disadvantage as a result of this practice. In a joint letter to Federal Minister of Finance Lindner, the five East German farmers’ associations therefore call for an end to “the unequal treatment of organic and conventional farms that has been practiced up to now, which in our opinion finds no justification in the coalition agreement,” says the letter, which is available to the FAZ. Rather, the allocation of land should be based on the principle of sustainable management laid down in EU agricultural policy.

“If a farm receives EU agricultural funding, it is doing business sustainably and should therefore be entitled to participate equally in tenders for BVVG areas,” said the presidents of the farmers’ associations from Brandenburg, Mecklenburg-Western Pomerania, Saxony-Anhalt, Saxony and Thuringia.

BVVG is currently developing rules for leasing

“We reject it when the state stipulates that only ecological companies do something for the environment,” says Uhlemann. “It’s unequal treatment, and he’s not entitled to it.” The associations are now placing their hopes in a conversation with Lindner, which should take place at the beginning of the new year. “We have clear ideas and hope to get to know Christian Lindner’s,” says Uhlemann. The BVVG, in turn, explains that the rules for future leasing are “currently being worked out”.

The state-owned company is meanwhile giving the all-clear regarding the development of land prices. The price dynamics that have been observed on the world market since 2007 have “slackened significantly, which is also reflected in the amount of purchase and lease offers made by the BVVG and submitted by the companies participating in the tenders”. In 2021, the average price per hectare was 21,080 euros, after 20,625 euros in the previous year.

The lease prices, on the other hand, remained almost unchanged last year at EUR 448 per hectare. At the same time, the BVVG rejected the accusation of selling or leasing areas to maximize profits. The prices are “an expression of the general market development” and the majority of the contracts concluded are based on tenders that represent “the bids of the market participants and their future expectations”.