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Julia Klöckner commits to limit the purchase of agricultural land in Germany by supra-regional investors

"Farmers need land," said the German Federal Minister of Agriculture when presenting the results of the study on the effects of supra-regional investments in agriculture.

1/28/2021

Julia Klöckner, German Minister of Agriculture.

Who does the field belong to? The answer in Germany is increasingly: a supraregional investor. Land prices have risen sharply - they have tripled since 2005. Therefore, farmers can often no longer afford the agricultural land for sale. This also has consequences for the structure in rural areas - for living together in the village and the quality of life on site.
The Federal Minister for Food and Agriculture, Julia Klöckner, had these social consequences researched by her Federal Research Institute for Rural Areas, the Johann Heinrich von Thünen Institute.
The study that has now been presented “Effects of nationally active investors in agriculture on rural areas” not only provides information on this, but also examines the question of why investors are so active in eastern Germany in particular. For this purpose, the agricultural structural development since reunification was examined.
Julia Klöckner: “We see: the agricultural land has become an object of speculation. But what is good business for non-agricultural investors is a great danger for our farmers: They lose fair and affordable access to arable land that secures their income: farmers need land. "
In order to counteract this development, the minister again clearly urged the federal states to fulfill their constitutional task: They had to adapt their land law to today's challenges and close the existing legal loopholes. About 75 percent of the leases in Germany would not be reported illegally. No purchase of shares has yet been recorded. “The urgently needed reform must not be passed on like a hot potato from state government to state government in the federal states. Action must now finally follow. There is no lack of knowledge: if you want it politically, you can do it. Baden-Württemberg showed the way and closed the gaps within a year in 2009, ”says Julia Klöckner.
But the federal government also has a duty, the minister added. As before, shareholders can avoid the real estate transfer tax by initially only investing 94 percent in an agricultural operation. After five years they buy the rest - all tax-free. The Federal Ministry of Finance has proposed setting this threshold to 90 percent: “That is a drop in the ocean and clearly not enough for me. I want this limit to be lowered to 75 percent. I made this clear to the Federal Minister of Finance and submitted a proposal, ”said Julia Klöckner. That would drastically reduce the avoidance of the land transfer tax when buying agricultural property.
The study by the Thünen Institute comes to two key results:

1. There is a risk of alienation within communities. Because non-resident business owners tend to integrate less into village life and are not committed to the community.

2. In the two regions examined, 30 years after reunification, the concentration of ownership of agricultural land is significantly higher than previously assumed. The economic pressure after the turnaround has led to the numerous sales. Financially strong investors take hold.
Julia Klöckner: “Our study shows that this development on the land market increases the distance between agricultural companies and the rural population - for example, by adding added value from the region to the distant company headquarters while the municipality finances the necessary infrastructure on site. One thing is certain: those who come from the area are more involved in village life and are involved in the community. It is important to examine these connections. "
Project leader of the Thünen Institute, Andreas Tietz: “At the center of our study is the realization that the nature of the structural change is changing. Operational growth is increasingly taking place in local and nationally organized holding structures. This process is driven by non-agricultural investors, but also in part by the farmers themselves. For us the question arises how this process changes the relationship between rural communities and agriculture. Agriculture is of central importance for local natural resources and resource-related infrastructures. It is also about the contribution of agriculture to rural development, the relationship between agriculture and population and, ultimately, about the social acceptance of today's agriculture. "

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