By signing TTIP the German Government will sacrifice agriculture to the interests of industry

By signing TTIP the German Government will sacrifice agriculture to the interests of industry

by Prof Dr Eberhard Hamer

In recent decades, German agriculture has had its greatest heyday and made much money, so that not only was it able to invest a great deal but also land prices have increased fivefold in the last 10 years and leases have tripled. There are even international agricultural funds, which want to escape this money accumulation and inflation by investing in land and forest, because they not only feel safe thus owning tangible assets but they also believe in further price increases.
But, due to international, European and national policies, agriculture is actually faced with dramatic changes that are first becoming apparent in the dairy and the pig market.
Till a short time ago, dairy farmers earned good money because of the milk quota in a “wellordered market”. But because the costs were the lower the more cows you had in your stable, in a system of guaranteed sales the number of cattle farms and the number of cows held in them increased constantly and so, of course, did the total production. With the sudden end of the milk quota overproduction flooded the market without restraint and there ruined the extortionate prices on the consumer market, so that today, dairy farmers make daily losses with selling prices of about 20 cents and costs of 35 to 40 cents.
Per cow the place in the stable costs about EUR 10,000, so a large cowshed with 400 places and cows costs about 4 million euros. If the daily production causes further debts to accrue on top of these costs, farmers with the largest debts are the first to default. The situation is alarming for the entire dairy industry. Farms are already dying out. If nothing is done about this, 25 to 30% of the milk market will be destroyed in the medium term.
In connection with the pig market we know the “pork cycle”, the disproportionate proliferation of pigs when prices are good, so that overproduction causes prices to collapse again and hence not only farms which operate too near the marginal costs are eliminated, but the others also reduce their livestock. The pig market is currently also in crisis and in revision because producer prices are below cost.

Why does the Federal Government not intervene?

  1. In the postwar period all governments and also the European Commission for agriculture aimed at self-subsistence. Germany was to maintain enough agricultural production to aliment its own population. The European Union has extended this principle to include Europe, but has now abandoned it under pressure from the United States, because they need to export agricultural products and therefore press the EU to accept the free import of their cheaper – partly genetically contaminated – agricultural products to Europe.
  2. The export to Russia played a major role for the dairy and pig market. But under pressure from the United States the federal government agreed to sanctions against Russia, which also affected the dairy market and suddenly cut off a significant share of exports. Thus political will has reduced the sales potential of the German dairy industry without any compensation being paid.
  3. According to the will of the Federal Government the gate is to be opened entirely for all agricultural products from the United States by TTIP. So the agricultural surpluses of the US would pour unchecked into Europe and cause prices to collapse, for example those for grain, which would then bring that same crisis to the grain producers which has already befallen dairy and pig farmers.
       The United States have openly stated that free grain exports to Europe would be required in return for the import of European cars. The industry is therefore pushing for TTIP and for the sacrifice of agriculture in favour of those industrial advantages. Merkel is willing to do this. The Minister of Agriculture, who would be the person called upon to defend agriculture, has gone to ground. So, after our experience with German politicians’ subservience up to now, we will have to expect politics to sacrifice German agriculture to US interests – to betray it.
  4. The United States are debt-ridden and plan to devalue the dollar’s external value. This would not only reduce their debts (albeit also cheat their creditors), but also again provide improved export opportunities. If free trade according to TTIP concurs with a cheap dollar, the tide of cheap US corn will be all the more devastating for German agriculture.
  5. It is not the first time that, a change in political attitude towards agriculture has led to crises in agriculture due to an opening of international markets. This was already the case in 1890 and in 1920. After 1890, hundreds of thousands of farmers became insolvent and beggars without any fault of their own, but only due to this kind of political change. Likeways in the early twenties, over 10,000 farms and country estates were lost when their owners went bankrupt, also due to cheap American wheat. Even now we are threatened by the risk that after the dairy and pig farmers also many grain farmers will finally have to pay with their existence for a European price drop politically extorted by the US.
       As in 1890 and 1920, the spiral will then continue relentlessly downwards: First the dairy, pork and grain prices drop, then the producers become insolvent, after that their stables become worthless because no one wants them any more, then even the price for their land collapses, so that the banks require further security and enforce bankruptcy. In the end 20 to 30% of the farms – and agricultural livelihoods – will again be destroyed and we will all be the poorer.
       TTIP might mean the end of agriculture’s heyday. Yet the export of e.g. industrial groups means more to politics than the existence of agriculture, the more so as most DAX-listed companies are foreign owned by more than 70%.

But we are unlikely to recover the agricultural capacity now destroyed in this crisis, even in the long run. The United States alone are using 50 million hectares of agricultural land to produce biofuel, and they could convert this to grain production at any time when there are export opportunities. And the granaries of Ukraine are also already largely in the hands of US corporations (Dreyfus and others), so that the European market is to be flooded with US produced and genetically contaminated grain from this side also.
The TTIP-enforced surrender of the self-sufficiency principle and the sacrifice of our indigenous agriculture in favour of US companies would not only be a temporary policy failure, but bring with it permanent damage which will cause existential problems for our provision with supplies as early as in the next world depression.     •
(Translation Current Concerns)

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