16 Aug 2021, 12:44

Climate-friendly farming: The proposals of Germany's agriculture commission

In a late push to include the farming sector in its efforts for a climate neutral transformation, Chancellor Angela Merkel's government in 2020 created the "Commission for the Future of Agriculture." Droughts and farmers' protests had moved  farming into the spotlight and the commission was meant to bring climate activists and farmers together to work out a compromise at last. One year on, the results include lots of measures - and their price tags - to make agriculture part of Germany's 2045 climate neutrality vision. This factsheet outlines the the commission's climate-related recommendations and calculations, which may well become part of the next government's agricultural policy after the 2021 elections. [Updates with reactions to the commission's report]

When it comes to climate action and emission reductions, the German agriculture sector has long been overlooked, for various reasons: Its overall contribution to Germany’s greenhouse gas emissions (about 9% of total emissions in 2020) is small compared to the energy industry or the transport sector, and farming has been considered hard to “decarbonise” as many emissions related to animals, soil, and food are hard to avoid or reduce as long as current eating habits prevail. But this has changed in the past few years and Germany’s new target of becoming “climate neutral” by 2045 has made it very clear that all sectors have to aspire to a no-emissions scenario, because all efforts of carbon uptake and sequestration will be needed for those emissions that are really not avoidable.

Agriculture emissions in Germany have fallen by around 24 percent since 1990, in large part due to the decrease in livestock numbers after German reunification. In addition, there are greenhouse gas emissions from agricultural land use, and land use changes, making up 4.4 percent of Germany’s emissions.

Germany’s Climate Action Law sets an emission budget for the agriculture sector of 56 million tonnes CO2equivalents in 2030 (down from 70 mt in 2020). The Climate Action Programme 2030 includes measures such as the reduction of nitrogen surpluses, strengthening of the fermentation of manure of animal origin, the expansion of organic farming and the reduction of greenhouse gas emissions in livestock farming as well as the promotion of carbon storage potentials in agricultural lands, e.g. humus build-up.

What is Germany’s Commission for the Future of Agriculture and why was it established?

In recent years and months, both the European Union and the German government have been tentatively starting to change some of the allocation criteria for the large support payments made to farmers in the EU. Instead of receiving support according to the size of the land they farm, farmers are to adhere to more and more environment and climate-friendly practices in return for the subsidies.

But environment and climate activists consider these changes too little too late and are pushing for more major changes in the sector, e.g. in the number of animals held and the use of nitrogen fertiliser as well as international trade in animal feed. They received a boost by the European Commission’s 2020 publication of the Farm to Fork strategy which aims at nothing less than a complete overhaul of the EU's food system.

Many farmers, on the other hand – already under pressure from increasing bureaucracy and the market power of the large food chains – angrily took to the streets in the end of 2019 and beginning of 2020 to protest against the government’s environmental policies.

To find a common ground and in the future shape policies that are accepted by both sides, the German government established a “Commission for the Future of Agriculture” (Zukunftskommission Landwirtschaft, ZKL) in July 2020 and tasked it with making a proposal for an ecologically, economically and socially sustainability agriculture and food system. The final report by the commission – consisting of 31 farming and consumer representatives as well as environment organisations and researchers – was published on 6 July 2021. The result was accepted unanimously by the ZKL’s members, despite lot of animosity between the different factions in the commission. It is hoped that the report will provide the common baseline for future measures – which in principle have been accepted by all stakeholders through the commission’s work. With this, the ZKL could achieve a similar success as the 2019 coal commission’s report which initiated the country’s coal exit.

Key premises of the ZKL report

Reducing emissions from the agriculture sector is only one of many objectives for a future farming system that the report lists and suggests measures for. In the first part of the report and throughout, the commission outlines some key facts and understandings that it bases its proposals on. The following are relevant for climate policy:

  • New technologies, enormous increases in production and productivity and cost pressures have led to a situation in which agriculture is “less and less able to operate in ecologically compatible material cycles and within the limits of natural resources”. In view of the external costs that the current system entails, “an unchanged continuation of the current agricultural and food system is out of the question for ecological and animal-ethical as well as economic reasons”.
  • Agriculture has to make its contribution in the fight against climate change and for the preservation of biodiversity. “The goal must be that agriculture, together with land use, makes use of its potential for positive contributions to limit global warming to 1.5 degrees Celsius.”
  • The services to society provided by agriculture deserve public recognition and economically attractive rewards.
  • Measures to increase the positive and reduce the negative externalities of agricultural production usually go hand in hand with an increase in production costs. The funds required will exceed those currently available in public budgets; they have to be provided by society as a whole.
  • The necessary and fundamental changes to the agricultural and food system need the wide-ranging acceptance by those directly affected. To achieve this, appropriate deadlines and reliable framework conditions must be set, and planning security must be guaranteed.

Following these basic notions, the ZKL’s report proposes a range of distinct policy measures under different categories.

General: Climate

The report states that in order to adequately meet the challenges of climate protection, it is necessary to “immediately implement, immediately effective measures to reduce greenhouse gases”.

The focus here is on more climate-efficient management, which is also often cost-efficient. Under special conditions, targeted state support for management methods that serve to reduce greenhouse gas emissions and store greenhouse gases should be continued and intensified, at least for a transitional phase.

Consumer behaviour, diets and animal husbandry

The majority of agricultural emissions occur in the form of methane, which largely stems from livestock farming, especially cattle farming. The ZKL concludes that it is necessary to reduce the consumption and, consequently, the production of meat. They suggest to:

  • Create an appropriate size of cattle herds in line with climate goals and a focus on pasture-based cattle farming. Animal farming should be tied to available land. Such decentralised livestock production leads to more regional fodder production, less concentrated nutrient emissions, lower emissions from transport of products and waste.
  • Following the recommendations of the German Nutrition Society, the consumption of animal products should be reduced. To make this feasible for farmers, the value added per animal must increase so that farm income remains at least stable.
  • Introduce a levy on food of animal origin, e.g. dairy products, meat or eggs, as proposed by the Kompetenznetzwerk Nutztierhaltung.
  • Optimise manure and feeding management.
  • Improve the lifetime performance of dairy cows.
  • Increase promotion of research into and marketing of domestic agricultural raw materials for use in animal feeds and alternative products for animal foodstuffs.

Promotion and creation of greenhouse gas sinks

To ensure that agricultural soils and peatlands contribute to CO2 storage of soils, the ZKL proposes humus build-up as a long-term measure. Concrete steps would be:

  • Increase state-financed support measures for the promotion of humus-producing crop rotations, catch crop cultivation and the cultivation of legumes.
  • Develop instruments to measure the changes in humus content so that permanent storage of carbon in mineral soils can be rewarded.
  • Make a balanced humus content a binding target of “good professional practice”.

The ZKL also proposes “differentiated” measures to protect moorlands which are natural carbon sinks but whose use for farming leads to greenhouse gas emissions

  • Convert currently agriculturally used moorlands from fields into grassland; protect this grassland and support its products and pasture management.
  • Re-wet areas with high climate protection potential, while ensuring income prospects for the effected farms.
  • Use and promote paludicultures.
  • Re-wetting is particularly expensive – one way of financing it, and at the same time ensure climate targets are met, could be an emission trading scheme for emissions from organic soils. But due to the complexity, monitoring and implementation, such a system cannot be established in the short-term.

Soil, nutrient cycles and fertilisers

  • Reduce nitrous oxide (laughing gas emissions) caused by the use of nitrogenous fertilisers. To this end, increase the efficiency of the fertiliser and reduce the nitrogen surplus per hectare according to the German sustainability strategy.
  • Establish incentive systems for optimisation of nitrogen efficiency.
  • Ensure rapid implementation of a simple, transparent and verifiable material flow balance for each individual farm.

Organic farming

Germany pursues the goal of having 20 percent of agricultural land under organic farming; the EU’s Farm to Fork strategy aims for 25 percent by 2030. The ZKL considers organic farming to be the “only sustainability programme that has a significant and extremely dynamic market of its own”, with a turnover of about 15 billion euros annually in Germany. It recommends:

  • Organic farms must, through research and innovation, training and advice, be enabled to further increase their productivity, e.g. in the fields of digitalisation, natural insecticides, crop rotations, minimal impact soil cultivation, biodiversity-friendly grassland management, improving the effectiveness of organic fertiliser, breading of suitable plants and livestock.
  • Ensure that EU funds are distributed adequately to enable the envisaged increase in organic farms.
  • Promote organic food industry.

Bureaucracy and rules

  • Reform those legal premises (in national and EU law) that give incentives to increase competitiveness by externalising actual production costs at the expense of public goods such as climate, biodiversity and animal welfare.
  • Existing regulatory law, which is in part very detailed and administratively costly, should be reduced to its actual function of setting minimum standards and sanction their violation.

Externalities and markets

External costs of the German agriculture sector arising from emissions, soil degradation, water pollution and biodiversity loss amount to at least 90 billion euros per year, according to a report cited by the ZKL. If internalised, the price of, for example 1kg of beef, would have to be 5-6 times higher than today. The ZKL concludes: “In view of this magnitude, an unchanged continuation of the current agricultural and food system is ruled out from the outset, not only for ecological but also for economic reasons, if the interests of future generations - who would otherwise have to bear many of these costs - are taken into account.”

After acknowledging that the current business model of the farming sector is unsustainable, the ZKL stresses that the measures suggested in its report to make it more sustainable come with a large price tag. And it enlists the help of the entire society to stem the costs of the transition, saying that farmers bearing them alone, would “endanger agricultural production in Germany”.

As “additional economic incentives to avoid or reduce external costs and to promote the external benefits of agricultural production and the food system,” the ZKL proposes:

  • To make avoiding currently externalised negative effects on the producer side economically attractive.
  • That market opportunities are closely linked to environmental and social sustainability.
  • That public subsidies serve the purposeful financing of the provision of public goods by the farming sector.

Costs of the transition

The ZKL says, from the off, that the amount of money needed for the transformation into a sustainable and climate friendly farming sector, “goes beyond the current market volume and existing public funding within agricultural policy”.

In its own cost estimate, the ZKL assigns the following price tags to the various measures:

The ZKL estimates that the total annual financing need for the transformation of the agriculture sector will cost between 7 billion to 11 billion euros. On the other side of the balance sheet are the current 6.2 billion euros p.a. that the German farming sector receives under the EU’s Common Agricultural Policy (CAP). But the ZKL cautions that most of this money – at least in the short term – will not be available for the transformation since it is tied up in land-size depending direct payments to farmers and other promotion schemes that don’t have a direct climate and environment impact. According to the ZKL, some 5 billion-9 billion euros have to be found annually to close this gap in the next few years; this sum will be reduced to 1.5 billion-5.5 billion euros per year once the CAP has been adjusted.

The ZKL stresses that these costs for the transformation to a sustainable and socially accepted agricultural and food system are far below the billions of euros caused the external costs of an unchanged continuation of the status quo.

In the longer run, the transformation will reduce the external costs of food production and food consumption (mostly in the health system and environment), benefitting all consumers. To prevent rising food costs from putting extra pressure on low-income households, the ZKL proposes a compensation payments and higher transfers to these consumers. To further buffer higher food costs, the ZKL suggests, for example, lowering the value added tax on fruit, vegetables and legumes, free and good quality kinder garden and school meals.

Changes to the Common Agricultural Policy (CAP)

The CAP has to “significantly contribute” to achieving the transformation into a sustainable agri-food system in the EU, the ZKL writes. The existing area-based direct payments to farmers “do not meet the requirements of the future” and should therefore be realigned, they continue. The ZKL proposes (inter alia) for the future two CAP funding periods as of 2023:

  • Gradually decrease direct payments and conditionalities. Instead introduce economically attractive (to farmers) programmes aimed at achieving transformation targets, e.g. premiums paid for eco-schemes.
  • Linear increase of the share of eco-schemes pillar 1 of the CAP while reducing direct payments.
  • The funds reallocated from pillar 1 to pillar 2 should be used to finance biodiversity and climate protection measures - while retaining the funds already earmarked for agro-environmental measures in the second pillar.
  • From 2028 at the latest, Germany should have federal funds for financing specific measures in Natura 2000 areas, and greenhouse gas reducing farming on organic soils. The money should come from the energy and climate funds, the fist pillar of the CAP and other federal budget sources.
  • Eco-schemes and the agro-environmental measures under pillar 2 of the CAP should be evaluated and the results of the 2024 evaluation should be used for the design of the programmes as of 2028.

International trade

Germany’s current agriculture system relies both on imports of fodder, for example soya products mainly from South America; and is itself a large exporter of, for example, pork, beef, and dairy products. One third of the total production of German agriculture is exported, around 20 percent of German agricultural exports go to third countries, the federal agriculture ministry (BMEL) states. The ZKL identifies difficulties in establishing higher sustainability standards in the face of global competition and the negative effects of agricultural trade on biodiversity, climate and food-sovereignty in countries of the global south as two issues that Germany’s agriculture transformation should address. The commission says a level playing field in international agri-food trade will need “European solutions and internationally recognised sustainability certification systems”. “In the medium term, an EU-wide regulation and, if possible, global agreements on due diligence in supply chains should be sought,” they say. To avoid production moving to countries with lower standards, measures such as a carbon border adjustment or other tariffs, import standards or import bans should be used, advises the ZKL.

The commission writes that Germany should “allow the less developed countries of the Global South to protect their markets for food commodities against imports, as long as this serves to build up their own supply chains for food commodities”.

Reactions to the ZKL report

The ZKL’s final report has drawn plenty of praise and agreement from most stakeholders but new fault lines are bound to appear when it comes to the implementation of concrete measures. Chancellor Angela Merkel said the report entails a lot of work for the next German government. The proposals outlined within it could turn the EU’s copious spending on agriculture into a “large sustainability project, which at the same time secures food supply and environmental protection,” Merkel said.

What other stakeholders said:

German Farmers‘ Association (DBV)

“This report, which was unanimously adopted by all stakeholders, is a basis for future political discourse on agriculture. Politicians, no matter who governs in the future, cannot ignore this,” Werner Schwarz, vice president of the DBV and member of the commission, said. All participants had made clear that the transformation process in the agriculture sector will be a “task for society as a whole to support and also finance”, he said. “The report is a clear agreement that with all the will to change towards more sustainability, the business aspect will always be taken into account. This is enormously important for our farms. Only if money is earned on the farms can we also provide environmental services." Schwarz said in an interview that accepting the phase-out of direct payments from the EU CAP will be one of the hardest points to sell to DBV members. Another concern is the possible levies on plant protection products or nitrogen fertilisers, he said.

Arbeitsgemeinschaft bäuerliche Landwirtschaft (AbL) (Working Group for Rural Agriculture)

Elisabeth Fresen, ZKL member and head of the AbL, said: “We see the urgently needed restructuring of agriculture as a task for society as a whole and, through a number of our recommendations, we are making real improvements possible for many farms.” Farmers can protect the climate, the environment, water and biodiversity and ensure the welfare of farming animals, she said. “For this, we demand adequate financial compensation,” she explained. “The prerequisite for the transformation is that politicians implement our recommendations and create political and economic framework conditions.”

Federation of German Consumer Organisations (VZBV):

"With its unanimous recommendations, the ZKL has described the work programme of the next federal government,” said Klaus Müller of the VZBV. He said a binding, EU-wide Nutri-Score, the labelling of animal welfare, origin and sustainability, more honest prices through taxing of unhealthy ingredients, as well as a social cushioning for low-income consumers could help to make food production healthier and more sustainable.

Greenpeace

Martin Kaiser, Executive Director of Greenpeace Germany said he was pleased that the Commission has been able to agree on a result but that agriculture “must change much faster than the report suggests”. The next government must implement the Commission’s recommendations without delay, Kaiser said, adding that the Germany’s climate targets can only be achieved by “halving the number of animals”. Kaiser had originally been a member of the ZKL but left in March 2021 as a protest against the government not taking into account the Commission’s recommendations on the EU CAP subsidies distribution in Germany. He reiterated that by allowing billions of euros in subsidies to be distributed according to the current rules the money was missing to support biodiversity, animal welfare, and climate action.

Researchers / Thünen Institut

Six researchers from different backgrounds and universities were part of the ZKL and shared their views in an article by the Thünen Institute, the Federal Research Institute for Rural Areas, Forestry and Fisheries.

Achim Spiller, professor at the University of Göttingen said that intact nature and better animal welfare were worth higher costs, but that low-income households will need to be compensated. “[Reforms] will pay off economically in the medium to long term, as many environmental and health burdens that occur today can be avoided through the consistent transformation of the agricultural and food system,” said professor Ramona Teuber from the University of Gießen.

Agri bloggers

Four farmers and agri bloggers who claim to represent the interests of many farmers who participated in the protests against the government’s agriculture reforms in 2019, wrote an open letter to farmer representatives in the ZKL criticising the results produced by the commission. “The tenor of the entire report gives us the impression that the provision of food is increasingly unimportant. Paid activities for climate, nature and biodiversity conservation increasingly set the agenda and are supposed to lead to a ‘transformation’ of agriculture,” they write. This was “pretty much the polar opposite” of what the protestors had wanted to draw attention to, they said.

Friends of the Earth Germany (BUND)

Olaf Bandt, chair of Friends of the Earth Germany (BUND) and ZKL member, said the 30 members, with their different interests and focal points, have succeeded well in finding common solutions for a major transformation in the agricultural and food sector. “This report can be the first step on the way to a social contract on a sustainable agricultural and food policy,” he said. “In the process, farmers should be rewarded for their achievements in protecting biodiversity, the environment and the climate with substantial funds." In an interview, Bandt said that environmentalists had not succeeded in including state enforced requirements for a reduction in livestock numbers in the report. Instead, it was agreed that this would have to be triggered by a change in dietary habits. In addition, the commission had not been able to find scientific evidence for the notion that small farms provide greater ecological services and require special financial support.

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