Agriculture without compensatory payments?
Possible consequences for individual holdings and regions

By Peter Wagner, Jürgen Heinrich and Klaus Hank, Halle

Exactly what form the future agricultural policy will take cannot be foreseen, but there is justified reason to believe that compensatory payments are more and more on their way out.

To demonstrate the impact such a shift in paradigms would have on selected types of holdings in Saxony-Anhalt and Bavaria, deviations between the business results of comparable successful holdings with and without business-related allowances/subsidies were calculated and identified. As expected, regular profits after deduction of the allowances/subsidies showed a negative development. However, the differences between the holdings in Saxony-Anhalt and Bavaria showed that the holding size alone is no guarantee for future survival.Under the changed framework conditions the proprietary structure of the holdings – not including other adjustment measures – becomes paramount for their stability. Thus, in the short and medium term the bavarian holdings under consideration would in any case have displayed less serious existential problems than their counterparts in Saxony-Anhalt - even without payment of allowances and subsidies.
In the interest of a "full-coverage" statement, aspects of "agriculture without compensatory payments" were calculated for the whole of Germany using a model on the basis of standard profit contributions. For the regions the calculations were mainly based on data for the "Kreise" (districts). Although agriculture will always to be ruled by the dictum "live or die" and unprofitable crops will continue to be replaced by others, adjustment reactions by agricultural holdings are left out of the model for synoptic reasons. The aim is to show what kind of changes are to be expected in the different regions without allowances or subsidies, if present structures were to be maintained. For the values "standard profit contributions per hectare", "standard producer income" "profit" and "calculatory profit" a set of figures illustrates opposing situations, i. e. the situation with and without paid allowances and subsidies.

The studies show that regions and agricultural holdings would be affected differently if payments and subsidies were abolished or reduced progressively. In many regions simply continuing as usual will therefore be neither sensible nor possible and the final discussion will invariably concern the question of what form adjustment reactions could take.

How do the general direct payments affect Swiss agriculture?

By Gabriele Mack and Stefan Mann, Tänikon

Using the SILAS-dyn optimisation model we are able to determine ex post facto how the general direct payments to Swiss agriculture producers have affected agricultural policy objectives such as income support, area-wide cultivation and resource conservation. The results show distinct differences between the premia paid per animal and per area. The payments per animal contribute first and foremost to increasing production as compared to a situation without support whereas the premia per hectare primarily secure farm income.

Adjustment and Preservation of an Optimal pH Value Typical for the Soil of a Particular Location – Basic Requirement for an Effective and Environmentally Compatible Plant Production

By Manfred Kerschberger and Gerhard Marks, Jena

The lime content of the soil exerts an influence on all factors important for plant growth and thus primarily determines the soil fertility condition. For this purpose, the measurement of the pH value of the soil as a basis for determining the lime fertilising requirements for soils and plants has proved its worth. In this context, the state also emphasizes the importance of control of the soil lime condition (within the framework of the German Fertiliser Application Ordinance – "Düngeverordnung").

The results of numerous long-term field trials regarding lime fertilising demonstrate the importance of the lime application to soils for a successful and sustainable plant production.

The studies refer to: lime content of arable soils, reasons for soil acidification in plant production, yield reaction of crops and field vegetables in correlation to the pH value of soils as well as aspects of yield security. It can be inferred from the particular significance of the lime supply of soils for its impact on soil fertility that the catalogue of especially noteworthy soil fertility parameters should be supplemented by the factors "lime status of the soil" and "soil reaction" respectively.

Environmental auditing according to EMAS on agricultural holdings

By Karin Eckstein and Helmut Hoffmann, Freising-Weihenstephan

Since 2001 farmers have been able to join the eco-management and audit scheme EMAS which has been introduced EU-wide by the European Community. The objective of EMAS is to achieve continuous improvements in the environmental performance of farms and to ensure the compliance with existing legislation. In a pilot project, the eco-management scheme was tested on Bavarian family farms. The advantages arising from EMAS are, above all, greater legal certainty and an image boost, but not a better marketing position. Operating expenses can also be lowered to some extent because of the more transparent organisational structure. Due to comprehensive documentation requirements, the implementation of the scheme involves excessive expenditure for family farms. There are improvements of environmental performance if a detailed analysis of gathered data is conducted and the results are put into practice on the farm.

Change in value of agricultural land due to the establishment of groundwater protection areas

By Martina Huber, Helmut Hoffmann, Helmut Hausladen and Andreas Jandl, Freising-Weihenstephan

This article analyses the change in value of agricultural land that is declared as a groundwater protection area. Firstly, we present some theoretical background information. We develop a new approach for the quantitative analysis of agricultural purchase prices. This approach is tested in three Bavarian districts. The investigation yields a first insight into the real purchase price conditions in the respective areas.

The results of the purchase price analysis show that people do trade agricultural land in the investigated groundwater protection areas. This result refutes the hypothesis that agricultural land in groundwater protection areas is generally not tradeable.

In areas where only a small proportion of the farm land is located in groundwater protection areas, the land area bought by natural personsis relatively small.

Natural persons, in most cases farmers, purchase arable land in water protection areas at prices below the customary market price . Water supply companies and public authorities, however, generally buy arable land at market prices.

For grassland, the purchase price analysis of the three districts shows a non-uniform picture regarding the change in value inside and outside the protected areas.

The expert interviews show that there is a discount on the fair market value when agricultural land is located in a groundwater protection area. Several factors influence the fair market value, for instance the extent of land use restrictions, the current use to which the land is being put, the situation on the local agricultural property market and the size of the groundwater protection area.
Compensatory allowances may limit but can not prevent a decrease of the fair market value of agricultural land.

The Village as "Habitat" – Methods, Contents and Results of Village Renewal

By Joachim Grube, Nienburg/Weser

Villages as historic sites have now finally evolved into rural settlements. The transformation of a once sedentary production society into a nomadic consumer society has brought former and new villagers a new kind of freedom – a development which has not been without consequences for the village itself.

20 years of village renewal, too, have left traces in rural areas, both in the architectural environment of the village and in the minds of its old and new residents. Currently, there are an estimated 4,200 rural settlements in the German state of Lower Saxony, 1,900 of which have been renewed or, at least, have reaped the benefits of a holistic planning and support.

What we can see today is a high level of complexity in the reality of rural life, which has increasingly been exposed to a variety of determining factors over the past 20 years of support for village renewal.

Although we should avoid utopian concepts for the future of rural areas and especially for villages because of the unstable social and political situation prevailing in Germany today, we will attempt to outline the stages of village development between 1985 and 2010.
We are mainly dealing with the basic clarification (see fig. 5 and 6) of the future sites of agricultural holdings in East and West Germany, which in turn will have implications for the aspects of living and transportation as well as cultural and recreational opportunities.

The conflict between the limited space and functional requirements of the village cores as the actual living environment of their inhabitants and the quite different production conditions of more or less industrialized large-scale agricultural holdings leaves no alternative but new designations of hamlet-like industrial sites in open spaces.

Not included in this model are those businesses that produce according to the principles of organic farming and sell their products on the farmyard nearby.

In the new Länder (federal states) of Germany (FNL), e.g. in Saxony-Anhalt, the sites of the former agricultural production cooperatives (LPGs) have more or less established themselves as future production sites over the last 15 years and can easily be developed into hamlet-like settlements of buildings for agricultural production and technology.

In the old Länder (federal states) of Germany, however, only those farms or industries can serve as a basis for the establishment of new hamlets in outside areas, which have already been resettled, whereas the farmer's residence should remain in the village core.

Methodical Analysis of Technical Problems for the best Solution among Alternatives – Example of the Separation of Methanol and Water Impurities from Biodiesel

By Ratan Kumar Ghosh and Hartmut Gaese, Köln, Hans-Peter Löhrlein and Rüdiger Krause, Kassel

This paper deals with the analysis of methodical solutions of technical problems. An analytical procedure is presented here for the selection of the most suitable process components of a system to separate methanol and water impurities from biodiesel for continuous production. A two-dimensional morphological matrix has been used to analyse and to select the most suitable method among different alternatives of each process in terms of cost, quality of performance, maintenance, reliability, durability (lifetime), operating costs, with due regard to the importance and acceptance of each alternative. In order to gain a clear picture of the problem, some aspects of biodiesel have also been discussed.

Keywords: Biodiesel, Impurities, Methanol, Water, Separation, Selection

Released 30. May 2007 as article