3 New Trends and Drivers for Agricultural Land Use in Germany
53
technologies are often linked to economies of scale and larger plots, e.g. in the case
of precision farming and efficient fertilizer use. An interesting point in this regard
is that a reconciliation of farming and nature protection might require appropriate
large scale and expensive technologies, thus, contributing to structural change (Schaft
and Balmann 2010). It is an open question whether such incentives for large-scale
farming might have an effect on land market and prices.
New technological developments might actually reverse such trends. Interesting
ideas relate to the miniaturization of agricultural technologies like small harvesters
and to ongoing digitalization of farming e.g. drone technology (ATB 2017). In fact,
such technological options might allow for competitive farming on smaller agricultural plots, thus, counteracting the need for large-scale farming and structural
change.
3.4.2 Policy Framework
There is no question that demand for agricultural land is highly policy-induced in
Germany and the European Union. The former protectionist CAP has contributed
to rising farm prices in the past whereas the liberalization of this policy had the
opposite effect. Furthermore, direct payments as introduced with the MacSharry
reform certainly contributed to rising land prices. Such impacts of price policies
and direct payments have been well analyzed and documented in the agricultural
economics literature (Offermann et al. 2012; Hennig et al. 2014).
In addition, a new feature of the CAP may have had an impact on land use and
on land markets and prices. For the financial period 2014–2020, the EU has decided
upon a new CAP framework and a major feature of this is the “greening” of direct
payments. Farmers can receive 30% of direct payments if, and only if, they fulfill
certain land use requirements: Arable land use must comprise a minimum number
of crops, permanent grassland is to be maintained, and 5% of arable land has to be
Ecological Focus Areas (EFA) (European Parliament and Council 2013, Article 43).
Despite such obligations, the general implications for agricultural land use seem to
be limited. Due to major exemptions (small farms, grassland farms) only 52% of
the EU agricultural land is affected by the EFA obligation (Pe’er et al. 2014), and
the minimum number of crops required on arable land hardly impacts land use (BfN
2017).
However, the requirement to maintain grassland use certainly will have an impact.
In Germany, the downward trend of permanent grassland use in the past seems to have
stopped and this is most probably due to the restrictive CAP policy framework already
existing in the preceding financial period and the restrictive greening regulation
since 2014. Hence, if regulations stay the same we expect the area under permanent
grassland to persist in the future.
The EFA framework will also have an impact on arable land use. Figure 3.10
shows the use of EFA in the German Bundesländer in 2015. According to the figure
most of this area has been used for cash crops. This may have beneficial effects for
53
technologies are often linked to economies of scale and larger plots, e.g. in the case
of precision farming and efficient fertilizer use. An interesting point in this regard
is that a reconciliation of farming and nature protection might require appropriate
large scale and expensive technologies, thus, contributing to structural change (Schaft
and Balmann 2010). It is an open question whether such incentives for large-scale
farming might have an effect on land market and prices.
New technological developments might actually reverse such trends. Interesting
ideas relate to the miniaturization of agricultural technologies like small harvesters
and to ongoing digitalization of farming e.g. drone technology (ATB 2017). In fact,
such technological options might allow for competitive farming on smaller agricultural plots, thus, counteracting the need for large-scale farming and structural
change.
3.4.2 Policy Framework
There is no question that demand for agricultural land is highly policy-induced in
Germany and the European Union. The former protectionist CAP has contributed
to rising farm prices in the past whereas the liberalization of this policy had the
opposite effect. Furthermore, direct payments as introduced with the MacSharry
reform certainly contributed to rising land prices. Such impacts of price policies
and direct payments have been well analyzed and documented in the agricultural
economics literature (Offermann et al. 2012; Hennig et al. 2014).
In addition, a new feature of the CAP may have had an impact on land use and
on land markets and prices. For the financial period 2014–2020, the EU has decided
upon a new CAP framework and a major feature of this is the “greening” of direct
payments. Farmers can receive 30% of direct payments if, and only if, they fulfill
certain land use requirements: Arable land use must comprise a minimum number
of crops, permanent grassland is to be maintained, and 5% of arable land has to be
Ecological Focus Areas (EFA) (European Parliament and Council 2013, Article 43).
Despite such obligations, the general implications for agricultural land use seem to
be limited. Due to major exemptions (small farms, grassland farms) only 52% of
the EU agricultural land is affected by the EFA obligation (Pe’er et al. 2014), and
the minimum number of crops required on arable land hardly impacts land use (BfN
2017).
However, the requirement to maintain grassland use certainly will have an impact.
In Germany, the downward trend of permanent grassland use in the past seems to have
stopped and this is most probably due to the restrictive CAP policy framework already
existing in the preceding financial period and the restrictive greening regulation
since 2014. Hence, if regulations stay the same we expect the area under permanent
grassland to persist in the future.
The EFA framework will also have an impact on arable land use. Figure 3.10
shows the use of EFA in the German Bundesländer in 2015. According to the figure
most of this area has been used for cash crops. This may have beneficial effects for