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GERMANY: EUROPE’S SECOND-LARGEST AGRİCULTURAL PRODUCER

12 December 20197 min reading

Germany is the most populous and economically powerful country in the European Union (EU). It is influential in agricultural policy, both within the EU and globally. Germany is the second-largest importer and third-largest exporter of consumer-oriented agricultural products worldwide and by far the most important European market for foreign producers. Germany is Europe’s second-largest agricultural producer behind France.

Germany has 83 million of the world’s wealthiest consumers and is by far the most populous and economically powerful of the European Union’s 28 member states. The German economy is the fifth-largest in the world and accounts for one-fifth of the European Union’s GDP.

Germany is a major producer of food and agricultural products and a leading player in the global marketplace. It is Europe’s second-largest agricultural producer behind France, with agricultural production amounting to 53.1 billion EUR in 2017. The agricultural and agri-food sectors are an important part of German economic activity. German agriculture alone produces 0.6% of the country’s wealth and employs 1.3% of workers. The agri-food industry, which includes nearly 6,000 farms, is the fourth largest industrial sector in the country, providing 570,000 jobs.

Half of the area of Germany is used for agricultural purposes. With its high degree of mechanization, the level of training of farmers and its yields, German agriculture is a successful agriculture that covers about 70% of domestic demand. In recent years, there has been a trend toward the concentration of farms and increasing their size (60.5 hectares on average in 2016 compared to 56 in 2010). After World War II, a farmer in Germany was able to feed ten people. Today, thanks to scientific and technological progress, the figure has risen to 142 people. Germany is the world’s third-largest exporter of agricultural goods. The German agricultural industry exports about one-third of its products. Grain is grown on about one-third of Germany’s agricultural land. Wheat is by far the leading crop, followed by barley and rye.

German consumers are hostile to products containing GMOs. It is a leader in the production and consumption of organic products (8.2% of cultivated areas were organic in 2017), and is by far the largest market in Europe. In 2017, the organic market reached a record of EUR 10 billion.

About a third of German processed foods are exported. German agricultural exports doubled compared to 1990 and even quadrupled compared to 1980. The majority of exports are to the EU countries (three quarters). Germany’s agricultural sector now accounts for nearly 20% of its sales revenue through agricultural exports. Food exports account for about 5% of the country’s total exports, and imports 7% of total imports.

AMONG THE TOP PRODUCERS OF GRAIN IN EU Germany is among the top producers of grain in the EU with 45.6 million tonnes of harvested production in 2017. Most of Germany’s cereal production is made up by wheat and spelt (54%), followed by barley (24%), maize and corn-cob-mix (10%).

Germany’s vast agricultural production makes it a net exporter of grain. Even though in terms of volume, Germany’s production of grain has declined by 4.6% over the past 5 years, its exports have increased by 14%, but imports decreased by 15.7 %. This might indicate on a slight reduction in domestic consumption. Over the past 5 years, Germany’s export value of grain declined by 32%, despite increasing export volumes. The situation can be explained with the fact that over the past 5 years, the agricultural commodity price of grain has severely dropped.

In 2017, grain production in Germany was 45.6 million tonnes. Germany’s total grain production for 2018 at 35.6 million tonnes. This was 26% below the country’s five-year average. Germany is the European Union’s second-largest wheat producer after France and for many years the EU’s largest producer of rapeseed, Europe’s main oilseed for edible oil and biodiesel production. In 2018, wheat production for Germany was 20.2 million tonnes. Germany will produce a larger wheat harvest this year despite the impact of an early summer heatwave followed by repeated rain. German authorities expect over 23 million tonnes of wheat, up 13.7 percent from 2018’s drought-hit crop. After last summer’s drought, German grains this summer also suffered from a heatwave that saw record temperatures in much of western Europe in late July, while repeated rain, especially in northern and eastern Germany, delayed harvesting.

The harvest of winter barley, largely used for animal feed, is expected to rise 33.2% on the year to 9.82 million tonnes. Winter barley was generally ripe when the July heatwave arrived and so escaped late-season damage. The spring barley crop, used for malt and beer production, is seen falling 11.8% to 1.94 million tonnes. The maize crop is forecast to rise 13.1 percent to 3.78 million tonnes but this would be 10.7 percent below the six-year average.

Germany is a net exporter of wheat and barley, which it produces in ample quantitates, but it is a net importer of maize and corn, oats, rice, buckwheat, rye, and sorghum. Accordingly, the latter cereal categories have the best prospects for foreign importers. Cereal product imports in Germany are mostly made up of bakery products, such as bread, pastry, cakes, biscuits, as well as pasta, and other preparations of flour, groats, and starch or malt extract.

Most of the imports in Germany originate from the EU countries. In 2017, EU countries contributed to 95% of cereal import volume and 93% of import value, while non-EU countries – just 5% of import volume and 7% of import value. The higher value of cereal imports from non-EU countries reveals that from outside of the EU, higher valued grain varieties are being imported, which are not available from EU countries.

Germany is among the largest consumers of grain in the EU. However, over the past 5 years, domestic consumption data has revealed a reduction by 12%, totaling to 41.4 million tonnes of consumed grain for food, feed and industrial purposes in 2017. Most of Germany’s consumption can be attributed to grain consumption as animal feed – approximately 60%, followed by food (18%), energy source ( 9%), industry (8%) and seed (2%).

An unchanging staple in the German diet is bread and other baked goods. Consumption of bread remains particularly high, with the most popular products being sliced bread and toast, as well as artisanal bread. Most of the bread consumption can be attributed to private-label products. Bread in Germany is consumed in various forms and places – as an easy meal at home, convenient snack on the go or addition to savory meal out-of-home, so its popularity is not expected to diminish in the nearest future. In fact, the ready-to-eat baked goods category is expected to record growth. However, as Germany is embracing the health and wellness trend, more consumers are opting out of white bread in the favor of wholewheat, multi-grain and even gluten-free bread with seeds and other additives, which present the best growth opportunities. Other, although less common alternatives favorited by the health-conscious consumers include bread of oat flour and chickpea flour.

THE STRUCTURE OF THE MILLING INDUSTRY The mill landscape in Germany is extremely diverse. Mill companies of all sizes are competing on the market, whether they grind grain on a large scale or occupy their niche. Despite its central importance to the food industry, the structure of the milling industry has changed dramatically over the past few decades: in 1950 there were around 19,000 mills, and their numbers have since steadily declined. There are currently about 550 active mills in Germany, 196 of which grind more than 1,000 tonnes a year. Despite the trend towards larger operating units, the industry remains small and medium-sized. Almost all companies are family-owned and have been for many centuries and for many generations.

The German mills process over 8.9 million tons of grain every year. Of this alone, 8.5 million tonnes are accounted for by wheat and rye bread. On average, a mill grinds about 43,400 tons of bread grain per year. The 13 largest mill companies in Germany cover more than 40 percent of the market. The 60 largest mills reach a share of almost 90 percent of the market. It is estimated that 30 percent of the products go to craft bakers, 55 percent to bakeries and food processing companies, 10 percent to specialty processors such as pasta manufacturers, and about 5 percent in small packages directly to the end-user.

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