German farmers invest a billion more

German farmers are not throwing money yet, but the willingness to invest is increasing. Higher prices for meat and milk mean better earnings. As a result, the investment amount in the coming six months will increase by one billion compared to last year.

According to Joachim Rukwied, chairman of the 'Deutschen Bauernverbandes', German farmers have regained the confidence to invest. The investment amount will probably increase by one billion euros in the coming 6 months to 4,6 billion euros. This means that the amount is not yet at the level of before the crisis years. Due to years of poor earnings, German farmers still have gaps to close.

'The increasing investment is good for employment and rural development', says Rukwied. This will increase the number of jobs in both the primary sector and the related sectors.

Farmer remains a reliable customer  
German banks still see farmers as a reliable and solid customer. This is mainly due to the stable collateral. This gives lenders a lot of security. The financing ratio for investment goods (without land) in German agriculture is currently 33 percent in debt versus 67 percent in equity.

The amount of loan capital reached a record level of 50,6 billion euros last December. The investment amount (without land) per job thus amounts to approximately 498.000 euros. Agriculture is therefore one of the most capital-intensive sectors of the German economy.

Risk management important
According to Rukwied, (technological) investments are necessary for livestock farmers and arable farmers to maintain their competitive position. Farmers are dependent on volatile agricultural markets. This requires new ways of risk management, such as hedging on futures markets. Reliable financing guidance is also becoming increasingly important, according to Rukwied.   

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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