27 October 1995

ENTREPRENEURS MAKE A GO OF IT

HUBERTUS Hubner is typical of east Germanys entrepreneurial new farm managers.

He started with little, but has invested in high capacity equipment, exploited German aid packages to the full and slashed labour to create a highly efficient unit with fixed costs spread across a wide area.

"I started with nothing – 10,000 Deutschmarks (£4500), a cow and a Trabant car," he recalls. Now he is farming almost 1000ha (2470 acres) with just three full-time men.

When the co-op he worked at as a manager was liquidated four years ago Mr Hubner was quick to seek rental agreements with four major landowners and the governments Treuhand. The deals pay landlords a rent according to the German points system for classifying soil types.

He admits he was lucky to deal with so few landowners. But there was competition. "I had a good industrial consultant who put a detailed financial proposal together. That clinched the co-op owners support."

Government aid has provided a £180,000 interest free loan, a £160,000 reduced interest loan and a £10,000 "new farmers" grant. That has helped him invest over £450,000 in high capacity equipment – the lifeblood of his system. Some heavily used machines are already being replaced.

His crops yield less than those further north (see table) owing to the rainfall shadow of Lake Muritz. Summer drought is common. His goal is to produce cereals at a consistent 6t/ha (2.4t/acre) at least cost. Contracts with a local mill and distillery ensure top prices for grain.

Without EU subsidies Mr Hubner admits he will be unable to farm during the next five years. "There are no luxuries here now, so it would be difficult. There is some scope to cut cultivation costs, but labour costs could rise, which will mean trouble."

For west German farmer Konrad Paetow pessimism doesnt even enter the equation. He is basing his east German unit on a proven formula used at home in Schleswig Holstein.

His commitment and ability to raise capital is reflected in a shiny new grain store that will also serve neighbouring farms. Indeed his east German farm at Schlutow, near Klink, is proving so profitable he wants to buy the land he currently rents. But unlike Mr Hubner he will have to deal with 82 landowners for 430 blocks.

Low soil humus is the main limit on crop output, he reckons. The old co-op system grew beet and potatoes intensively, but failed to return organic manures. Extra N now goes on in autumn and spring to stimulate deeper rooting and all straw is ploughed in.

The farm is arranged in three big blocks of wheat, rape and barley. A small area of sugar beet is also grown, but is limited by quota.

Oilseed rape is a key profit maker, but EU targets mean the area must fall from 50% to 15% of his farm. Industrial rape is grown on set-aside as a break and to spread fixed costs. "If set-aside falls to 10% it will be a catastrophe – we need it as a break," says Mr Paetow.

Further north, the Baltic port of Rostock, Bernd Kopmann has established a 1591ha (3930-acre) farm at Hohendorf. Once he operated sprayers and spreaders on the former co-op which employed over 100 workers – now he runs a team of 10.

"I could manage with six, but we do contract and building work too," he explains. Unemployment in the east is officially 10%, but rises to nearer 30% once job creation schemes are discounted, he says.

The business is financed by capital raised against his house and 20ha (49 acres) of land, plus an arrangement which sees him farming the land for two years before paying the 103 landowners.

He aims for export markets – shipping to Italy and Portugal from the nearby port at Rostock is as cheap as road haulage from Frankfurt, he points out.

Just down the road from Mr Kopmann is Deert Rieve, an eager west German crop consultant who moved to Muuks with his young family from Schleswig Holstein. Selling his house and using all his savings allowed him to establish a 1250ha (3100-acre) unit.

Managing it single handed is hard work, he admits. But high horsepower equipment and farming crops in simple blocks helps simplify operations.

He plans to expand, up to a limit of 2000ha (4940 acres). Anything larger can create staffing problems he comments.


East German Entrepreneurs (1993/4)

KonradBerndDeertHubertus

PaetowKopmannRieveHubner

farm size (ha)91415911250935

landlords82103 "many"4

leasesmostly mostly1,12 or12 years

(years) 18 years12 years18 yearsplus

Soil qualitymediummediummediummedium

32-54 pts28-60 pts22-58 ptsav 40 pts

Mechanisation1.15hp/ha0.82hp/ha1.1hp/ha0.8hp/ha

Staffmgr + 4.5mgr + 10mgr + 8mgr + 3.5

Main crops, area, ha

and yield (t/ha)

w wheat293 (8.1)52 (8.6)307 (8.7)330 (6.0)

w barley302 (7.4)293 (8.2)241 (7.8)130 (6.0)

s barley-58 (7.2)94 (7.2)- –

w rape301 (4.3)270 (4.8)217 (4.6)180 (3.1)

s beet22 (57)100 (53)80 (44)- –

w rye- -67 (10.4)106 (n/a)100 (6.5)

Costs £/ha:

seed65394745

ferts14410911489

sprays86917795

others61855768

fixed [1]465473488459

Ave output [2]118310491091886

Profit361252309136

* All farms also had set-aside, most growing industrial rape on it.

[1] inc rent.

[2] inc area aid + ancillary activities.