27 October 1995

PROSPECTS

RISE IN THE EAST

East German agriculture has changed much since reunification. But the process is far from over, as Charles Abel found earlier this year

IN the heart of Mecklenburg Vorpommern, three hours east of Hamburg, lies Klink. It is a town in turmoil.

Traditional townhouses stand alongside stark blocks of flats – a legacy of nearly 50 years of communist rule. But most striking of all is the rash of new buildings in the outskirts.

Retail parks, in-fill housing and new roads abound – all underpinned by hefty government grants.

East German farming is undergoing a similar transition, as revealed by the state of crops in the huge fields characterising the region.

In mid-summer severely lodged barley, weed-ridden maize and silage fields with horrendous wheeling damage were common.

But there were also vast expanses of deep green winter wheat, as level as a billiard-table, and oilseed rape crops, standing proud and disease free. Sugar beet stretched across 100s of hectares at a time, in clean, straight rows. And healthy potatoes in well tended ridges received ample moisture from modern irrigators.

In most cases, the state of the crop mirrored the type of farm. Good crops belonged to a growing band of entrepreneurs who have successfully capitalised large tracts of arable land. The ones usually associated with large, heavily staffed, cumbersome co-operatives are struggling to adapt to the market economy.

Many of the latter will not survive, predicts Dr Horst Wagner, of the local ministry office in Schwerin. Economies of scale and government grants are not enough to ensure their profitability.

"About 50% of the enterprises have serious money problems. The commitment is very high, but there are problems breaking down socialist ideas. It will take another generation to work that out."

Half will fail and end up being farmed by the most successful units, he reckons. That is despite considerable help from the state through waived tax, preferential interest rates, interest free loans, building grants, compensation for lost yields and guaranteed loans.

Rents are also rock bottom, complying to the local standard of £1.80/point (land is scored 0-100 on soil quality). Land rentals on the sandy, light soils around Klink are up to £90/ha (£36/acre). The same land costs up to £3200/ha (£1290/acre) to buy. Few do.

Before unification arable farming in Mecklenburg Vorpommern was concentrated in the hands of 1100 state run co-ops, each averaging 4500ha (11,120 acres). Already the area farmed by co-ops has dropped to 60%.

The trend is towards more large, privately farmed units. But those bring a high social cost, which the planners hoped to avoid.

"The biggest dispute was why not destroy the co-op structure and start again," notes Dr Wagner. The main reason for keeping the co-op approach was unemployment.

As old co-op structures fail many landowners have little alternative to renting to the new, low-labour private farm businesses and seeking alternative employment.

Dr Wagner believes this turmoil is a key reason why east German units should get the same aid as those in the west. "Many of the farmers are starting out on their own for the first time, their income is still less than they could get on unemployment, they have big loans to repay and they get fewer subsidies in other areas than farmers in the west do."

Area aid is crucial for all east German farms, he says. "Without Brussels payments none of Germanys farms could survive, except perhaps the partnerships with over 500ha."

But despite the problems farming is the only sector where productivity in the east matches that in the west, he claims. Arable profits now average £180/ha (£74/acre) – similar to west Germany where small, part-time units predominate.