Hamsters are nonsense, says farmer president Joachim Ruckwied. In any case, there will be no bottlenecks in agricultural products in Germany until next year. However, it will be more expensive. And with one crucial product, even the farmer’s president doesn’t know what to do next: fertilizers.
FOCUS Online: The prices for grain and dairy products, but also for potatoes are going through the roof. The rapeseed price is rising because biodiesel is more in demand than ever. And if I don’t have a use for a field, I put a pinwheel on it. Are German farmers currently the happiest people in the world?
Joachim Ruckwied: You can’t be happy with what we see from Ukraine every day. Human suffering is hard to bear. The Ukraine war also has a massive impact on us farmers. Agricultural markets are going crazy, input prices have exploded. The costs of diesel, fertiliser, gas or animal feed mean that the previous increase in prices is de facto in vain. In addition, we are concerned about whether operating materials and feed will be available at all in the future. We are in a kind of blind flight.
The price difference between organic milk and conventional milk has more than halved within a year. Will it soon also be worth buying organic products in terms of price? Why is the price gap narrowing so much?
Ruckwied: It doesn’t matter whether it’s organic or conventional – the milk producer prices have to rise, because all milk producers also have higher costs. In order to be able to continue farming at all, we farmers have to pass on these costs. Food is therefore becoming more expensive. But the price on the shelf is essentially formed by the relationship between supply and demand.
Certainly – energy prices and fertilizer prices have risen. But is this the explanation for the rising prices for agricultural products in Germany, which are not really scarce in this country?
Ruckwied: In Germany, for example, we currently have enough grain. But it is traded on the world market and the price has risen very sharply due to low stocks and the war in Ukraine. Because grain from the Ukraine is only available in small quantities, if at all.
Last year the price was 180 to 200 euros per ton of wheat, currently it is around 400 euros. But you have to know: the price of grain is only a fraction of the price of bread. Above all, energy for production has become more expensive, and wage costs have also risen.
Are some simply jumping on the bandwagon of broad price hikes since the outbreak of war?
Ruckwied: Inflation was already at a very high level before the war broke out. The war made that even worse. In comparison, however, we in Germany spend a much smaller proportion of household income on food than people in other countries. I’ve been saying for a long time: food must be worth more to us and that must also be reflected in a higher price. Prices should have been at today’s levels before the current jump in inflation. Because we farmers need more.
Who benefits from the higher prices?
Ruckwied: I can only speculate. Presumably the gas and oil producers.
Do you see any supply bottlenecks for any agricultural product in Germany this year?
Ruckwied: No. Hoarding sunflower oil and flour was an overreaction. That is not necessary in Germany, the supply of food is guaranteed until the first quarter of 2023. There could be brief bottlenecks with individual products.
It is crucial that sufficient fertilizers, especially nitrogen fertilizers, are available in the coming year. Therefore, we have asked the federal government to create a national fertilizer reserve, similar to gas.
What do farmers think of the higher prices for dairy products, cereals, rapeseed and potatoes?
Ruckwied: Not much at the moment. Most farms have already sold their grain harvest from the previous year, so only a few benefit from the high prices. It is currently possible to conclude preliminary contracts for the coming harvest season at significantly higher prices, but nobody knows how far the costs will rise. As I said: It is a blind flight.
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Shouldn’t subsidies for agriculture be reduced if significantly higher prices can suddenly be achieved on the market?
Ruckwied: Prices always fluctuate somewhat. But what we are witnessing now is severe turbulence. Just because the prices of individual commodities are currently very high doesn’t mean that things will stay that way.
Let’s take the price of pigs: it has just plummeted. Direct payments are therefore very important to stabilize the income of our farming families, especially in these times.
Why do the Germans keep hoarding?
Ruckwied: I’m not a psychologist, but food security is our very own instinct. It doesn’t work without food and drink. But hamster purchases make no sense, on the contrary we advise against it.
Even before the start of the war in Ukraine, producers of agricultural products had raised their prices more than they had in almost eleven years. According to the Federal Statistical Office, they rose by an average of 22.5 percent in February. Your impression: Are the manufacturers using the general rise in prices to raise the price themselves in the slipstream?
Ruckwied: All areas of the food chain are massively affected by the increased costs. Gas is the main source of energy in many companies, and large dairies in particular cannot work without gas. Without gas, there would be no milk, no cheese, no quark. These high prices cannot be borne by the industry alone, let alone by the farmers. They must also be passed on to consumers.
How do you rate the work of Agriculture Minister Cem Özdemir, who has been in office for six months?
Ruckwied: The first 100 days of grace are over. Now the Federal Minister of Agriculture has to deliver, because important decisions are pending. For example, we urgently need concrete signals on how to proceed with the conversion of animal husbandry.
Financing must be secured here, and changes in building law are also needed. Time is of the essence.