As of: February 2, 2024, 4:44 p.m
By: Bona Hyun
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To the annoyance of the farmers: the federal government is pushing through cuts in the agricultural diesel subsidy.
But what does the step mean for agricultural businesses?
Berlin – It has been decided: the Bundestag passed the 2024 budget late.
The budget financing law also includes the controversial cut in the agricultural diesel subsidy for farmers.
This should be phased out gradually by 2026.
Farmers had been protesting against this nationwide for weeks.
But the traffic light stuck to the cut for agriculture.
“The adoption of the budget financing law and thus the gradual abolition of agricultural diesel subsidies are consistent,” says Professor Alfons Balmann to
Ippen.Media.
“Agriculture would be well advised to think ahead,” said the agricultural economist.
Budget 2024: Bundestag gradually removes agricultural diesel subsidy – “finally put to the test”
Balmann believes that numerous other agricultural subsidies “finally need to be examined because they can hardly be justified in their current form.”
“In addition to the EU’s area, redistribution and farm succession bonuses, this also includes many national benefits, such as vehicle tax exemption, sales tax flat rate, profit determination according to Section 13a of the Income Tax Act for small businesses, inheritance tax benefits – to name just a few examples,” Balman said.
“These subsidies not only have to be paid by taxpayers, but they also encourage agriculture to become dependent on subsidies.” The agricultural economist sums up: “Sticking to the status quo has little future.”
Agreement in the 2024 budget: subsidies for agricultural diesel expire – implications for farmers
So far, thanks to the agricultural diesel tax break, farmers and forestry companies have been able to receive a refund of 21.48 cents per liter of diesel.
This means that the energy tax incurred is partially repaid.
In order to receive a refund, companies must submit an application to the respective main customs office and submit one year's fuel receipts.
The tax relief is subject to conditions.
How much money businesses would have to forego in the future depends on how many liters of diesel an agricultural business uses.
On average, farms in Mecklenburg-Western Pomerania require around 100 liters of diesel per hectare.
For a 500-hectare farm, this corresponds to around 10,500 euros in reimbursement per year.
This is what calculations by a business advisory group for farmers have shown, reports
NDR
.
Many farmers recently protested against the dismantling of tax relief for agricultural diesel.
© David Young/dpa
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Bundestag decides to end agricultural diesel subsidies: How bad are farmers really?
Only every farmer can answer for themselves how threatening the existence of the planned measures are for farmers, says press spokesman Markus Drexler from the Bavarian Farmers' Association to
Bayerischer Rundfunk.
“Allowances and subsidies can cover a share of operating income between four and 40 percent, depending on the business orientation,” explained agricultural professor Thomas Herzfeld to the
Berliner Morgenpost
.
However, the agricultural diesel reimbursement that is now being discussed only takes up “a very small share.” In an article by
Berlin.Table
it was said that the production of one kilo of wheat was mathematically only 0.24 cents more expensive due to the cut in agricultural diesel. a liter of milk only costs 0.24 cents.
Criticism of the end of the agricultural diesel subsidy: “The federal government is taking away monthly income”
The Bavarian Farmers' Association meanwhile fears an additional burden if the agricultural diesel subsidy of 21 cents per liter of diesel is completely eliminated.
With a consumption of 110 to 120 liters of diesel per hectare and an average size of German farms of 63 hectares, this would mean an additional burden of 1,500 to 1,600 euros for each farm.
However, since the average includes small side businesses, the total is often higher.
“In businesses that serve as their main source of income, the federal government is taking away several months’ income from farming families,” a spokesman for the farmers’ association criticized
Ippen.Media.
Farmers worried about cuts in agricultural diesel - despite gains in recent years
It is therefore not possible to say in general terms what impact the cut in agricultural diesel subsidies will actually have on farmers.
A look at the numbers at least shows that farmers have also achieved above-average profits in recent years.
On average, a farm earned a whopping 115,000 euros in 2022/23 - an increase of 45 percent compared to the previous year.
The reason for this was, among other things, the profitable price developments for agricultural products in the wake of the war in Ukraine, as stated by the Hessian state agricultural company, among others.
“The boom on the milk market, rising international prices for grain and falling pig numbers led to a significant increase in profits in all types of main-line agricultural businesses,” summed up Gerhard Schwetje, President of the Lower Saxony Chamber of Agriculture.
Proponents also argued that ending the agricultural diesel subsidy will have a positive effect on the environment.
When asked by
IPPEN.MEDIA,
agricultural expert Matthias Lambrecht from Greenpeace said: “The tax subsidies for agricultural diesel are consumption-dependent.
It therefore makes sense to reduce this subsidy now so as not to further promote the consumption of fossil fuels.
The higher price of diesel provides incentives for economical consumption and the development of innovative agricultural machinery technologies that reduce greenhouse gas emissions.” (Bohy)