Land deals in Germany – Companies are the New Farmers!
Economic grievances and a polity that fails to act in East Germany has led to several farmers and peasants losing their land to industries. Since the breakdown of GDR, thousands of hectares of state-owned land have been sold to industrial farms and investors, negatively affecting the rural peasant communities.
In 2016, the biggest agricultural company of Germany, KTG Agrar, also one of the biggest land owners in Germany, declared bankruptcy. Yet, the government showed no intent to return the huge tracts of land that was in possession of the company back to farmers and peasants. Instead, a reinsurance company and private foundation bought the land using loopholes in the existing law. The KTG-case shows that even in democracies of the Global North like Germany, farmers cannot access land because of a systematic failure of politics.
HISTORY OF LAND TRANSACTION IN EAST GERMANY
In the former socialist German Democratic Republic (GDR), huge agricultural land of the so-called “people owned farms” was state property. Huge operations worked on the land, independent peasants and farmers were rare at that time. After the breakdown of the GDR in the early nineties, questions were raised about how these state-owned lands would be used in United Germany. The government at that time decided to sell and lease the land. A public company BVVG was put in charge of managing the use of formerly state-owned agricultural land. BVVG had the task to lease or sell the land most profitable. By the end of 2009 BVVG sold 627,000 ha agricultural land.1 Despite, protests by peasant movements and young landless people for access to land, it was sold to agricultural enterprises and, by exploiting loopholes in the law, even to private investors. One of these companies was KTG Agrar: Until summer 2016 the company controlled 38,000 ha of which a huge share is in East Germany.
Because of the concentration of land in the hands of investors and companies the region witnessed depopulation in villages and a decline of infrastructure and disappearance of local culture in rural areas of Eastern Germany.
BANKRUPTCY OF KTG AGRAR:
In summer of 2016 KTG Agrar declared bankruptcy. For many years, the company had misused money of its investors and established a complex network of sub companies and reported exaggerated profits.. In autumn 2016 the liquidator of KTG started to sell the properties of KTG Agrar. KTGs possessions also included nearly hundred hectares of state-owned land which was leased to KTG by BVVG, the agency that was in charge of leasing and selling state-owned land.
The German LVC member AbL and the opposition green party in the German Parliament called the government to lease the land to peasants and landless to give them the chance to start farming. However the Government, displaying a complete lack of apathy and responsibility, put up the land for auction to investors. Ignoring the havoc such a decision could bring upon the rural economy of the East, the government made the mistake of giving away fertile land to private entities.
LEGAL LOOPHOLES IN THE LAW:
It is important to note that the sale of land had started much before KTG declared bankruptcy. As early as spring 2016, KTG had sold land to companies and investors so as to find funds to pay its interests. KTG had several sub-firms registered as ‘agricultural companies’ and this allowed them to officiate sale of these lands. According to German Law, agricultural land can only be owned by farmers or agricultural companies.
Investors with no background in farming, use this loophole in the law and invest in these “agricultural companies” by holding large number of shares in it. In Germany many companies like Thomas Philipps (retail trader), Joachim Olearius (banking family) and Rolf Henke (publisher) bought land exploiting this loophole.
There are other glaring examples where the law has been turned on its head and exploited thoroughly. In the spring of 2016 KTG sold, 2250 hectares each, to the Munich Re an insurance firm. This transaction was “legal” because KTG first sold the land held by several sub-companies to one company and Munich Re later bought a 94.9% share of this company. This was a clever ploy to also avoid taxes. Unlike peasants, farmers and all private persons in Germany, who must pay real estate tax if they buy land, Munich Re did not pay a single Cent for in fact buying 2250 hectares of land. They did not buy the land directly but the share of a company. If the land would have been sold directly to the reinsurance, Munich Re would have had to pay about 1.8 million Euros in taxes.
PEASANTS AND SMALL FARMERS ARE DISREGARDED
Mario R. and Lisa W. have been landless and recently had the chance to buy, together with a group of people, a small plot of land in Eastern Germany. On the land, they started small-scale agricultural production of organic, seasonal and healthy food for local marketing and consumption. For buying their small plot they had to pay 10.000 Euros in taxes (unlike Munich Re!).
Governments at the regional and national level are influenced by a strong group of lobbyists. Their interests lie in just amassing profit, with little or no concern for the development of the region and the promotion of organic peasant farms. Berlin could be an easy link for small-scale farmers like Mario and Lisa to market their produce, but little interest is paid by the administration in creating structures that link their farms to the city. Instead, millions of euros are spent in developing industrial agriculture by promoting firms like KTG Agrar, which only end up as a burden on people.
“To buy land for our newly established farm we had to take a loan of 170.000 Euro for 5.7 hectares. The agricultural subsidies we get from the EU are even less than the annual loans we have to pay. Just mega-farms with more than 1000 hectares benefit from this support.
This kind of agricultural policy creates a situation in which well-educated young people have almost no chance to become a farmer. The population in rural areas of North-East Germany gets older and older and young farmers in rural areas would make the population younger”, says Mario.
Several young people in the region are keen to produce local, organic food just like Mario and Lisa. After KTG declared bankruptcy, young peasants and movement members of AbL (LVC member organization in Germany) had gathered on the fields of KTG demanding from the government that they be allowed to practise sustainable agriculture. However, the current land price and lease price are too high for these young farmers. Despite the government’s announced intent to increase the share of organic agriculture to 20%, the land of which it is practiced is stagnant at mere 8%. It would be more effective if the State could lease its land to young people and encourage organic production, instead of selling it to private entities. Firms like Munich Re and the private foundations such as Gustav-Zech that bought shares of KTG Agrar, are both based in rich urban areas of Munich and Liechtenstein – and are extracting money from the already exploited rural areas in East Germany
1For further information see Roma Herre (2013): Land concentration, land grabbing and options for change in Germany, in: Land concentration, land grabbing and people’s struggles in Europe, TNI 2013, https://www.tni.org/files/download/land_in_europe-jun2013.pdf
This article has been sourced from a report of La Via Campesina that was recently published, which featured a compilation of cases of violations of peasants’ rights. Click here for the full report