Concession to farmers

The unpopular diesel tax was brought in under former agriculture minister, Renate Kuenast, of the Green Party. It imposed a 10,000 liter capacity on which farmers could claim tax rebate and required farmers to carry the cost of the first 350 euros in full. Both these limitations will, according to Aigner, be lifted by the end of 2009.

Members of the German Farmer's Union drove more than 500 tractors from the border with Denmark in the north and from Bavaria in the south to occupy a 6km stretch ending at Berlin's Victory Column.

Farmers' Union members were demanding higher milk prices, more government subsidies and a leveling of the diesel tax. According to the Union's vice-president Udo Folgert, the differences between diesel levies on EU farmers vary by as much as 36 cents per liter, with German farmers paying the highest amount in the EU at 40 cents, a difference which for German farmers amounts to 900 million euros a year.

German farmers have warned the government that the effects of the continuing global economic crisis on their industry is threatening bankruptcy for as many as 75 percent of farmers.

Farmers' Union president Gerd Sonnleitner called on the government to prop up the agricultural sector before it was too late.

"The German agricultural sector contributes 15 percent of GDP. If it collapses, this will filter into all other areas. German farmers enable the nutrition of over 81 million people. We, along with the banks and the auto industry, we as the branch that did nothing to cause the economic crisis, want our own stimulus package," he said.

Chancellor Angela Merkel has announced an emergency meeting with dairy farmers for Friday at which she hopes to be able to announce that the EU has decided to allow farmers access to low interest loans and subsidies.

Aigner, who was speaking at the rally of around 6,000 farmers ahead of a meeting later on Monday of EU agriculture ministers in Brussels, also said she was fighting to make money from an EU agricultural fund available earlier than the planned December date. This could provide up to 5.4 billion euros in subsidies. For now 50 percent of the financial aid is expected to be made available by October. Farmers and politicians will be harrying Brussels to bring that date forward to July 1.

Twenty cents do not a livelihood make

Dairy farmers, in particular, have been agitating for government support to push up the wholesale price of milk, now at 20 cents a liter, which is less than half what it was a year ago.

Speaking in an interview with German newspaper Die Welt, Aigner said Berlin alone could not lift German milk producers out of the crisis. The German dairy industry had to up the ante to regain its strength on the export market, she said.

"The dairy industry has to exert itself to make the German milk market more competitive and see that real milk gets sold and not milk substitutes," Aigner told Die Welt.

The main point of contention, and one that has brought the German Farmers' Union into conflict with the German Dairy Producers' Union is the controversial milk quota. The Dairy Union, a splinter group that now has some 25,000 members, argues that the only way to solve the milk crisis is through strict market regulation. Blaming the loosening of the milk quota for much of the current crisis, dairy union co-chair Johannes Pfaller argues that only strict milk production limits can push the price back up to a competitive level.

The German Dairy Farmers' Union has, in recent weeks, been increasingly critical of Sonnleitner, accusing him of following a policy of market liberalism which is destructive to German prices. Pfaller also accuses Sonnleitner of being on the side of the agricultural industry rather than the farmers he is supposed to represent.

These are criticisms that Sonnleitner vehemently refutes. Sonnleitner says his union has always been against the November 2008 raising of the milk production quota.

Sonnleitner argues it is the EU politicians who agreed the quota and who now have to agree to reduce milk production levels to a rate that the market can sustain.

According to the dairy lobby, one-fifth of German dairy farms could go out of business if prices do not go up.

Author: Tanya Wood

Editor: Susan Houlton