Possibilities and limitations of agriculture in low-yield areas of the newGerman states - Northeastern Saxony

This article is based on a study of the Prospects for Agricultural Developm ent in North-eastern Saxony sponsored by the State of Saxony's Ministry for Agriculture, Food and Forestry (SML)(cf. in this regard also 6). After reu nification, a detailed synopsis was compiled of the number and quality of t he factors of production, and the existing natural and economic framework c onditions, affecting farming in north-eastern Saxony, a region of poor yiel ds in eastern Germany. Using this empirical study as a basis, an estimate o f the development potential of agriculture was conducted using a recursive multiperiodic model. The results gained with this model were then employed to analyse the simultaneous effects of the current agricultural policy on d iverse goals affecting the society as a whole. Evaluation of the data and t he dynamic model calculations revealed, inter alia: (a) Under the current c onditions, profitable farming is possible in low-yield areas of north-easte rn Saxony, hence no general cessation of farming need be feared at the pres ent time. (b) Even if subsidies remain unchanged, a further reduction in th e agricultural labour force must be expected. The government acreage premiu ms are going to be divided amongst ever fewer people, so that the subsidies per employee will rise with the passage of time. (c) The current agricultu ral policy is producing considerable distortions of the acreage allocations : for example, on poor-yield soils the cultivation of oil-seeds would stop should any decoupling of the premium payments from production take place. S hould, for ecological reasons, a change from arable land to green grazing b e desired, or a rededication of land to other purposes, then the current su bsidisation policy would deny farmers any satisfactory ron economic incenti ves. (d) Despite the high level of investment aid available, no general exp ansion of animal husbandry may be expected in the region under study. The r esults of this regional study lead to the following conclusions: The parall el aims of agricultural policy - improving the distribution of incomes, cre ating jobs, and conserving the cultivated landscape - are not going to be a chieved on any scale which might satisfactorily reflect the high budgetary expenditure involved. At the same time. there exists an essentially long-te rm danger of a maldistribution of labour, capital and land. Hence long-term government subsidies should only be granted for achieving clearly defined goats in landscaping (where possible under the auspices of a specially crea ted organisation). And thus it would be logical in this respect, for a tran sitional period, to link the government premiums - which would have to be d ecoupled from production, of course - to certain "conservational conditions " in order to prevent a large part of the land falling fallow. Each amendme nt to the subsidisation policy should take cognizance of the principle of " protection of confidence".