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Production
Estimates and Crop Assessment Division |
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Production
Estimates and Crop Assessment Division |
Crop yields in the central and eastern European countries have historically lagged behind their western counterparts for a number of reasons. However, if the changes that have taken place in eastern Germany over the last decade are an indication of what can be expected, then western and central European yields will converge over time.
The European Union (EU) is made up of 15 member countries, and is one of the world's largest producers of wheat, barley, rye, and rapeseed. In addition to the current EU-15, there are ten Central and Eastern European countries (CEEC-10) who are expected to accede to the union in 2004. Based on averages from 1998-2002, EU management of wheat and coarse grain production will instantly increase by around 25 percent (50 million tons) as the club enlarges from 15 to 25 members. Many factors make conclusions difficult regarding the future of CEEC agriculture and how the CAP came to act on producers' decisions in east Germany. Presently prices in the EU are lower after MacSherry and Agenda 2000 reforms. Producers, however, have more direct income support, and upward production trends have not slowed despite the reforms. East Germany and the CEEC countries share some agronomic factors, and trends from East Germany's accession can be instructive of the future.
WWII resulted in a divided Germany. The farms in East Germany were collectivized, and in 1989 the average size of a farm producing arable crops was 4,500-5,000 hectares. In 1989, the average size of a farm producing arable crops in West Germany was less than 20 hectares. Not only were farms larger in East Germany, but fields were bigger. The satellite image below shows an area on the border between East and West Germany near Wolfenbuttel in the 1990's. Notice the size difference of the pink fields, which represent cultivated area.
Arable crop fields along the border
of former East and West Germany (1990s)
source: Landsat GeoCover, NASA ESAD
After the collapse of the Berlin wall, Germany was unified in 1990. East Germany immediately became eligible for all the benefits of the Common Agricultural Policy (CAP), which allowed east German agricultural products to be sold in the EU market, and for capital to flow into the stagnant agriculture industry. After the initial shock, area began shifting between crop types because money was available for chemicals and improved varieties. Yields began to improve. Large field size meant economics of scale of farm inputs were rapidly achieved, resulting in greater efficiency, and production of all arable crops increased.
Since 1986, area, yield, and production of wheat, barley, rye, and rapeseed in east and west Germany has shifted dramatically. Wheat area in east Germany has steadily increased, and yields have made progress toward becoming equal with those in west Germany. Despite declining barley area in east Germany, yields have increased, resulting in no change in production. East German rye production has exploded since reunification, as area and yield have steadily increased. Rapeseed production in east Germany has dramatically increased as more area is devoted to this crop, and yields typically exceed those in west Germany.
Germany is the largest contributor to the CAP budget, and German farmers have recently been the major beneficiaries of the intervention program that guarantees farmers a market for their crop. Rye currently makes up the vast majority of the intervention stocks, and purchasing rye from German farmers has been a substantial expenditure from the CAP budget. Based on historic production levels, Poland has the potential to produce as much, if not more, rye than Germany. If the CAP is not reformed to eliminate rye from the intervention program, the increased expenditure on rye could be a serious burden. Also, Poland has decided to administer the benefits of CAP funds using the "simplified" method, meaning that all farms will receive direct payments, regardless of what is produced. The simplified payment may be a strong incentive for some farmers to switch from potato production to rye, since rye is covered by the intervention program. However, the simplified payment may reduce the competitiveness of some commercial farms, since it will be a reduction from the previous level of support by the Polish government. Rye intervention could be abolished or at least modified under the terms of the proposed Mid Term Review (MTR), which could affect farmers in Germany and Poland.
There is some uncertainty about the agronomic potential of farms in Central Europe. Collectivization in this part of Europe took place to varying degrees, with the creation of some very large farms, and the persistence of many small farms. The satellite image below shows an area on the border between the Czech Republic and Austria near Laa in the 1990's. Notice the dramatic size difference of the pink fields in the neighboring countries. The small farms in Austria are supported by the policies of the CAP.
Arable crop fields along the border of the Czech Republic
and Austria (1990s)
source: Landsat GeoCover, NASA ESAD
The relative costs and market prices of various commodities after enlargement will ultimately drive many of decisions that farmers will make. From a crop production standpoint, the basic question is whether productivity increases observed in east Germany will be duplicated in the CEECs.
Koester, U. E. and Brooks, K. M. (1997) Agriculture and German Reunification.
World Bank Discussion Paper No. 355. The World Bank, Washington, D.C.
Statistisches Bundesamt, various years
USDA/FAS, various years
European Union: Grain Area, Yield, and Production Tables
http://www.fas.usda.gov/pecad/highlights/2002/11/eu15/index.htm
Central Europe Fall Update
http://www.fas.usda.gov/pecad/highlights/2002/11/EE_Fall_Update/index.htm
U.S. Mission to the Eureopean Union, Office of Agricultural Affairs
http://www.useu.be/agri/usda.html
EUROPA, The European Union On-Line
http://europa.eu.int/index_en.htm
