German Farmers Protest Ag Subsidy Cuts

CNBC writer Sophie Kiderlin reported at the beginning of this week that “Farmers across Germany on Monday began protests against the government’s economic and agricultural policies, blocking roads and highways with tractors and marching through major cities.”

“Farmers are protesting the government’s plans to reduce or withdraw tax breaks for the agriculture sector, which were announced in late December as part of the 2024 budget,” Kiderlin wrote. “The plans included subsidy cuts for fuel usage by farmers and tax breaks for farming vehicles which sparked anger among farmers who say this would endanger their livelihood.”

Convoys of tractors and trucks, some adorned with protest banners reading ‘No beer without farmers,’ gathered on German roads in sub-zero pre-dawn temperatures, kicking off a week of protests against plans to phase out agricultural subsidies https://t.co/2JgoBubatS pic.twitter.com/p9B5cixvR6

— Reuters (@Reuters) January 8, 2024

The protests are occurring in almost all of the country’s 16 federal states, according to Reuters reporters Andreas Rinke and Miranda Murray, and have included some clashes with police.

The protests have had wide-ranging impacts, AP’s Geir Moulson reported. “In some areas, farmers used tractors to block entry roads to highways early Monday. There was disruption due to convoys of tractors in and around some cities, too. Production at a Volkswagen auto plant in Emden in northwestern Germany was stopped because access roads were blocked, preventing employees from getting to work.”

After initial backlash — before this week’s protests — “the government on Thursday climbed down partially, saying that the car tax exemption would be retained and the cuts in the diesel tax breaks would be staggered over three years,” Moulson reported. “But the German Farmers’ Association said it was still insisting on the plans being reversed fully and would go ahead with a “week of action” starting Monday.”

“The changes will result in 2.5 billion euros ($2.7 billion) less in savings than initially anticipated, but will not affect plans to adopt the budget at the start of February, a government spokesperson said,” according to Reuters reporter Maria Martinez.

While the German government partially walked back its plan last week, Kiderlin reports that government leaders — “including from the coalition government’s own parties” — at the beginning of this week “called for the government to walk back its policy plans entirely. It ramps up the pressure on a government already under intense scrutiny.”

However, Bloomberg’s Michael Nienaber reported on Monday that “German Chancellor Olaf Scholz rejected calls to make further concessions to farmers as protests caused widespread transport disruptions across Europe’s largest economy.”

“‘That is our proposal and I believe it is right and balanced,” Scholz said Monday at a news conference in Berlin after talks with his Luxembourg counterpart,” Nienaber wrote.

The cut to the subsidies that is being protested was “part of a package to fill a 17-billion-euro ($18.6-billion) hole in the 2024 budget,” Moulson wrote.

That budget gap exists after a German court “ruled that a re-allocation of emergency Covid-19 funds to the current budget was unlawful,” Kiderlin wrote.