The decline in the agricultural sector reflects broader economic trends in Germany. Economic growth is hindered by structural challenges such as rising energy costs and stagnant exports.
Despite the overall decrease, the German dairy industry managed to achieve slight growth. This is primarily due to strong demand for dairy products abroad. Germany remains an important exporter of milk and cheese, particularly to other European countries. This international demand compensates for the lower domestic consumption.
According to the EY business cycle barometer, the decline is attributed to rising costs for fertilizers, energy, and feed. Many farmers struggle to pass these costs on, resulting in lower profit margins. Smaller businesses are especially hard hit.
Promotion
The contraction in agriculture aligns with the broader economic downturn in Germany. The economy shrank by 0.3 percent in 2024, following a similar decline in 2023. Economists say this is exceptional, as Germany has long been known as the engine of the European economy.
The German food industry also recorded lower revenues. This is caused by decreasing consumer purchasing power, with consumers increasingly choosing cheaper alternatives. The shift to cheaper brands affects both domestic producers and exporters.
To support the sector, interest groups are advocating for more government aid. They emphasize that the focus should be on innovation and efficient use of resources to reduce costs. Additionally, greater collaboration between farmers and technology companies is encouraged.
While some experts are optimistic about a potential recovery in 2025, others point to ongoing challenges such as geopolitical tensions and economic uncertainties in Europe. The agricultural sector is expected to recover at best slowly, depending on energy prices and export opportunities.