For the first time in ten years, the turnover of German agriculture and livestock farming has decreased, by around three percent. Only the dairy industry is still in the plus. With this contraction, the agricultural sector follows the slight decline in the entire German economy, for the second year in a row, mainly due to setbacks in the chemical and automotive industries.
The decline in the agricultural sector reflects broader economic trends in Germany. Economic growth is being hampered by structural challenges such as rising energy costs and stagnating exports.
Despite the overall decline, the German dairy industry managed to achieve a slight growth. This is mainly due to the strong demand for dairy products abroad. Germany remains an important exporter of milk and cheese, especially 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 are struggling to pass on these costs, resulting in lower profit margins. Smaller companies in particular are struggling.
The decline in agriculture is part of the broader economic downturn in Germany. The economy shrank by 0.3 percent in 2024, after 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 sales. This is caused by a decline in purchasing power among consumers, who are increasingly opting for cheaper alternatives. The shift to cheaper brands affects both domestic producers and exporters.
To support the sector, interest groups are calling for more government support. They stress that the focus should be on innovation and efficient use of resources to reduce costs. In addition, more cooperation between farmers and technology companies is encouraged.
While some experts are optimistic about a possible recovery in 2025, others continue to point to ongoing challenges such as geopolitical tensions and economic uncertainties in Europe. The agricultural sector is expected to recover slowly at best, depending on energy prices and export opportunities.