Industry Trend Analysis - Agriculture To Prove Contentious During 'Jamaica' Coalition Negotiations - OCT 2017


BMI View: In Germany, agriculture will prove one of the more contentious issues in the upcoming coalition negotiations between the CDU, the FDP and the Greens. The Greens will have the upper hand in negotiations, as agriculture is prioritized to a greater extent in their platform when compared to the other two parties. That said, the Greens' more radical proposals will be defeated due to the low-vote share in rural areas. Environmental concerns will receive a boost from the Greens' participation in debates on the CAP reform in the run up to 2020.

Our view on the German election is for Angela Merkel to lead a coalition government composed of her own Christian Democratic Union (CDU), the centre-right pro-business Free Democratic Party (FDP) and the centre-left environmentalist Alliance '90/The Greens' (Greens), otherwise known as the 'Jamaica coalition' (See ' Three Way Coalition Negotiations To Usher In Period of Uncertainty ' , 25 September 2017). Angela Merkel received a solid endorsement of her agricultural policy platform from farmers, 61 per cent of whom voted for the CDU, according to Forschugruppe Wahlen. However, agricultural policy will prove to be one of the most contentious areas of debate during coalition negotiations, given the diametrically opposed positions held particularly by the Greens and the FDP. Farmers are, therefore, unlikely to have much visibility on agricultural policy before 2019, as the Greens hold out for concessions in what they view as a priority area.

Strong Preference For CDU Among Farmers
Percentage Share Of Farmers Vote In 2017 General Elections
Source: Agrarheute, BMI

Below are the main policy areas which will be up for negotiation:

Breakdown Of Parties' Positions On Agriculture
CDU FDP Greens
Source: Agrarheute, BMI
Direct payments In favour of differentiating direct payments according to farm size. Opposed to differentiating direct payments according to farm size. Claims that this would incentivise land fragmentation. In favour of differentiating direct payments so that they are proportional to farm size.
Opposed to shifting from the first to the second pillar of the CAP Opposed to shifting from the first to the second pillar of the CAP In favour of shifting from the first to the second pillar of the CAP
Greening In favour of the use of agrochemicals in ecological conservation areas. In favour of the use of agrochemicals in ecological conservation areas. Opposed to the use of agrochemicals in ecological conservation areas.
Opposed to the expansion of ecological conservation areas. Opposed to the expansion of ecological conservation areas. In favour of expanding ecological conservation areas
Fertilizers and agrochemicals Consider existing regulations to be sufficient. Consider existing regulations to be sufficient. Prioritizes the security of food supply over environmental concerns. In favour of strengthening regulations on the use of fertilizers and agrochemicals, including through the EU. Seeks to permit only products that are 'harmless to human beings'.
Market liberalization In favour of milk market liberalization. In favour of milk market liberalization. Neutral
Risk management In favour of improving risk management instruments at EU level In favour of improving risk management instruments at EU level Neutral
Livestock In favour of stronger animal welfare regulations. Seeks to develop a national livestock strategy and promote voluntary animal welfare standards. Seeks to create financial instruments and certainty for livestock owners. Neutral In favour of stronger animal welfare regulations. Opposed to intensive livestock operations and excessive use of antibiotics. Seeks to promote regional and mobile slaughtering facilities and limiting animal transportation to four hours.

Going forward, we believe that the Green party will be in a strong position to extract concessions from the other two parties when it comes to agricultural policies, given its focus on sectors with the largest environmental impact, such as agriculture and energy. CAP reform will be debated extensively in the run up to 2020, and there is already a significant trend towards a stronger focus on environmental issues, with the election of Emmanuel Macron in France and the selection of Nicolas Hulot as Minister of the Environment; the Green party's participation in the 'Jamaica coalition' will strengthen this trend. However, the Green party will be prevented from implementing some of its more radical policy proposals, such as a ban on glyphosate, due to its weak electoral result in rural areas: it secured only 5 per cent of farmers' vote, compared to 14 for the FDP and 61 for the CDU.