Foreign investors buy 20,000 hectares of agricultural land – politicians look the other way!

Foreign investors buy 20,000 hectares of agricultural land – politicians look the other way!

The air is burning in eastern Germany because politicians are more or less idly watching while foreign investors, especially from Australia, want a big piece of the German agricultural pie. The Gustav Zech Foundation recently sold an impressive 20,000 hectares of agricultural land to these investors for a whopping 300 million euros. A business that not only fills your wallet, but also raises many questions. What are those responsible actually doing?

Deutsche Agrar Holding (DAH), which was taken over from the bankruptcy estate of KTG Agrar in 2016 for a mere 5 million euros, is an integral part of the discussion. There are laws that require such transactions to be checked, but neither the federal nor state governments seem to have much interest in this. According to the Foreign Trade Ordinance, an audit should actually have taken place for areas over 10,000 hectares, but this was far from the case: the Federal Ministry of Economics remains silent when it comes to details of investment audit cases.

The criticism is growing

In the midst of this standstill, the rural agriculture working group (AbL) raised loud voices of criticism. The responsibilities between the federal and state governments are perceived as extremely confusing. The ministers of the affected federal states such as Brandenburg, Mecklenburg-Western Pomerania, Saxony and Saxony-Anhalt feel restricted in their actions. Saxony-Anhalt's Agriculture Minister Sven Schulze has already described the state regulations regarding share purchases as a "blunt sword", noting that only the federal government can really prohibit such transactions.

It is becoming increasingly difficult for the affected countries to set a clear political course. Since the federalism reform in 2006, the regulatory powers have rested with the respective states, and the helpless conditions are a hidden call for reform. Brandenburg has announced that it will examine legal options for greater transparency and control when purchasing shares. But here too there are concerns: According to the state parliament of Saxony-Anhalt, the verdict was made in 2022 that legislative competence ultimately remains with the federal government.

New agricultural structure law in Lower Saxony

In Lower Saxony, however, people are prepared to go one step further. The planned agricultural structure law there would like to introduce the approval requirement for share deals and even provides for fines of up to one million euros for violations. A measure that seems entirely sensible. But as is usually the case, there is resistance here too: the rural population of Lower Saxony fears more bureaucracy and rejects the draft, which could further complicate the negotiations.

To add the icing on the cake to all the complexity, the number of foreign companies in the German agricultural landscape has also increased. This rose from 118 to 153, an increase of 30%. According to the latest statistics, there were a total of 2,919 business groups with an incredible 2.1 million hectares of cultivated area. That's an increase of 32% since 2020 - an awakening among international investors is already noticeable.

It looks like Germany could soon be deeply mixed up by foreign investors in the agricultural sector. It remains to be seen whether politicians will really intervene. Until then, it will remain exciting and those responsible may have no choice but to show a good hand in regulation.

For further details and background you can read the reports from Mercury and Agricultural today read up.