Agriculture 4.0: Bidding farewell to the family-run farms?

Agriculture is one of the sectors of the economy that can expect to benefit from far more efficient production due to digitization. However, the new technologies that are gradually making their way into the agricultural sector are associated with high investments. This is increasing the pressure to set up large-scale operating units. The worsening problems finding a successor are compounding the difficult situation. By the time the baby boomer generation among farmers enters retirement, the „farm decimation“ in Germany can expect a further boost.

By 2040 the number of farms is expected to decline from currently 275,000 to around 100,000. Assuming a largely unchanged total farming area in Germany, the average size of a farm will rise from 60.5 to some 160 hectares. At the same time, the number of permanent jobs in the sector is expected to halve to 325.000. Driven by changing nutrition habits and environmental protection efforts, ecological agriculture is growing in importance. Even if the current strong expansion of organic farms were to weaken up, the number of organic farmers is expected to increase by 2040 to around 45,000 and the share of ecologically-cultivated areas increase from currently 10 percent to around one fifth of the cultivated area in Germany.

In the long-term, we risk bidding farewell to the centuries old model of the family-run farm characterised by self-employed farmers, small farming units and family members helping out. Looking ahead, the sector will increasingly feature farm operations that are still owner-run but large, capital-intensive agricultural companies managed in accordance with business management principles. The new generation of agricultural companies will make intensive use of the latest technologies and increasingly resort to a non-family workforce despite the fall in manpower deployment. The key to the successful transition into a highly-modernised, competitive German „Agriculture 4.0“ lies in good education and advanced training methods as well as in forward-looking investments.

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