Eastern Europe keeps a tight hold on local land ownership

by NORMAN DUNN

The break-up of the communist bloc countries over the last decade has brought the pioneer scenario right into Europe's back yard, so to speak. There's a lot of good growing land out there at prices just a fraction of those in the west. Example: $10,000 Can per acre is not an unusual price for farmland in Germany, and much more can be paid in Austria or the Netherlands. One tenth of this would buy you good cropping land in west Poland or Hungary, and there are regions in the east where the price is considerably less.

Fearing floods of capital-heavy west European farmers snapping-up whatever is offered for sale, countries such as Poland, Hungary, Bulgaria, the Czech Republic and Slovenia have placed a complete ban on foreign purchase of farmland.

So far, renting of land to foreigners is allowed throughout middle and eastern Europe. In fact, the Hungarian government reckons that there are over 500 non-nationals tenanting farms in the country now. Most are Austrian, and about 150 are from Germany. The total of foreign tenant farmers in Poland is put at over 300.

But the middle and east European countries are determined to keep land ownership for local farmers as long as they can. Most have their own support programs for the home agriculture sector, based to a large extent on bank loan guarantees and cheap interest rates for farm development loans. Even if foreign farmers content themselves with renting land, it's turning out not too easy for them to get their hands on this development money. Slovenia has been quite open about its stance and says point blank that it is not giving financial aid to foreign farmers, tenants or owners. Hungary has established a similar law.

Looking for ways around this obstacle, some western investors have grounded agricultural corporations renting or buying land with "ownership" invested in native businesspeople who have minority holdings. The response was swift: Bulgaria, Hungary and Latvia, which are also opening up to the west, have introduced rulings that only allow aid to go corporations where nationals have a majority holding.

Soon, most of the countries mentioned will be new members of the European Union. One batch including Poland, the Czech Republic, Hungary and Latvia may join as early as the end of 2003. Rumania and Bulgaria are lining up for accession four years after that.

Most countries want to keep foreign land ownership to a minimum even after membership, although the EU rules basically permit nationals to live, work and own land in any other member state.

For the east, things are to be different. Foreign farmers won't be able to buy land in Poland until 12 years after accession, although the story so far is that the regulations may be relaxed for farmers who have secured tenancies in that country beforehand. Hungary, the Czech Republic, Slovakia and Bulgaria are proving to be relatively more flexible and they plan to allow foreigners land purchasing powers just seven years after the countries join the EU.

This sort of protective policy against western farming pioneers brings its winners and losers. For instance, a recent scheme in Rumania with foreign farming investment has not only greatly improved local infrastructure and increased regional employment but also boosted export of high value farm goods -- cheeses in this case -- into Austria and Germany.

On the other hand, free access for comparatively wealthy western entrepreneurs into the east European land market could be disastrous for regions currently farmed well by small-scale family farms. Most observers recognise this and that's why the long ban on foreign ownership will probably stay in place for most countries -- and be joined later by strict planning and environmental stipulations to make sure the pioneers who do come are there to farm and not to participate in the agricultural version of asset stripping. BF

Norman Dunn writes about European agriculture from Germany.

Biogas brings more cash onto the farm

by NORMAN DUNN

Currently, there's growing pressure from powerful environmental or "green" lobbies for more electricity to be produced from renewable energy sources, including on-farm biogas. This sort of gas production is being welcomed in many countries as a useful way not only of reducing environmentally-harmful emissions of carbon dioxide from finite fuel production of electricity, but also for cutting out odours and gases from farm manure, producing a valuable no-smell compost for field fertilizing and, not least, developing a new earning enterprise on the farm.

Another bonus is also beginning to emerge. Hitherto, farm-based biogas production has been more or less limited to the amount of manure produced in the barns. True, a few enterprising farmers in Denmark boosted their biogas production by selling fermentation space to local slaughterhouses or dairies for their by-products. Others in middle Europe have also started contracts with local authorities and bakeries for waste foods for the same reason.

But the latest development is that ordinary farmers can now grow crops especially for mixing with the (usually liquid) animal manure. Chopped sugar beet is being tried as an energy-rich addition. Recent trials have also got good results from grass silage made in big bales from waste ground and roadsides, but also from conventional farming pasture. In Germany, trials with this sort of silage added to liquid cattle manure boosted methane output from the fermenter by up to 200 per cent. The scientists running the tests claimed power production gave as good a return as did feeding the forage to livestock, and certainly paid for the baling and carting.

But first let's look at the usual biogas production system on farms over here. Mainly liquid manure (slurry) is used, with or without added methane-boosting material. This is naturally fermented in a gas-tight container, producing methane which in turn is used for fuelling an electricity-generating engine. The "green" lobby has helped pass European Union regulations requiring electricity suppliers to accept this electricity from renewable energy sources into their networks. Payments have been set by the various governments and these run from the equivalent of $0.09 Can per kilowatt hour to as much as $0.13, the latter price being paid to German farmers at the moment.

Looking at the last figure, it's therefore not surprising that the most biogas plants feeding the power grid are currently to be found in Germany. More than 1600 are currently in action, compared with pretty near zero just a decade ago. Success here has also been due to the individual German federal states helping farmers get biogas plants started with capital investment grants or tax breaks.

The next-best country for on-farm biogas output is Austria with something over 125 units currently in production. Portugal and Switzerland are creeping closer with around 100 on-farm units each, with most of the other European countries running just a few experimental plants.

It is true that wind turbines have grabbed the most headlines in Europe lately as natural source energy producers and farmers haven't been slow to take part in this movement. The number of wind turbine towers in the countryside has been increasing by 20 to 50 per cent per year.

But huge planning permission problems are beginning to develop for the massive turbine masts in almost every country. Individual capital investment is also hefty, running to as much as $750,000 Cdn a mast, although farmers who have built such turbines on their land assure me that, in the right position with plenty of wind, they pay for themselves within 15 years and have a working life of at least 25 years.

But the capital demands can be much less for the manure/crop fermenters. Ready-built units big enough to ferment all the manure from a 50-cow or 200-sow enterprise cost less than $500,000 Cdn and pay for themselves in European price conditions within eight years, claim the manufacturers. There's also nothing to stop farmers building their own system to save on investment. In fact, most would-be biogas producers buy in only a minimum of store-bought components, such as fermenter. Even an old four-stroke engine can be fairly rapidly converted into a methane gas burning generator.

The rules and regulations on storage and disposal of manure from livestock enterprises are becoming ever stricter in Europe. For instance complete covering of the surfaces of manure containers is now mandatory in the Netherlands and Denmark, and field-spreading the manure in Denmark has to be followed-up with a harrowing-in operation within six hours.

Fermentation for biogas stops smells and gas emissions and that's why we'll be seeing many more biogas plants on cattle, swine and poultry units, with the resulting electricity production producing a useful new for farmers. BF

Norman Dunn writes about European agriculture from Germany.

by NORMAN DUNN

Innovative dairy products keep European consumers coming back for more

by NORMAN DUNN

Experts here reckon that the German dairies have the most ideas with, since 2000, a staggering six brand new products introduced weekly in the milk drink, yogurt, dairy desserts or cheese segments. Belgium, Austria and the Netherlands are not far behind.

Dairy companies are also among the biggest customers of television advertising time on the European continent. In Germany alone, the country's120 milk processing companies spent the equivalent of $180 million Cdn. advertising their products last year -- representing just over 1.25 per cent of total turnover. Doesn't sound much, does it? But the milk advertising budget was actually double that spent by the meat and fish industry.

Toffee-flavoured yoghurts or cheeses matured in red wine might seem a long way from the milking machine back on the farm. But there's no doubt here that the whiz kids in the product development departments are the ones ensuring stable returns for the farmers.

The countries where new milk products are being stacked on the supermarket shelves every week are benefiting in more sales, and at least some more cash is tricking back to the farmers. Despite 10-15 per cent rises in retail prices this year, sales of German and Dutch fresh milk products -- yogurt, milk drinks, cottage cheese -- have risen, in Germany by 16,000 tonnes in the first seven months. And, where drinking milk is trendy thanks to these ideas, milk producers are currently getting the equivalent of an average 52.5 cents a litre.

In Britain, where a more conservative attitude to advertising basic food and drink products rules, farmers are only getting around 40 cents a litre. Of course, that's under the cost of production on most British farms, a fact currently causing a lot of dissatisfaction among U.K. dairymen.

What kind of ideas really help the farmers? Well, let's take a look at what the 200 Intermopro exhibitors had to offer in early October.

Right now, two concepts seem to be most attractive to the European consumer -- new flavours and ideas aimed at healthier living, the so-called functional foods.

Flavours have a field day at every European dairy event and, this time round, that old favourite vanilla was backed up by new products featuring cinnamon, walnut, mandarin-marzipan, roast apple and gingerbread. These have been christened the "winter flavours." Ready for next spring are other tastes for yogurts, dairy desserts and milk drinks such as white almond, milk-coffee and rhubarb-vanilla.

Even the functional foods no longer rely on plain old low-calorie fare. Exotic tastes are ringing the cash registers here, too. Tirol Milch from Austria used the Intermopro event to launch "Latella," a functional food milk drink with only 0.1 per cent fat and flavoured with ginseng or melissa.

One of Europe's largest processors launched a milk breakfast drink as a complete substitute for orange juice, cereals, toast and coffee. NutriStart is the name and it features a 0.3 litre plastic bottle containing a milk, cereal and fruit mix plus added proteins, calcium, vitamins and roughage. Already selling well in supermarkets, Campina's NutriStart covers a third of an adult's daily requirement for vitamins, proteins and calcium and can be knocked back in less than a minute and costs around $l.50 a shot.

The marketing experts have never had a problem with cheese in recent years. Certainly since mad cow disease hit Western Europe, there's been a boom in this alternative protein source. In the last six years, total cheese consumption has increased by 12 per cent in the European Union. But here too, exceptional ideas are needed to keep sales running at the same rate.

Flavours and textures are just as variety-rich as on the yogurt shelves, but this year a new trend has emerged from the taste laboratories: savoury cheeses with strong red wine input.

This year at Intermopro, no less than five major cheese makers presented this concept.

Swiss producers Emmi, for instance, presented a cheese regularly washed with a red wine/herb mix during six months of maturation. The south German cheesemaker Baldauf introduced a delicately-flavoured white Lindenberg which spends a period of its production phase in a red wine bath, as does the clearly-labelled "Red Wine Rebel," a six kg, 48 per cent fat roundel launched by the Salzburg creamery in Austrian Schönegger.

Allgäuland in Bavaria obviously wanted to make its red wine cheese launch a bit more exclusive. Chianti is the wine used in this instance and the resultant slicing cheese, Chiantino, is actually bathed in this liquid sunshine for no less than a guaranteed 100 days!

European milk processors have been busy forming joint ventures and other amalgamations for more business efficiency in the last years. Could it be that the continent's wine makers want to join in? BF

Norman Dunn writes about European agriculture from Germany.