© Tilo Grellmann/Adobe Stock Commissioned in response to policy discussions in Schleswig-Holstein, this HFFA Research Paper by Oliver Mußhoff critically evaluates the economic implications of a proposed tax on plant protection products (PPP), originally recommended by Möckel et al. (2015).
In 2015, a German state ministry explored introducing a PPP tax to incentivize more sustainable pesticide use. The proposal suggested a EUR 20 levy per hectare annually, expecting to reduce PPP usage significantly. While environmental objectives are central, the broader financial effects on the agricultural sector and related industries remained insufficiently examined.
Using conservative, transparent economic modelling based on publicly available data, the study assesses the direct and indirect effects of the proposed tax on farm incomes, sectoral revenues, and the wider value chain. It also models the impact of potential structural changes, such as a shift towards organic farming.
The proposed tax would raise PPP prices by 45%, reducing demand by up to 35% over time.
Arable crop farmers could face income losses approaching EUR 1.8 billion; this rises to EUR 2.2 billion if 20% of farms convert to organic practices.
The policy could trigger further losses of EUR 400 million in related sectors and EUR 700 million in value chain adjustments.
Tax revenue generated would be around EUR 1 billion—substantially less than the total economic losses incurred.
The study advocates for “nudging” approaches, such as clear toxicity labelling, as more efficient and less disruptive alternatives to taxation.
