Financing the transformation of German agriculture

HFFA Research GmbH analyses future investment needs and financing pathways for the transformation of German agriculture.

Context & Challenge

German agriculture is facing profound structural, environmental, and economic changes already now and in the years ahead. Shifting market conditions, climate change mitigation and adaptation, environmental challenges, rising production standards and changing consumer behavior increasingly shape production and investment decisions of farmers.

As Germany’s development bank for agriculture, the Landwirtschaftliche Rentenbank plays a central role in supporting structural change and investment in the agricultural sector. To continue fulfilling this role, the bank must anticipate how agricultural production systems and farm investments are likely to evolve and how these developments translate into changing financing needs over time.

Against this background, the study commissioned by Landwirtschaftliche Rentenbank aims to develop a baseline scenario and differentiated future thematic pathways for German agriculture for the coming decade, providing a structured foundation to identify future agricultural investment needs. The results are intended to support the strategic development of funding and financing instruments of Landwirtschaftliche Rentenbank.

Our Approach

In collaboration with Prof. Oliver Mußhoff from the Department of Agricultural Economics at Humboldt-Universität of Berlin and Dr. Marius Michels from the Department of Agricultural Economics and Rural Development at University of Göttingen, HFFA Research GmbH conducts a qualitative and quantitative analysis of different transformation pathways of German agriculture.

The project combines three core elements:

1. Thematic development and investment pathways: Based on existing projections and policy objectives our team develops a baseline scenario and different thematic pathways for German agriculture in the coming decade. These pathways are based on a comprehensive literature analysis and contrasted with insights from more than 30 qualitative interviews with key stakeholders to identify structural and other challenges as well as specific investment drivers and to inform the quantitative specification of the baseline scenario and pathways.
2. Investment and financing analysis: For the baseline and each pathway, we systematically assess investment needs for the next ten years (until 2036) for technologies in areas such as arable and horticultural production, animal husbandry, and farm-based energy production.
3. Environmental effects: In addition, key environmental effects such as greenhouse gas emissions, chemical input uses, and biodiversity are explicitly captured as outcome variables of the baseline and development pathways.

Key Insights