Unrest in the agricultural sector - Baywa crisis: Concerned farmers seeking new agricultural traders
The debt crisis at Germany's largest agricultural trader, Baywa, is having noticeable effects this summer: Many worried farmers, especially in southern Germany, are turning to other buyers for their grain harvest. Private agricultural traders are receiving numerous inquiries from farmers looking for a buyer or a storage facility for their harvest. Similar reports are coming from the cooperative farming sector.
Farmers Seek Alternative Buyers for Harvest
"Baywa's problems are affecting the entire industry," says Michael Osterholzer, CEO of Osterholzer Agricultural Trading in the Lower Bavarian town of Massing. "For the first time, we've had to turn away grain at a location because we're full. But it's not just Baywa's problem. Many farmers still have grain from last year's harvest in storage."
Baywa Dominates Its Core Markets
Baywa, which emerged from the cooperative movement, buys a significant portion of the harvest in its core regions of Bavaria and the new federal states. While there are no exact figures, a leading expert estimates that Baywa's market share in Bavaria could be around 40 percent.
However, the company is struggling with significant financial debts totaling over five billion euros. The main issue is the high burden of interest payments, which amounted to almost 100 million euros in the first quarter of this year alone. Baywa has assured farmers that the necessary funds for paying for the harvest are available, and there have been no reports of payment delays or defaults.
Help on the Way
Given Baywa's significant importance, an insolvency is virtually unthinkable in the agricultural sector. The two main shareholders have pledged financial support, and a joint aid package worth hundreds of millions of euros in cooperation with the lending banks is in the works.
"The Baywa issue just before the harvest has caused some confusion and uncertainty," says Bernd Zehner, head of agricultural trading at the medium-sized Zehner Group in Lower Franconian Bad Königshofen. "It's not just the farmers who are affected, but all other market participants involved in the various marketing chains."
Clarity Expected in Late September
More clarity is expected by mid to late September. By then, not only should the exact size of the aid package be known, but the consulting firm Roland Berger should also present a restructuring report, and the management should publish the company's first-half figures.
"The financial struggles of Baywa are causing ripples across the agricultural sector," noted Maria Santos, a farmer from Baden-Württemberg. "I've had to explore alternative options for selling my crops due to Baywa's limited buying capacity this season."
"In light of Baywa's financial predicament, many cooperatives are seeing an increase in farmers seeking storage facilities for their produce," commented Hans Müller, the cooperative manager from Allgäu. "Agriculture as a whole is feeling the ripple effects of Baywa's debt crisis."
