(de-news.net) – As prolonged heat and drought expose weaknesses in climate adaptation, water infrastructure and farm economics, towns and the agricultural industry across Germany are facing mounting operational and financial strain. The effects are unfolding at both the local-government and farm levels, with pressure building around water security, harvests, production costs and the ability of municipalities and agricultural businesses to finance the measures needed to cope with increasingly difficult conditions.
The president of the German Association of Towns and Municipalities, Ralph Spiegler (SPD), welcomed Environment Minister Carsten Schneider’s (SPD) proposal that the Federal Government, states and municipalities share responsibility for heat protection. Spiegler said municipalities were already under severe financial pressure as the consequences of climate change collided with longstanding shortcomings in federal support. In his view, designating heat protection as a shared responsibility would also have a direct financial implication: The Federal Government would need to make a substantial contribution rather than assigning municipalities additional responsibilities without providing sufficient funding.
For municipalities, securing the drinking water supply has become the most immediate priority. Spiegler estimated that Germany could need as much as 800 billion euros in water storage investment over the next 20 years, underscoring the scale of the infrastructure challenge. He also pointed to continuing shortcomings in intermunicipal infrastructure, particularly systems intended to connect municipalities and facilitate the distribution and sharing of water resources between them.
Farmers face rising expenditures as drought cuts into harvests
At the same time, the continuing drought is producing substantial losses across the agricultural sector. The German Raiffeisen Association (DRV) estimates that about three million tons of grain and rapeseed have been lost since the drought intensified in mid-June, resulting in more than 600 million euros in lost revenue. The association expects the 2026 grain harvest to reach 40.6 million tons, more than 10 percent below last year’s roughly 45 million tons. Rapeseed production is likewise forecast to decline to about 3.7 million tons, compared with 4 million tons last year.
Despite the below-average harvest, the DRV does not currently foresee a domestic grain shortage. Germany consumes about 40 million tons of grain each year, a volume that roughly corresponds to the expected 2026 harvest. The association also does not expect significant increases in consumer prices for baked goods. Grain represents only a small component of the final retail price, while energy, labor and administrative costs are considered more important influences on what consumers ultimately pay.
The German Farmers’ Association, however, describes substantially more difficult conditions at the farm level. Its president, Joachim Rukwied, said large areas of southern Germany had become dry and brown, with the situation particularly severe in regions that had gone long periods without rainfall. Farmers are being squeezed from both sides: Yields and producer prices are weak, while production expenses have risen sharply, particularly for energy, diesel and fertilizer. At the same time, increasingly tight liquidity is making it more difficult for farms to finance the next crop cycle and cover expenses before new revenue arrives.
The consequences extend beyond crop production. In several states, particularly in southern Germany, heat and drought have sharply reduced available feed, prompting some farmers to slaughter livestock earlier than planned. Rukwied has described cases in which producers could no longer readily pay bills for fertilizer and crop-protection products and therefore had to seek bank financing or draw on household savings and insurance policies. The financial strain is consequently affecting not only current production but also the ability of individual farms to continue operating through the difficult period.
The farmers’ association is calling for immediate government action to ease that pressure. Among its proposals are an increase in the EU fertilizer subsidy from 60 million euros to 180 million euros, bringing forward the payment of 80 percent of EU direct agricultural aid to October, and reducing diesel taxes through at least the end of November. Rukwied has also urged the government to implement the coalition agreement’s proposed tax-free risk reserve. Such a mechanism, he argues, would allow farms to build financial buffers that could be drawn upon during years of poor harvests or other exceptional difficulties.
Broader concerns over food security as Germany’s farm outlook clouded
The agricultural sector has already been taking steps to adapt to changing climatic conditions. Those measures include soil-management practices designed to conserve water and the cultivation of varieties with greater heat resistance. But Rukwied argues that adaptation alone cannot offset the combined effects of extreme weather, elevated input costs and low producer prices. He has also pointed to wheat prices, which remain only marginally below levels recorded in the 1980s, as an indication of how limited farmers’ room to absorb additional losses has become.
Regional differences remain pronounced. In Northern Germany, intermittent rainfall has left crops in comparatively acceptable condition, although yields there are also expected to remain below average. Southern Germany faces a considerably more difficult outlook. In some areas, losses in potatoes, vegetables and sugar beets could be severe or even reach total crop failure. The lack of new plant growth is also creating an increasingly serious problem for livestock feed, adding another layer of pressure to already strained farm operations.
The broader supply outlook is also becoming more difficult. Lower harvests in Germany, elsewhere in Europe and in other major producing regions are tightening global grain balances, while geopolitical tensions, including the war in Ukraine, add further uncertainty. The DRV expects logistics to become increasingly important in the coming months because transportation networks face disruption from both geopolitical instability and low water levels on inland waterways. The association is therefore urging policymakers to expand infrastructure investment as a means of protecting supply security.
Rising global fertilizer prices have not yet had a limiting effect on the 2026 harvest, according to the DRV. Many farmers had already purchased their fertilizer or applied it to their fields by the time the Iran conflict began, meaning the subsequent price increases did not substantially affect this year’s production decisions. The greater concern is now shifting toward the 2027 crop year. Because nitrogen fertilizer has become considerably more expensive, many farmers are delaying purchases and hoping prices will decline.
The DRV, which represents about 1,600 cooperative businesses involved in agricultural trade and processing, consequently views the current harvest as manageable from a supply perspective but increasingly vulnerable economically and logistically. For municipalities and farmers alike, the drought is highlighting the growing costs of adapting infrastructure and agricultural production to harsher and less predictable weather conditions, while also exposing the financial limits of the systems expected to respond.
