Meat tax: Will Germans swallow higher prices?
It’s summer, and in Germany, people are cooking out at the grill. Grocery stores and supermarkets are well aware of this and have filled the shelves with vast amounts of meat. Shoppers can find piles of meat marinated, sliced, skewered and pressed into sausages, and they can find the meat at low prices.
This week, a 500-gram (1.1-pound) rib-eye steak — advertised as “the best steak for connoisseurs” — cost €7 ($7.85) at discount store Aldi. Pork sausages cost €3.73 per kilogram. The same amount of mixed ground pork and beef costs less than €4.
And consumers don’t even need to clip a coupon because in Germany nearly all supermarkets stock meat at similarly low prices.
Big market for cheap meat
The low prices are not only because meat, like bread, fruits and vegetables, is considered a staple food item and therefore subject to a reduced value-added tax (VAT) rate of 7% instead of the standard 19%.
Instead, it is largely because production is cheap and prolific. The meat industry is a major economic sector in Germany with the 25 largest meat companies generating sales just shy of €27 billion in 2018.
Critics have accused meat companies of maximizing profits at the expense of poorly paid farm and slaughterhouse workers and the animals’ welfare.
Stricter regulations outside Germany
In Germany, the Animal Welfare Act applies to livestock, but hidden-camera photos and videos released by animal protection organizations have shown that the majority of animals suffer on industrial farms. The images show animals in confined spaced where they are unable to move freely and where the key concern is getting them to slaughtering weight as quickly as possible.
Martin Hofstetter from Greenpeace said Germany’s regulations are “more lax,” whereas in other EU countries farmers are required to allocate more space for rearing pigs than in Germany.
He also said regulations on the amounts of liquid manure and the use of drugs and antibiotics are more tightly controlled in other countries.
“This development was politically intended in order to make Germany a world champion exporter of cheap meat products,” said Hofstetter.
Those Sunday roasts add up
Eating meat has long been considered a sign of prosperity in Germany and regularly putting a “Sunday roast” on the table meant that things were going particularly well for a family.
Between 1961 and 2011, meat consumption rose from 64 kilograms to 90 kilograms per person per year. Since then it has been sinking and currently stands at around 60 kilograms annually per person.
Additionally, every year, around 20 kilograms of meat per person are processed into animal feed and other items. The Food and Agriculture Organization of the United Nations (FAO) put the global meat consumption average at 40 kilograms per person.
According to the Federal Statistics Office, 29.4 million pigs, cattle, sheep and goats were slaughtered in Germany in the first half of 2019 and processed into 3.9 million tons of meat. These figures continue to put Germany among the world’s top meat producing nations.
A right to meat at every meal?
Most Germans do not like being confronted with graphic, sometimes shocking, images showing the treatment of the animals they eat.
However, in the supermarket, if they believe no one is watching, most still tend to choose cheaper meat over the more animal and environmentally friendly organic products that tend to cost more than four times that of the conventional meats.
Would that change if meat became more expensive? Politicians, as well as environmentalists and animal rights activists, have floated the idea of increasing the VAT rate for meat and animal products from 7% to 19%. And while there is some agreement on the possibility of changing the tax rate, groups on the left and right disagree on how to spend the potential tax income. While some want to earmark the money to improve animal welfare, others want farmers and workers to see an increase in benefits.
A tax too high for some and too low for others?
Critics of the tax switch reject the increase as antisocial because the price hike would affect everyone, regardless of their income.
If VAT were increased to 19%, that ribeye would cost €7.78 instead of €7; and a kilogram of pork sausage would go for €4.15 instead of €3.73.
If a few cents were added to the price of cold cuts, milk, and eggs, it would cost consumers several euros by the end of the month. Critics have argued that for some low-income families such a financial burden is too great while at the same time not costly enough to convince more prosperous families to reduce their meat consumption.
EU Commissioner Günther Oettinger also warned against national measures as meat is a staple food product across the entire EU single market. Even if it became significantly more expensive in Germany, the price of exported meat would remain unchanged.
The true cost of inexpensive meat
Green party parliamentarian Renate Künast said she favors targeting the tax advantages provided to meat producers.
“We subsidize mass livestock farming with hard-earned taxpayer money,” she told the daily Rheinische Post, adding that the true cost of inexpensive meat is far higher
when taking the health and environmental consequences of factory farming into account.
That toll, Künast said, should include the costs of climate pollution due to high livestock numbers, the cost of treating health problems from too much exposure to antibiotics from pork and rising groundwater prices due to nitrate pollution.
Only after factoring in those costs could “fair comparison” be made be between conventional and organic meat be made, she said.
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