E. German Farms Aim To Set European Records

`EIGHT years,'' says Jorg Schmidt, holding up eight stubby fingers. That is the time he and his partner have to make their farm as competitive as western European operations. He thinks they can do it in five.

With speed and buoyant optimism, farmers here in eastern Germany are busy catching up with the West. Eastern Germany is ahead of other former East bloc countries in throwing off a half-century of state planning.

Eastern German farmers are not as experienced with market-style agriculture as their Western counterparts, says Otto Bammel, deputy chief of the Berlin bureau of the German Ministry of Food, Agriculture, and Forestry. But ``within the next generation, they may be more competitive'' than west German farmers, he says. Reacting to market forces

It is hard not to get swept up in the enthusiasm of the easterners. Mr. Schmidt and his partner, Jurgen Frenzel, were managers of the huge 19,000-acre cooperative here under the communists. Now, the pair is managing almost one-third of the former grain and dairy cooperative and they have aggressively made changes. They have cut the cooperative's work force from 230 to 28. They have slashed the potato acreage that state planners used to mandate. They are boosting the quality and production of their dairy farm.

``We must try to work with these world prices,'' Mr. Frenzel says. ``We don't think the government will pay us many subsidies.''

A large Midwestern farmer would feel at home here. As Frenzel and Schmidt explain their operation in their brightly lit office, a secretary next door types production records into a computer. The pair has invested huge amounts of capital to upgrade facilities and install a computerized British milking system.

``It was easy,'' Schmidt says of the mental transition from state planning to market forces. ``The `thinking' is easy, but the `working' is very difficult.''

Under the old regime, there were few incentives for agricultural efficiency. Any profits from state farms, for example, had to be returned to the state. Even with the less-restricted producer cooperatives, such as this one, the government controlled what machinery managers bought and how they set production targets.

Regional directors assigned the details. ``We tried to make it workable for the farmers,'' recalls Horst Taeger, formerly in charge of animal breeding and feeding for the Potsdam region. Economic incentives played no role. ``A farmer took a rabbit to the slaughterhouse and was paid 60 marks - East German marks,'' he says. ``After processing ... his same rabbit cost 22 marks. This was known as `economic' production.''

Since the regime collapsed in 1989, east German farmers have adapted rapidly to market price signals. By 1991, they had more than doubled rapeseed acreage and reduced by three-fourths the land devoted to potato production. By the end of 1992, they had cut cattle numbers in half and the hog population by two-thirds. Dairy production also nose-dived as better-quality western German products hit store shelves. Eastern Germany adapts

East German farmers are attacking the quality issue too. Already in 1992, grain in some of eastern Germany's prime areas fetched higher prices than in western Germany, according to a United States agricultural publication. Western farm experts say that livestock and dairy production will also rise as farmers improve quality.

Schmidt and Frenzel sold all their hogs early on to raise cash. Now, they have restarted a small hog operation as an experiment. They are even thinking of starting up a small processing plant so they can sell the meat directly. Mr. Taeger is already scouting an abandoned slaughterhouse as a possibility for area farmers.

It is not surprising that eastern Germany is adjusting to market agriculture more quickly than other former East bloc countries. It has several advantages. It inherited intact the West German legal system, allowing a fully developed justice system to deal with land disputes. It immediately adopted the European Community (EC) agricultural program, whose subsidies are significant. And western Germany continues to pour in subsidized loans to revamp eastern Germany's agricultural sector. Last year, Frenzel and Schmidt invested 600,000 marks ($375,000) in equipment. The farm sports everything from Russian tractors to West German combines to John Deere balers. ``All the money we make, we invest in the farm,'' Schmidt says. Shrinking work force

Under the old regime, some 800,000 people worked on farms. Today, fewer than 220,000 remain. Some experts think that the agricultural work force will shrink further to 150,000 or perhaps even 100,000. Most of the people who left found other work, retired, or are in subsidized training schemes. Taeger, now retired after working briefly for the unified German government, says some farm workers resent the changes, although most support the new system.

The question of land ownership remains an even bigger challenge, says Mr. Bammel of the agricultural ministry. Since most of the land in the communist state farms was expropriated from farmers between 1945 and 1949, working out the various land claims is taking time. One-third of the production cooperatives have not been converted into family or corporate farms.

Germany and the EC are currently at odds about how much production the country can legally sell, since the government underestimated how much eastern farmland would stay in production.

When it is all worked out, however, eastern Germany will emerge with farms that are larger and potentially more efficient than practically anywhere else in Europe. The average size of its family full-time farms - some 300 acres - may be small by US standards, but it dwarfs the west German average of 80. Corporate farms here are three times larger. And Schmidt and Frenzel's operation of 5,400 acres of crop land would make even an American farmer take notice.

East German farmers are on the move. ``Give them to the end of the decade and they'll be over here eating the West German farmers' lunch,'' says a Western diplomat.