Robin Dutt has a lovely problem on his hands. Sat in his office in Frankfurt, the man who replaced Matthias Sammer as the sporting director at the German Football Association last August, taking on responsibility for the development of young players and coaches, doubts there is any room for improvement. "We are at the top level and it's difficult to go above that," Dutt says. "If we are in the year 2000 and we are at the bottom it is OK. But nobody sees anything wrong here."

A decade or so after the DFB travelled the world in search of best practice, Dutt smiles at the irony that other nations are coming to them for advice these days. Dan Ashworth, the Football Association's newly appointed director of elite development, was among recent visitors, spending three hours with Dutt, the former Bayer Leverkusen and SC Freiburg coach, in a meeting that must have been enlightening.

German football is booming, reaping the rewards of the strategy drawn up after their dismal performances at Euro 2000, when Germany finished bottom of their group. Forced into an overhaul of youth football, the DFB, the Bundesliga and the clubs decided that the development of more technically proficient homegrown players would be in everyone's best interests. This led to the creation of academies right across the top two divisions.

The fruits are there for all to see. Joachim Löw, Germany's coach, is blessed with a generation of gifted young players – Julian Draxler (19), Andre Schürrle (22), Sven Bender (24), Thomas Müller (23), Holger Badstuber (24), Mats Hummels (24), Mesut Ozil (24), Ilkay Gundogan (22), Mario Götze (20), Marco Reus (23), Toni Kroos (23) … the list goes on – and Dutt says there are more coming through in the under-21 side who will travel to Israel for the European Championship next month.

As for Saturday's Champions League final at Wembley, the DFB proudly points out that 26 of the players Bayern Munich and Borussia Dortmund named in their Uefa squads this season are homegrown and eligible to play for Germany. More than half of those players came through the DFB's talent development programme, which was introduced in 2003 with the aim of identifying promising youngsters and providing them with technical skills and tactical knowledge at an early age. Covering 366 areas of Germany, this impressive initiative caters for children aged 8 to 14 and is served by 1,000 part-time DFB coaches, all of whom must hold the Uefa B licence and are expected to scout as well as train the players. "We have 80 million people in Germany and I think before 2000 nobody noticed a lot of talent," Dutt says. "Now we notice everyone."

Some youngsters attending the development programme are already affiliated with professional clubs but others may be only turning out for their local junior side, which means the weekly DFB sessions are also a chance for Bundesliga teams to spot players.

It is the opposite of what happens in England, where the FA relies on clubs to develop youngsters. Dutt smiles when it is suggested to him that the DFB are doing the clubs' recruitment for them. "But if we help the clubs, we help us, because the players of our national teams – the youth teams and Joachim Löw's team – come from the clubs," he says.

The incredible depth of Germany's coaching resources, as well as the DFB's close relationship with Bundesliga clubs, helps to make the programme. According to Uefa, Germany has 28,400 (England 1,759) coaches with the B licence, 5,500 (895) with the A licence and 1,070 (115) with the Pro licence, the highest qualification. It is little wonder that Ashworth said last month that there will be no quick fix for English football. The country that invented the game has forgotten that we need people to teach it.

For Germany, post-Euro 2000 was about changing philosophies as well as employing more full-time coaches and upgrading facilities. The DFB wanted to move away from playing in straight lines and relying on "the German mentality" to win matches. Instead coaches focused on developing fluid formations that required the sort of nimble, dexterous players who would previously have been overlooked because of their lack of physical strength.

A youth player trains at Freiburg's academy. Photograph: Stefan Pangritz

"In the past there were a lot of big players. But look at our players now," Dutt says. "You realise that an important thing for a football player is technique and then the height of the player, ordinarily, will be small. [Diego] Maradona, [Andrés] Iniesta, Xavi – all little players. In the defence we think we need big players. Mats Hummels is big but he is very good with the ball. In 1982 Mats Hummels wouldn't have played in defence, he would have played at No10. In the 1970s, [Franz] Beckenbauer was playing football and [Hans-Georg] Schwarzenbeck was running after the English players – if he got the ball he gave it to Beckenbauer and the job was done. But now Schwarzenbeck is Hummels, and Hummels plays like Beckenbauer and Schwarzenbeck."

If one club has led the way when it comes to producing young players in Germany it is Freiburg, who have won the German equivalent of the FA Youth Cup four times in the past seven years. Their 25-man first-team squad consists of 10 homegrown players, six of whom started in the 2-1 defeat against Schalke last Saturday, when Freiburg needed to win to pull off the unimaginable and qualify for the Champions League. Beckenbauer was among those who travelled to Freiburg's Mage Solar Stadion hoping to see history made.

Freiburg's coach Christian Streich. Photograph: Stefan Pangritz for the Guardian

Under the tutelage of their erudite and colourful manager Christian Streich, a qualified teacher who worked in the club's youth setup for 16 years, Freiburg were one of the stories of the Bundesliga season. With an annual wage budget of only €18m (£15.4m), which covers the coaching staff as well as the first-team squad, Freiburg's fifth-place finish was a remarkable achievement, even if Streich was unable to conceal his disappointment that they will be playing in the Europa League, rather than the Champions League, next season and that four of his best players have been snapped up.

Last week the Guardian went behind the scenes at Freiburg, whose location, on the fringes of the Black Forest, is every bit as impressive as the work that goes on at the football school. The facility, which has four pitches including a small stadium, cost €10m in 2001, before the academy reforms were introduced and at a time when Freiburg were relegated from the Bundesliga, which gives an idea of how committed they are to producing players.

Freiburg has neither the financial wherewithal nor the desire to compete for overseas talent, so there is no chance of Streich, or any of his staff, being spotted with an agent in São Paulo brokering a deal for a teenage Brazilian. Of the 66 players in the under-16 to under-19 age groups in their academy, all but two are eligible to play for Germany. In keeping with the ethos of the club, where there is a wonderful sense of community, every senior academy player earns the same.

Across a sizeable area where they face little competition from other Bundesliga clubs, Freiburg work closely with five amateur feeder teams who receive a part-time coach to train children aged 8 to 11 twice a week. The most promising players are invited to attend the academy during school holidays and for occasional tournaments at weekends. "We believe it is not good for a nine-year-old to play [regularly] for a professional football club because it changes the reasons why he plays football," says Sebastian Neuf, a member of the football school's management.

Once a player reaches under-12 level things change. Those who live within 40km of Freiburg train at the football school up to four times a week and play in a league, where teams can win a title and be relegated, a major difference to the way academies are run in England. The earliest an academy player would take part in competitive football with a professional club in England – where the theory is that it "should be about performances, not results" – is at under-18 level.

Dutt offers an interesting response when asked about the rationale behind the league system. "It's important for the mentality to have some games in the year you have to win, but it is not the main thing. The main thing is to do good training.

"For the Germans this system is very important. It's like golf. If I play golf in England, no club wants to know my handicap. If I go to play in Germany you have to show your handicap. If you play with a guy you don't know, the first question is: 'How do you do?' The second question is: 'What is your handicap?' Germans want to reach something, they want to go up."

There is no shortage of silverware on show in Freiburg's academy, yet the club are not obsessed with winning leagues and cups and acknowledge there is life outside football. Through a nationwide elite schools programme supported by the DFB, the 16 players who board on the top floor of Freiburg's three-storey academy building, along with those who live with host families and travel from home, are able to continue their education around their football schedule, which sometimes means training before and after lessons.

Freiburg place great emphasis on academic work, so much so that they like a selection of their staff to come from a teaching background, so that they can provide educational help whenever it is needed, including on the way to matches. It is not uncommon for players to do homework on the coach. Streich says that clubs have a moral obligation to think about what happens to those who fail to make the grade.

"When I went to Aston Villa eight years ago I told them our players, under-17, 18 and 19, go to school for 34 hours a week," he says. "They said: 'No, you're a liar, it's not possible, our players go for nine hours.' I said: 'No, I'm not lying.' They said: 'It's not possible, you can't train and do 34 hours of education.' I said: 'Sure. And what do you do with the players who have for three years, from the age of 16 to 19, only had nine hours a week of school?

"They said: 'They have to try to be a professional or not. They have to decide.' I said: 'No, we can't do that in Freiburg. It's wrong. Most players in our academy can't be professionals, they will have to look for a job. The school is the most important thing, then comes football.' We give players the best chance to be a footballer but we give them two educations here. If 80% can't go on to play in the professional team, we have to look out for them. The players that play here, the majority of them go on to higher education. And we need intelligent players on the pitch anyway."

What is clear is that those who are good enough will get a chance at Freiburg, which makes the €3.5m the club put into the youth academy every year (about 10% of turnover) feel like a sound investment. Against Schalke, in what was one of the biggest games in Freiburg's history, Streich gave Sebastian Kerk, a Germany Under-19 international, his debut. Nobody at Freiburg batted an eyelid.

While Freiburg have been investing in youth for years, not least because the club's existence depends on it, Streich acknowledges that huge changes have taken place across all Bundesliga clubs, in particular when it comes to attitudes towards coaching, where a "jobs for the boys" mentality has largely disappeared. He believes England needs to rethink its own approach.

"They have to look to build coaches in England. They have a lot of money and they have bought players. But for me the most important thing is to educate the coaches in the youth academies.

"Before in Germany, if you played in the Bundesliga for a few years, clubs said: 'We'll take them to manage the under-17s.' But they had no education to be a coach. Sometimes the same thing happens in England – I saw this. On the pitch these players played very well but that doesn't mean they're a coach, and now this changes in Germany. And then under-15, under-17 and under-19 coaches, they gave them a salary so they could do this work full time. Coaches came from university, who had studied sport, they mixed it up and then it got better."

Under-11 and under-12 boys during training at Freiburg's academy. Photograph: Stefan Pangritz for the Guardian

Streich smiles when asked what he thinks of some of the top English clubs, which spend millions on youth programmes despite there being no obvious pathways to the first team. "You can't compare someone like Manchester City with SC Freiburg, it's saturn and the moon," he says. "We played against Manchester City's youth team here, in the Black Forest, some years ago and also a few years later. They had one player from Sweden, one player from Finland, one player from Brazil, one player from here, one player from there. 'What do you do next year?' 'Yeah, we buy eight or nine players.' 'What about scouting?' 'We have 20 people scouting at youth [level].' We only have four for the professionals."

Frank Arnesen, who is full of admiration for Streich's work at Freiburg, has been on both sides of the fence and is well qualified to compare the merits of youth football in Germany and England. The Dane, who has just left his position as sporting director at Hamburg after working for Chelsea and Tottenham Hotspur in the same capacity, believes England has the best facilities for young players but feels the spending power of Premier League clubs denies academy graduates the chance that exists in the Bundesliga.

"The money is a big part of the problem in England because clubs go out and buy finished players instead of waiting," Arnesen says. "Young players need to make mistakes to get better, but managers think they can't afford [for] that to happen. You see the squads, even in the smaller clubs, they get players from all over instead of bringing young players through."

Arnesen believes that the introduction of the "50% plus one" rule in 2001, which requires Bundesliga clubs to be owned by their members, has helped to promote homegrown talent. In the absence of foreign benefactors it makes financial sense, and also appeals to the supporters in control, to give young German players an opportunity.

Youngsters play table football at Freiburg's academy. Photograph: Stefan Pangritz

The landscape could not be more different in the Premier League, where the majority of clubs are in foreign hands and English players in the minority. It is hard, almost impossible, to imagine Germany accepting that situation, not least because the success of the national team is at the forefront of everyone's mind.

"I think one thing is very important, coaches who are coaching for the national team of Germany, from upstairs to down, they are very respected and it's a good job to have. In England I am not so sure about that," Arnesen says. "I think there is a feeling that to work for a club is much higher than the FA but that's not the case in Germany."

It was one of the reasons why so many people were surprised when Ashworth, who was attracting interest from leading clubs because of the exceptional job he did as sporting director at West Bromwich Albion, opted to take up a high-profile but extremely challenging position with the FA at its new national football centre at St George's Park, where it remains to be seen whether he will get the support he needs from the Premier League and its clubs. Arnesen, who recently met Ashworth at Hamburg, believes relationships need to change in England.

"The FA [must] create a situation where it is an honour to be there and you need help from clubs," he says. "Hamburg have one of the biggest defensive talents in Germany, Jonathan Tah [the national Under-17 captain]. Sometimes he is training from Wednesday to Friday [with the DFB] and he cannot play Saturday in his own game for Hamburg. We did not think that was correct so we sat down and talked, and that is what the Germans do."

Dutt agrees. "I spoke three hours with Dan about this," he says. "It will be better for England if the clubs and the association talked together. If you see the English clubs, there are a lot of foreign players and not many from England. Chelsea win the Champions League and then the Europa League, so they have success. But the English national team, I don't think they are successful at this time."

The Elite Player Performance Plan, which the Premier League introduced a little more than two years ago, feels like the last throw of the dice for youth development in English football. Millions of pounds are being pumped into academies, with clubs free to cast their net far and wide for players who will have more contact time with coaches than ever before, albeit with no promise of greater opportunities to break through. Time will tell whether it works.

Back in Frankfurt, Dutt is looking at his watch before his next meeting. There is just one final question for him before he heads off: why is it that Bundesliga academies so rarely bring in players from overseas? "If you want to get an African player, or a player from Brazil, you need money," he says. "It's cheaper to bring through your own player from Germany. And we have enough players here."