Boerenbusiness Agricultural Congress
'Sustainable companies perform better financially'
Dry years are usually positive years for arable farmers when it comes to income. The opposite is true for dairy farming. The year 2018 is an exception to the rule. This is apparent from the figures presented by Wageningen Economic Research during the National Economic Agricultural Congress on 18 December.
The different types of agricultural companies see their labor income per unpaid annual work unit (AWU) decrease in 2018. A company has an average of 1,4 AJE, which means that the amount is multiplied by 1,4. Despite the fact that averages are discussed, the spread is enormous: from -€10.000 to more than €100.000 per AJE.
Drought affects incomes
On average it takes income almost €30.000 off. Drought plays a major role everywhere; for example, dairy farmers see their feed costs rise sharply. As a rule, arable farmers can benefit from high free market prices. These will manifest themselves this year, but there is little question of profiting.
Linda de Bie (Wageningen Economic Research) gave text and explanation of the figures during the National Economic Agricultural Congress. The year 2017 was, apart from the arable sector, a top year for the Dutch agricultural sector. Incomes were historically high; at a level not seen since 1995. However, this year income is falling in all sectors.
Not taking advantage of drought
De Bie outlines the effect of the drought on the basis of historical data. In 2006, also a dry year, the income of the arable sector increased by about 100%, compared to the average income in the surrounding 4 years. In the years 2003 and 1983 this sector also made a significant outlier. The year 1976 still stands out sharply, because then the income was 140% higher.
The situation is different for dairy farmers. Dry years are by definition bad news, because of the poor feed supply. The fall in income in this sector varies, depending on the dry year, between 10% and 30% when a comparison is made with the 4 surrounding years.
The type of soil also determines income. The income difference of dairy farmers is €17.000 between sandy soil and clay soil or peat meadow soil. On average, this income difference is approximately €5.000 per AJE.
Huge differences
The differences are even greater among arable farmers. This year, Wageningen Economich Research estimates the income per AWU at almost €80.000 if the company is located in the northern and central clay area. An arable farmer in the southwestern clay area has to make do with €3.000. With €22.000 per AJE, the Veenkoloniën, the northern sand area and the eastern, central and southern sand areas are in between.
There are several reasons for these differences; such as the possibility of irrigation. The building plan is also important. Arable farmers benefited most from the onion price, which rose by 110%. The price of ware potatoes went up by 50% and that of wheat by 28%. Sugar beets show the only negative outlier.
In the livestock sectors, all selling prices fell, mainly due to an increasing supply. This is reinforced by higher costs for fertilizer sales, feed, energy, labor and machines. De Bie: "The feed conversion is higher, especially among pig farmers."
Scale size is decisive
Despite the criticism of scale, large companies perform better. The bigger, the more they earn. In addition, she notes that the largest companies include many horticultural companies. "Growth is not a must, but it does provide food for thought. The companies with 25 hectares or less have the lowest income, often due to the highest costs. The larger the company, the greater the yields. For example, a company of 250 hectares or more much better."
Sustainable companies perform better
With dairy farms it is striking that especially the sustainable(er) farms score well. The income difference of the 25% best performing companies is almost €14.000 higher than the other 75%. Their labor input per kilo of milk is higher, but the cost price is slightly lower. Feed costs are lower, as are animal health costs per cow. The long-term debts per kilo of milk are also slightly lower.
As a result, the critical milk price for the top is 25% lower. This is €30,82 per 100 kilos, compared to €32,75 for the other 75%. "It is striking that organic dairy farms do not necessarily perform better," says De Bie. This mainly happens in years with a low current milk price.
The mixed companies, on the other hand, show a stable income trend, but this is below the average for the specialized companies. "They always participate in the good and bad markets. Is mixed the solution, in combination with scale? We have to discover that in the future."
Working together pays off, but not on price
Which company has the best future? "Innovative companies and the companies that lead the way and seek change perform best," says De Bie. "They also seek cooperation and reap the benefits."
She also mentions the farmer's chain position. "There may be some openings in the cooperative selling of products. However, it remains difficult to distinguish yourself with your products. Research shows that the price is often not higher, but that partnerships work more efficiently. Unfortunately, the price does not improve. by."
In all cases, De Bie emphasizes that the choices at your company must match your entrepreneurship. "Plan a course and don't deviate from it. You have to focus to achieve something. You often do that together. There are opportunities for collaboration, so grab them."
Niels van der Boom
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