Analysis Countus Arable Farm Index
Potato and onion prices push Index up
After a decline, as a result of the first yield estimate by CBS, the Countus Arable Farm Index has used November to bounce back. A slightly increasing trend in the potato futures market and significantly higher onion prices make this possible.
Apart from the price for EU feed wheat, all product prices included are increasing. The Emmeloord quotation for seed onions (30% to 60% coarse) in particular shows an unprecedented increase. On November 7, it was still worth €27,50 per 100 kilos, to arrive at €28 per 43 kilos on November 100.
Onion cultivation in splits
The expected effect is dampened by the extremely low yield. Statistics Netherlands estimates the total seed onion yield at 825.000 tons, from 25.650 hectares. About 1 year earlier, that was 1,45 million tons, coming from 26.123 hectares. A price increase of 56% is therefore compensated by a decrease in yield of 43%. On balance, the Arable Farming Index, and therefore the farmer's income, will not benefit.
The potato yield also has to do with a clear decrease in yield (23%). The April contract for 2019 dipped to €28,60 per 100 kilos at the beginning of November, before rising to €30,60 per 10 kilos on November 28. Here too, the yield keeps the yield in check.
Adjusted beet price
Provisional yield figures have also been published for sugar beet cultivation, which are also considerably lower. A total of 6,9 million tons of sugar beet is expected, which is 1 million tons less compared to 2017. However, the Arable Farm Index still calculated the sugar beet price of 2017, which was €45,60 per ton.
However, this is not a fair comparison to the reality of this season. Thanks to an extremely low price level on the sugar market, Cosun's final payment price is expected to be significantly lower (compared to 2017). The base price for 2018 is €32,50 per tonne and it is estimated that not much will be added. Although this is not the final payout price, we still include it in the Index (for a fair comparison).
Effect on Index
The effect of the price adjustment is significant on the Index. For example, based on the old figures, the Index comes out at 48 points in week 119,4. However, if we apply the new calculation to this, the level drops to 110,4 points. Where the Index, based on the data available at the time, previously came out as one of the best since 2004, this is no longer the case.
Despite the unprecedentedly high onion prices, a stable potato price and stable feed wheat price, the arable farmer hardly benefits. That conclusion can be drawn from the Index. It reflects the harsh reality. It is impossible to sketch an average this season, because the differences in company income are huge. Anyone who has a freely-sellable product of good quality, coupled with an average to good yield, is an asset. For most, however, this is not reality. There is little or no benefit.
Are you interested in the economic situation of the farmer and his position in 2019? Then come to the National Economics on Tuesday 18 December Agricultural Congress in Flint in Amersfoort, where interesting speakers outline backgrounds to the arable farming, dairy farming and pig farming sectors. Subscribers of Boerenbusiness can reserve 2 free tickets.
Niels van der Boom
© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.