News Liquidity Monitor
A lot more money in the drawer of arable farmers
The higher sales prices of agricultural products and the payment of premiums by the Netherlands Enterprise Agency (RVO.nl) have increased the current account position of arable farms. This is shown by the liquidity monitor of ABN Amro and Wageningen Economic Research.
At the end of the first quarter of this year, the current account of arable farms was on average €54.000. That is considerably more than 1 year earlier. During the first 3 months of 2019, an average of €17.000 was credited.
High product prices
The financial balance of arable farms is considerably better than 1 year ago, because product prices were considerably lower then. RVO.nl also paid premiums. ABN Amro writes that it is possible that some of the products were sold earlier, so that more money came in earlier. This was especially the case in March.
The allocated costs have decreased. Additional income and private withdrawals are also included in the balance, but this does not apply to transfers to the savings account. In addition to revenues, expenses were also higher in the first quarter. In addition, significantly more repayments were made in March, as a result of which depreciation is higher than 1 year previously. Higher loans and repayments may be a result of the drought in 2018, according to the bank.
Big differences
The differences between the arable farms are large. The companies that had sufficient free product to sell were able to benefit from high market prices. There are also sufficient arable farms with a small harvest at low contract prices.
ABN Amro expects that the arable farmers will need the relatively high balance in the second quarter. Since a large part of the crops have been sold, a lower income stream is expected. The financial level is generally fairly even in the first 2 quarters. In addition, diesel costs are also higher, which also puts pressure on the liquidity position.
Niels van der Boom
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