News Liquidity Monitor
Farmer earns more with less
The lower yield of the 2018 harvest has resulted in a higher financial return for arable farmers. ABN Amro can conclude this on the basis of the current account of companies. The financial situation is normal. Income has decreased due to cultivation and harvesting costs.
At the end of the third quarter, the current account balance at ABN Amro's arable customers was €16.000. This is almost €13.000 more than 1 year earlier. The decrease in the balance in the second quarter is the same as in 2018. The bank reports this in a press release about its Liquidity Monitor.
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Since there is little income from crop sales in the third quarter, the liquidity position is declining. In addition, costs are incurred for cultivation and harvest. Depreciations were €20.000 more than credits. In the second quarter, this was the other way around. However, more was spent on investments. Partly because extra money was borrowed from the bank. More repayments were also made in the third quarter than 1 year previously.
Harvest 2018 has been fully processed and paid for the third quarter. The lower yields per hectare have been compensated with high sales prices. This growing season, however, more costs have been incurred for labour, irrigation and energy. The allocated costs were at a lower level. The liquidity position of arable farmers varies greatly from region to region. The bank knows partly due to the weather conditions. Irrigating intensively or not makes a clear difference.
Better beet price?
ABN Amro expects a lower price level for onions and potatoes. The price for sugar has increased slightly, although it remains to be seen whether this will be noticeable in the beet payout price. After October, liquidity is likely to improve as the first products are delivered and paid for. Variation per farm remains, thanks to the differences in rainfall between the various arable areas.
The lender endorses the uncertain situation in arable farming. Many potatoes are currently not (yet) behind the shelves. The costs for the current growing season are paid in installments, with limited investment. In addition to the sale of products, payment entitlements from the Netherlands Enterprise Agency (RVO.nl) also increased the balance in the fourth quarter.
Niels van der Boom
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