Corona keeps influence on arable farmer's liquidity

Arable farming companies are still experiencing the consequences of the corona crisis, the ABN Amro liquidity monitor shows. The average current account position fell to €4.000 towards the end of the third quarter. This is still €1.300 more than in the same period last year.

The drop in demand for chips potatoes in particular has led to lower incomes, according to the liquidity monitor (a collaboration between ABN Amro, Wageningen University & Research and the Ministry of Agriculture, Nature and Food Quality). In total, credits in the third quarter were €20.000 lower than last year. The fact that liquidity at companies is still higher than last year is partly due to an early payment of payment entitlements by the Netherlands Enterprise Agency (RVO.nl). Arable farms already received an advance of more than €12.000 in July, while the total payment usually only takes place in December.

Less investment
The liquidity position was also positively influenced by a decrease in investments and arable farmers paid less tax. The latter may have to do with applying for a postponement of payment (one of the corona measures from the government). Several banks have also decided to postpone repayments, and in some cases also interest payments, until October 1. As a result, expenditure was €34.000 lower than a year earlier. As a result of the above measures, the liquidity position has remained stable.

In the longer term, these taxes and financing costs will of course still have to be paid, so that a decrease in liquidity is to be expected. In addition, the payments from RVO.nl will be lower in December, because a part has already been paid out in July. On the other hand, a number of arable farmers will still receive a benefit from the emergency fund for the French fries.

What to expect?
Although the price developments of onions and sugar are somewhat more favorable than last year, potato prices are actually considerably lower. However, because the harvest of many arable crops is still in full swing, ABN Amro reports that it is difficult to make a good prediction of the liquidity position of the arable farmers. What will in any case play a major role is that the sale of arable products will be highly dependent on developments in the field of corona. For example, the stocks of frozen chips are large, which is unfavorable for the price of free potatoes.

In addition, the last quarter of the year normally results in an increase in liquidity. However, due to the price development and lower payout by RVO.nl (an average of about €18.000 per company), the credit is expected to be lower than last year in the last month of the year. In contrast, on the grain market records have now been broken and the yields of onions and carrots are reasonable to good. These developments can somewhat dampen the decline among chip potato growers.

Kimberly Baker

Kimberly Bakker is an all-round editor at Boerenbusiness. She also has an eye for the social media channels of Boerenbusiness.

k.baker @boerenbusiness. Nl

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