Balance dairy farming better
Agricultural real estate market on the move
The agricultural market in the Netherlands is in full swing. This is apparent from the second NVM Agrarisch & Landelijk Vastgoedbericht, which was presented on Thursday 26 October.
Developments in the various sectors have had a significant impact on the real estate market. A number of these developments are, for example, the high milk price, the fipronil affair and the stricter environmental requirements for pig farmers.
Stable land price
The average agricultural land price in the first half of 2017 was €57.800 per hectare. That is comparable to the price for all of 2016.
There are, however, differences in the price per type of land use and per part of the country. For example, the price of arable land is lower (€62.000 per hectare). That is almost 6% lower than the price for the whole of 2016 (€65.700 per hectare). On the other hand, the price of grassland has risen sharply to almost €55.000 per hectare. The differences by region are also striking. For example, the land price in Waterland and Droogmakerijen increased by €7.500 per hectare. Southwest Brabant saw an increase of €5.000 per hectare.
Ground mobility is under considerable pressure. "Potential sellers are waiting, because of the low interest rates and the capital yield tax. The banks are also hesitant to finance land. Recently, more use has been made of ground lease, ground lease, whereby land is sold to the leaseholder as a means of financing. ', says Ard Klijsen, chairman of the NVM department of Agricultural & Rural Real Estate.
Fewer dairy farms for sale
The NVM notes that money is finally being made in dairy farming again. "The milk price has risen and the balances have improved. The number of companies sold is increasing (just over 40 companies were sold) and the number of companies for sale is decreasing (almost 100 companies were for sale)", reports Klijsen. However, these figures are still higher than the average of the past 5 years.
"The first agreements are also being made in this sector for the purchase and sale of phosphate rights. The dairy farmers are also preparing for the system, which is expected to come into effect on 1 January 2018."
In recent months, the balance of a standardized dairy farm (55,5 hectares and 101 dairy cows) has improved to almost €18.000 per farm. That was less than €10.000 per company in July last year. This also has to do with the rising milk price.
Potato prices important arable farm
The development of results on the arable farm is mainly determined by the potato prices. "The favorable growing conditions in July and August and the expansion of the potato acreage in Northwestern Europe lead to higher potato production, which is pushing prices down," says Klijsen. It is therefore expected that the balance will be slightly lower.
The price of arable land has fallen by 6% to €62.000 per hectare. This decrease was partly caused by observations in areas with lower arable land prices. After a drop in sales in 2015 and 2016, the number of arable farms sold is already at the 2016 level.
Recovery in the pig market
The NVM report sees the first signs of recovery for pig farms. The better sentiment is partly due to an increase in the pig price. "Thanks to the good pig prices, pig farmers can once again grow some bacon for the future," says Klijsen.
"However, the companies that have been sold are still often sold under pressure from a financier. But forced sales now seem to be decreasing." In the first half of this year, 77 pig farms were offered, of which only 6 were sold. In 2016, 28 companies were sold.
Klijsen is, however, pleased with the cabinet's intention for a warm remediation of pig farming. The government is allocating €2 million for this over the next 200 years.
Decrease in regular rent
Liberalized leases are becoming more and more popular. The regular leased area decreased by approximately 2012 hectares in the period 2016 to 19.000 to 267.000 hectares. On the other hand, the area of liberalized leases has increased to more than 100.000 hectares.
For the unregulated form of lease, the average price increased from €2012 per hectare to €2016 per hectare between 730 and 860, an increase of 18%. However, the liberal lease price in some parts of the Netherlands even rises to €1.500 per hectare. The average price for regulated lease has increased from €560 to €690 per hectare in the same period, an increase of no less than 23%.
The NVM expects this trend to continue in 2017.
Kimberly Baker
© 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.