Arable farming sector suffers from low sugar price

The arable sector had to deal with lower income last year, partly due to the low prices of sugar beet and potatoes. In its sector forecast, ABN Amro expects that this year will also be dominated by a low sugar price.

This year, sugar beet cultivation is once again dominated by the low sugar price† worldwide, acreage expansion and favorable weather conditions ensure higher production. The price on the futures markets is 20% to 30% lower in March than in the same period last year and the bank expects the price to remain under pressure this year. This is because the increasing supply will lead to a surplus. 

Worry less
The low sugar price also means a lower price for Dutch farmers, but they have less to worry about than their competitors. This is because there are still ongoing contracts from 2017when the price was higher. Above all, Dutch farmers are well able to grow a relatively large amount of sugar beet per hectare, which means that the yield per hectare is higher than in other countries.

The majority of arable products are destined for Europe and Africa is the most important continent for onions (after Europe). Now Senegal has closed its borders to the import of various products (including onions), the bank expects uncertainty about the export possibilities to the country in 2018. This makes the sales market for onions smaller and that puts pressure on prices.

The weather matters
Also the potato prices are currently under pressure and the weather remains the most important factor. The growing season can give a yield difference of 20% and is therefore of greater influence than any acreage expansion or more efficient production.

The same goes for wheat. The price of wheat is under pressure worldwide and farmers are reducing the acreage, but it is not enough to reduce production. For 2019, ABN Amro expects that the acreage will have been reduced enough to allow prices to rise.

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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