Future more negative
More liquid assets for arable farmers
In the first quarter of 2018, the current account balance at arable farmers increased by an average of €13.000. ABN Amro reports this, in response to their own barometer. The growth is therefore less than 1 year earlier, but there are more liquid assets available.
A farmer at ABN Amro had an average balance of €36.000 in its current account in the first quarter. It is an increase of €13.000, compared to the previous quarter. Last year, that increase was €10.000 higher. The final balance was then €9.000 higher.
Storage pays less
According to the lender, the reason for the smaller increase is because arable farmers have done less for their storage products (for example potatoes and onions). Transfers to the savings account and private expenses are also included in the barometer, as are income from secondary activities. Of course, the figures vary considerably per company; ABN Amro only shows an average.
The development of the cash flow is governed by the seasonal pattern among arable farmers. As a result of moderate to poor product quality, arable farmers have sold their product earlier. This has consequences for the cash flow. Inputs such as fertilizer, crop protection products and starting material often still have to be settled. As a result, the barometer gives a somewhat distorted picture, ABN Amro admits.
Low oil price
A lower oil price has ensured that related products have been purchased more cheaply; it goes then to diesel and fertilizer. Meanwhile, the oil price is rising again. The payment of sugar beet came at the beginning of April, which means that it has not yet been included in the barometer.
The low point for arable farmers was reached in October 2017. At that time, companies were down by an average of €10.400. The highest position was reached in March 2018 (average of €36.000). that was in March 2017 still over €27.000.
Situation is deteriorating
ABN Amro expects its current account position to deteriorate in the second quarter, whereas it was able to hold its own in 2017. This is due to deferred costs and low product prices. Arable farmers who still have products in their storage will retain this for as long as possible. This is due to the price level.
According to the bank, the depressed financial climate is causing investments to be postponed and some companies creating a liquidity shortage. Long-term planning is difficult to make in the current scenario. The current situation is negative, but the sector is volatile. the differences are sometimes large.
Niels van der Boom
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