How does Rabobank finance in uncertain times?

Rabobank is also referred to as the farmer's bank by many. But how does Rabobank notice this in uncertain times? Marijn Dekkers, sector specialist dairy farming at Rabobank Nederland, explains.

The rising land price makes it more difficult to finance farms, among other things. There are also all kinds of other challenges in the field of sustainability. How does this affect the financing from Rabobank? 

Rabobank is proud of the fact that they are called a farmer's bank, but what does the farmer notice about this these days?
"We are a bank with knowledge of the market and the sector. We know what is going on at the company and we also keep an eye on the international markets. With 90 analysts, spread all over the world, we bring global knowledge of markets and sectors to the kitchen table of our customers, so that we can really think along with the farmer and help to fulfill his ambitions."

Rabobank is cautious about new loans, but would like to have it repaid faster on, for example, land (30 years). Why is that?
"I don't immediately have the idea that we are more reserved, but the current high price of the means of production (such as phosphate and soil) do not always make it easy to give a good interpretation. We ask for sufficient repayment, because then you retain new financing options (and thus continuity). If we finance too much and don't have it repaid, you get a kind of lease system at the bank. That cannot be the intention. It is more important that by repaying you build wealth."

"In addition, financial resilience is also very important. Due to the more volatile markets and increasing demands, this financial space needed in operation. The reserve, which some farmers may notice at the moment, has everything to do with that. You are dealing with an uncertain world. We will not easily finance (without or with little repayment) if someone buys a house where we know that the roof needs to be replaced. This is now happening in agriculture and we are noticing the social pressure. How the crop protection products, ammonia and CO . will perform in the coming years₂ is still unclear. You don't want to be played right away if the future turns out differently."

How does Rabobank deal with the many challenges, such as the rising land price?
"During the financing, we do not take the development of the land price into account. A buyer must now be able to pay and not count on an increase in the land price, because then it will become a form of investment. That is possible, but preferably not. with borrowed capital.The rising land price, in combination with, for example, the phosphate rights, create additional pressure. We therefore advise you to buy very carefully. Because there is now relatively little trade, the price of land is high. Many more quitters are expected in the coming years. In terms of phosphate and land prices, this could provide some relief at a regional level. The question is whether the stayers can absorb these means of production to the same extent."

"Sustainability is the future", says Rabobank. How does the farmer notice this? Will it be financed more easily, for example?
"In a sense, yes; for example, we have green finance in the Netherlands. If you bet on sustainable energy or organic agriculture, you get an interest discount. We also have the impact loan, for when you are affiliated with a quality mark. And we also look at sustainability. from the company. Sustainability is linked to economic sustainability. And you are only economically sustainable if you move along with the demands of society and the market. This is a constant trade-off."

Is the agricultural sector a sector with a future?
"It is certainly a sector with a future. This is because we live in a world in which the need for food is only growing and the Netherlands has so much knowledge and experience. But there is no time for sitting still. We are dealing with social challenges, such as the CO₂-goals and biodiversity. That certainly influences our conversations with the farmer. With our international 'banking for food strategy' we remain a farmer's bank. And we can also say that the agricultural sector has a good basis, with strong chains and a good export position. But we have to get used to the fact that change is the only constant."

Anne-Jan Doorn

Anne Jan Doorn is an arable expert at Boerenbusiness. He writes about the various arable farming markets and also focuses on the land and energy market.

aj.doorn@boerenbusiness. Nl

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