ING: brake on agricultural production growth

ING expects production in the agricultural sector to increase by 2020% in 0,5. This means that growth is below the long-term average. Production increase is inhibited, especially in intensive livestock farming.

Intensive livestock farming is struggling with production ceilings and nitrogen policy. At the same time, there are still many uncertainties, which means that 2020 will be an exciting year for many livestock farmers expect ING† Arable farmers are in somewhat calmer waters and are benefiting from a continuing increase in demand from abroad. Uncertainty about the trade agreement after Brexit and potential trade conflicts elsewhere in the world do pose risks.

Moderately positive
The economic bureau of ING predicts that the long-term growth of 1,2% will remain unaffected in the coming years. Nevertheless, the outlook for 2020 is moderately positive. After the sharp contraction in production in 2018, the agricultural sector again grew by 2019% in 0,5. Similar growth is expected in the coming year, partly due to consumer demand in the Netherlands and neighboring countries, which continues to develop positively.

In 2020, the nitrogen policy will hardly have a negative effect on the production levels of livestock farming. “Hundreds of pig farmers have signed up for the warm remediation of their sector, but which part of this will really stop in the short term is unclear, partly because of the currently high pig prices. For dairy farmers, the remediation policy is still under development," said Henk van den Brink, sector economist for the agricultural sector at ING Economics Bureau.

Only noticeable after 2020
ING predicts that the almost 10% decline in the pig population, expected by the Ministry of Agriculture, will only be noticeable after 2020. These are mainly uncertain times for intensive livestock farming. Although higher milk prices are on the horizon for dairy farmers, the planned nitrogen measures, the continuing threat of trade conflicts and the uncertainty about the trade agreement with the British after Brexit pose risks.

Arable farming benefits from sales developments
Purchasing power in the Netherlands will increase in 2020 and consumption growth in Europe will remain constant. The expectations are therefore positive, including for arable farmers. According to ING, they are going to have a quiet season after the extreme harvests and high prices in recent years. The bank reports that in this sector the yields are average, but 65% higher for onions and a quarter for ware potatoes compared to the previous season.

The valley for the sugar prices also seems to be over and the world grain price is rising due to good demand and a reduced supply due to poor harvests in North America, among other places. Finally, ING emphasizes that the costs for arable farmers are rising sharply, partly due to the ban on certain crop protection products.

Jeanette Pennings

Jeannet has her roots in the flower bulb sector and she grew up on an agricultural company in the northern part of North Holland. As a generalist she reports for Boerenbusiness across all sectors. She is also exploring the possibilities of sponsored advertising.

j.pennings@boerenbusiness. Nl

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