News Income estimate
Real decrease in income due to high costs of agriculture
Selling prices of agricultural products have risen sharply, but at the same time, costs have also risen sharply this year. As a result, agricultural income barely recovers, according to the new income estimate of Statistics Netherlands and Wageningen Economic Research. If the income development is adjusted for inflation (2,6%) and taking into account the growth in the volume of labor (1,3%), then the real agricultural income falls by 2,6%. In 2020, revenues fell by almost 5%.
The big outlier downwards is pig farming. In this sector there is a negative income of €49.000 per unpaid annual work unit, even if the Fixed Expense Allowance is included. Last year that was a minus of €14.000. On sow farms, the negative income is even €136.000 per annual work unit. Only at the fattening pig farms the income is positive, at €49.000.
Serious Cash Flow Problems
Wageningen Economic Research (WUR) has also looked at the cash flow of agricultural companies. The pig farms, especially sow farms, are under pressure for the second year in a row. Less than half of the companies have a positive cash flow, according to Harold van der Meulen on 20 December in the presentation. "15% to 20% have serious cash flow problems. Corona support is therefore very welcome at these companies."
The swine sector again faced significant price declines (-9%), due to decreased demand for pork from China and Germany's export restrictions to China due to African swine fever. As a result, part of the German pork ended up on the European market, resulting in lower prices.
The volume of animal production decreased by 3% this year. The average selling price increased by 3,5%, keeping the production value at the same level as last year, namely €10,6 billion. Cattle and milk in particular have become more expensive.
Shrinking livestock
Livestock farmers supplied fewer animals to the slaughterhouses than last year, partly due to a decline in the livestock population. Milk production this year decreased by 2,5% compared to a year earlier. The milk price was 10% higher. The production value of milk accounts for half of the production value of livestock farming.
Production at the same level
Animal production this year was lower than last year, but crop production has increased. As a result, the total production remains at the same level. Due to higher average selling prices, the production value of the agricultural sector increased by 6,5%. The value of consumption rose - by 9% - faster than the value of production. Subsidies and corona compensation decreased by 9% (or a minus of €140 million). The costs of fertilizer and compound feed were higher than in 2020. Prices for gas and electricity rose by almost 40%.
The numbers can be found at www.agrimatie.nl. Read this afternoon Boerenbusiness also an extensive interview with Robert Hoste, pig production economist at Wageningen Economic Research, about the income estimate.
Linda van Eekeres
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