'Volumes and margins under pressure due to rising costs'

The volumes and margins of agricultural companies are under pressure due to the explosive increase in costs, according to the sector forecasts Agricultural 2022-2023 that ABN Amro published today (February 4). For example, high feed costs put a strong pressure on the margins of livestock farmers and arable farmers have to raise their prices due to the higher fertilizer prices.

Due to the rise in energy prices, fertilizer has also become more expensive, about 50% on average in 2021 and even doubling in November. ABN Amro expects fertilizer prices to remain high this year due to higher energy prices. The bank expects arable farmers to pass this on in the price of products such as potatoes, wheat and onions. "The call from Brussels for extra measures to achieve the water quality goals can also lead to lower volumes in the long term," says ABN Amro. Stable volumes are expected in arable farming this year. In 2023, the bank expects a contraction of 1%.

A major cost item for livestock farmers is feed (60 to 70% of the costs). The prices of the Dutch animal feed industry will have risen by approximately 2021% in 15, especially in the second half of 2021. ABN Amro expects animal feed costs to remain high for part of 2022 due to a shortage of specific animal feed raw materials and the relatively high price of grains and soy. Transport costs, adverse weather conditions, labor shortages and high fertilizer prices are putting upward pressure on grain prices.

Labor shortage
"The costs of energy, fertilizer and animal feed, but also of packaging will also remain relatively high this year. We expect some relief in the second half of 2022, because there will be fewer disruptions in the chain. We are already seeing some bright spots, such as a higher production of the industrial sectors," says Nadia Menkveld, sector economist Agrarian at ABN Amro in a press release. "However, the shortage of labor will dominate this year as well. There is a major shortage of personnel in all economic sectors, which also affects the agricultural sector and the processing industry. The costs of labor can also rise as a result."

Linda van Eekeres

Linda van Eekeres is co-writing editor-in-chief. She mainly focuses on macro-economic developments and the influence of politics on the agricultural sector.

l.vaneekeres@boerenbusiness. Nl

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