'Volume agricultural sector will shrink 2 percent this year'

Due to the war, higher gas prices and (the associated) inflation of an expected 5,3%, ABN Amro has revised the volume forecasts for sectors for 2022 downwards. A contraction of 2% is expected for the agricultural sector. That was 0% last year.

The explosively rising gas and electricity prices will cost Dutch businesses an estimated €22 billion this year, according to ABN Amro in its sector forecasts. Based on discussions with the market, it has been assumed that variable rates are paid for half of the consumption of the business community. This remains an estimate, because there are no specific figures.

Food industry among most vulnerable sectors
The market expects that prices for gas and electricity will not fall, if at all until the spring of 2023. The food industry is one of the most vulnerable sectors to high energy prices, according to the bank. This concerns, for example, industrial bakeries and potato processors. The sector may also experience the consequences of higher fertilizer prices. "First of all, Russia is a large producer of fertilizers, but that production also requires a relatively large amount of gas. The substance is used in the production of vegetable products such as rice, grains, potatoes and sugar beets. If the prices of these increase, the food processing industry will notice the consequences of this.”

ABN Amro calculated the energy costs, including electricity, gas and coal, but excluding, for example, petrol and diesel for transport, based on figures from Statistics Netherlands (CBS) and Agrimatie, for the twenty sectors that have the highest energy costs in relation to turnover. to make. This includes seven food-related branches (see table).

Compared to 2019, the year on which the percentages are based, gas and electricity rates have increased fivefold. That can lead to deep red numbers. "Unless the companies succeed in raising output prices." According to the bank, the question is whether all affected companies can pass on the billions in extra energy costs to customers. Eggs are cited as an example. "Jumbo, Albert Heijn and purchasing association Superunie report that they will reimburse higher costs for table eggs. Poultry farmers are partly relieved of the pain caused by the increased energy prices. The other part must be passed on to the industry, where the eggs are processed into food."

The competitive position of Dutch companies - vis-à-vis other countries - is also affected in some cases. The bank mentions horticulture, where competitors from southern Europe have an advantage due to the warmer climate. "Some greenhouse growers leave their greenhouses partially or completely empty, because the costs are too high and this is not compensated by higher turnover. Still other growers choose to light less, which puts pressure on production."

'Companies may have a hard time after the summer'
Volume forecasts have been revised downwards. The volume of the food sector is expected to remain the same this year (-0,4% in 2021). A contraction of 2% is expected for the agricultural sector. In general, the prognosis is still positive. "This is because demand is strong and end customers are to some extent willing to pay the higher prices," ABN Amro said in its report.

In the second half of the year, the effect of increasing scarcity and higher prices will become more pressing and the bank expects a deterioration. "If costs remain high, companies may have a hard time after the summer."

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