Energy prices are still below crisis levels in 2022, but gas, oil, and diesel have risen sharply recently. At the same time, interest rates and liquidity for businesses are less favorable than four years ago. Read more about energy prices and cost risks for the agricultural sector.
"Armed conflict in the Middle East could severely impact Dutch sectors," ABN Amro headlines its analysis of the economic consequences of the war in Iran. Greenhouse horticulture and food companies, in particular, are cited as vulnerable sectors in the face of higher energy prices. Arable farming and livestock farms are also feeling the effects, according to the bank.
Energy accounts for 15% to 25% of greenhouse horticulture costs, according to ABN Amro. Arable and livestock farms are particularly sensitive to fertilizer price fluctuations in this regard. According to the bank, fertilizer accounts for around 5% of these farms' costs.
According to the sector analysis, the impact on arable farmers will remain limited for the time being, as they have already largely purchased the fertilizer they need for this season. Furthermore, the researchers assume that animal manure will be used instead of artificial fertilizer wherever possible.
The impact on exports is also limited. The Dutch food and beverage industry exports €2,9 billion to the Middle East, representing 2,8% of total exports. For dairy, this share is slightly higher, at 5%. According to the researchers, some Middle Eastern destinations can be supplied via alternative routes.
Sharply rising energy prices
Since the end of February, the European gas price (TTF) has nearly doubled: from around €32 to approximately €59 per MWh. At the same time, the oil price briefly rose to almost $120 per barrel. Diesel also became significantly more expensive. For large consumers, the diesel price rose rapidly from €1,74 to €2,08 per liter (excluding VAT), an increase of approximately 20%. The transport sector is particularly affected by these consequences, although companies can often offset the higher diesel costs through a diesel clause in contracts.
Overall, the bank concludes that the situation is less extreme than during the 2022 energy crisis, when gas prices rose to record levels due to the war in Ukraine. The current price increase is still significantly lower than that. Moreover, many companies have since taken measures to limit their energy consumption or signed contracts at lower rates.
Interest and liquidity
According to ABN Amro, there are clear differences compared to four years ago on other fronts. Less favorable factors include higher interest rates, lower average liquidity positions for companies, and lower gas reserves in Europe.
It's therefore crucial for businesses to keep a close eye on costs, says ABN Amro. This also applies to liquidity needs. According to the bank, previous crises have shown that costs can suddenly rise sharply, putting companies under financial pressure.