BB 10 years Just call
'Make clear agreements regarding the sale of piglets and pigs'
Boerenbusiness is 10 years old this year. As part of this anniversary, we look back and look forward to important events in the sector. Which developments play an important role and what should we prepare for in the coming years? Today a conversation with Robert Stienen, agricultural relationship manager and pig farming specialist at ABN AMRO.
The number of pig farmers in the Netherlands is decreasing, with the stopper scheme in prospect, an accelerated decrease in the number of pig farms must be taken into account. Due to the corona crisis and African swine fever (ASF) in Germany, the sale of Dutch piglets is more difficult. According to Stienen, it is important for those who stay in the sector to make clear agreements with their customers about sales.
To what extent has the role of the financier changed in the past 10 years?
"The core has of course remained the same, banks still like to lend money to good companies. But over the years there have been more and more requirements and conditions that a bank has to meet. As a result, the role of financier has become less flexible and The bank is less resilient than in the past, so we are checking whether there is sufficient room to absorb setbacks in the operation itself, because cash flow fluctuates strongly in the sector.
"What has also changed is the extent to which investments are financed by the bank. Years ago it was easier for good companies to apply for full financing, nowadays an entrepreneur also has to contribute real equity. In addition, companies have become increasingly professional in the past decade and the bank expects that from entrepreneurs themselves. They must actively look ahead and anticipate possible setbacks. Entrepreneurs are increasingly coming up with strategies themselves and we support them in this."
The number of pig farmers in the Netherlands continues to decline. How many entrepreneurs are left in the Netherlands?
"Over the years you have indeed seen a continuous decrease in the number of farms. This will continue in the coming years, the stop scheme accelerates this process. Entrepreneurs who would like to stop in the longer term may now stop earlier due to the remediation scheme. the number of pig farmers will decrease faster in the short term, but in the longer term this will be rectified because fewer entrepreneurs will then stop."
"In this respect, the number of pig farmers will decrease proportionally faster than the number of pigs. Pig rights will also be bought by entrepreneurs who do continue. I estimate that the number of pig farmers can fall by 10% respectively, the number of pigs, on the other hand, will certainly not increase. 10% off."
What do you think is the raison d'être for those staying in the sector?
"I think that those who stay in the sector should above all stay at the wheel and regularly look in the mirror. The Dutch pig farmers had good years in 2017 and 2019, they have to be careful with those earnings. As is known, the pig cycle has high levels. peaks but also deep troughs, so my tip is not to invest all your assets immediately, but also keep liquid assets to build up a good buffer."
"It is also important to make good agreements. That aspect is now clearly emerging with the African swine fever in Germany. Entrepreneurs who have made good agreements with their relations can now still sell their piglets despite the difficult sales to Germany. entrepreneurs who have not made concrete agreements hardly have any sales for their piglets, so ensure certainty and make clear agreements."
Do many entrepreneurs actually reserve money for building up buffers, or are a lot of investments also made?
"Entrepreneurs in the sector are indeed building up buffers. They want to go into the future with a little more certainty and not get stuck when bad years are turned. There are of course also pig farmers who invest a little more, for example in overdue maintenance and under others paying off creditors. I don't really see investing in scaling up, rather in optimisation."
What is your expectation for pig prices in the near future?
"I'm not very negative about it. Look, in the short term the situation is of course very uncertain and the piglet sales market is hanging and strangling. Due to the African swine fever in Germany, the flow in sales has stopped. we have just come out of a difficult period in view of the corona crisis in which the slaughter capacity fell sharply. I expect that the price level will be good again in the coming years. When China has its domestic pork production back up to standard, the situation will of course be very different, but until then In time, I expect the global supply and demand ratio to remain good. It is impossible to predict whether we will reach the high pig prices of early 2020 in the coming years, but of course I hope so!"
Chanti Oussoren
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