News Energy
Expensive energy affects more than horticulture and fertilizer
The increased energy costs, especially for gas and electricity, affect many sectors. ABN Amro compiled a top 20 of sectors that are sensitive to higher energy costs. Greenhouse horticulture is number one, where energy costs amount to 15,3% of turnover. Other agricultural sectors are also included in the list.
The energy costs for greenhouse horticulture in 2019 amounted to €1.261 million. The sector result in the same year was €1.116 million. Relatively speaking, energy costs thus amounted to 113% of the result. For the chemical industry (fertilizer and crop protection), energy costs account for 4,6% of turnover and 52% of the result. In agricultural services, energy accounts for 3,0% of the turnover and 18% of the result. The flour industry, potato processing industry and the fruit and vegetable processing industry are also in the top 20.
Thin margins
A large part of the business community is directly affected by the high energy prices, according to ABN Amro. Several companies have (partially) hedged against price increases with fixed contracts. For them, the blow of the high energy bill comes later because the bank expects high prices to last until 2023. What makes the companies in the top 20 extra sensitive to the increase in energy costs are the often thin margins.
The higher costs incurred cannot be fully passed on to customers by all sectors and companies. It is likely that fertilizer factory Yara will not be able to fully pass on the extra costs of the more expensive energy. By scaling down production, the manufacturer is probably trying to keep losses limited, according to ABN Amro.
Investing pays off
According to the bank, the current energy crisis makes it clear that sustainability pays off. Companies that have invested in recent years in, for example, insulation or the generation of sustainable energy are less dependent on the fluctuations in the market for fossil fuels and therefore now have a competitive advantage.
Jurphaas Lugtenburg
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