Large farmers determine the land market

Larger companies invest much more in land than smaller companies. "These large companies therefore also determine the demand for land and the price of land," writes Wageningen Economic Research (WUR).

Only the largest group of companies, especially arable farms, invest seriously in land. Every year, the largest arable farmers invest about €230.000 in land. At the largest dairy farmers, that amount is about €96.000. The smaller agricultural companies invest considerably less in land: a maximum of €25.000 per year. WUR determines whether a company belongs to the group of largest companies on the basis of your own size for economic size per company.

The fact that these larger companies invest more in land is mainly due to the fact that they have an advantage in expanding acreage. This is because they often achieve higher economic results. Income continues to rise with an increase in firm size, according to figures from the WUR† This also means that scaling up is still continuing.

Upscaling in the dairy sector
However, it is noticeable that the increase in scale is faster in the dairy sector than in the arable sector. The total number of dairy farms decreased by 2010% between 2018 and 12 to 15.500. The share of small companies has fallen sharply in that period, while the number of large companies has risen sharply: from just under 1.000 companies to 4.000.

The average area in dairy farming increased by 6 hectares to 53 hectares per farm. The growth in the number of large dairy farms is therefore mainly due to intensification and not so much in acreage size. At the same time, the average area of ​​arable farms increased from 38,5 hectares to 41,5 hectares. In the same period, the number of large companies in the sector has doubled to about 800. These 800 companies make up 7% of the total number of arable farms.

The fact that the increase in scale in dairy farming is faster than in the arable sector is mainly due to the economic results per hectare. The WUR has calculated that the income of dairy farms in the period from 2013 to 2017 is €1.085 per hectare. For arable farms this amount comes to €860 per hectare.

Equity
On the other hand, a larger proportion of arable farms are financed with equity capital. Of all arable farms, 80% is financed through equity, while this is 67% for land-based dairy farms. In the group of largest companies, the part that is financed with own money is slightly lower: 70% for arable farming and 60% for dairy farmers.

Anne-Jan Doorn

Anne Jan Doorn is an arable expert at Boerenbusiness. He writes about the various arable farming markets and also focuses on the land and energy market.

aj.doorn@boerenbusiness. Nl

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