'Nitrogen policy makes grassland cheaper'

ABN Amro believes that the price for grassland will continue to be under pressure in the coming years due to the nitrogen policy and a lack of successors. On the other hand, it is expected that the price for good arable land will actually rise, causing the two prices to be further apart. 

The average land price has increased by about 7% in 30 years, although at the beginning of 2019 a turning point became visible. Although the prices for arable land have bounced back slightly, the price for grassland has remained at the same level. ABN Amro expects the price for grassland to remain under pressure in the next 5 years. A price decrease is also not excluded.

The reasons for this are the nitrogen policy and a lack of follow-up. As a result, the supply of grassland is increasing faster than the demand, according to the bank. ABN Amro also notes that the profitability of the dairy farms is also under pressure, as a result of which they have less financial room to buy land.

Demand for cropland is increasing
At the same time, ABN Amro expects the price of good arable land (due to scarcity and stable demand) to increase slightly. The stricter environmental requirements in the arable sector do, however, result in a higher cost item and lower yields. As a result, there is also less room for arable farmers to invest in land. Nevertheless, the demand for good arable land continues to increase, because scaling up can be a way to cut costs. 

Despite everything, it is important for ABN Amro that land remains in the ownership of farmers. "The increase in land value has been important for wealth building by farmers and horticulturists. That is why it is important that farmers not only work on the land, but also own it," says Pierre Berntsen, the director of agricultural companies at ABN Amro. "Owning land stimulates the stewardship that is in the genes of farmers. After all: own land, you take extra good care of it."

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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