Sector forecast ABN Amro
Unrest dairy farming not gone
Dairy farming has recently gone through a turbulent period, and that unrest is not over yet. ABN Amro reports this in its sector forecast.
Last week it was announced that the European Commission (EC) has come up with a proposal for the granting derogation† This will be voted on in the Nitrate Committee today (Wednesday 4 April). ABN Amro reports that the lower usage standards will increase the costs for manure removal, while the price of milk is falling. It keeps the anxiety going.
Milk price falling
The worldwide milk price increased by almost 2017% in 40. At the end of 2017 the price stabilized and this year the milk price has fallen again. The higher price made it attractive to produce more milk, which meant that the supply increased in 2018. That puts pressure on the price, according to ABN Amro.
Although the cash position is positive, the buffer to absorb setbacks is minimal. It means that 2018 and 2019 will be a challenge for many dairy farmers. Investments in phosphate rights must therefore be carefully considered, the bank reports.
Impact on (beef) cattle farming
As with dairy farming, the phosphate reduction plan has also had an impact on beef and other livestock farming. Many cattle were brought to slaughter, increasing the number of slaughters by 3%. Despite the increase in (beef) meat, the price did not fall.
The price indicates a balance of supply and demand. This is beneficial, because the demand for meat has been under pressure for some time. That is also the reason why farmers and traders are targeting countries outside Europe. In 2017, the export value of beef increased by 4% to €2,4 billion.
Export growth within Europe was 3%, but to Asia exports grew by 30% and to the United States it even doubled. This doubling is partly due to the expansion of the export possibilities of veal to the US, ABN Amro reports.
Kimberly Baker
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