Extra costs due to purchasing roughage

The third quarter of 2018 will entail additional costs for a group of dairy farmers. This is what ABN Amro outlines in its liquidity monitor. These costs arise from the drought, but the good results in 2017 and the balancing of the phosphate rights also result in higher costs.

"We expect additional expenditure in the coming period", ABN Amro outlines. Against this background, the bank calls it 'pleasant' that (due to the increased milk price) more dairy farms receive income that covers the costs. In addition, dairy farmers may have to deal with the good results of 2017, which could lead to tax pressure. 

Cost-intensive business rising
The dry conditions are even more current. "For example, companies (especially intensive companies in the east and south of the Netherlands) will incur additional costs for the production as a result of the drought purchase of roughage." The third bummer is the system of phosphate rights. Companies are adjusting the rights to the number of livestock. This can lead to extra costs due to the purchase of rights, or because livestock has to be sold. Another possibility is a lower milk production in order to lower the phosphate level. 

As a result of the rights and the discount, the fixed costs have to be spread over fewer kilos of milk. "On average, this increases the cost price by one and a half cents per kilo of milk."

Lowest supplementary payment since 2009
"The milk price in the second quarter of the year was below the liquidity cost price at many companies, resulting in a negative cash flow." What did not help was the supplementary payment by FrieslandCampina, which halved compared to 2016. This was the lowest level since 2009. The average current account is €10.800. That is €4.000 less than 1 quarter earlier, or a decrease of about €40 per cow. 

The bank indicates that the milk resulted in less income, but that more loans were taken out. "At the same time, savings decreased and more investments were made." These investments were mainly made in phosphate rights and the remediation of asbestos. 

Herman van den Pol

Herma van den Pol has been with us since 2011 Boerenbusiness and has developed over the years into a market expert Milk & Feed. In addition, she can be seen weekly in the market flash about the dairy market.

h.vandenpol@boerenbusiness. Nl

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