News Dairy Analysis 2018
Will there be a turnaround in the land and real estate market?
What will the land and real estate market for dairy farms look like in 2019? Brokers expect that the phosphate rights and investments in the removal of asbestos roofs will have a major impact. What can the dairy farming sector expect?
Brokers expect a larger supply of companies in 2019, which will eventually lead to a price decrease for dairy farms and grassland. Hans Peters, chairman of the Rural and Agricultural Real Estate Section at VBO Makelaar, sees this too: "You can only spend every euro once. Dairy farmers have already spent many of those euros on phosphate rights and investments in the removal of asbestos roofs. At the same time, they have to herds are shrinking, resulting in lower yields."
According to Peters, it is striking that relatively many young entrepreneurs retire early. "Those companies have no successor, but they do have to invest in low-emission techniques, phosphate rights and/or the removal of asbestos roofs. In the long run, they will only ask themselves 1 question: what am I actually doing it for?"
More offer
Peters expects that the companies that will come onto the market in 2019 will be difficult to develop. "It concerns, for example, companies with fewer than 80 cows, a small house plot and high financing." However, the increase in supply will not apply to every region. "In certain areas, the supply will increase less rapidly, because the soil type there can also be used for other crops (besides grass and maize)."
Lourens van der Lelij, a real estate agent in the northeast of the Netherlands, also notices that the growth in the offer differs per region. "In my region, the companies are usually small and land-bound. These companies are almost never offered in their entirety. The land of these companies often goes to other farmers, while the property is sold to private individuals."
He admits that the situation is different nationally. "More and more farmers are getting fed up with the rules in our country; for example, removing asbestos roofs easily costs €30.000 to €40.000. All these factors add up, so I expect that there will be more supply on the land market in 2019."
Less interest
While there is more supply, it is expected that the interest in buying a dairy farm is low. This is partly a result of the land-related rules, which ensure that a company is only allowed to grow under limited conditions: land and phosphate rights have become more important for the company's price. And since rights in particular are expensive, financing capacity is a concern.
Due to the increasing supply and low demand, price pressure is also expected. "A dairy farm with a lot of land will continue to yield enough, but this will become a lot more difficult for companies with a small house plot. Pasture is also becoming increasingly important and more stimulated, so that a small house plot is no longer interesting," says Van der lily.
Figures for 2018
Figures from the Dutch Association of Real Estate Agents and Valuers (NVM) show that fewer companies were indeed sold in the first half of 2018 than in the first half of 2017. However, these figures are somewhat distorted, because the stopper scheme was introduced. As a result, an exceptionally large number of companies were sold.
The fact that fewer sales were made and that the companies were on the market for longer supports expectations only slightly. Still, brokers expect the proverbial straw to overflow. The comparison between the import of the milk quota and the phosphate rights system is therefore quickly made; after the introduction of the milk quota, there was also more supply on the market.
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Anne-Jan Doorn
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