News Liquidity Monitor
Liquidity dairy farmers will increase in 2019
In the first quarter of 2019, the current account position of dairy farms rose sharply. This is striking, because milk prices are not particularly high at the moment. This is apparent from the liquidity monitor of ABN Amro and Wageningen Economic Research.
The current account position of dairy farms averaged €7.000 at the end of March, an increase of €10.600 compared to the end of 2018. Liquidity received a boost, especially in the first quarter of 2019, as dairy farmers received premiums on the previous year (for sustainability and grazing).
Various dairy farms in the Netherlands saw the current account position climb out of a trough in six months. In October, an average dairy farm was down by €13.000. This means that the liquidity of a dairy farmer has increased by about €20.000 in just under six months.
A lot of uncertainty
According to ABN Amro, it is very difficult to make a prediction for the coming period, partly because the effect of the extreme drought in 2018 is not yet clear. Last winter and the first months of the year were also relatively dry. The bank expects that this could lead to a roughage shortage. On the other hand, intervention stocks of milk powder have almost run out, which is certainly not bad news for dairy farms.
Tim Roetman
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