Dairy farmer is about to break even

The returns in dairy farming are almost equal to the cost price, according to the Liquidity Monitor published by ABN-Amro and Wageningen Economic Research (WUR). However, rain is urgently needed to prevent drought damage.

Because various dairy processors in recent months have payout prizes decreased, the liquidity of dairy farms has decreased by €7.000. At the end of the second quarter, a dairy farmer was in the red on average €1.900. In addition to the lower milk price, the second quarter is usually an expensive period for dairy farmers, due to (outsourced) land work and manure disposal costs.

Nevertheless, ABN Amro and WUR consider the average decrease of €25 per cow to be small. In general, dairy farmers break even. Compared to the same period last year, the bank does note declining investments and an increase in payment arrears.

Drought can have consequences
So far, the drought has not affected the cash position of dairy farms. Due to good grass harvests earlier this year, extra forage purchases are often not necessary. There are, however, considerable stock differences per company.

When there is no rain and grass growth stops, this can cause problems on some dairy farms. On balance, cash positions are expected to remain relatively stable in the coming months.

Click here to view the monitor. 

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness. He also focuses on dairy, pig and meat markets. He also follows (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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