ABN Amro: 'Cost price kills dairy farmer'

ABN Amro suspects that the payment arrears of the dairy farmers are increasing because the milk price does not cover the costs. In the third quarter of the year, liquidity on dairy farms deteriorated by an average of €13.000, which amounts to €130 per cow.

This is apparent from the liquidity monitor that the bank, together with Wageningen Economic Research, publishes every quarter. At the end of the third quarter, dairy farmers were on average €15.300 in the red. The declining liquidity is mainly due to the fact that costs are higher than the average milk price (approximately €35 per 100 kilos). The cost price has gradually increased in recent years and that is now 'nailing' dairy farmers.

The dry summer of 2019 does not (yet) have any adverse effects. Since a lot of grass has been harvested in the spring, most companies do not have to buy extra roughage and concentrates. However, extra costs have been incurred for irrigation in recent months.

No increase in milk price
ABN Amro expects the payment of payment entitlements (in December) to be a welcome addition. This is because no serious increase in the milk price is expected for the time being and the costs of roughage (including silage maize) are probably above average.

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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