Dairy farmer has hardly any investment space

With the current milk price, the average dairy farm in the Netherlands is just barely covering its costs, but ABN Amro expects a rising return for the coming months. 

This is evident from the liquidity monitor that the bank publishes every quarter, together with Wageningen Economic Research (WUR). At the end of 2019, dairy farmers were on average €8.000 in the red. This position is €700 lower than at the end of 2018. Many companies have partially or fully supplemented the generic discount on phosphate rights from the cash flow. This partly explains the tight liquidity development.

The milk price (including bonuses) was slightly higher over the whole of 2019 than in 2018. To be precise, about 37 cents per kilo of milk. According to the bank, this is not enough. As a result, there is little room for investment in, for example, land, growth or sustainability. 

Milk price improvement
There may be some relief, because the bank expects an improvement in liquidity on dairy farms in the coming months. Many companies have already purchased extra (rough) feed after last summer's drought. In addition, expenditure is traditionally lower in the winter months. It is also expected that the milk price will improve in the coming months, provided no incidents occur. This is because the dairy market is developing favourably.

Chanti Oussoren

Editor at Boerenbusiness who studies the dairy, pig (meat) and feed markets.

c.oussoren@boerenbusiness. Nl

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