News Land market
High land price forces dairy farmer to lease
Dairy farmers own less land due to rising land prices and are using more and more land through lease, according to the quarterly publication of Alfa Accountants.
In the quarterly publication 'Figures that speak for the dairy farming sector', the accountancy firm keeps track of the rolling annual figures up to and including the first quarter of this year. This shows that the percentage of land owned by the average dairy farm in Alfa's customer base has decreased.
The average number of hectares that dairy farmers have in use this year amounts to 66 hectares, an increase of 1,4 hectares. The portion owned by this has declined. Last year the ownership percentage was still 57%, this year it has dropped to 55,5%. On average, the dairy farmer owns 36,6 hectares, while the share of leased land has increased by 1,7 hectares.
According to Hans de Bie, Food & Agri market manager at Alfa Accountants, this has to do with rising land prices. "Farmers are going to think more about whether these land prices are still justified to invest. If land prices remain so high, it will no longer be financeable because then the risks are too great."
Forced leases
The fluctuating milk price is reflected in the vulnerability of dairy farms. Entrepreneurs have to tighten variable costs or, for example, postpone replacement investments. There is little control over the fixed cost items. These matters have to do with the limitation of investment space, which in turn ensures that leased land is a forced solution.
Financial space
The figures also show that in the last 4 quarters dairy farms have spent €1,35 less per 100 kilos of milk than in the previous year. On an average farm this amounts to a saving of €15.294, which is mainly due to the decreasing feed costs of €0,94 per 100 kilos of milk.
Animal health costs also offer financial scope, but there are major differences between companies. On average, the costs amount to €13.922 per year. However, the top 25% of companies with an average cost pattern of €7.440 end up significantly lower in health costs.
Chanti Oussoren
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