'Dairy farmer must keep a close eye on costs'

What kind of year have dairy farmers had?
"Due to corona and higher feed costs, income fell by €6.000 to €43.000 per Unpaid Working Year Unit (AJE), making income below the average in agriculture, which is estimated at €54.000. The corona crisis was not the only cause of the declining yields. The valuation of milk fat was already under pressure at the beginning of 2020. The decline in income could at the same time be compensated by a growth in size. The average number of cows increased in 2020 for the first time in years from 100 to 105 cows."

What do you expect the feed price to do in 2021?
"We expect higher concentrate prices in 2021 due to rising raw material prices. This could cause margin pressure, especially for companies on sandy soils, especially because the roughage position on many companies is not sustainable. For the medium term, based on the European Commission's outlook, we expect: less pressure on feed prices. This is due to the fact that animal numbers in Northwestern Europe will probably decline somewhat."

And the milk prices?
"As far as the benefits in the form of milk prices are concerned, there is uncertainty in the market due to corona. Due to the lockdowns, sales towards the out-of-home segment, which usually provides the most added value, have fallen. There are also concerns about the effects of corona on the economy and therefore the purchasing power of consumers. However, expectations in the second wave are less negative than this spring. This is partly because exports to China are picking up again."

The milk price in 2020 was even lower than 30 years ago, CBS concluded based on the income estimate. What can be done about that?
"This is a challenge for the Dutch dairy sector to better valorize the milk, but that is of course easy to say. After all, we produce largely for the international market. The lagging milk price forces dairy farmers to keep a close eye on costs. And there There is still profit to be made for many entrepreneurs, because the mutual differences in benefits between the companies were again large last year. Also look critically at the return on investments. Another option is to generate revenue in addition to the sale of milk and dairy cattle. At WUR, we are working on the Delta Plan for Biodiversity Restoration and we are investigating expansion options, such as the provision of ecosystem services. This offers possibilities, but is still in its infancy."