Agriculture has a lot to worry about, especially in livestock farming, but also in arable farming there is the necessary uncertainty about plans by the national government and Europe. And this is quite apart from the other turmoil that is going on in the world. However, this has not yet had a major impact on incomes.
Incomes in dairy farming are even 'historically' high. It is partly a matter of luck, but keeping a cool head as an entrepreneur definitely pays off, agrees researcher Roel Jongeneel of Wageningen Economic Research (photo) after the presentation of the income estimate for agriculture and horticulture. The nitrogen discussion, with all the associated concerns, has so far not hit dairy farmers hard in their wallets; the average livestock farmer gained €70.000 compared to last year. Things went even better in arable farming.
What to invest in?
In the slightly longer term, this year's prosperity could pose a problem, Jongeneel's colleague Harold van der Meulen knows. Because where should you invest this year's earnings? Perhaps buying additional land is an option, but stable adjustments become difficult, because then the whole uncertainty surrounding permits comes into play. Making additional repayments at the bank may not be the best option, because it is not certain whether that money can then be activated for the company again. There is therefore a good chance that a large part of the money will go 'unused' to the tax authorities.
An entrepreneur cannot influence everything, but how a farmer does business also depends very much on what type of entrepreneur he or she is. In all sectors - whether things are going well or poorly on average - there is a group of entrepreneurs who are coping better than average. WUR does not yet have a fixed profile of this group, but additional research into them will certainly be conducted in the coming years, Van der Meulen promises.
Effect plans are always close by
According to Jongeneel, it is difficult to say what the coming years will bring. The uncertainty hanging over agriculture did not have the same effect in all areas. The Russian invasion of Ukraine mainly caused higher energy costs, but also pushed up many agricultural commodity prices. It can be assumed that the effects of this will decrease further next year, but that is not certain. If concrete agreements are made about nitrogen and nature next year, this will have a greater share in the uncertainty that is increasingly affecting agriculture, but nothing is yet certain about this either. The purchase of companies and emission rights for nitrogen and nature is not really going smoothly. The government is also bound by strict state aid rules. Viewed in this way, the purchase of rights by market parties from outside agriculture may not be such a bad solution, Jongeel believes.
The total number of uncertainties remains greater
Global political uncertainty will also affect market prices and therefore farmers' incomes next year. Still, a range of prices can be expected to fall next year. It can already be seen that the dairy market is declining. This will also result in lower milk prices for the farmer. However, the milk price is not expected to return to the level of recent years. All costs have risen too much for that. What it will become remains uncertain and – entirely in line with the changed circumstances – more uncertain than in the previous five to ten years.