'Dairy farmers' turnover will decline 15 percent this year'

Most dairy farms in the Netherlands are breaking even with the current price formation, Rabobank says in a new publication with sector forecasts. On an annual basis, turnover will fall by 15% this year, according to sector specialists. It is different for agriculture. There, 'reasonable/good business results' are expected.

Rabobank expects milk prices to fall slightly (further) in the coming months. No major change is visible on the supply or demand side, the sector specialists write. "In terms of milk supply, we see a stabilization in the US and it will be important for the coming months how the milk season in Oceania will start. Price inflation and the associated sales volumes are important for the demand side. Consumer prices will remain at a high level for the time being. demand is expected to be limited in the coming months." For land-based livestock farming, the bank expects a year-on-year drop in turnover of 15% in 2023 (see figure). There will be some recovery in 2024, when a turnover increase of 3% is expected compared to this year. "Most dairy farms in the Netherlands are breaking even with the current price formation. We do not foresee large margins," according to the sector forecast.

Arable
The arable farming sector paints a different picture. Sales are not growing, but they are not decreasing either. “Expected revenues are at a level comparable to 2022, which was also a year of above-average revenues,” the bank said. For 2024, a slight annualized decline in turnover of 0,1% is expected. Due to the changeable weather conditions in the growing season (wet spring, late sowing and planting season, dry period followed by a lot of precipitation), the sector specialists expect harvest volumes to be below average. However, the pricing of various arable products is above average. "This allows entrepreneurs to discount the increased costs (fuel, labour, seed and propagating material, fertilization, etc.). All in all, these factors are expected to result in reasonable/good business results for the arable farmers."

Pigs
As far as pig farms are concerned, according to Rabobank, the mood is positive despite falling market prices. "The supply is relatively tight and will decrease further due to a decrease in production in Europe. The average meat price over the first seven months of 2023 is more than 40% higher than in 2022. There is also a positive trend for the rest of the year market expectation." In this sector, the bank expects a 2023% increase in turnover for the whole of 35. Next year, the pig sector is expected to see a 10% year-on-year decline.

Contraction of added value in the agricultural sector
In addition to the turnover forecasts for the subsectors, Rabobank also looks at the added value ('the turnover minus the value of all (purchased) semi-finished products and services that are processed in the production') of the main sectors. In the second quarter of this year, the added value of many sectors declined. The added value of agriculture shrank by no less than 4,1% compared to the first quarter. Partly because of this, the bank expects the agricultural sector to shrink by an average of 2023% in 1,3 compared to last year. Last year there was a contraction of 2,9%. An increase in added value of 2024% is expected for 1,8.

Linda van Eekeres

Linda van Eekeres is co-writing editor-in-chief. She mainly focuses on macro-economic developments and the influence of politics on the agricultural sector.

l.vaneekeres@boerenbusiness. Nl

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