Santa Claus doesn't exist, or does he?

Sustainability, climate, CO2, nitrogen. Everyone's talking about it, but meanwhile, the current pricing of agricultural products is anything but sustainable. From milk to potatoes and from Brussels sprouts to celeriac. The price reductions are piling up, and unfortunately, so are the costs. It seems as if the challenges are constantly increasing. "Complicated," as they say in politics.

That's precisely why it's more important than ever: stay calm, because calm can save you. Keep doing what you're good at: producing high-quality products. You'll have to tighten your belt now more than ever.

Interest discount
Speaking of price discounts. There's no such thing as free money or Santa Claus, but there is an interest discount. How can you get one, besides negotiating sharply? One way is by demonstrating your sustainability practices. And that's precisely where opportunities are being missed. Forgetting to simply explain what you're already doing about it. Not out of reluctance, but because sustainable measures are so commonplace that no one mentions them anymore.

Interest benefits are welcome compensation for the price pressure and cost price on the company. If the market doesn't reap the rewards for your efforts, it's especially helpful if the bank partially compensates. So, it's wise to honestly ask yourself: what sustainable measures have I already taken? And how can I communicate them more clearly?

This doesn't have to be complicated. It can be done with a single sheet of A4 paper outlining what you're already doing and what you plan to do in the coming years. Don't sell yourself short. Banks appreciate a short and clear overview. This can result in an interest rate reduction of 0,2% to sometimes as much as 1%, depending on the arrangement. If you're looking at financing worth a million, you can easily calculate the benefit yourself.

Working capital supplement not necessarily a drama
Given today's market, it's not inconceivable that many entrepreneurs will soon be making additional demands on their financiers. Supplementing working capital may be necessary for the short or perhaps longer term. While this isn't something you're looking forward to, it doesn't have to be a major problem. Consider the company's long-term prospects.

Santa Claus might not exist, but an interest rate reduction that softens the blow of low product prices? It's closer than you think.

Joar van der Velde

Joar van der Velde is a senior relationship manager at Farmers Funding & Advies. He and his wife also own a farm with a holiday park in Herkingen, on the island of Goeree-Overflakkee in South Holland.

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.