The farmer is the trump card in the city-state of the Netherlands

The number of farms in the Netherlands halves every 25 years. Until recently, animal numbers remained reasonably stable, because a farmer who stopped was often taken over by 'the neighbor'. However, the model of scaling up is quickly reaching its limits, forcing agricultural suppliers and buyers to anticipate shrinkage.

Animal feed companies, milk processors and slaughterhouses have set up impressive production equipment in recent decades, for which no expense has been spared. But not all that glitters is gold. The stainless steel in the factories is based on the current size of the agricultural sector and this is where the problem lies: animal numbers are under pressure. The livestock farming sectors in particular are concerned about the lingering nitrogen issue, which is leading to a decline in the livestock population. And apart from the nitrogen policy, the question remains whether there are enough successors to absorb the aging population in the sector.

aging
According to a study by Agridirect, the average Dutch farmer was 2022 years old at the end of 58. In principle, you continue farming for another 10 years and then hang up your boots or hand over the whole thing. This takeover is by no means self-evident. On paper, dairy farms have the most successors available, but even then this is only 61%. The processing dairy industry and supplying feed companies are already seeing the storm and are trying with all their might to retain permanent farmers to prevent work from drying up. 

The times when milk processors applied a membership freeze are now behind us. In fact, the hunt for the farmer has intensified in recent years. At almost every milk processor in the Netherlands, the door is wide open for new members or suppliers. From Farmel to FrieslandCampina and all the surrounding flavors. A German party has also recently started collecting milk in our country, while Dutch milk processors in turn are focusing on Germany and Belgium. In the city-state of the Netherlands, the permanent dairy farm has become a sought-after object.

Triangle London, Paris and Berlin
Whether farming continues to be good in our country is of course another matter. The increasingly strict laws and regulations are a concern, as are the high prices for agricultural land. This is an obstacle to business development, especially for non-land-based dairy farmers. This means that abroad continues to beckon, although you have to wonder whether the grass is actually greener there. Canada is often looked at as the Valhalla for dairy farmers. With an almost infinite agricultural area, farming is undoubtedly good, but this advantage also has a major disadvantage. You are far away from the sales market. This is in contrast to the Netherlands; which is located in the middle of the prosperous triangle of London, Paris and Berlin, where dairy is anchored in the food culture. In other words: the consumer is just around the corner. Not entirely unimportant in times when transport distances are under fire and local production is increasingly valued.  

Industry is vulnerable
Under the economic laws of supply and demand, the degree of scarcity determines the price. These also apply to the dairy market. In 2022, the milk price unexpectedly rose to above €60 per 100 kilos, while €50 was considered unfeasible in the past. Scarcity turned out to be the magic word. In the meantime, €40 is seen as a disappointing level, partly because cost inflation is taking hold. Processors can no longer afford a mediocre milk price, because this inevitably leads to an outflow of suppliers. Conversely, this principle applies to feed companies, where margins are under pressure to prevent customer loss. It is not so much an individual farmer, but the processing and supply industry in particular that is vulnerable to a shrinking livestock population. This makes the permanent jack a popular trump card that land entrants are happy to have in their pocket to continue playing the game. 

This column was written in the run-up to the Cattle & Mechanization trade days in Hardenberg that take place on October 24, 25 and 26. Boerenbusiness is associated with this event as a media partner. Organized on Tuesday, October 24 at 17:00 PM Boerenbusiness a live podcast in the Klepperzaal with the theme: 'The Netherlands, dairy country in 2035'. Together with editor-in-chief Eric de Lijster, Wouter Baan will discuss this with Arjan Schimmel (chairman of ZuivelNL), Rik Loeters (director of Trigona Dairy Trade and foreman BBB-Gelderland) and Marijn Dekkers (sector manager of dairy farming at Rabobank). 

Wouter Job

Wouter Baan is editor-in-chief of Boerenbusiness and Food Business. He also closely follows the raw materials markets and focuses on animal proteins such as dairy and meat. He regularly interviews leaders from the agricultural sector and the food world.

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