News Warm remediation
Buying a million pig rights is not feasible
Plans for the 'warm remediation' in pig farming will be revealed soon. Meanwhile, rumors are already circulating that the Ministry of Agriculture, Nature and Food Quality (LNV) wants to buy more than 125 million pig rights with an amount of €1 million.
Of the total budget (€200 million) for the so-called warm remediation, €125 million would be spent on buying pig rights. The remaining amount (€75 million) would go to sector innovation, as fell in early June New harvest to read.
At the beginning of June, pig rights were traded for a price of approximately €115 per right (South region). With the amount of €125 million, more than 1 million pig rights could be bought on paper, taking into account demolition and remediation costs. In the market, however, the feasibility of this calculation is strongly questioned by some.
Rights compensation not enough
According to Mark van den Brand of rights mediation company Agripunt, this calculation cannot be done and an average pig farmer cannot stop at only a rights compensation. Van den Brand: "When a pig farmer stops, the bank will also have to be repaid." A realistic amount must also be set aside as a demolition fee for the stables in the yard.
According to Van den Brand, far too little account has been taken of these aspects in the calculations outlined; according to him, the amount is no more than a compensation of rights. "However, a pig farmer cannot stop for rights money," says Van den Brand. He therefore estimates that the enthusiasm to participate in the warm remediation will probably be very limited if rights are paid.
"In that case, a pig farmer would probably prefer to transfer his rights to a fellow pig farmer." The willingness to participate in the warm remediation will probably only be released with a rights fee plus a substantial scrapping fee, the rights broker expects.
Depending on the duration
Jan Pijnenburg, advisor at DLV Advies, thinks that a young entrepreneur with a profitable pig farm will indeed not be enthusiastic about stopping the activities for rights money. However, not every entrepreneur is young and has a profitable pig farm. "Some people need a last push and then a rights fee may be sufficient", Pijnenburg estimates.
It remains to be seen whether €125 million is enough to buy up 1 million pig places, according to Pijnenburg. "In theory it is possible, although 1 million pig rights is quite a lot in practice." The degree of registrations will also depend, according to Pijnenburg, on how long the termination scheme, if any, will be open.
Historically, an average of 3% of pig farmers quit. There are years when hardly any pig farmers stopped, but a few years later they caught up again. Fewer companies have stopped in recent years, so this percentage may be increased again to approximately 7% in the coming years with the help of a scheme. But everything remains dependent on the additional conditions, the DLV advisor expects.
Broad(er) package of measures
Hans Peters of Peters Vastgoed also states that a broader package of measures is needed to persuade pig farmers to participate in a termination scheme. Peters is thinking of cost-effective demolition subsidies or the so-called space-for-space scheme. "Pig farmers already have the choice to stop for rights money," says Peters.
Like the other rights brokers, Peters also notes that the rights market has meanwhile reacted to the news that pig rights may be bought up. Thus, the price is rising in all areas. Those who still want to buy rights this year realize, according to Peters, that it just has to happen now. However, the rumor has led sellers to demand higher prices, sometimes creating gaps between bid and ask prices.
Provided clarity quickly
Both the buying and selling parties benefit from clarity, let the brokers know. Clarity is probably coming soon; agriculture minister Schouten has promised to reveal the plans for the 'warm remediation' before the summer recess. Then it should become clear how deep the ministry wants to cut into the Dutch pig population.
Wouter Job
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