Sow farmer must tap buffers

The returns in pig farming are under pressure. This is mainly due to declining revenues. In the first half of 2018, the current account balance of pig farms decreased by €21.000 to almost €16.000. ABN Amro makes this known.

ABN Amro relies on the liquidity monitor, which shows that the knife cuts both ways for Dutch pig farmers. While the pigs and piglets yield less, feed and manure prices are rising. The monitor shows that the current account on pig farms touched a record level of €2 last November.

ABN Amro signals that pig farms have repaid slightly more in the past quarter, compared to the previous quarter. In addition, less was invested and more saved and more was transferred to private.

Tapping into buffers 
The liquidity position on pig farms can vary considerably in practice, due to the differences between sow, finisher and mixed farms. If we look more specifically at the figures, it appears that the returns of sow farmers in particular are under pressure. Current accounts on these companies have been negative since March and have fallen by €24.000 in recent months. This equates to a decrease of approximately €30 per sow. The financial buffers that in 2017 have been built up are now urgently needed, according to the bank.

Fattening pig farms may benefit from the declining piglet price† This compensates for the low pig price, which can dampen the feed profit. Whether this will be enough for a cash flow improvement in the second half of 2018 remains to be seen. This is usually the case, but the bank still has a hand in hand. This is probably because the outlook for the pig market is bleak, while the manure disposal costs likely to remain high.

Liquidity Monitor
The liquidity monitor was created through a collaboration between ABN Amro, Wageningen Economic Research, the Ministry of Agriculture, Nature and Food Quality and Agrifirm.

Wouter Job

Wouter Baan is Head of Meat & Dairy at BoerenbusinessAt DCA Market Intelligence, he focuses on dairy, pork, and meat markets. He also monitors (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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