News Liquidity Monitor
Sow farmers further in the red again
2018 was not an easy year for pig farmers, especially for sow farmers. For example, the current account of the average sow farmer declined by more than €2018 in the course of 65.000. This is shown by the liquidity monitor of ABN Amro and Wageningen Economic Research (WUR).
The current account position of Dutch pig farms decreased by €2018 in 35.700, bringing the current account of the average Dutch pig farmers to a negative balance of €1.500. At the beginning of 2018, this was still €32.200.
The real situation is even more negative, according to the bank, because some pig farmers have transferred the money from the savings account to the current account. The €0 barrier was broken in December. One of the reasons for this was the rising feed price; this increased by 6% over the full year. This has caused the cost to rise significantly.
Sow farmers show greatest shrinkage
Due to the increased supply and the lagging demand for piglets, the piglet price in 2018 was on average 30% lower than in 2017. This has also cut the yields of the sow farmers, with the result that they are faced with a liquidity shortage. The average current account of a sow farmer is now €28.000 in the minus.
They compensate for this deficit by, among other things, applying for more credit and loans. In addition, they have cut back on the repayment of loans and they have taken more money from the savings account. It is striking that more money has been transferred to the private account.
Grass a little greener at meat pig farmers
The cash position of Dutch fattening pig farmers shows a smaller decline than that of sow farmers. The fattening pig farmers will lose €2018 in 7.000, resulting in a current account position of €12.700.
The traditional recovery in the second half of the year largely failed to materialize this year. The meat price was not (extremely) high, but showed a relatively stable picture. In the second quarter of 2018 in particular, the current account position of fattening pig farmers decreased.
many stoppers
ABN Amro expects many pig farmers to throw in the towel in 2019, including many small sow farmers. This will have a positive effect on the overcrowded fertilizer market. In addition, 2019 is expected to offer recovery, with prices moving towards the long-term average.
There are also several factors at play, the outcome of which is difficult to predict. So takes African swine fever carries a great deal of risk and creates uncertainty in the sector. On the other hand, the animal disease can provide new markets in China.
Tim Roetman
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