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Liquidity position of pig and dairy farming under pressure, arable farming stable

26/07/2018

From the first liquidity monitor for pig farming, it appears that the current account of pig farms in the second quarter of 2018 has deteriorated by 21,000 euros compared with the first quarter, averaging 16,000 euros at the end of June. At the end of November 2017, this average still peaked at 45,000 euros. The decrease was caused by increased feed and manure removal costs and decreased selling prices for fattening pigs and piglets. Expectations for the remainder of 2018 are that, due to an ample supply in the EU, selling prices for fattening pigs and piglets will remain under pressure. The same applies for the liquidity position of pig farmers.

The average current account position of dairy farming in the second quarter of 2018 amounted to 10,800 euros. Compared with the previous quarter, this is a decrease of almost 4,000 euros, which was mainly caused by a lower milk price. Expectations for the coming quarter are that the prolonged drought will affect fodder production and cause additional expenses, which in turn will affect the liquidity position.

At an average level of just below 40,000 euros, the current account position of arable farms in the second quarter is stable. The coming quarters will show how the weather conditions will affect the liquidity position of arable farmers. For instance, the prolonged drought will lead to considerably lower yields for most crops compared with 2017. Farms with full irrigation capacity will be able to somewhat limit a decrease in production. Lower production can be partly compensated by higher prices, since the drought affects Europe as a whole. Whether businesses will actually profit from higher prices also depends on the marketing methods and whether or not there are contractual arrangements.

Wageningen Economic Research's liquidity monitor provides a monthly overview of the development in the current position of agricultural farms and is published each quarter on the Agro and food portal. The main goal of the monitor is to share insights with entrepreneurs and to support them in their operational management. The liquidity monitor is the result of a public-private partnership between Wageningen Economic Research, the ministry of Agriculture, Nature and Food Quality and ABN AMRO. Agrifim's accession to the partnership has led to a liquidity monitor for pig farming for the first time this quarter. More information on current developments of the cash position in dairy farming, pig farming and arable farming can be found via the links to the Agro and food portal below. For the news item on the results, please see the ABN AMRO bulletin on dairy farming, pig farming and arable farming.

Additional information for this item
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Liquiditeitsmonitor
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