Resilience in the agricultural sector despite challenges

The Dutch agricultural and horticultural sector faces challenges, but the financial outlook remains positive. After a strong 2023, prices remain stable and costs are lower despite uncertainties due to wet weather. This reflects the sector's resilience, although volumes are expected to decline slightly, according to ABN AMRO.

Agricultural and horticultural volumes are under pressure due to several factors. The supply of eggs, broiler chickens, and pork is tight. The transition to the Beter Leven label and buyout schemes have led to a decline in the numbers of broiler chickens and pigs. Persistent rain has delayed sowing and planting, negatively impacting arable farming volumes. Despite these challenges, volumes in lit cultivation are increasing due to lower energy costs. ABN AMRO predicts a 1.5 percent volume reduction this year and 3 percent next year.

Prices and costs

The combination of lower supply and high demand keeps the prices of agricultural products at a high level. Milk prices are expected to rise slightly due to higher demand. Costs for fertilizer and feed have decreased, contributing to lower production costs. However, higher interest rates and rising costs due to wet weather and the end of derogation for manure disposal are creating financial pressure.

Labor and succession

The agricultural sector faces challenges in terms of labor and succession. Approximately 180,000 people are employed permanently in the sector, with a significant share being family members of the farm owners. During peak periods, around 105,000 workers, mainly migrants, are hired. The sector struggles with an aging workforce and competition for labor from Central and Eastern European countries. Uncertainties surrounding legislation and societal issues make it difficult to find staff and successors.

Future prospects and sustainability

ABN AMRO expects nitrogen emissions in agriculture to be halved within ten years through buyouts, innovation, and management measures. This will result in a reduction in the pig and dairy cattle population. Simultaneously, the area for organic and extensive farming is expected to increase. Farmers will take on a broader role, not only producing food but also managing nature and providing energy. The shift from animal to plant proteins offers opportunities for arable farmers. Certifications and payments for green and blue services can contribute to the sustainability of the food system, with the new government allocating 500 million euros annually for these initiatives.

Abnamro.nl