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Netherlands: Lower farm income due to less dairy cattle and dry summer

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Staff Writer | Wednesday December 19, 2018 5:41AM ET
Netherlands cows
Europe   Agricultural income has been under pressure

Revenues in the agricultural sector have dropped this year in the Netherlands.


In comparison with 2017, agricultural income declined by almost 11 percent.

After a good year for farmers in 2017, with agricultural income exceeding the 1995 level for the second time in more than two decades, income declined across a broad front.

Agricultural income per annual work unit fell below that level again in 2018.

This is evident from an initial estimate conducted by CBS and Wageningen Economic Research.

Agricultural income has been under pressure throughout the past two decades. This is related to price developments of agricultural products, rising supply on the world market and increased input costs of such products as animal feeds and natural gas.

Between 1995 and 2018, total agricultural output rose by 25 percent, coinciding with a 5-percent decline in total agricultural income.

In 2018, total agricultural output volume was 1.4 percent down on the previous year.

The lower level of sales in arable farming and horticulture was partly due to poor harvests as a result of extreme drought and exceptionally high temperatures throughout the Netherlands.

Output declined in the livestock sector as well. Slightly increased output prices compensated somewhat for the lower production value, resulting in final agricultural output at only around 1 percent below the level of 2017. The lower production value had a downward effect on revenues, partly exacerbated by a 3-percent rise in the value of consumption over the same period.

Increased prices of animal feed and seed varieties were the predominant factor in the higher agricultural input costs this year as compared to last year. Likewise, prices of natural gas were up year-on-year, whereas the cost of pesticides fell.

The value of livestock production declined in 2018, after an upward trend in 2017. Output in the livestock sector declined by around 1 percent, while average output prices declined by 5 percent relative to the previous year. Almost all vital livestock products went down in price.

The livestock sector also had a higher supply to slaughterhouses of bovine animals. The dairy herd was reduced on account of the introduction of a phosphate reduction plan for the dairy sector. Due to the smaller dairy herd, milk production fell by over 2 percent.

In 2018, the price of pigs dropped by around 12 percent, ending at the same level as two years previously.

There was considerable demand from Asia for pork in 2017, but demand fell in 2018. Pig production is good for roughly 20 percent of total output in the livestock sector.

Table egg production increased by 4 percent. There was loss of production volume in 2017 as a result of the Fipronil crisis which occurred during the third quarter. In 2018, prices of table eggs were again in decline.

In the Netherlands, output in arable farming is greatly affected by the largest sector, that of flowers and plants. Their production value, which is good for almost half of the total production value in the plant sector, was at similar levels as one year previously. Relatively poor results were seen in cut flower production, whereas plant production improved year-on-year.

Flower bulb growers saw a disappointing harvest, not merely on account of the drought; the cold spring and hot summer contributed to poor growing conditions as well.

Arable farmers had lower yields this year as a result of extreme drought and exceptionally high temperatures around the country. Fewer potatoes were harvested in comparison with 2017. Harvest yields of onions and cut maize were far below 2017 levels. The short supply drove up the prices of most plant products to much higher levels year-on-year.

In horticulture, greenhouse vegetables suffered from the drought as well. Not only did yields fall below expectations, but the quality of the vegetables was poorer as well. Apple and pear harvests were not as much affected by the drought in general as the trees were given extra water.

This year sugar beet production was 13 percent below the level in 2017. The lower yield was related to this year’s weather conditions. Furthermore, last year’s yields were very high as the sugar quota was abolished.

 

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