Covid-19 causes average Dutch farm business income to decline

THE HAGUE, Netherlands: Average farm business income in the Netherlands declined in 2020 with clear signs of financial stress among cut flower growers, pig and dairy farmers. The disruptive impacts of the Covid-19 pandemic on the Dutch agricultural system have been broad and varied. Bedding plant and potted plant growers achieved a positive return on their activities as people spend more time at home and taking a considerable interest in decoration, home styling and gardening.

Wageningen Economic Research (WER), formerly known as LEI, in collaboration with Dutch statistics office CBS, on Thursday 17 December updated their farm income forecast for 2020. According to the agency, average Dutch farm business income was €54,000 in 2020,  that is a €20,000 lower income compared to 2019. The figures represent the financial performance of what WER describes as ‘the unpaid annual work unit’ or the financial return to all unpaid labour on the farms (farmers, their spouses and family workers).

A key influencing factor was the outbreak of coronavirus pandemic. With restaurants, hotels, schools and event planners closed, many of the country’s farms were dumping milk, eggs and cut flowers, causing an overall 2 per cent drop in income per farm.

Covid-19 creates many losers and some winners. The winners primarily benefited from increased demand for agricultural product which consumers perceive as healthy for body and soul. As such, goat farmers, growers of trees, fruits, field-grown vegetables, bedding plants and indoor plants experienced higher revenues as a result of Covid-19.

Greenhouse horticulture is known for being one of the driving force behind Dutch farm income, but the overall picture for this sector is mixed. Overall, WER estimates the average income for Dutch greenhouse growers €180,000, which represents a €20,000 drop from last year.

However, incomes tend to fluctuate. On potted and bedding plants nurseries, average incomes were €181,000, which means a €50,000 increase from last year. This rise in income is primarily due to operating costs that decreased more rapidly than yields. In potted plants, Covid-19 shocked demand  leading to lower revenues, partially offset by lower operating costs due to cheaper energy and a reduction in newly planted crops.

In calculating incomes, WER stresses it has factored in the financial aid and wage subsidies Covid-19 battered growers received from the government.  Average incomes of Dutch bedding plant growers increased as under lockdown people took a greater interest in gardening.

In cut flowers, the picture is bleaker. On Dutch cut flower nurseries, average incomes are €122,000, which represents a €54,000 drop in income from 2019. The unprecedented global health crisis forced growers to plough many hectares of flowers back into the soil. The government provided assistance in the form of financial stimulus packages which brought some relief but were largely insufficient to compensate for all losses. WER highlights how flowers shops and garden centres across Europe were forced to close their business, resulting in smaller revenues from sales, while the growers’operating costs reduced.

WER anticipates average incomes of greenhouse vegetable growers to be lower as number one crop tomato experienced increasingly fierce competition from Spain and Morocco. The closing of restaurants left tomato growers with fewer buyers. At the same time, the appetite and price for Dutch greenhouse grown bell peppers continued to raise, while revenues from electricity sales lagged behind.

In its statistical notice, WER provided some positive news with regards to the Dutch nursery stock sector, which saw a seven per cent increase in average incomes (€103,000).

Another notable conclusion from the survey, include a 9 per cent decrease in average income  for Dutch bulb farms primarily caused by a lily market in the doldrums.

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