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Trying times for German farmers

Willingness to invest declines significantly

In addition to tight liquidity, unresolved political issues and challenges surrounding agricultural production make it difficult for farms to plan for the future.

In many regions, the prospects for the 2018 harvest are very poor. In the coming months, the effects of the heat and drought of the summer will place heavy financial burdens farmers, particularly on those specialising in arable farming. Furthermore, forage farmers will also have to brace for rising input costs.

Fodder supply is getting tight on many farms. After low milk prices have already caused declines in liquidity in recent years, dairy farms are yet again faced with new major financial challenges. The cries for help from the government are becoming increasingly louder.

The tight financial situation is prompting many farms to put planned investments on hold for the time being. According to the Agricultural Business Barometer, only 25 per cent of farmers plan to invest within the next six months, compared to 31 per cent a year ago. Additionally, the volume of planned investments is also noticeably lower (minus 20 per cent). Compared to 2013 and 2014 when the sector was particularly keen to invest, the planned capital expenditure has thus almost halved. The current reluctance to invest particularly affects the core areas of agriculture, namely investments in commercial buildings as well as machinery and equipment.

But tight liquidity is not the only reason for the current dire sentiment in the agricultural sector. In addition, pessimists are concerned about unresolved political issues and challenges surrounding agricultural production. With respect to a future that is currently extremely difficult for farmers to predict, some of the most pressing topics are livestock farming strategies, the fertiliser ordinance, future strategies of arable farming as well as digitisation and grid expansion.

For detailed figures on the current index of the Agricultural Business Barometer, the state of liquidity, willingness to invest and the planned volume of investments as well as other important factors, please read the thorough report by the German Farmers’ Federation DBV.

 

The Agricultural Business and Investment Barometer

is calculated quarterly in a representative survey on behalf of the German Farmers’ Federation DBV, the VDMA Agricultural Machinery Association, and the Landwirtschaftliche Rentenbank. In June 2018, Produkt + Markt interviewed about 1,000 farmers and agricultural contractors for the current circuit.

 

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