Wednesday, May 22, 2024

Tougher times for farmers in Haugalandet


Of thomas | 11.05.2024 07:32:07

Agriculture: In 2021 and 2022, the farming industry in Haugalandet experienced a solid increase in contribution margin, but last year it was tougher. After the “corona market” with closed borders ended, profits fell. At the same time, costs for feed and electricity skyrocketed, and so did interest rates. This is written by the local newspaper Grannar.

Challenging times
Andreas Lundegård from SpareBank 1 SR-Bank Landbruk observes that 2023 looks more challenging than expected. Analyzes of around 600-800 farms in Haugalandet show that especially forage-based productions such as dairy and cattle suffer from high costs. The coverage contribution for dairy cows has fallen from NOK 39,000 to NOK 30,000 per cow, a decrease of 22 per cent, even though the income per liter of milk was stable. Dairy cow production, which includes beef, has seen profits halved, with the contribution margin per cow falling from NOK 18,000 to below NOK 9,000.

Lundegård emphasizes that more beef is produced than there is demand for, which has contributed to the reduced coverage contributions. A subsidy week of NOK 5,000 per animal has only partially compensated for this loss.

Coverage contribution per sheep has fallen by NOK 400
The sheep farmers are also facing challenges, with the contribution per sheep falling from NOK 1,060 to NOK 650. Although the subsidy to sheep farmers has increased to NOK 2,350 per sheep, the increase in costs still constitutes a significant burden. In contrast to sheep and suckling cows, pig production has remained stable with a contribution margin that touches the record level from 2022 of NOK 601 per pig, despite market fluctuations.

Many farmers feel the pressure from delayed subsidy payments, which affects liquidity. Especially newly established and those who have invested in free-standing barns feel the effect of higher interest costs. For example, an interest rate increase of four percent for a loan of NOK 10 million can result in NOK 400,000 in increased interest expenses. Lundegård, with 25 years’ experience as an economic advisor in agriculture, warns that some farmers may risk forced sales.

Important to maintain stability
Although the situation in 2023 has been challenging, Lundegård sees improvements in 2024. The Innovation Norway pot for new dairy barns was used up early in the year, and there is great demand for agricultural properties. It is also positive that the prices of fertilizer and energy have fallen, and concentrate prices are expected to be reduced by 10-15 per cent. A sensible farming deal for 2023 is also in place, and May 2024 could bring further improvements. For the farming industry, it is now important to restore the stability from before 2023 for a stronger belief in the future.


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