Jan Vernooij’s feed silos protrude high above his pigsties. The large cylinders at the back of the yard in Beusichem are usually well filled, but those for wheat and soya are empty.
Until recently, Vernooij fed his pigs wheat, soya, corn kernels, barley, bread flour and a little compound feed. Now they get almost only compound feed. This is due to the sharp rise in grain prices, which are also pushing up the price of alternatives such as soy. Vernooij was lucky that his family business was able to purchase compound feed relatively cheaply a few weeks ago, he says.
The sharp rise in the price of wheat and other grains is hitting Dutch livestock farmers hard. Since Russia’s invasion of Ukraine, wheat has become nearly 50 percent more expensive, according to the financial news agency Bloomberg. Last Friday almost 340 euros was paid for a ton of wheat, almost 20 percent more than at the beginning of the week.
The export of grain from Russia and Ukraine has come to a standstill. The war has made Ukrainian ports unusable. It is an open question whether arable farmers in Ukraine will be able to sow in the future.
Ukraine is considered the breadbasket of Europe. Together with Russia, the country accounts for 30 percent of the world’s grain exports. The scarcity that now arises because trade has come to a standstill is pushing up prices on the world market. Although the Netherlands mainly buys its grain in Germany and France and hardly imports grain from Ukraine, world prices are also pushing up those of Dutch purchases.
Feeding round
The fact that these high prices hit livestock farmers so hard is that feed accounts for 60 to 80 percent of their costs, he said an analysis of Rabobank† Some pig farms have been suffering major losses for weeks as a result.
From behind a dusty computer in a corner of the farm, Jan Vernooij controls the automated food distribution for his 6,800 pigs. The morning feeding round is in full swing. The screen shows that the feed composition has changed drastically. The proportion of compound feed has been increased from 15 to 85 percent. The rest consists of grain maize that the pig farmer grows himself. Vernooij has broken even in recent weeks, he says.
Pig breeder Marcel Merkens from Ingen has long since passed that point. He expects that the expensive feed will cause him a loss of around 400,000 euros on an annual basis.
That comes on top of previous setbacks; last year he was already affected by the shortage of staff in slaughterhouses that depressed his sales, and by the swine fever. The price that the breeder received per piglet fell as a result. “Very likely” he will soon leave the company. He hopes to avoid bankruptcy through the purchase scheme of the government.
According to Helma Lodders, chairman of the sector organization Vee&Logistiek, it will be up or down for many livestock farmers in the coming weeks. “Farmers are faced with an increase in the cost of feed of about 20 to 30 percent. And that is independent of the extra costs for energy and diesel oil. All farmers suffer from this, no one can escape it.”
Farmers’ organization LTO Nederland is trying to map out how many companies are affected by the rising prices. She has conducted a poll among members, a spokesperson said.
In addition to their rising costs, farmers are also concerned about possible food shortages. Economist Roel Jongeneel, affiliated with Wageningen University, nuances this: “Food safety in the Netherlands is shock-resistant. I don’t expect shortages so quickly.”
The farmers are now looking especially anxiously at the sales market, for example at supermarkets. “The costs rise first with the farmer. We now usually have to sell below cost”, explains Vernooij. For a kilo of pork it saves about 18 cents this week. The company sells an average of 500,000 kilos in a week. As “one of the few in the Netherlands”, he does have price agreements in the Albert Heijn chain. These agreements are part of the supermarket’s Beter voor Varken, Natuur & Boer program, which has developed its own long-term pricing system. About 3 percent of Dutch pig farmers is a member, confirms Albert Heijn.
For Vernooij, these agreements mean that the supermarket will partially compensate his company for feed and electricity prices. But for the farmers outside the program, the losses of recent weeks are for their own account. The livestock farmers therefore hope that the buyers will eventually pay the cost price of their meat production.