The latest positive trends in the economic gains for agriculture continue into 2012 with better earnings, increasing production and increasing investments. But farmers experience to a greater degree restrictions to an increased production.
Four out of ten farmers expect to increase production and every 4th farmer expects to increase investments in 2012. Likewise every 4th farmer expects that they will earn more in 2012.
This is indicated by the farmers barometer, a 6 monthly survey a carried out by the Knowledge Centre for Agriculture.
- The farmers barometer looked into 2012 for the first time, and it looks positive, says Klaus Kaiser, business economic leader at the Knowledge Centre.
Especially expectations to an increasing investment is a sure sign that confidence in the future is returning. And the large farming businesses are ahead – here nearly every 3rd farmer expects to increase investments by more than 25% in 2012.
2010 a staging post
After 2 very difficult years the economy at the farm level began to correct itself during 2010 and the study indicates that farmers expect the economic improvement to continue.
- 2010 was only a staging post on the road to continued improvement in 2011 and 2012. Many agricultural businesses have come through the crisis by trimming their production, partly through a reduction in costs and a focus on business operations.
- The optimism is also based on higher product prices and the continuing low interest, added Klaus Kaiser, who at the same time emphasised that the optimism should also be seen in the light of a difficult starting point.
Many farmers have experienced big losses in recent years and are still fighting for a better economy in their business. Similarly the economy of the farm business is very sensitive to market prices for farm products and to an increase in interest rates.
Increasing restrictions
The farmers’ barometer also shows that farmers experience an increase in restrictions towards increasing production.
- Restrictions are primarily closely related to high production costs that 6 out of 10 farmers report as a problem. But also the challenges to sourcing funds for expansion plans, law related restrictions and a lack of environmental approvals are reported as a big and increasing problem for farmers, says Klaus Kaiser.
The chairman of the Danish Agriculture and Food Council, Niels Jørgen Pedersen expresses a reserved optimism about the recent figures, but emphasises, that there are still a number of outstanding challenges that await the industry.
- I am naturally very pleased that many farmers can see light at the end of the tunnel. Better earnings, increased production and a greater interest in investing are all positive indicators. But at the same time it is necessary to point out that as a business we still have a number of challenges ahead that require that politicians and the bank sector are active partners to allow us to secure the improvements and develop our businesses further, stated Niels Jørgen Pedersen.