In 2021, the price for energy and feedstuffs make trouble in agricultural holdings

Agriculture & fishery
© AdobeStock  Photoagriculture In 2021, the price for energy and feedstuffs make trouble in agricultural holdings

The second estimates of farmers’ incomes for the year 2021 made by Statbel[1], the Belgian statistical office, have been submitted to the European Commission (Eurostat).

  • Weighed down by the increase in input price, the net value added of agriculture decreases by 6.9% in 2021.
  • The increase in intermediate consumption is estimated at 15.1%: the costs of energy, feedstuffs and fertilisers have a strong impact on the financial profitability of the agricultural sector.
  • The weather conditions were unfavourable to the yields of cereals and certain horticultural productions (pears and tomatoes).

Statbel estimates that in 2021, the value of the agricultural industry's output would increase by 9.1% while intermediate consumption would rise by 15.1%. This increase in costs would result in a decrease in the net added value of agriculture. Taking into account expenditure on labour remunerations and public transfers (taxes and subsidies not directly linked to production), the income of the factors of production would fall by 6.2%.

The increase in intermediate consumption is largely due to the evolution of input prices. While energy prices fell in 2020, they have more than made up for it in 2021. The impact is not only on fuel consumption but also on the price of fertilisers (gas being an essential element in the manufacture of nitrogenous fertilisers). Some industrial sites, in view of the rising production costs, have suspended the production of these fertilisers, thus accentuating the increase in prices and raising the risk of shortage. Annual fertiliser prices are estimated to be 1.5 times higher than last year.

In addition to energy, the price of animal feed has also risen adversely for the profitability of the various breeding industries. The exceptional rise in price for cereals and oil and protein crops on the European and world markets has had a positive impact on the profitability of these crops, but has had a negative effect on the breeding industries. Prepared feeds are also rising in price, so that the price effect of animal feed is estimated at +15.3%.

[1] In cooperation with regional authorities and experts.