Frontpage News 2015 Banks are taking t...

Banks are taking the agriculture industry’s situation seriously

18 December 2015

​Parts of the agriculture industry are facing challenges as a result of revenue underperformance combined with a high level of debt amongst other factors.
Future prospects for some agriculture groups do not look promising and the number of bankrupted agribusinesses is increasing. Fortunately however, there is also a group of approximately every third farm holding that is performing well.
 
However, this does not change the fact that the number of bankruptcies within the last year is approx. 61 per cent higher than in the previous 12 months.
And this is generally at a higher level than in previous years.
 
Not all ailing farm holdings end up at foreclosure. Voluntary agreements on the full or partial sale of holdings are entered into more and more, at times on the farmer’s own initiative, just as in other cases, famers successfully sell their estates on the free market. This development will surely continue in 2016.
Better settlement prices and higher turnovers will aid the agriculture industry as a whole, but several holdings that do not have the possibility of continuing operations must unfortunately leave the sector so that new actors can strengthen recovery within the industry.
 
“Banks are taking the situation very seriously and are cooperating respectfully with individual farmers to find the best solution for both parties. It is important that the process towards farmers is handled correctly,” CEO of the Danish Bankers Association, Ulrik Nødgaard says and emphasises that it is also about the property market being able to absorb the supply of agricultural holdings, just as banks would like to contribute through sound new investments and reinvestments.
 
However, Danish agriculture also needs better framework conditions, so that revenue can be increased in both the short and long term. The Danish Bankers Association, therefore, supports signals for political initiatives that can help Danish agriculture and looks forward to the Danish Parliament enacting these, including establishing the investment fund, Dansk Landbrugskapital, so that equity investment in agriculture can be strengthened.

 
Figure 1. The number of bankruptcies in agriculture
N.B.:2015 figures are up to and including November
Source: Calculations by Statistics Denmark and the Danish Bankers Association
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