In recent years, Danish farmers have seen a significant improvement in their financial position. This is mainly due to higher prices in various agricultural sectors, lower interest rates and refinancing. The value of Danish farms has doubled in the last five years to an average of DKK 17 million per farmer, mainly due to better yields in crop production and pig farming.
But there are big differences between the sectors. Livestock farming has a bigger debt compared to crop farming for example. Pig farmers often have higher production costs and are under more pressure from fluctuating market prices. On the other hand, crop products have lower costs and more stable yields.
In terms of agricultural debt, we have seen a decrease in total debt burden since 2018. Last year, total debt amounted to 263 billion kronor, a significant decrease compared to the peak year 2010, when debt amounted to 355 billion kronor. This decrease is mainly caused by low interest costs and the refinancing of fixed loans with variable interest rates. This allows many agricultural companies to reduce their interest costs and reduce their debt.
The annual report on increased incomes comes at an unfavourable time for Danish agriculture and livestock farming. At the political level, the level of a future CO2 tax on agricultural products is currently being debated. This new levy is intended to reduce air and water pollution and to reduce the impact on the climate.
Although this CO2 tax is seen as essential from an ecological perspective, the measure is met with resistance in the agricultural sector. Farmers say it will increase their production costs and weaken their position. Agricultural organisations are calling for full compensation for future loss of value of agricultural land and for companies that have to downsize.
Critics point out that agriculture and livestock farming have done little for environmental protection and nature restoration in recent decades, and have therefore been able to build up and increase their assets. According to them, the new figures show that farmers can certainly afford the new CO2 tax.