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Every seventh farmer on the brink of financial ruin
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February 24th, 2015
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Low milk and meat prices the crux of the matter
The low price of milk and meat means that 1,500-1,700 Danish farmers – about 15 percent of all farmers in Denmark – are on the cusp of financial collapse, according to a new report by consultancy firm Seges.
The farmers face huge deficits, have accumulated a lot of debt and their lack of efficiency has made their situation even more hopeless, the report found.
“The calculations have been made based on current low price levels,” Klaus Kaiser, the chief economist for Seges, told Børsen business newspaper.
“Via a more long-term consideration with normal price levels, there are about 950 farmers – 8-9 percent of the nation's farmers – who are in the group with debt over 70 percent and low efficiency. They are under considerable strain and their future as farmers is very unsure.”
Kaiser underlined that if the banks were to panic, up to 1,700 farmers could be forced to close down operations.
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Operating profits down
Martin Merrild, the chairman of agriculture association Landbrug & Fødevarer, is not optimistic and expects many farmers to go bankrupt.
“We have too many farmers with too weak a financial situation,” Merrild said. “Even if farmers want to keep plugging away, even though it looks bleak, then the low prices lead to liquidity problems.”
Agriculture figures from 2014 showed that operating profits, on average, by Danish farmers fell by over 300,000 kroner last year.
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