Radical government measures are causing structural shifts in livestock farming – and this will not be without consequences for suppliers. The compound feed sector is facing major challenges due to the expected decline in the number of animals. This is evident from the latest report from ABN Amro: Livestock decline extends beyond the farm.
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From stable to factory: the impact of termination regulations is significant
More than 1.500 livestock farmers are about to voluntarily terminate their business via the National Termination Scheme for Livestock Farming Locations (Lbv and Lbv-plus). With a combination of termination compensation and increased skimming of animal and phosphate rights, the government is committed to significantly reducing the livestock population. This reduction – expected to be 15 to 18 percent by 2030 – is intended to reduce nitrogen emissions and reduce the manure surplus.
But this transition is not limited to the farmer himself. Companies in the chain, including compound feed suppliers, are also faced with a significantly lower demand. According to calculations by ABN AMRO, this could lead to a structural decline in GDP of 1,5 billion euros per year and 13.300 jobs that may disappear.
Compound feed companies see sales shrink by 200 million
The outlook for the compound feed industry is worrying. According to the analysis, the sector will be hit by around 200 million euros in lost turnover. This is because livestock farmers are stopping or reducing their production capacity, which reduces the demand for compound feed. Other suppliers such as veterinarians, machine builders and contractors are also affected.
The consequences differ per region and sector. The biggest blows are expected to fall on the pig farming sector (-16%) and the poultry sector (-13%). These sectors are major consumers of compound feed, which means that the direct impact for compound feed companies is considerable.
Strategies needed to avoid overcapacity
Not only the compound feed sector, but also the processing industry such as dairies and slaughterhouses sees the uncertainty increasing. The threat of overcapacity hangs over the market. It requires companies to make rapid adjustments and strategic choices. Think of reducing production capacity or looking for sales in export markets.
Innovation and specialisation can also help to limit economic damage. For example, compound feed companies could focus more on high-quality, tailor-made feeds or serving niches such as extensive or organic livestock farming.
New opportunities: repurposing agricultural land and labor
The shrinking livestock population offers opportunities as well as risks. Arable farming, nature development and space for other economic activities can arise on the freed-up land. According to the analysis, 10.000 hectares may become available for arable farming, which amounts to an increase of almost 2% of the current area.
In addition, the release of labor and space on the energy grid may provide air for other sectors in the economy. But this transition takes time and requires direction and cooperation in the chain.
