Agriculture has been hit hard by climate change; Investments are urgently required’ | Akkerwijzer.nl

Climate change in the Netherlands can lead to lower yields in the direct sense, due to factors such as mild winters and hot summers, more exceptionally dry or precipitation, and other extreme weather conditions such as hail and heavy storms. The crop can also be affected indirectly, because new diseases and insect and fungal infestations can arise due to high temperatures, Atradius concludes in his report.

Viticulture in the Netherlands

Although climate change will generally result in poor harvests, there are also sectors that can benefit from changing conditions, according to the credit insurance company. Consider growing viticulture in the Netherlands, or lowering energy bills in horticulture, because greenhouses need less heat in winter. Or a change in competitive pattern, with production moving to northern regions due to the more difficult conditions in southern Europe,” says Edwin Kollmann, head of underwriting at Atradius in the Netherlands.

Climate change is a problem that, according to him, is expected to have a significant impact on Dutch agri-food companies in the future. “In the short term, the discussions around nitrogen and carbon dioxide emissions are much more pressing for this sector,” Coleman says.

south of Europe

Atradius says that after droughts in southern Europe and floods in northern Italy, only thanks to government assistance has the wave of bankruptcies in the agricultural and food sectors been averted. “Last year was the warmest year on record in France, and this year already promises more than the same year. A month ago, 68 percent of groundwater levels in France were already very low.

The picture is similar in most countries in southern Europe. In Spain, according to Atradius data, between October 2022 and May this year, it rained 28 percent less than expected. It was also hot and dry in Italy, but that varies from region to region. For example, heavy rains in May this year caused severe flooding in the Emilia-Romagna region in the north of the country. Italy suffers from both ends of the extreme weather spectrum: The country also recently suffered its worst drought in 70 years.

Risks of late payment and bankruptcies

According to the credit insurance company, severe weather is bound to hit the food sector hard. Floods and droughts in southern Europe affect farmers first, before lower yields, supply problems and higher prices affect companies in the rest of the supply chain. This increases the risk of late payments and bankruptcies.

Atradius is a credit insurer that primarily focuses on large corporations. In the agricultural sector, this is mainly agribusiness. The insurance company, through its reports, tries to provide its customers with information about the current potential risks.