Demand for Danish pork is at a record high, which is why Danish Crown is now using a new tool to support the building of new pig stables for finishers. The programme will allow its owners to borrow money for the construction of new stables for their farm businesses and build the capacity for finishing pigs.
- A number of our owners would like to build but have difficulty in getting the necessary financing. Therefore, we have created a model where they can borrow an amount that corresponds to the collateral in the coming years' supplementary payments which, on the one hand has a reasonable interest rate, but on the other hand has a hard repayment profile. This is clearly only possible because of current market conditions and because the outlook for the next couple of years is better than we have seen for a long time,” says Nicolaj Nørgaard, director of Owner Services at Danish Crown.
Danish Crown’s farmer owners can borrow DKK 650 for each newly built pig sty. In most cases, this would amount to between 20 and 25 percent of the total cost of building a new barn. The money is repaid over the balance and depending on the start of pig production, will have to be repaid over two or three years.
Danish Crown has allocated 200 million DKK for this purpose. If all the loan programme is successful and the total amount is invested, this would mean an increase of 1.2 million pigs per year.
The loans are offered to all farmer owners in accordance with the first-come, first-served principle, although the construction must have commenced no later than six months after Danish Crown has given a commitment to the loan.
- This is a new model for financing that, in my view, will be particularly attractive to skilled farmers who have already proven that they can run their production efficiently, but have not yet accumulated enough capital to be able to entirely fund the barn construction themselves. At the same time, it will probably also be an attractive model for some of the farmers who today focus 100 percent on the production of piglets, says Nicolaj Nørgaard.
Since the financial crisis, the financial sector in Denmark has been reluctant to lend to agriculture and especially to the construction of new stables for piglets. This has contributed to the fact that an investment backlog has been built up in this part of the industry, and this could end up hurting agriculture in general, according to Danish Crown's chairman.
- Denmark is an agricultural country, and a very large part of the population supports Danish agriculture because we contribute to the society with jobs and earnings. We must safeguard this support, and we do this best by jointly securing workplaces in the slaughterhouses and in the wider agricultural sector, so I hope that this initiative can help secure and once again lift the Danish production of pigs, says Erik Bredholt.
The application for loan commitments is open with immediate effect and the interest rate on the loans has so far been set at four per cent.
Nicolaj Nørgaard, director of Owner Services, Danish Crown