Much more expensive diesel affects farmers' income

The oil price has fallen this week, making diesel slightly cheaper as well. However, uncertainty in the energy markets remains high. Rabobank expects that higher diesel costs will mainly weigh on farmers’ income, because they can pass on these costs only to a limited extent. The oil price has fallen since yesterday. On Monday it stood at $94.25 per barrel and at the time of writing (Tuesday afternoon 9 June) it is $92.71. Iran and Israel have stopped the attacks they carried out on each other over the past weekend again under pressure from Trump (for the first time since the ceasefire of 8 April). Iran has set as a condition that Israel does not attack Lebanon. Compared with last week too, the oil price is lower. Although there is hope for a peace agreement, the situation in practice remains the same. Iran makes shipping in the Strait of Hormuz virtually impossible and America blocks Iranian seaports. As a result, only part of the oil from the Gulf region reaches other destinations. Diesel price Diesel follows the downward price movement of crude oil and now costs €160.34 per 100 litres from 4,000 litres (LTO member price). Despite the recent price decline, diesel costs for agricultural entrepreneurs remain considerably higher than at the beginning of the year. High diesel prices in agriculture mainly weigh on farmers’ income, because they can pass on the costs only to a limited extent, states RaboResearch in a new publication. The bank calculates: on average, entrepreneurs in land-based sectors such as arable farming, dairy farming, open-field vegetables, fruit growing and flower bulb cultivation spend between €10,000 and €20,000 on diesel per year. Of the horticultural sectors, that is about 1% of the turnover of dairy farming 2% and of arable farming about 4% of turnover. Farmers cannot pass on the higher diesel costs in the prices of their products, the bank notes. The higher diesel costs - which are significant with an average diesel price increase of 33% in May compared with the beginning of 2026 - will therefore mainly lead to pressure on income in the affected sectors, according to RaboResearch. Because the higher energy prices also work through further down the chain, Rabobank expects the price of food products in general to rise by between 5% and 10% in 2027. At present, food inflation is still limited. Physical shortages of oil products are not expected in Europe according to the bank. Gas price Gas has also fallen slightly in the past day, to €48.16 per MWh. Compared with a week ago, however, there is an increase of 3.3%. The fill level of European gas reserves has risen to over 42%. In the Netherlands it remains behind at just under 19%. A year ago around this time it was almost 39% (and in Europe 51%). The market mechanism to replenish gas reserves is lacking because of the high price. Energy experts are not worried about a gas shortage for next winter. Energie Beheer Nederland (EBN) has the legal task of trading in gas and even without a well-filled gas reserve it is expected that sufficient LNG will be available to meet demand. Electricity Last week the daily average of the Epex Spot fluctuated between €40.15 and €129.10 per MWh. Lidl accelerates transport electrificationThat companies continue investing in electrification despite grid congestion is evident from Lidl's plans. The supermarket chain will accelerate the electrification of its transport by three years. Next year all 440 stores in the Netherlands must be supplied electrically. Lidl Netherlands says it can absorb and flatten peaks in electricity consumption by combining large-scale solar generation on the roofs of distribution centres with enormous battery storage. Since 1 March 2024 Lidl has already phased out fossil fuels and non-electric transport runs on bio-LNG or HVO100.