COPENHAGEN (Reuters) - Losses for already hard-pressed Danish farmers are likely to be bigger than previously expected, an industry lobby group said on Wednesday, warning this could trigger more bankruptcies.
Denmark, like many other countries in Europe, has been hit by one of the hottest summers on record, which has damaged crops and hit farmers’ income.
The drought, combined with low pork prices, is expected to trigger losses in the Danish agricultural sector not seen since the 2008 financial crisis.
The losses could reach almost 8 billion Danish crowns ($1.23 billion) this year, according to research institute SEGES, part of the Danish Agriculture & Food Council lobby group.
On its own, the impact of the drought is seen at around 6 billion crowns, it added. At the beginning of the year, SEGES forecast a small profit for the sector.
“There is no doubt the drought has impacted so many farmers, that there will be more bankruptcies,” SEGES economist Klaus Kaiser told Reuters, declining to give an estimate.
Denmark’s harvest of wheat, barley and rye could fall by about 40 percent from previous years, the lobby group has previously forecast.
To view a map on European drought, click tmsnrt.rs/2M4kIvA
The industry had already been struggling with a Russian ban on food imports introduced in 2014.
Twenty Danish agricultural businesses declared bankruptcy in June, more than twice the number in the same period last year. In 2018 so far, 100 farmers have declared bankruptcy, compared with 130 in all of 2017.
Pork producers are suffering the most, as pork prices are at their lowest since 2007. On top of this, the drought has hit fodder production and forced farmers to buy more expensive fodder from third parties.
Reporting by Emil Gjerding Nielson; Editing by Stine Jacobsen and Mark Potter