THE FINANCIAL POSITION OF DUTCH GROWERS

R. Rijneveld
The core of the financement problem on many horticultural holdings in The Netherlands lies in the discrepancy between on the one hand the capital need and on the other hand the available own capital, with in addition temporary borrowed capital on the usual security of a mortgage transfer of property or personal guarantee.

In the last ten years the capital requirements per firm has strongly been increased due to the:

  1. enlarging of the total firm capacity, which mostly has been coupled with intensification (change over from horticulture in the open to horticulture under unheated glasshouses, and horticulture in unheated houses to heated houses);
  2. substitution of labour by capital, also as a consequence of the strongly increased wages (mechanization and automation).

Undoutedly the capital requirements per firm will increase further in the future (table 1).

Table 1. The development of capital in the years 1959–1968

(average figures per holding in £)

  Own Borrowed Total
  capital capital capital

Amount per 1–1–1959   8555   3353 11908
Amount per 1–1–1966 15145 10751 25896
Amount per 1–1–1968 16185 10983 27168

As concerns the juridical structure of the holding, the Dutch firms are predominantly one-man-firms, the number of limited companies is very small.

In the one-man-firm the risk bearing own capital is at the same time personal capital. Own capital can not be attracted on the capital marker. This capital can increase only by savings and inheritances.

Family loans without repayment obligations can be characterized as own capital. By every regeneration change a discontinuance in the size of own capital is occurinf (more heirs).

Shares of a family concern are difficult to negotiate; in fact the share capital is a forced property. The continuance of the own capital of the holding is, however, greater than by the one-man-firm.

The function of the own capital is twofold:

  1. it provides the basis for the attraction of credit (the smaller the own capital, the smaller the creditfacilities;
  2. it serves as a buffer operating losses (maintaining firm- continuance).
Rijneveld, R. (1969). THE FINANCIAL POSITION OF DUTCH GROWERS. Acta Hortic. 13, 40-49
DOI: 10.17660/ActaHortic.1969.13.5
https://doi.org/10.17660/ActaHortic.1969.13.5
13_5
40-49