Arable farming in transition towards a profitable and future-proof sector

Alongside its role right at the heart of agricultural practice and its transition, the Centrum voor Duurzame Landbouw Transitie (CDLT) plays an important role in scientific research. As part of one of the PhD research projects at CDLT, Thom Dijkstra is studying the business-economic consequences of the transition for arable farmers. For this research, he is talking with farmers, advisors and industry specialists. Hessel Kingma, arable farming sector specialist at Countus, is one of them. Although Kingma himself does not come from a farming background, his time in the Noordoostpolder left him thoroughly infected with enthusiasm for the arable sector. He worked for years at Univé, then at NAK, and spent a number of years at Agrico before moving to Countus. At Countus he is the go-to face for the arable sector: alongside individual advice, relationship management, financial analysis and knowledge sharing, he also focuses on the strategic future questions facing arable farmers. We spoke with Hessel Kingma about developments in arable farming and his vision for a more sustainable arable sector in the Netherlands.

State of affairs in arable farming

In the current sector, Kingma sees that businesses using conventional cultivation methods are continuing to develop. Because growers have achieved good financial results in recent years, he sees businesses scaling up or specialising further. At the same time, it is expected that the 2025 growing season will be a weaker, possibly even a very poor year, particularly for potato cultivation. Another development is the crop protection framework agreement ('convenant gewasbescherming') being worked on by the government, farmers' organisations and supply chain partners. The agreement forms part of the sustainability transition facing agriculture, and is also one of the biggest challenges for arable farming.

Profitable business operations as part of goal-based steering

More and more arable farmers are focusing on their soil. Growers are gaining experience with, for example, green manure crops, so that their soil improves in water permeability, crops grow better, or fields can be worked earlier in the season. The biggest challenge in soil improvement for farmers lies in the return on investment: the costs of soil improvement are usually immediate, while the benefits in sustainable productivity, resilience and revenue only follow later. According to Kingma, this means the risk of actively working on soil improvement currently lies entirely with the growers. In the Netherlands, there is an increasing shift towards goal-based steering, in which the sector as a whole works towards a number of goals within sustainability and quality, such as water, climate, biodiversity, soil and scarce resources. What should explicitly be added to this, according to Kingma, is the goal of 'a profitable business operation for the primary sector'. Adding this goal would share the grower's risk with the rest of the chain. Investing in sustainability does not always pay for itself yet at this point. There is progress to be seen, but it is not yet a major revenue model.

Opportunities for arable farmers in transition

For arable farmers considering sustainability, there are also opportunities. Regenerative agriculture, for example, offers potential not only in terms of price per kilogram, but also in terms of yield and quality. Kingma puts it this way: 'it's not just the financial picture of what you're paid per kilo, but your yield and the quality of your yield can also improve.' Although hard figures on yields in regenerative systems are scarce, there is growing evidence that better soil quality benefits yield per hectare in the long run. This makes sustainability not just an ecological choice, but also an interesting business strategy.

License to produce

In addition, developments in laws and regulations point to growing market demand for sustainably grown products. Through European legislation such as the Corporate Sustainability Reporting Directive (CSRD), large buyers are increasingly being steered towards sustainability, and will have to translate that into their purchasing policies. 'If you want to be ready for the future, then moving towards more sustainable production also creates the room to still be able to sell your products in the future.' This concept of the "license to produce" (the right to be allowed to supply a buyer) makes clear that moving early pays off. Those who invest now in more sustainable business operations are building a position that could prove decisive for market access in a few years' time.

Collaborations for smarter entrepreneurship

As mentioned earlier, the Dutch agricultural sector is still in the process of specialising, which makes sense from an entrepreneurial perspective. A mixed farm combining arable farming and livestock is not for every entrepreneur. However, Kingma does see a solution here: more collaboration between arable farms and livestock farmers. Exchanging land can create room to extensify, through what is known as the integrated farming plan. 'You start using your manure much more efficiently, you exchange feed with each other, and you join forces. One person knows much more about soil, the other about animals, and that combination simply makes things stronger.' However, this kind of collaboration is not yet embraced by the government; particularly from a tax perspective, the integrated farming plan is actually being discouraged. Still, Kingma sees opportunities here for agricultural entrepreneurs: 'it's both smart for sustainability, but actually also just really smart business to enter into that kind of collaboration.'

The role of technological innovation

Businesses will also change as a result of innovation, both in crop development and green manures, and in technological innovation. Research is underway into whether crops can grow with fewer nutrients, which could bring cost savings on the input side for growers. This can be reinforced by technological innovations such as AI drones, which allow for more precise assessment of where fertilisation or crop protection products are needed, for example by evaluating the leaf index. However, these technological innovations come with a considerable financial investment, which is not feasible for every grower. Mainly larger businesses will be able to invest in them; for average and smaller businesses, it may come down to a choice between income and innovation. 'And given the cost developments of the past three years, there's a real chance that average or smaller arable businesses won't be able to take that step at all.' Investing in sustainable technological innovations requires sufficient returns, which was not the case for many arable farmers this past year. It is to be hoped that these technological innovations will be adopted widely enough, that system prices will fall, and that they will also become available to average and smaller arable businesses. An alternative scenario is an arable sector in which large businesses focus on technological innovation while smaller businesses serve niche markets.

Although the challenges are significant, Kingma sees enough perspective for Dutch arable farming. Entrepreneurs who invest in good time in soil quality, collaboration and innovation can not only contribute to societal goals, but also strengthen their own future resilience. The sustainability transition calls for choices, but at the same time offers opportunities for a strong and resilient sector.

CDLT can play a valuable role in this by actively bringing forward stories from the transition. The task is not only to say that change is needed, but specifically to come forward with concrete evidence, measurable results and practical support. There is understanding for the farmer's position, the social side is recognised, but a sustainable transition ultimately also requires a story that adds up on the financial side.