People who know the Rabobank will initially laugh at this title. The rabobank is known as one of the richest banks in the world. They don't go bankrupt that fast, do they?
But is Rabobank really that rich? Or are their books wrong? 'Did they cook the books?'
The Rabobank has lent a huge amount of money to Dutch farmers. Their main collateral is their land. The debts of these farmers should be covered by the value of the land.
This raises the question: How much is the value of farmland? Or rather: Has Rabobank been messing around with the value of the farmland?
The Rabobank lend about 26 billion Euro to farmers. If farmland is valued according to the yield of the land, then more than 20 billion Euro is not covered by the value of the land.
And it is not just the Rabobank. Throughout the EU there are many other agricultural banks that have been messing with the value of farmland.
Since the Second World War, Rabobank (formerly Raifeissenbank and Boerenleenbank) gradually became a monoploloist in lending to Dutch farmers. Rabobank provides work for the appraisers. They are fully dependent on Rabobank and follow its instructions.
When a farmer stops, he sells his land. If the value has fallen, he cannot pay his debts. If the value has risen sharply, he can pay his debt to Rabobank and has a pension.
As soon as the value of the land decreases, Rabobank has a huge problem. All farms will have debts far greater than the value of their property. Then the Rabobank will have to write off a huge amount of money. That is not what the bankers want. Fortunately, the appraisers work for Rabobank. That makes life a lot easier. Every year the land is valued higher. The farmer is happy and the Rabobank is happy. The debt is always passed on to the next generation of farmers.
This pyramid game went well for decades. But now the government has to take nitrogen measures. As a result, the cattle of the farmers must be halved. Oops! Now the whole house of cards is collapsing.
If farmers produce less per area of land, the value of agricultural land decreases. Presumably, the appraised value of the land is about eight to ten times ( !!! ) the value of the use. This could mean, that the Rabobank has to write off 80 percent of the amount lent to the farmers.
In principle this is quite simple to calculate. One ha. (10,000 square meters) delivers 45 tons of potatoes. That's about 9000 euros. To grow those potatoes, the farmer has to incur costs. That is about 7,500 euros (in 2019). So one hectare yields 1,500 euros. And that is a very optimistic estimate. The farmer also has to make some money. Say 1,250 euros. That leaves 250 euros for the land. If you multiply this by 30 years, you get a land price of 7,500 euros. Maximum.
If you assume an interest rate of 3.3% you get the same amount. 3.3% interest rate for a loan with risk is very low.
The prices for agricultural land have, however, increased to about 60,000 to 80,000 euros per ha. or more. The average selling price of a ha of farmland is therefore almost ten times its value in use. This can of course not go well.
If Rabobank has to write off 80% of the money lent to farmers, it has 'a little problem'.
In 2018 the EU gave a standard subsidy of 267.34 euro per ha. This means that the EU will actually double the yield of the land. Why does the EU do this? This money ends up at Rabobank and similar banks. It costs the taxpayer a lot of money. And the farmers don't get anything out of it.
By now, Rabobank's policy and the EU's agricultural policy have come into direct conflict with physical reality. A catastrophe is looming for the farmers. In fact, almost all Dutch farmers are on the verge of bankruptcy.
It is possible to save the Dutch farmers. But then we have to sacrifice Rabobank.
We should oblige Rabobank to remediate all farmers' loans.
Arable land prices must be brought back into line with the actual value in use. The net yield of the land must be the basis of the value.
Farmers should receive income support as far as they need it. They work for society and for the people. If we don't reward them enough, it's actually slavery.
You could also say that the farmers are just treated like money cattle. If you can read Dutch, see De Boeren: Het geldvee van de Rabo bank
It is of course unlikely that Rabobank will be sacrificed. Rabobank has friends in The Hague and Brussels. The farmers there are hardly welcome.
But Rabobank has a problem. The farmers now realize what Rabobank has done. They are very angry now. And rightly so!
In this article I focus on the problems of the Rabobank and the farmers in the Netherlands.
It seems, that many other EU-countries have the same problems. The prices of farmland are much higher than the yield of that land. Banks are playing pyramid-games with the price of farmland. The EU taxpayers are billed for these games. The banks grow fat. The politicians get nice jobs with the financial corporations after their 'tour-of-duty' in politics. And the people of Europe are robbed.
More and more people become aware of the evil games the bankers and politicians play. It is nearly 1789 again and the European 'leaders' do not realize this. (1789 is the year of the French revolution.) Monseigneur de Guillotine is waiting backstage for a majestic comeback. And the band plays on.
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