How the Dutch plan to reduce cow numbers to meet phosphate limits

The Dutch dairy sector has come up with a significant package of measures aimed at substantially reducing the production of phosphate by the dairy farming sector in the year 2017.

In order to meet their phosphate limits in 2017 and to safeguard the renewal of phosphate derogations next year, the Dutch dairy herd will need to be culled by over 170,000 head.

The measures are aimed at an annual reduction of 8.2m kilograms of phosphate by the dairy farming sector.

A statement said that in order to reduce phosphate, animal feed businesses united in the trade organisation Nevedi have committed themselves to further decreasing the gross Phosphorus content in compound feed in 2017.

Meanwhile, several schemes are to be introduced which will pay farmers to reduce livestock numbers and cut milk production:

1. Scheme for those who stop farming and those who reduce their livestock

In the first half of 2017, a €50m scheme for those who stop farming and those who reduce their livestock will be opened for livestock reduction.

The scheme is initially meant for farms that want to fully stop producing milk in the first or second quarter of 2017.

Money for the scheme is to partly come from the ‘national envelope’ of the EU support package of July 2016 (€19m of the €23m), which will be supplemented with €25m.

For this ZuivelNL will raise the contribution of dairy farms by €0.18/100kg of milk for the year 2017. Additionally, the Ministry of Economic Affairs will contribute €6m to the scheme.

Participation at subscription

Dairy farmers who want to make use of the scheme will be given three opportunities to subscribe, with the first opening will take place early in the first quarter of the year 2017.

In the subsequent subscription periods the premium to be paid per dairy cow will decrease and become less attractive. The exact premium is still to be determined.

The cows must demonstrably have been disposed of by means of a statement of death, export or slaughter within two or three months after termination of the period of subscription at the latest, according to the statement.

Conditions

Only the number of cows of the LU (livestock unit) category 100 registered for the farm on October 13, 2016 will be eligible for the scheme.

Those who stop farming may keep young cattle (LU categories 101 and 102), but the number of young cattle may not increase in 2017.

Liquidity provision

The banks will set up a provision for a liquidity bridge in advance of the implementation of phosphate rights as from January 1, 2018.

This is a common activity of banks in situations of major changes in operational management. The dairy farmers must contact their banks and make appointments themselves with respect to this.

Other dairy farms

Based on the results of the first subscription period it will be decided whether the scheme will, apart from for those who stop farming, also be opened for dairy farmers who continue their business in 2017 but dispose of a part of their livestock.

The scheme for those who stop farming and for those who reduce their livestock will be implemented by the Netherlands Enterprise Agency (RVO). The scheme is expected to result in a total phosphate reduction of 2.5m kilograms.

2. ZuivelNL Phosphate Reduction Plan

The ZuivelNL (the main Dutch dairy organisations) Phosphate Reduction Plan is focused on dairy farms that will be continued in 2017.

The plan includes two schemes which together are to lead to a phosphate reduction of 4m kilograms. The dairy farmers can decide themselves which scheme is most suitable for them.

A. Milk Money Scheme

This scheme assigns a reference volume of milk to dairy farms. The reference volume is set to the milk production in the calendar year 2015 minus 4%.

During the year 2017, the monthly milk supply is compared with this reference volume. Here the supply pattern of 2016 is followed, unless the dairy farmer prefers the supply pattern of 2015.

Dairy farms that supply more milk monthly than the reference volume in 2017 will receive cuts to the money they receive for milk.

A deduction of 90% of the basic milk price (for FrieslandCampina the guaranteed price), which is the milk price excluding any premiums, will be applied to the surplus supply.

This Milk Money Scheme is mandatory for all Dutch member dairy farmers of FrieslandCampina.

As an alternative for the milk money scheme, dairy farmers can also opt for the LU reduction scheme.

B. LU reduction scheme

A dairy farm participating in this scheme is given a LU reference. This is equal to the number of LUs from the categories 100, 101 and 102 registered for the farm on July 2, 2015 minus 4%.

The farm must decrease the number of LUs from these categories present on October 1, 2016 to or below the level of the LU reference.

This austerity package is to be implemented in the year 2017. Any increase of the number of LUs after October 1, 2016 will be added to this austerity package. Full details of the LU reduction scheme can be seen here.

C. Extraordinary situations

Farms that did not have a phosphate surplus in 2015 and therefore are land-related in accordance with the definition of the Dutch Manure Law, do not need to reduce their livestock in relation to the livestock density on July 2, 2015 if they participate in the LU reduction scheme.

Further details for farmers that find themselves in such extraordinary situations can be read here.

In order to be able to apply the same system to all dairy farms and dairy companies in the Netherlands, ZuivelNL will apply for a so-called agreement that is declared universally binding for the ZuivelNL Phosphate Reduction Plan at the Ministry of Economic Affairs.

The parties involved in this package of measures included the Dutch Federation of Agriculture and Horticulture (LTO Nederland), the trade union of the Dutch dairy farmers (NMV), the Dutch Agricultural Young People’s Association (NAJK), dairy companies united in the Dutch Dairy Association (NZO), animal feed businesses united in Nevedi, the banks and the Ministry of Economic Affairs.