In addition to the large resources that suddenly become available to finance new and existing nature (such as De Peel) that still need to be adapted, the formation decisions regarding the nature and reduction policy for the number of animals continue to affect the food and agricultural complex.
From CU leader Gert-Jan Segers left in the train draft formation agreement it turned out that the CDA and VVD, the conservative parties in the intended new government coalition, have in any case agreed to an amount of €14-19 billion on top of resources already allocated by the outgoing cabinet. Earlier this week it reported General Newspaper that the amount would have risen to €20-30 billion by 2030. In any case, the Netherlands appears to take its new nature policy extremely seriously financially.
The far-reaching policy will cause effects in the market whose contours can be sketched, but the precise dynamics with which they will take place are not yet clear.
The manure dossier, which in the past gave rise to scandals due to the dumping of surpluses, changes in a scenario of significant shrinkage of all animal sectors (dairy farming -40%, pigs and poultry up to -50%) in a situation of shortages. Dutch arable farmers would then have to buy manure abroad. However, there is already a shortage there, so that more use of fertilizers is an obvious choice.
Even in a milder scenario in which more pig and chicken manure remains available, there will still be a manure shortage, although a small surplus of phosphate remains.
The effects of the two scenarios have been requested by the government calculated by the Netherlands Center for Manure Valuation (NCM).
Without precision fertilization, in addition to livestock farming, arable farming in the Netherlands will also shrink significantly due to declining yields on too expensive land
According to director Jan Roefs of NCM, mechanical fertilizer production by processing animal manure should be considered in both the first and second scenarios. Due to the needs of intensive Dutch open field cultivation, the correct composition of nutrients in fertilizers is essential. That is why it is important to collect, factory crack and reconstitute animal poo and pee into nutrients that are tailored to the specific needs of crops. This costs fossil energy either directly or indirectly. This goes against the ambitions of the EU and the Netherlands, which want to get rid of manure produced using fossil energy. However, Roefs warns against the idea that the reduced Dutch livestock farming sector provides immediately usable ‘beautiful ripe manure’ – as D66 MP Tjeerd de Groot calls it – for all forms of vegetable cultivation. The high productivity that Dutch arable farmers strive for requires tailor-made fertilization. Without such precision fertilization, in addition to livestock farming, arable farming in the Netherlands will also shrink significantly due to declining yields on too expensive land.
At the moment, farmers from nearby countries still buy animal manure in bulk from Dutch farmers because of the surpluses in our country. For a number of years, French farmers have surpassed the Germans as the main buyers of Dutch animal manure. The reason for this is that the sandy soils in the nearest German areas have had to deal with stricter environmental measures against leaching of fertilizers via soil and groundwater. As a result, Dutch manure was released, which northern French arable farmers and open field horticulturists liked to use to improve their soils and to use less fertilizer. According to Roefs, the prices of animal manure in France and Germany will increase locally for current buyers of Dutch manure. In the triangular relationship between France, Germany and the Netherlands, he does not expect any major price effects at the macro level. It is not easy to predict how the fertilizer market will develop in the new shortage situation in the Netherlands, because traders regulate the fertilizer flows so that the traded volumes and their destination are not transparent. It is probable that in the Netherlands animal manure from a cost item for livestock farmers become a source of income again.
Presumably, the use of fertilizers (which the Netherlands wanted to get rid of) will increase. In the event of high gas prices or the desire to make fertilizer (which for its nitrogen component depends on an energy-intensive production process) only with green hydrogen, a further increase in the price of fertilizer will have to be taken into account. Based on sound calculations, Prof. Machiel Mulder that green hydrogen will remain scarce for the foreseeable future because of the excessively high production costs.
The members of the FrieslandCampina cooperative, who also own the FrielsandCampina factories, may have been so confused for some time that sensible regrouping and reorganization will prove difficult.
Reorganize dairy farmers?
Wageningen UR calculated the employment effect and the contraction of the gross domestic product (GDP) of the nature policy in the dairy and slaughter sectors. The share of the dairy chain in the national economy is estimated to fall from 1.1 to 0.8% of GDP. The dairy chain and intensive livestock farming together still account for 1.8% of GDP. With the smaller livestock size, their contribution will shrink to 1.4% of GDP. Dutch dairy processors will produce an estimated 4.2 million tons of milk (out of 14 million that Dutch farmers produce in total). This loss creates overcapacity among the processors, with the risk that factories will have to be closed down and written off. Especially for FrieslandCampina (by far the largest processor in the Netherlands with three quarters of the Dutch milk flow), which has been struggling for years with bad results and proves to be difficult to manage due to the tense relationship between management, cooperative board and farmer members, this can prove problematic. However, it can also be an advantage because FrieslandCampina can slim down as a result of the pressure that has arisen and thus become a healthier company. At home, the cooperative pays a high milk price to too many of its members; the company must take in more milk than it can sell in a distinctive and profitable manner. If they can go off, that will benefit the profit and loss account of the factory.
At the moment, Dutch factories buy 560,000 tons of raw milk from abroad. That volume could increase to 2.6 million tons, so that eventually dairy processing in the Netherlands will shrink by 15%. However, that percentage does not include the economic effects for the individual companies. In the worst case, the large block of dairy farmers of the FrieslandCampina cooperative could fall apart. Should that happen, a new market dynamic will arise, but also the challenge of restructuring the cooperative with currently approximately 15,000 members – the largest homogeneous group of farmers in the Netherlands. This must be done in a situation where strong emotions and mistrust are currently strongly dividing the ranks. The members of the FrieslandCampina cooperative, who also own the FrieslandCampina factories, may have been so confused for some time that sensible regrouping and reorganization will prove difficult. The behavior of the farmers can therefore become a threat to the dairy processor and multinational Royal FrieslandCampina and lead to smaller new commercial companies that restart the factories.
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Domino effects of the new Dutch nature policy – Manure becomes valuable and must be processed, pressure on FrieslandCampina farmers – Foodlog