Close to 200,000 cows are to be culled over the coming months in the Netherlands in a desperate attempt by Dutch authorities to avoid losing their nitrates derogations.
The Irish Government will soon be seeking approval for the continued availability of the Nitrates Derogation to Irish farmers.
The Nitrates Directive has been in place since 1991. It aims to protect water quality from pollution by agricultural sources and to promote the use of good farming practice.
Similar to many intensive Irish dairy farms, the majority of Dutch livestock farmers have derogations to apply up to 250kg/ha of nitrogen per year, up from the standard annual limit of 170kg/ha.
However, this derogation has been jeopardised by the Dutch breaching their phosphate limits each year for the last three years.
Farmers had been banking on the introduction of a new quota system for phosphorus that would have allowed retiring farmers to sell their phosphorus allowance to those staying in the sector.
However, a ruling that this would contravene EU State aid rules has forced authorities to adopt a more drastic option of reducing national output by 13pc through a cull of the estimated 1.8m dairy herd.
Initial predictions had indicated a figure of closer to 100,000 cows being culled, due to mitigation measures being considered by the Dutch government.
“Low phosphate concentrates that would reduce the phosphate load in the slurry were being suggested, so there’s no doubt that this is a severe knock-back for the Dutch industry and the intense politicking in recent weeks between lobby groups for pigs and dairy is unlikely to end here,” said Rabobank’s dairy analyst, Kevin Bellamy.
Livestock production is so intensive in Holland that there is very little artificial fertiliser used, which limits the scope for low phosphorus compounds to be used. In addition, the concept of exporting processed animal slurry to other regions outside of the Netherlands has been opposed by locals objecting to proposed sites for mega slurry processing facilities.
Dutch and Irish in the firing line
The Dutch, along with the Irish, have seen the biggest increases in milk production since the removal of milk quotas.
Many other regions blamed both the Irish and their Dutch counterparts for collapsing milk prices over the last two years. While Dutch milk output is likely to fall by a minimum of 750,000t, it is a preferable to losing their nitrates derogation, which would double the cut imposed.
While Irish dairy farmers will see the development as a positive one, beef finishers will be concerned about the impact of an extra 100,000 cull cows in a European beef sector that is already struggling. Spot milk prices in Holland have risen to 45c/l in recent weeks, with Fonterra also giving their price forecast by 12pc to NZ$6/kg milk solids.
The move by the world’s largest dairy co-op is set to boost returns for Kiwi farmers by €850m, and brings the average milk price in New Zealand to 29.9c/l, similar to Irish averages following increases across the board from Irish milk processors for October deliveries.
However, large Irish exporters of milk powders such as Ornua and Glanbia will be unhappy this week as the EU has decided to start selling intervention stocks at prices of just €2,100/t, which is likely to slow further price increases.
Meanwhile, Northern Irish milk suppliers are pushing for processors to switch to setting milk prices on a forward rather than retrospective basis.
Source: Farm Ireland