23 October 2020

4 minute read

Europe

The total amount of milk produced will remain the same until 2024 and then increase slightly towards 2030. This is evident from a basic scenario of an exploration of development directions for Dutch dairy farming for 2030 carried out by Wageningen University and Research. Four scenarios are juxtaposed. The study was carried out by Wageningen Economic Research on behalf of Friesland-Campina.

Baseline scenario

The basic scenario is based on established and implemented policy and continuation of past behavior in the dairy farming sector. Policy that has not yet been fleshed out in concrete terms, such as external netting and the proposed new fertilizer policy, for example, has not been included. In the basic scenario it is assumed that the dairy farmers will use the financial scope available to invest in the growth of the dairy farm. In this scenario, the number of dairy cows will drop to just under 1.5 million over the next ten years. The total milk production will increase by 4% because the milk production per cow continues to increase autonomously in line with the trend of the past period. The average farm size of a Dutch dairy farm will increase in the basic scenario from 101 to 139 dairy cows.

Wageningen University & Research is relying on a newly developed economic model that enables a cohesive study of the effect of economic, policy and social changes on the structure of the Dutch dairy sector. The model uses data from the CBS Agricultural Census and the Business Information Network of Wageningen Economic Research.

The model explorations show that some of the dairy farmers will stop in the next ten years due to age and the lack of a successor, but there is also a proportion of the farmers who are expected to have to stop because they can no longer meet their financial obligations .

in the basic scenario, dairy farming remains within the phosphate ceiling and the nitrogen ceiling and the agreements from the Climate Agreement appear to be feasible. However, there still seems to be a challenge on the theme of ammonia. The research also shows that the results of the baseline scenario are sensitive to changes in the assumptions of the model, such as the milk price, technical results or the level of interest to be paid.

Exploratory Scenarios

In addition to the basic scenario, the study also explored three exploratory scenarios in which the question was asked: what would happen if ...? These scenarios are based on possible future societal changes and aim to explore which development directions the sector could go through in the coming decade.

In the first exploratory scenario, there is more attention from the market and society for 'nature-inclusive' dairy farming. In the second scenario, 'the free market', the emphasis is on the production of reliable and cheap food and there are no additional requirements for nature and the environment. In the third scenario ('focus on social requirements and returns'), dairy farmers do not make the most of growth, but the dairy farmer sets requirements for the income from the company and other investment opportunities within and outside the company are also considered.

In all three of these exploratory scenarios, the number of dairy farms decreased further in 2030 than in the base scenario. In addition, these scenarios lead to on average larger companies, which are on average clearly larger and more intensive in the free market scenario and on average more extensive in the nature-inclusive scenario. In the scenario in which dairy farmers focus less on growth, total milk production decreases the most.

An important result of the study is also that a model has been developed with which the effect of changes in the economy, policy and investment behavior on the structure of the dairy farming sector can be explored in conjunction. The model can also be used to calculate new scenarios and circumstances.

Simultaneously improving the sustainability and economic perspective of dairy farming is not an easy task and should not be approached too one-sidedly. It is important that all relevant stakeholders, such as dairy farmers, banks, dairy companies, regional and national policymakers, develop appropriate measures, management and economic perspective, aimed at the long term
Alfons Beldman, project leader at Wageningen University & Research, about what the research means for Dutch dairy farming