October 20, 2020
Wageningen University & Research publishes study on future of Dutch dairy farming
Wageningen University & Research (WUR) has published the results of a study conducted for Zuivelcoöperatie FrieslandCampina U.A.
The study explored the future of Dutch dairy farming. Within the framework of this study and on the basis of established and implemented policy, researchers elaborated a baseline scenario and three exploratory scenarios for dairy farming in 2030.
In the study, these future scenarios offer forecasts for the year 2030 with regard to the number of dairy farms in the Netherlands, the number of cows per farm and the total milk production in the Netherlands.
FrieslandCampina said it will take the future scenarios that have been drawn up into consideration in its long-term strategy development and decision-making, for instance, when evaluating investments in connection with the necessary milk-processing capacity.
The baseline scenario from the WUR study shows that, in the coming decade, the number of dairy farms in the Netherlands is expected to decrease by 33%, from nearly 15,987 in 2018 (baseline year) to 14,852 in 2020 and to around 10,600 farms in 2030. In this baseline scenario, the total quantity of milk produced will remain the same until 2024 and will then increase slightly (by around 4%) as 2030 approaches.
While the number of dairy cows will decrease in the next 10 years, it is assumed that the future development in the milk production per cow will be in line with the trend over the last decades. Lastly, the average size of Dutch dairy farms will increase from 101 to 139 cows, according to the baseline scenario.
WUR bases this study on data from the Statistics Netherlands (CBS) agricultural census and the Farm Accountancy Data Network (FADN) of Wageningen Economic Research.
The baseline scenario set out in the research assumes that dairy farmers will use available financial means to invest in the growth of their farms. In addition to dairy farmers who will shut their operations in the next 10 years due to age and lack of a successors, it is expected that another group of farmers will be forced to stop as they are no longer able to meet their financial obligations and make the necessary investments.
Only existing and implemented policies have been taken into account in calculating this scenario. Possible new policies like the external offsetting for ammonia and the proposed new manure policy have not been included. The scenarios also assume that the behaviour demonstrated in the dairy industry in the past will continue in the future.
In the baseline scenario, the dairy industry will remain below the phosphate ceiling, and compliance with the nitrogen ceiling and Paris climate agreements appears to be feasible.
On the other hand, there still seems to be a challenge in the area of ammonia.
The study also shows that fluctuations in factors such as milk price or applicable interest rate may substantially impact expected outcomes in 2030.
In addition to the baseline scenario, the WUR study also sets out three exploratory scenarios in response to hypothetical developments.
The scenarios are based on possible future societal changes and are intended as a way to explore other potential avenues of development the industry might encounter in the coming decade.
The first exploratory scenario involves greater attention for 'nature-inclusive' dairy farming from both the market and society. The second scenario – the 'free market' scenario – emphasises the production of reliable and affordable food and entails no additional demands in terms of nature and the environment. In the third scenario, which has a 'focus on social aspects and return on investment', dairy farmers do not pursue maximum growth but rather explore other possibilities for investment within and outside the dairy farm.
In all three exploratory scenarios, the number of dairy farms in 2030 decreases further than in the baseline scenario. These scenarios also lead to an increase in average farm size, with the average farm in the free market scenario being clearly larger and more intensive and the average farm in the nature-inclusive scenario being more extensive. The scenario, in which farmers are less focused on growth, has the largest decrease in total milk production.
Alfons Beldman, a WUR researcher, said: "Simultaneously improving both the dairy industry's sustainability and its economic prospects is no simple matter and should not be approached in unilateral fashion. It is vital that all relevant stakeholders - such as dairy farmers, banks, dairy businesses and regional and national policymakers - work to develop a cohesive package of measures, direction and economic prospects aimed at the long term."
Frans Keurentjes, chair of the board of Zuivelcoöperatie FrieslandCampina U.A., said: "The baseline scenario of the WUR study shows that FrieslandCampina should assume that the quantity of milk will remain stable in the coming years. When this static yield is set against the rising costs faced by dairy farms, it is clear that FrieslandCampina's task of creating value for our member dairy farmers will become even more relevant in the years ahead."
Through its cooperative strategy "The Merits of Milk", FrieslandCampina strives to create maximum added value for the member dairy farmers. Supplements such as "On the Way to PlanetProof" are an example of those efforts.
In keeping with market and societal trends, FrieslandCampina has been working with members to achieve goals in connection with circularity, climate and nature for many years . This not only enhances the sustainability of the dairy farms but provides the farmers with opportunities to increase their revenue as well.
As far as FrieslandCampina is concerned, all parties associated with the sector - the dairy farming chain, the scientific community and the government - share a duty to invest in the sector's future, the dairy cooperative said. Such investments are necessary to meet future requirements with regard to sustainability. Given the current economic reality, dairy farmers cannot do this alone, and a broad base of support is truly essential, FrieslandCampina said.