Kieran Coughlan: New uncertainty in nitrates derogation demands strategic thinking
The renewal of the derogation is an EU decision over which farmers have little control.
As the dust settles from the revelation any potential extension of the nitrates derogation will require consideration of the Habitats Directive, there is a realisation among farmers that securing the derogation will, at best, be significantly more challenging than expected. The potential for areas or catchments to be excluded from derogation is also on the cards.
What does this mean for farmers both in derogation and more generally? Undoubtedly, a cohort of those operating at a high stocking rate will wish to secure the future of their business.
The lack of certainty in the derogation being renewed — and even in the event of renewal, the expected higher environmental thresholds and continued threat of withdrawal — will see some farmers look to expand their land base so they move permanently to a stocking rate where organic nitrogen from livestock falls below the 170kg/ha limit.
Farmers looking to dilute their stocking rate below this level, while retaining their overall quantity of livestock, will either seek to buy or rent additional land.
The SCSI/Teagasc Annual Agricultural Land Market Review & Outlook 2025 showed land rents increased by 9% in 2024 for grazing land and 8% for tillage land.
Many leases are renewed with current tenants in situ at rates halfway between the former rents and the higher rates for new holdings coming on the market. This practice masks the true underlying inflation rate for holdings that are new to the market or where there is a change in tenants.
The average land price for grazing land stood at €294/acre for grazing/silage land and €320/acre for tillage land. A decade ago, the average price per acre for rented land stood at €177/acre for grazing/silage ground in the Munster and Leinster region, with tillage land making an average of €202/acre in those regions.
Over 10 years, grassland rental prices have increased 66%, and tillage land by 58%. A significant portion of land available for rent is now tied into long-term contracts due to incentives in place over many years.
Perhaps the only disadvantage of the leasing system may be laid bare if the nitrates derogation is not secured or is only partially secured — the amount of land available in any one year would be limited to that coming out of a lease, new land coming on the market from retiring farmers, and that currently let via conacre. A sudden change in demand will only act to further drive inflation in land rents and prices.
For farmers currently in derogation, it would be worthwhile scenario-planning what actions to take if the derogation is lost or unavailable in their catchment. Actions could include exploring with neighbours whether they would consider importing slurry or leasing some of their farm holding — discussions that require diplomacy to avoid offence.
Another action is to engage in milk recording and genotyping, along with health measurements including mobility scoring, temperament, calving difficulty, and age. This will help identify underperforming animals or those past their peak for culling if needed.
Derogation farmers rearing their own heifers might want to sound out local beef farmers or calf customers about contract rearing heifers or non-milking cows during the dry period. A 100-cow herd that sends 25 late-calving cows away for three months during the dry period can, in effect, carry eight more cows throughout the year. Farmers considering this should factor in the impact of TB restrictions.
Another option is temporarily grazing cows or cattle on another farmer’s land to dilute the nitrates profile of the herd. The renewal of the derogation is an EU decision over which farmers have little control.
Without missing a beat in the quest to secure the derogation, it would be remiss not to consider the potential farm-level impacts and what actions could mitigate the fallout should the derogation not be renewed nationally or within a region.
