The cull of 160,000 cows which started in the Netherlands on March 1 will cut Dutch milk production this year by 6-10%, and will add 0.61% to annual EU beef production.
Dutch milk production will dip temporarily in 2017, but will gradually resume its increase, starting from 2018, according to a United States Department of Agriculture assessment of the country’s plan to cull 160,000 cows, which started on March 1.
The cow cull will therefore only temporarily improve the EU dairy market — and it could depress the EU beef trade this year.
It will cut milk production by 6-10%, depending on how farmers decide to meet the targets.
This has halted the fast expansion of Dutch milk production after the EU abolished milk quotas in April 2015, jumping 6.8% in 2015, or by an additional 850,000 tonnes of milk, to 12.5mt.
The cow cull also ends the FrieslandCampina dairy co-op’s incentive payments to its Dutch member dairy farmers which have successfully kept the company’s 2017 milk intake up to March in balance with its available processing capacity.
The Dutch based co-op (the world’s sixth biggest dairy company, with a turnover of €11 billion) paid €6.85m to farmers in January and February this year, to persuade them to cut milk production by about 53m kg.
It made similar payments in 2016, after the fast expanding Dutch milk supply in the latter months of 2015 exceeded the traditional spring peak supply, and put pressure on milk processing capacity.
Now, the Dutch livestock sector is positive about the new clarity in regulations to reduce phosphate emissions, and the industry is confident farmers will cut emissions sufficiently, preserving the Dutch nitrate derogation.
For the longer term, the livestock sector expects that improved efficiency will still allow further expansion of dairy herds and milk production, through more effective feeding and fertilisation of pastures, and further processing and exporting of manure.
It is part of the plan to save the country’s nitrates derogation granted by the EU, which allows allowed Dutch farmers use extra fertiliser.
Without it, dairy farmers would have to reduce their herds by 480,000 animals, or about 20%.
But the EU is now willing to leave the nitrate derogation in place this year, and negotiate a continuing derogation up to 2021, if the Dutch livestock sector successfully carries out an EU-approved plan to reduce phosphate emissions from livestock by at least 6.6m kg (one of the conditions of the derogation granted in 2006 was to not exceed the 172.9m kg of phosphate emissions reached in 2002, but this was breached in recent years).
The new plan requires farmers to reduce their herd size, or stop farming, and requires feed compounders to lower the phosphorous content in the feed.
Meanwhile, the Dutch Ministry of Economic Affairs must report the level of phosphate emission to the EU every three months, or the Netherlands could lose its nitrate derogation, incur EU fines, or be forced to further cut livestock numbers, in addition to the ongoing cull of about 160,000 cows (6.6% of the Dutch dairy herd, and 0.38% of the total EU dairy herd).
At an average slaughter weight for cows and heifers of 299 kg, additional beef production of about 47,840 tonnes can be expected.
This is equal to 11.6% of annual Dutch beef production.
It exceeds the Dutch beef processing capacity, requiring some animals to be exported for slaughter elsewhere.
The dairy cull rules bar farmers from transferring their cattle from a dairy farm to another type of farm.
The cull does not seem to have affected the EU cull cow market yet.
But market watchers will be vigilant for signs of an impact over the next couple of months, until July, when the compensation payment offered to Dutch farmers decreases rapidly.
If there is an impact, it may affect the beef trade in the UK, because the Netherlands is a key export destination for UK cow beef.
Irish beef exports could be hit, in turn, because of our heavy dependence on exports to the UK.
In other parts of the Dutch plan to reduce the country’s phosphate pollution from livestock, exemptions are ending which allowed expansion of pig and poultry farms, with the precondition that excess manure from the farm is processed.
The phosphorous content of pig feed will probably also be reduced.
But the effect on pork and poultry production is expected to be minimal.
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