Phosphate rights: the facts at a glance (part 2)

In the first part In this series we examined the introduction of phosphate rights, we looked at the operation of phosphate rights and we paid attention to the financing of phosphate rights. This second part focuses, among other things, on land-based companies, discounts and the emergency regulations.

What about land-based companies and discounts on phosphate rights?
Land-based companies are not affected by the discount on phosphate rights. A company is land-bound for the phosphate rights system if all phosphate can be placed on its own company. In short: when there is no phosphate surplus.

When does a discount not apply for business transfers?
For the business transfers that were reported before January 1, 2018, rights can be transferred without the 10% discount. After the commencement date of the phosphate rights system, this is only possible without a discount if there is hereditary succession, blood and affinity in the first to third degrees.

What happens to the phosphate rights and land ties in the event of a company takeover?
In the event of a takeover, a new Chamber of Commerce number is created. This is leading for the Netherlands Enterprise Agency (RVO.nl). When a company takeover has a new Chamber of Commerce number, RVO.nl sees this as a new company. That company did not yet exist on July 2, 2015.

The result is that the company had no land on July 2, 2015 and is therefore not land-based. For example: a company in which father and son form a partnership remains virtually unchanged, but the Chamber of Commerce number does change. This eliminates any land ties.

Minister Henk Kamp reports in a Letter to Parliament dated September 7, 2017 that companies where a takeover took place after July 2, 2015, must still take into account the situation as it was before the takeover took place. If these companies were land-based, they will also be so in the new situation and will not have their phosphate rights cut. He indicates that this must be arranged in an AMvB (General Administrative Order), which also sets out the skimming percentage.

How are the phosphate rights distributed?
The current proposal states that the phosphate rights that are transferred at 10% will be skimmed off and end up in a phosphate bank. These allowances will be released when phosphate production is again below the ceiling. The rights are not transferable. How the phosphate rights are distributed has yet to be laid down in an Order in Council.

These rights are spent on companies that meet certain criteria. This includes:

• Land-based companies,
• Degree of grazing,
• Encouraging young farmers.

What is the relationship between the phosphate reduction plan in 2017 and the phosphate rights system in 2018?
Officially speaking, there is no correlation between them the phosphate reduction plan and the phosphate rights system. That is the position of the Netherlands Enterprise Agency. However, both parties are returning to the reference date of July 2, 2015. If farmers are exempted from the phosphate reduction plan, this could also have consequences for the phosphate rights system.

1.757 dairy farms have registered in the phosphate reduction plan as a emergency. This is approximately 10% of the number of dairy farmers. The agreement with the phosphate reduction plan is also that the bottleneck arrangement is equated with that of the phosphate rights system.

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What is the status of the emergency regulations and the effect of expansion?
The emergency regulations in the phosphate reduction plan correspond to the regulations in the phosphate rights system. A company is classified as a shortage if a company has 5% less phosphate production due to:

• Construction work,
• Illness or death of a person from the partnership,
• Illness or death of a first-degree relative,
• Destruction of the stables.

In July its on the bottleneck arrangement 2 situations added. Companies can now also be seen as a problem when:

• They are a start-up (started between January 1 and July 2, 2015) and produce at least 10% less phosphate than in a situation of full occupancy. These starters receive 50% extra phosphate rights on the difference between the animals present on July 2, 2015 and the existing stable capacity.
• They have had to deal with the expansion or realization of a nature reserve and/or the construction and maintenance of public infrastructure. Due to this special circumstance, production must be at least 2% lower on July 2015, 5.

The committee concludes that the generic discount This will increase by 1% and will be sufficiently reduced with a generic discount of 8,3%.

This was the second part of this three-part series. The third part will be online on Wednesday, October 25, with attention to the following questions: what is the difference with the milk quota, what about generic skimming and what is the status of the derogation?