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Phosphate rights: a single smile and many tears
The agricultural sector is full of dynamism, which should come as no surprise given the frequent media coverage. The recent report 'Sustainable and healthy - together towards a sustainable food system' (the Council for the living environment and infrastructure) speaks clearly: on the basis of food policy we should already anticipate a decline in livestock. Fortunately, the government is not in favor of this, but the tone has been set once again.
Written by: Hans Peters, chairman of the Rural and Agricultural Real Estate Section
The lack of clarity about the derogation has led to a great deal of uncertainty among dairy farmers. Confidence waned and the price of phosphate rights skyrocketed when it turned out that the derogation would definitely continue. After all, the planned investments were able to continue. There is the news from FrieslandCampina (about far-reaching sustainability of milk production) on the contrary and this also led to a short fall in prices. We should certainly not underestimate the hefty package of wishes of the dairy giant.
Accident regulation
And we are not there yet. In May it became clear that the bottleneck arrangement in the phosphate rights system is definitively not extended. A major downer for entrepreneurs who have made irreversible investments and still had insufficient livestock on their farm on the reference date (2 July 2015). Minister of Agriculture Carola Schouten states that due to the extra allowances required, an (even more severe) generic discount would be unavoidable. But weren't the phosphate rights actually intended to counteract unbridled growth in dairy farming?
What is the consequence of these measures? Very simple: a growing number of dairy farmers are giving up. This accelerated remediation is probably not foreseen in The Hague, because it creates a strong impulse for upscaling. Exactly the opposite of what we actually intended, because scaling up is still a dirty word.
Stop big impact
The fact that older dairy farmers make a well-considered decision to terminate their business is up to this point. The lack of successors and the strict requirements (particularly in the south of the country) also play a role in this, but it is distressing that a large group of relatively young entrepreneurs take the decision to stop their activities earlier than planned. The emotions associated with such a decision cannot be underestimated. In many cases, the old family business ceases to exist. That has a major impact; not only on the dairy farmer and his family, but also on many other stakeholders.
In those cases, the broker/valuer has a much larger role than the business guidance of the processes associated with business termination. In those cases, the task of adviser places high demands on our profession. We are increasingly becoming farmers' coaches, and that role will only increase.
Half of 2018 has now passed. Many phosphate rights have changed hands. For the buyers this means a substantial investment; the cost increases. The situation is of course different for the sellers: the sale of the rights offers them the opportunity to take different paths. For this group it would be better to speak of fos'baat'rechts.
