Inside Milk
Who benefits from the phosphate bank?
The start of the phosphate bank is getting closer and closer. For example, Minister Carola Schouten (Agriculture, Nature and Food Quality) has paved the way for using the bank with the proposed amendments to the Fertilizers Act. She also reveals how it works and who benefits from it?
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Schouten said that the phosphate bank can be used from November 1 at the earliest a letter to Parliament known. The amendments that must be implemented in the Fertilizers Act to make this possible are now also known. It states, among other things, that the rights applied for in calendar year 2018 can only be used in 2019.
How does the phosphate bank work?
With each transaction, 10% of the traded rights end up in the phosphate bank. Entrepreneurs do not know how many rights are in the bank in mid-September. This will only become known when the minister publishes it in the Government Gazette. "It is not possible to determine this in advance."
- Carol Schouten
When allowances are released from the phosphate bank, we no longer speak of allowances. This concerns an exemption. This is related to the phosphate ceiling for dairy farming (84,9 million kilos). Every additional right can be seen as unjustified state aid. The fact that the 'extra' rights can still be invoked is thanks to the European environmental support framework. The bank therefore grants an exemption, which makes it possible to produce more phosphate. It is important that this is possible without having to purchase rights.
The sector ceiling is the standard for state aid, but the standard for the release of rights is the national phosphate ceiling (172,9 million kilos). As long as production remains below this, the bank can be called upon. It does mean that the fate of dairy farmers is partly determined by pig farmers and poultry farmers.
When will the rights be released?
Minister Schouten will announce in the Government Gazette when an application can be submitted. The note here is that this should be done as late in the year as possible. "This because the phosphate bank maximum capacity." At the same time, there are still a few important periods. For example, a decision must be made on the application within 13 weeks.
To test entrepreneurs against the conditions, the data from May 15 (phosphate space) and September 1 (phosphate rights) are used. It is the reason why Schouten is aiming for an opening on September 2019 from 1. This way, entrepreneurs know where they stand in the following year.
Only in 2018 this will be different. There is insufficient time to grant the exemption from 1 January 2019. This will therefore be granted later and will apply (retroactively) for a period of 5 years.
Who is the exemption for?
The exemption is mainly aimed at land-based farmers and land-based young farmers. The group of young farmers is given priority. The conditions for a young land-based farmer are almost the same as the conditions for obtaining the additional payment 'Young farmers' under the Common Agricultural Policy. So up to the age of 40 someone is a young farmer.
- Carol Schouten
"Intensive dairy farmers are not eligible for an exemption, even if they are young farmers," says Schouten. By intensive, the minister means: a dairy farm that produces more phosphate than can be placed on its own land. With regard to the phosphate bank, this requirement is even stricter, because there must be installation space on private land that is not being used. A positive production space is therefore required.
"An example: the phosphate space in 2018 is 5.000 kilos and the allowances cover a volume of 1 kilos on September 2018, 4.000. You can then apply for an exemption for a maximum of 1.000 kilos," explains Adreas van der Vis, lawyer at Countus.
He adds: "You must also have sufficient phosphate space in the following 5 years. You may not alienate phosphate rights during the years of the exemption. It is therefore not possible to sell/lease 500 kilos of phosphate with an exemption. An exemption is not transferable."
Too many requests?
Minister Schouten takes into account (based on the number of land-based dairy farms and the number of companies with the ambition and potential to grow) that the bank contains too little phosphate to cover all applications. When that happens, the order of treatment and awarding will be determined by drawing lots.
It is important that an entrepreneur has not violated the rules surrounding the phosphate rights system 3 years before application. If this has happened, then that is a ground for rejection.