Why does Dutch milker receive less subsidy?

The fact that 'only' slightly more than 20% of the income of Dutch dairy farmers consists of subsidies (compared to 40% in other European countries) is partly due to the higher intensity level in the Netherlands. In this comparison, an 'average company' has been calculated with an intensity level of just under 18.000 kilos of measuring milk. The average Danish company produces 12.000 kilos of measured milk.

Since the payment entitlements from Europe are paid out as a hectare premium, the share is higher in countries with a lower intensity level. For example, the Netherlands averages €2,50 per 100 kilos of measured milk, while the Danes average €3,40. This comparison emerges in the analysis 'Cost price comparison with abroad', which is a project of Wageningen University and the IFCN (International Farm Comparison Network). This project was financed by ZuivelNL.

Big differences in Europe
Aart Everts from Wageningen University also contributed to this comparison and explains that the income from the operation of the dairy farm is also an important factor. At €8,90 per 100 kilos of milk, the Netherlands scores clearly higher than Denmark (€5,20) and France (€5).

In Denmark the milk price is comparable to the Netherlands, but the costs are higher. For the French, the revenue from milk money is actually lower. In contrast, Germany (€9,60), Ireland (€11,50) and Poland (€18,10) score better per 100 kilos of measured milk (excluding subsidies) than the Netherlands. In all of these countries, the costs are on average lower than in our country.

Are the Dutch more efficient?
The comparison also reveals the dependence on subsidies. The fact that the Netherlands (just like the Irish) comes to 22% shows that we and the Irish are succeeding in generating more income from the 'real' business. It should be noted that this comparison was made based on figures from 2017. That was a year with relatively high milk prices, at least in Europe. If milk prices are lower, dependence on subsidies increases. That can even be 100%.

When the income for a typical Dutch company is below €23.115 (with respect to the comparison), subsidies provide 100% or more of that income. In Denmark it is €69.666 and in Poland €7.159. "In 2017, the Dutch dairy farmer was more efficient than the Danish one," says Everts. "However, due to the high degree of intensity, the Dutch are also more sensitive to a lower milk price. Countries with more extensive business operations then receive more subsidies because they have more hectares on average." 

Marginal subsidies
While European dairy farmers still obtain a substantial part of their income through payment entitlements, dairy farmers in countries such as Australia, New Zealand and Argentina have to do without. In the United States, only a small portion of subsidies is paid out through disguised schemes. For example, the US government provided some relief to dairy farmers last year due to the trade war with China. They received support of €0,23 per 100 kilos of milk, while it has been calculated that the loss from the trade war could amount to €3 per 100 kilos.

In addition, the government of American President Donald Trump subsidizes (40% to 50%) various insurance policies for extreme weather conditions, for example. There is also such a thing as an intervention. This can be used when prices of an agricultural product are very low, as happened with the milk price last year.