Lodders asks questions
VVD doubts about free trade in phosphate rights
Should there be supervision on the trade in phosphate rights? That is the question that Helma Lodders (VVD) poses to Carola Schouten, Minister of Agriculture, Food Quality and Nature (LNV). This is because she fears speculation and fraud.
Schouten announced at the end of November that the system of phosphate rights from 1 January 2018 starts. From that moment on, phosphate can be traded definitively, but there is already plenty of trade in the options on the rights. It has pushed prices up and results in prices around the €8.000 to €8.500 per cow.
Looking critically at trade
Current developments are reason for Lodders to take another critical look at the trade in phosphate rights. She is in favor of free trade, but fears speculative behavior and fraud. This recently also happened in the trade in emission allowances. “Trade must be fair and take place on a level playing field.”
The VVD considers a fair and transparent market to be of great importance to dairy farming. The dairy farmers must thereby be protected against parties that do not have the immediate aim of using the phosphate rights themselves. Supervision and regulation can help prevent speculation, market manipulation and insider trading. European legislation and regulations seem to underlie this.
Phosphate: a financial product
Lodders also asks the minister whether the trade in phosphate rights should be regarded as trade in financial products. If that is the case, the phosphate rights trade would even be supervised by the AFM (Financial Markets Authority) and the DNB (From Nederlandsche Bank) can fall.
According to calculations by Boerenbusiness the current phosphate market is a market with a value of approximately €17 billion. The calculation is based on the current market price paid in pre-trade for these rights. Phosphate production has been determined on the basis of the figures from CBS for 2015 minus 8,3%, the possible discount for non-land-bound dairy farmers. According to current legislation and regulations in the financial markets, this market value is eligible for supervision.
Protection dairy farmer
Lodders emphasizes that the importance, as far as she is concerned, lies in the protection of dairy farmers. "They are already sufficiently exposed to major challenges with the arrival of phosphate rights, so fair and transparent trade should be a precondition for the introduction of these rights."
The trading of phosphate rights by third parties, even before the phosphate rights have been made official, has resulted in questions being put to the House of Representatives. The VVD considers the trading of phosphate rights, even before the actual introduction, a risk of speculative behaviour. Here, fair trade and a level playing field can be lost sight of and the bill will ultimately be paid by the individual farmer.
Intervention must be possible
She asks the minister whether she is prepared to map out the financial size of the market, the market participants and the turnover rate. She also asks for the possibility of supervision to be indicated, so that there is more transparency and intervention can be taken in the event of excessive transactions or market-disrupting effects.
The questions asked by VVD can be found here
Herman van den Pol
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