A turbulent week for dairy farmers

A selection of the companies affected by the Phosphate Reduction Plan 2017 Regulation and the State Secretary for Economic Affairs met on 12 April 2017 before the Interim Relief Judge of the District Court of The Hague.

The aim of the meeting, according to the livestock farmers, was to suspend the Scheme because of its undeniable ineffectiveness. However, these preliminary relief proceedings were not the only development in the difficult file on growth regulation of dairy farming.

The State Secretary again informed the House of Representatives by means of 2 letters that he was going to adjust the Regulation. A few days earlier, the State Secretary reported on the discussion in the meeting of the Nitrate Committee on March 29, 2017. Until April 1, a request could be made to increase the reference number due to special circumstances. How does the Netherlands Enterprise Agency (RVO) deal with this? I will list all the developments for you.

The summary proceedings
The summary proceedings was brought in early March by Hekkelman Advocaten NV and Linssen CS Advocaten. This was heard by the preliminary relief judge on 12 April. In summary proceedings explained that the Regulation is unmistakably non-binding and must be rendered inoperative, or at least not be applied.

A series of arguments have been raised for the ineffectiveness of the Scheme:

1. The Regulation is incorrectly based on Article 13 of the Agriculture Act.
2. The Scheme is inconsistent with Article 1; first protocol of the European Convention on Human Rights.
3. A system of phosphate rights is anticipated that entails unauthorized state aid.
4. The Scheme is contrary to the principle of legality and the general principles of good administration.
5. There is no compensation plan.
6. The Scheme violates Article 104 of the Constitution (taxes are levied by virtue of a law).

Before the Secretary of State, Mrs. Drijber and Huurnink speak. Entirely in line with expectations, they pleaded rejection of the claims. According to them, the Regulation can be based on Article 13 of the Agriculture Act. In their view, there is also no disproportionate infringement of the property rights of livestock farmers. 

The preliminary relief judge will rule on this case on 4 May 2017. That is an unfortunate and late moment. This is because the first reduction period has already ended.

Multiple changes to the Scheme
Before the commencement of the injunction hearing, Mr. Drijber still has to present a letter from State Secretary Van Dam to the House of Representatives. It appears from that letter that the Regulation will be amended again after the amendment of 28 March.

The Regulation is limited to milk-producing farms. No more money is imposed on non-milk producing farms. The implementation of this amendment has yet to be finalised. The removal of milk-producing farms in particular is a focus in this regard. 

One day later, the State Secretary announced another change. He wants to reduce the negative effects of the Rare Cattle Breeds Scheme. As far as varieties that are kept on non-dairy farms are concerned, the change announced in the letter of 12 April already offers a solution. 

The solution is less generous for rare breeds on dairy farms. Livestock farmers on dairy farms, with rare and less common breeds, have to choose for themselves which animals are removed. Rare breed calves born or to be born after 1 October 2016 are excluded from the Regulation. Population growth is therefore not hindered. This increase must be marked in the I&R system. 

pinched
During the hearing of the summary proceedings on April 12, it became clear that, contrary to what had been announced, the State Secretary had not yet been able to put together an advisory committee for cases of bottlenecks. So it will take a while to install it. This means that for the time being no example cases can be reported to the Netherlands Enterprise Agency. 

Increasing the reference number
Many cattle companies last week asked the Netherlands Enterprise Agency to increase their reference number. With regard to the shortage reports, the Netherlands Enterprise Agency reports the following: 

'Have you made a report via the ''Special circumstances'' form, submitted a cut in or out form, or reported a business transfer or split? We aim to handle all requests before May 1, 2017. You can assume that we will process your request if you have received a confirmation of receipt.

Have you submitted a response for phosphate rights and received a message that your response has been reviewed? In that case, we will include this information in the context of the Phosphate Reduction Plan 2017 scheme. It is possible that your response has not yet been assessed. We aim to process these responses before 1 May.

Do you have a milk producing company? The changed data will then be passed on to ZuivelNL. The data that you can now consult on the portals of the dairies does not yet incorporate all the changes you have submitted.

Do you have a non-milk producing business? You will then see on the first decision whether your details have been changed.'

A response to reports of shortages is therefore not expected before 1 May. In case of rejection, objection is open. The term to lodge an objection is 6 weeks. 

Nitrate Committee
The Nitrate Committee met on 29 March 2017 and the Netherlands reported on the implementation of the package of measures agreed with the European Commission to reduce phosphate production to the permitted ceiling.

In the letter from the State Secretary, dated 10 April, to the House of Representatives, he does not provide any information about the content of the explanation provided to the Nitrate Committee. The hope is modestly expressed that the presentation has given sufficient confidence to arrive at a positive advice for a new derogation from the Nitrates Directive. Meetings will be held again before the summer. 

And further?
For non-dairy farms, export stables and cattle farms with rare breeds of cattle, the Regulation has been given a positive turn. Exciting weeks are ahead for milk-producing companies.

Peter Goumans

Peter Goumans is a lawyer at Hekkelman. He focuses on the agricultural sector and closely follows developments in this sector. In his blogs he discusses legal issues in the agricultural sector.

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