Uncertainty for beef farmers continues

The phosphate rights system has been included in the Fertilizers Act as of 1 January 2018. Not only dairy farms are allocated phosphate rights, but in a number of cases this also applies to beef cattle farms.

Beef farms do not receive rights for all their cattle, but only for their young stock. The Minister of Agriculture, Nature and Food Quality (Carola Schouten) therefore assumes that beef cattle farms are entitled to the allocation of phosphate rights, but also need them. This is due to the way in which the statutory regulation is designed.

Beef farmers were involved in the phosphate reduction targets (2017 Phosphate Reduction Plan Regulation) last year, but these companies have been excluded from the scope of the 2017 Phosphate Reduction Plan Regulation due to undesirable side effects. Now, these companies are once again faced with limitations. However, that was not the intention of the legislator. 

Legislator's intention
The explanation of the bill for Phosphate rights for dairy cattle is clear: "(...) the present new system is aimed, in view of the observed growth in dairy farming and in view of the need to ensure that phosphate production is again below the manure ceiling, exclusively at those farms that keep animals necessary for the production of milk (….)". According to the pleading, this concerns animals that are kept for the production of milk and animals that are kept to replace dairy and calf cows. 

This is further explained with the consideration that there is a group of farms (between 2.500 and 3.000) where no dairy and calf cows are kept, but where young stock is kept that are bred to replace dairy and calf cows. Because these companies also contribute to the growth of the sector and to phosphate production, it has been decided not only to share the dairy and calf cow category, but also the two categories of young stock.

Elaboration in the Fertilizers Act
The intention of the legislator has not been sufficiently translated into the text. The granting of phosphate rights is legally linked to dairy cattle, but this term is defined far too broadly. The Fertilizer Act defines dairy cattle as dairy and calf cows that have calved at least once and are kept for milk production or breeding. Young cattle younger than 1 year for dairy farming and female rearing calves for beef cattle farming up to 1 year old also fall under the definition. And finally, also young stock older than 1 year (all cattle of 1 year and older including beef cattle, with the exception of red meat bulls and breeding bulls) are included.

The consequence of this definition is that the statutory regulation has a broader scope than intended by the legislator. After all, this also includes young stock on beef farms. Schouten has acknowledged this by allocating phosphate rights. It is striking, however, that this does not happen in the dairy and calf category. This also includes cows that are kept solely for breeding; suckler cows can therefore be brought under the chosen definition and phosphate rights should also be issued for this.

However, that doesn't happen. The position that suckler cows do not fall under animal category 100 does not hold. The definition in the law does not mention any animal categories and it is evident that suckler cows are kept for breeding and therefore fall under the definition. The statutory regulation therefore leaves no room for interpretation.

Divergent interests
The interests in the beef cattle sector are diverse. For a number of companies, the award is welcome. After all, these are tradable rights that represent a value. Other companies see the allocation of phosphate rights as a check. After all, phosphate rights limit the scope of business operations. This also affects land management organisations.

Highly undesirable
The lingering uncertainty is not without consequences. Some of the award decisions have not been contested and are therefore irrevocable. For those who have objected, the uncertainty continues for the time being. The Netherlands Enterprise Agency takes the time to make a decision on the objection. An assessment by the judge will only take place afterwards.

Other companies have not received any award decision at all. They can still provoke a decision by submitting an application. In the meantime, the end of the first quarter of 2018 is approaching and there is less room for maneuver to adjust the stocking density to the size of the phosphate right.

However, it cannot be ruled out that Schouten will intervene, but that also takes time. In order to exclude beef cattle farms from the phosphate rights system, the Fertilizers Act must be amended. This state of affairs is undesirable for companies that are completely outside the scope of the problem, because the legislator was clear about this.

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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