Effects of animal productivity on the costs of complying with environmental legislation in Dutch dairy farming

Effects of animal productivity on the costs of complying with environmental legislation in Dutch dairy farming P. B. M. Berentsen, Farm Management Group, Wageningen University, Hollandseweg 1, 6706 KN Wageningen, The Netherlands Available online 20 November 2003. Abstract Dutch dairy farmers have to comply with two policies that aim to reduce losses of nitrogen and phosphate to soil and ground water. The first policy (Mineral Accounting System, MINAS) uses a farm gate balance approach for registering nutrient input and output and consequently nutrient surpluses. Surpluses above an acceptable level are taxed. The second policy (Manure Transfer Agreement System, MTAS) aims at restricting manure application by requiring a manure transfer agreement for manure that is produced on the farm but cannot be applied according to maximum application rates. A possible way to meet both policies is to increase animal productivity in order to complete the milk quota with a smaller herd. This paper explores the impact of increasing animal productivity on economic results of dairy farms of different intensities taking into account environmental policies and a restricting quota. Furthermore, the yearly costs of extra quota are determined below which it is more interesting to buy extra milk quota in response to increasing milk production per cow than to decrease the number of cows. A linear programming model of a dairy farm is used to examine the economic and environmental effects of improved productivity for three farms differing in intensity. From the results, it appears that an improvement of dairy cow productivity leads to considerably lower costs of meeting the environmental policies. From the economic values (EV) of milk production under the 2003 environmental legislation follows that farms with a low intensity can pay three times as much for additional quota than high intensity farms. Author Keywords: Dairy farming; Productivity; Environment; Economic value; Quot