In the next decade, the number of dairy farms in the Netherlands is expected to decline by 33 per cent, from 16,000 in 2018 to approximately 10,600 in 2030. The total amount of milk produced will remain the same until 2024 and then increase slightly until 2030. This is revealed in a baseline scenario resulting from an exploratory study conducted by Wageningen University & Research on development scenarios for the Dutch dairy sector in 2030. In this study, four possible scenarios were compared. The research was commissioned by Friesland Campina and carried out by Wageningen Economic Research.
The baseline scenario is founded on existing policies and the continuation of past behaviour in the dairy sector. Policies that have currently not yet been detailed have been excluded from the scenario. The baseline scenario also assumes that dairy farmers invest available funds in the growth of their enterprise. In this scenario, the amount of cattle declines over the coming decade. The amount of milk produced increases by 4 per cent, as the volume of milk each individual cow can produce grows in keeping with the trend shown over the past period. The average herd size on Dutch farms will increase from 101 heads of dairy cattle to 139.
Wageningen University & Research bases this scenario on data from the Central Bureau of Statistics (CBS) agricultural census and the Business Information Network of Wageningen Economic Research.
Some of the dairy farmers will terminate their business over the next decade due to old age and lack of a successor. Still, some will also have to end their entrepreneurship as a result of failure to meet financial commitments.
In the baseline scenario, the dairy sector stays within the limits of phosphate production and nitrogen emissions, and will likely achieve the goals laid down in the climate agreement. There is a challenge in terms of ammonia emissions. Research shows that fluctuations in, for example, the price of milk or interest rates may severely impact the expected results.
In addition to the baseline scenario, three possible scenarios have been explored based on the question: What would happen if…? These scenarios are based on potential future societal changes and are intended to investigate what possible developments the sector could experience over the next ten years.
In the first explorative scenario, the market and society increase their focus on nature-inclusive dairy farming. In the second scenario, ‘free market’, the primary focus is in producing sufficient affordable food, without additional restrictions to protect nature or the environment. In the third scenario, ‘focus on social demands and profit’, the dairy farmers do not focus on maximum growth. Instead, the farmer demands a fixed income from the business and looks for investment opportunities within the farm and elsewhere.
These three scenarios show a greater decline in the number of dairy farms than the baseline scenario. Furthermore, these scenarios lead to larger farms, which are larger and more intensive in the free market scenario, and more extensive in the nature-inclusive scenario. In the third scenario, where farmers do not focus on maximum growth, the total milk production declines most severely.
A significant outcome of the study is the development of a model that predicts the effects of changes in economy, policy and investment behaviour on the structure of the dairy sector in cohesion. This model allows us to calculate new scenarios and circumstances.
Alfons Beldman, a researcher at Wageningen University & Research, on the value of this study for the Dutch dairy farming sector: