Adaptations in dairy farming required in the long term

Dutch dairy farming has undergone many developments in recent years. This prompted the Dutch organisers of the congress to ask for an overview of past developments in dairy farming and expectations for the future, based on studies already carried out and on six cases involving Dutch EDF dairy farmers.

In the short term, the economic effects of the expiry of the derogation and the introduction of buffer strips, along with the associated manure disposal costs, play a major role for many farms. For quite a number of farms, the short term will be focused on survival: how to get through this period? In the medium term (2030–2035), several studies indicate that all the objectives and targets (nitrogen, climate, manure) seem impossible to achieve without a reduction in livestock numbers. The extent of the reduction required is not yet clear; the Agricultural Agreement mentioned 30%. The studies also show that the trend towards larger farm sizes will continue. Whether farms become more intensive or, conversely, more extensive and nature-inclusive in the medium term will depend on concrete incentives from policy and, possibly, from the market.

For the long term (after 2035), it appears that adjustments are needed. Key principles include:

• Dairy farming focuses on using grass and by-products, converting them into high-quality food for human consumption.
• Dairy farming minimises the use of feed produced far away and/or on land suitable for growing food for people.
• Dairy farming ensures good animal welfare, allowing animals to express their natural behaviour.
• Dairy farming contributes positively to biodiversity restoration.

For the report, the (future) strategies of six Dutch EDF farms were discussed. The farmers were asked whether they consider themselves ready for the future. This question was first addressed in general terms and then explored in relation to several specific themes: expiry of the derogation and extensification, climate targets, nitrogen and ammonia, biodiversity, animal welfare and dignity, future market demand, and economic and financial aspects. One farmer indicated he is not yet ready for the future, while the other five responded positively, each in their own way.

How are these farmers approaching this? In general, thesy take the lead in developing their own strategies. They invest time in understanding developments in their operating environment, even though this is not always regarded as real work. Many do the calculations for their plans themselves, or at least make sure they understand the figures well. Most focus on being among the best-performing farms. The group also looks further ahead: while short-term challenges such as high manure disposal costs are difficult for several farms, they try not to let these issues dominate their long-term decisions.

The report also outlines possible future scenarios, ranging from the regular path of scaling up to short- and medium-term strategies. The researchers emphasise that when deciding on a future strategy, it is essential to carry out a thorough analysis. This starts with the farmer themselves: why are you a dairy farmer, and what are your key skills? Next, it is important to identify relevant trends in the surroundings, both in the immediate environment and in the wider market and society. The strengths and weaknesses of the current situation (structure and performance) also help determine what is possible. These building blocks form the basis for selecting an appropriate strategy.

“The long-term challenges require adaptation of the dairy farming business model,” says Beldman. “It is a dairy sector operating within a ‘safe and just’ space. This calls for adjustments to the business model and, in particular, to the revenue model. It is difficult to develop this from the existing situation, so the focus should shift more from outside to inside (‘outside-in’). What are the societal expectations and demands, and how can these be translated into a business and revenue model? An approach well suited to this is the concept of business model innovation,” concludes Beldman.