28 February 1997

HOW DUTCH FIGHT TO STAY AFLOAT…

Falling milk prices, rising feed and fertiliser costs, and environmental constraints, confirm that dairying in Holland is under pressure. Farm business consultant Tony Evans reports

DUTCH dairy farm profitability has declined by 18% in real terms since the introduction of milk quotas.

Milk price has, at the current price equivalent of 30p/litre, remained static but in real terms has declined over the past 10 years.

Feed and fertiliser prices have historically been 20-30% lower than those in the UK. So until the past few years overall profit has been high, but then with land at £17,297-£19,768/ha (£7000-8000/acre) it has to cover repayment. Dairy farms are farmed much more intensively with stocking rates at 2.5 cows a ha (1/acre).

Nitrogen and phosphate levels are very high and mineral limitations are being introduced rapidly to conform with national and EU legislation/standards – which also include a reduction in stocking rate.

Leasing and quota can be traded under specific guidelines (see below left) and purchased milk quota depreciated, on a straight-line basis, over eight years.

Looking at costed farm data in Holland a comparison of milk production systems can be made and the message is simple: High yields from forage using genetically superior cows managed on simple systems provide the best returns.

With costs of production rising and stocking rates having to fall, the Dutch are keen to minimise losses and increase efficiency a cow.

To this effect their dairy research station at Lelystad is pursuing three key areas:

&#8226 Increasing yield a cow. Current results show good margins, with milk quality and herd fertility maintained.

&#8226 Reduced fertiliser usage by using high clover swards – two herds with separate land areas are being compared on a high N policy at 300kg/ha N (240 units/acre) and a low N policy at 100kg/ha N (80 units/acre). Current results indicate a lower margin/ha return of £480 for the low N policy. However, if quota was leased out this lower margin disappeared. But would farmers do it?

&#8226 Robotic milkers – research has been underway for almost eight years with performance slowly improving but capital investment cost still very high. Current results show very low cell counts. Cows will accept this method of milking when housed but less so when at grass. TBCs vary according to the system used. This system could be the way ahead for the family if there is a shortage of labour.

&#8226 Tony Evans wrote this report after a study tour to Holland last summer with Genus. He is now a senior dairy business consultant with Andersons. &#42


Quota leasing and purchase guidelines

HollandUK Comparison

(Dutch "Rule

of thumb")

Leasing15p (50% of10-15p

milk price)

Purchase£1.50 (5 x55-65p

milk price)


Dutch dairy herd comparisons

19901996%Change

Number of dairy herds47,00036,000-23

Herd size4046+15

Yield a cow(litres)6,0696,638+9


Dairy farm performance comparisons

HollandEngland/Wales

1995/961995/96

Milk producers36,01027,332

Average herdsize4674

Litres a cow6,6385,325

National quota(m litres)10,94011,313


Profitability comparison

Holland England/Wales

(Top 25%) (Top 10%)

Gross output100100

Variable costs2835

Gross margin7265

Labour610

Power & machinery1512

Sundries165

Property charges186

Finance62

Total overheads6135

Profit1130