Fairly stimulating, accounting and rewarding farmers for sustainable agriculture

The goals for agriculture are: halving ammonia emissions by 2030 or 2035, halving greenhouse gas emissions by 2050 and keeping the nitrate concentration of groundwater below 50 milligrams of nitrate per litre. These are ambitious goals, but they are also achievable. But then we have to translate them into goals for each company in a fair and clear way. Farmers can then steer towards this and, if necessary, cut their coat according to their cloth: sometimes it will mean stopping, and more often it is possible to achieve the goals with a major adjustment of the business operations and management. This requires a financial and legal framework that offers perspective.

How do we translate national objectives into concrete objectives per agricultural company and per province?

Although much is already known about the tasks and the use of measures, this has not yet been translated into concrete goals per company. These goals must be clear, transparent and fair. For example, it does not help to tell all farmers: halve ammonia emissions. The emissions per company vary greatly and in this way you unfairly tar farmers with the same brush. It is also clear that not all problems are equally important in each province. Each province has its own accents and priorities. These are roughly related to the natural conditions (soil type, hydrology and proximity to nature reserves) and the type of companies, crops and animal numbers.

Our proposal is to translate the national targets into permissible emissions per company, expressed per hectare for land-based companies and per animal for non-land-based companies. If you are above, you have to reduce. If you are on top and below, you are fine. As key performance indicators (KPIs) we propose to establish permissible ammonia emissions, nitrogen surplus in the soil and greenhouse gas emissions per company.

• In order to halve ammonia emissions, we allocate the desired national reduction to the available area of grassland, cornland and arable land or the number of animals. A livestock farm may then emit 20 to 25 kg of ammonia per hectare. The permissible emissions per animal vary between 0.05 and 0.50 kg of ammonia per animal, depending on whether it is a chicken, pig or veal calf. Because ammonia is deposited at a short distance, additional measures are also required within a radius of 500 to 1000 m around sensitive nature areas.
• To reduce nitrate leaching, we calculate an allowable nitrogen soil surplus as a source of leaching. In doing so, we take land use, soil type and groundwater level into account. The allowable surplus then varies between 50 and 125 kg nitrogen per hectare.
• In order to halve the emission of greenhouse gases, we calculate a maximum permissible emission per company, just like with ammonia. For example, 9 kg of nitrous oxide and 150 kg of methane may be emitted per hectare of grassland. Per animal, the permissible emission varies from 3 to 12 kg of methane for pigs and veal calves.

In addition to these three tasks, there are also specific objectives for soil subsidence in the peat area, the quality of the surface water, biodiversity and soil quality. Soil subsidence can be tackled by defining a desired ditch level per area and implementing this within existing water level decisions. In order to improve the water quality of the surface water, adjustment of the phosphate use standards is necessary, supplemented with measures to improve the ecology of ditches. For this, as well as for improving biodiversity and soil quality, use can be made of existing advisory instruments that can be applied at company level, such as the Biodiversity Monitor, the Business Soil Water Plan and the Open Soil Index.

Based on the above objectives per company, it is easy to calculate what the provincial objectives are. This can be done by multiplying the permissible emissions and soil surplus by the agricultural area and the number of animals per province. The methodology elaborated here guarantees the necessary reduction, but can be further differentiated. Stopping the largest peak polluters, in combination with area-specific customization within a radius of 500 meters around nature reserves, can, for example, lead to a higher generic emission standard.

What measures can we take to achieve the goals?

Objectives can be achieved with a combination of measures. Through relatively simple adjustments in crop and animal management (Good Agricultural Practice), through major system adjustments on the farm that often take several years to achieve or pay for themselves (e.g. switching to organic farming or low-emission stables) and through relocating or terminating farms at area level.

Due to their high contribution to ammonia deposition, many livestock farms within a radius of 500m around nature reserves will have to be relocated or bought out in order to meet the nitrogen targets. However, outside these vulnerable areas, many livestock farmers can meet the nitrogen targets mainly with management measures on the farm, such as the use of low-protein animal feed, fertilization in accordance with the fertilization advice and better manure application on the land. System innovations also contribute, such as building a low-emission stable.

A sophisticated fertilization strategy is also needed to reduce nitrate leaching. Good soil management helps here, but especially on the dry sandy soils in the south and east of the Netherlands, additional measures are needed, such as extensifying the crop plan and lower usage standards. It is essential that the use of animal manure is tailored to the crop needs.

In order to meet the climate target, livestock farmers must reduce methane emissions with different feed, methane inhibitors and manure processing, and both livestock farmers and arable farmers must reduce nitrous oxide emissions through management. Livestock farmers in peat meadow areas will almost certainly have to extensify in order to meet the climate targets, because the water level in many peat meadow areas will rise. In addition, the use of underwater drains can reduce the subsidence of peat soils. An integrated package of measures is needed for the nitrogen target, the climate and water quality.

How can we ensure that the goals are achieved?

The objectives at company level can be translated into emission rights per company. For the farmer, the introduction of these emission rights means that an additional production factor is added: emission rights are needed to be able to produce. This can happen as follows. At the start of the new policy, the government allocates emissions to the company based on, for example, the situation in 2018, including the objectives that must be achieved within an agreed period. A sustainable company that emits little needs to reduce less than a company that emits a lot. If the desired emission is so low that it is not economically feasible, a company must purchase additional rights from companies that stop or extensify below the standard. Because emissions must decrease nationwide, part of the emission rights can be skimmed off with each transaction. This skimming factor can vary per province, depending on the assignment. This skimming is in fact a tax, which ensures that part of the rights disappear from the market with each transaction. The government can also buy up emission rights and then destroy them.

It is essential that the government ensures that the objectives for the above-mentioned KPIs are achieved. This involves monitoring whether measures are implemented, including Good Agricultural Practice and instruments such as aCycle Indicator. This is necessary to demonstrate that nitrogen surpluses and emissions of ammonia and greenhouse gases on the farm are actually reduced. For example, if a farmer applies an improved manure application technique, this can be guaranteed by using certified contractors. Calculated or measured indicators can demonstrably ensure lower emissions.

What is the legal and economic picture of the transition and what perspective is offered to farmers?

Realising the tasks requires major adjustments and efforts from the agricultural sector. This has implications for the size of the sector and for the revenue model. For a vital agriculture it is necessary to strengthen the revenue model via various lines: targeted government payments for green services, larger contributions from chains and consumers, and a general contribution for landscape and biodiversity management from the citizen/taxpayer. In the transition process, the instrument of landscape land is important to facilitate extensification of agriculture and to realise maintenance and management of the landscape.

We propose that the provinces make agreements with individual farmers on how they will achieve the above emission targets. They can also establish rules for Good Agricultural Practice in area arrangements, so that self-management occurs instead of complex regulations. In such an arrangement, provinces can also make multi-year agreements on fines, costs and benefits. The starting point is that all functions of the farm, including maintenance of the landscape and increasing biodiversity, are rewarded. From that framework, farmers can then calculate whether their farm is still a profitable enterprise with fewer livestock, higher environmental costs, meadow bird management and/or maintenance of hedgerows. Sometimes the answer is: no, more often it is yes, we suspect.

And the peak polluters?

The introduction of emission rights and the use of landscape land does not alter the fact that the government must quickly create nitrogen space by buying up peak polluters. The budget for extensification and devaluation of land (17 billion euros) seems a lot, but with it the government can devalue at most 200,000 hectares of land. That size is equal to the buffer zones around nature reserves, so that there is no money left for the remaining tasks. Moreover, with the current budget a maximum of 15% of ammonia can be reduced through buy-up schemes. The remaining 35% must then still be achieved with management and innovation.

We believe that the government can spend its money more effectively. The government can also buy up the land and/or emission rights of all farmers who are retiring over the next 10 years. If the government buys up or skims off the agricultural land and emission rights of these farmers, agriculture can reduce production and livestock through natural attrition and thus realise half of the nitrogen target (25%). With this purchase, the provinces will immediately have land available for the extensification of livestock farming. In 2023, this seems to be the most cost-effective way to facilitate the transition to sustainable agriculture.

Finally

Looking ahead, we see perspective for the agricultural sector in the Netherlands. By defining production rights for permissible emissions and soil surpluses per company, targeted management can be achieved to improve air, water and soil quality and a financially healthy agricultural sector.