Keith Woodford says Dutch dairy farms prosper despite modest subsidies, tight regulation, by a focus on science, highly educated farmers and a strong sense of social responsibility

By Keith Woodford*

In late May, I was in Holland with colleagues from Calder Stewart as part of a self-education project on hybrid dairy systems. These systems involve 12-month production of milk from the combination of grazing and off-paddock systems.

One of the first lessons we learned is that many Dutch cows graze below sea level. The north-western half of Holland is almost totally below sea level apart from artificial man-made structures called polders. In these regions, the pastures lie three to five metres below sea level. There is an English saying that God made the earth, but the Dutch made Holland.

The Dutch started building dikes some 700 years ago and they have never stopped. During that time, the sea level has been steadily rising at about three millimetres each year as Earth has continued its long-term emergence from the Ice Age. 

Dutch dairy markets are about 35 percent internal and 65 percent exports. There are no price supports. However, Dutch dairy farmers do receive European Union grants of about 400 euros (roughly $NZ650) per hectare for environmental management. Hence, there are lots of trees, the paddocks are small, and the rules around effluent are very strict. 

There are many effluent management actions that New Zealand farmers can do which Dutch farmers cannot do. Accordingly, Dutch dairy farms need lots of effluent storage – for up to eight months.  Most of this is held beneath the dairy barn in huge tanks. The barns are airy and there is little smell.

Livestock numbers (adjusted for breed liveweight) are increasingly regulated based on assessed phosphate loadings.  These phosphate allowances can be bought and sold – they become a licence to farm. Just as in New Zealand in relation to new nutrient limits, there is lots of controversy.

One of the farmers we visited, who commenced a development program prior to the new regulations, has successfully sued the Dutch Government for an increased phosphate allowance. This has sent shock waves through the system, and the Government will undoubtedly mount an appeal through higher courts.

Per hectare production is high from a combination of feed grown on-farm plus bought-in supplements. A typical farm would run two large Holsteins (the large cousins of Friesians) plus young stock per hectare, and produce about 18,000 litres of milk (1350 kg fat plus protein) per hectare.

The industry structure has similarities to New Zealand. FrieslandCampina is the dominant co-operative with a 65 percent market share. CRV (which operates in New Zealand as CRV Ambreed) is the dominant farmer-owned herd improvement co-operative, similar to New Zealand’s LIC (Livestock Improvement Corporation), and is one of the ‘big three’ global suppliers of dairy semen.

Like New Zealand, the Dutch industry has had an increasing focus on China, but with infant formula as the key value-add product. They are happy to leave the commodities to New Zealand.

On our trip, we received great support from the CRV team who took us to a range of farmers who were pushing the envelope in various directions. These included high production farms with cows averaging over 850 kg milksolids (fat plus protein) per 305-day lactation, organic farms with somewhat lower production and higher costs, and hybrid farms with various levels of grazing.

Farmers who have their cows outside for at least six hours per day for at least 120 days of the year receive a price premium of 1.5 euros per litre paid by their processor, which is about five percent above the standard price. However, this ‘grass-fed’ milk is not kept separate from other milk. Rather, it provides a market story that Dutch cows lead a happy outside-life together with nice pictures for dairy-product labelling.

Unlike New Zealand, the urban community seems generally supportive of dairy industry practices. There is a sub-group of ‘urbanista bovinophobes’ who believe no animals should be farmed, but farmers and farming are generally held in high regard. This favourable situation has not been achieved by chance. Animal welfare standards and environmental management standards are both very high. The farms are exceptionally tidy.

There are a few Dutch farmers using similar grazing systems to in New Zealand, and we found ourselves talking about grazing mass, the three-leaf stage and residuals, just as in New Zealand. However, there is much less synchrony over there between pasture supply and cow feed demand. The Dutch pastures lie dormant for up four months or more, and then bolt away in spring. When we were there in late May, grass production was about 140 kg dry mater per hectare per day – enough to feed about seven cows each day at that time of year for each hectare.

Robot milking is very common. On one farm with two herds side by side, the robotically-milked cows produce about seven percent more than the human-milked cows. This is largely as a result of additional milkings which the robotically-milked cows choose of their own accord. 

A key reason for robotic-milking is labour reduction and lifestyle. Unlike in America, dairy farm labour is very expensive. Most farmers rely on family labour.

The farms we visited were typically of about 100 cows, but across all of Holland the average farm is somewhat smaller than this. These are big cows - typically 650 to 700 kg, and sometimes more. And they produce a lot of milk. 

Land is expensive – it can be anywhere from 45,000 euros per hectare to over 80,000 euros per hectare. So, it is not surprising that the Dutch have spread out across the dairy world in search of new opportunities.  It seems that the Dutch and dairying go together.

The level of science and technology application are very impressive on the farms we saw. The farm families are making a success of their lives. One farmer told us that he needed a price of about 32 euro cents per kg (about $NZ6.50 per kg milksolids) to be profitable.  He said his purchased feed cost him nine euro cents per litre of milk produced, his other costs including his own salary came to 14 euro cents, and interest plus debt reduction was another nine euro cents. Right now, he is getting 36 euro cents. However, a year ago he was only getting 25 euro cents and life was tough.

Genomic selection of bulls based on DNA testing is increasingly favoured, and works sufficiently well such that progeny testing of bulls is now minimal. Farmers can choose their own selection criteria, with good feet and good udder conformation being highly favoured. The selection system works because the Dutch, working with other European countries, now know which genes affect these specific characteristics. (In New Zealand, the equivalent information for our cows in our environment is currently less reliable.)

Famers also select strongly for bulls that will produce cows of high longevity so as to reduce the number of replacement stock that need to be raised. They are already achieving cow longevity similar to New Zealand when measured in years, but with almost double the lifetime milk production given the high annual lactation yields.

My overall impression of Dutch dairy farming is strongly positive. They have got their act together, with a focus on lots of science, well-educated farmers, and an understanding that they have to do things right if they are to retain a social licence from the rest of the community.

If there is an Achilles heel to Dutch dairying, it is the small size of the farms, and the long cold winters. These farms lie at a northern hemisphere latitude equivalent to 650 km south of Invercargill.    

In New Zealand, the counter claim to Dutch efficiency will be that the Dutch get big subsidies. But by my calculations, these grants comprise less than seven percent of income on highly productive farms, and they do come with obligations. I think we have lots to learn.

Cows and wind turbines epitomise the Netherlands countryside

Fleckvieh dual purpose (dairy plus beef) cows on a Dutch organic dairy farm


*Keith Woodford is an independent consultant who holds honorary positions as Professor of Agri-Food Systems at Lincoln University and Senior Research Fellow at the Contemporary China Research Centre at Victoria University.  His articles are archived at http://keithwoodford.wordpress.com. You can contact him directly here.

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20 Comments

Can you imagine if we tried to reclaim the sea and graze cows , the foreshore and seabed fiasco would be the first thing to rear its head again

Yep, there'd be Sea Snails. Endangered, natcherally.

... until now , I didn't realize that we could milk sea cows ...

Man , a tee heeee moment for me ... dugong learn summit new at interest.co.nz every day ....

Thanks Keith. It just shows what can be done if one uses their intelligence. It makes our efforts look pretty poor. There is no future competing at the bulk commodity end of the market. When will we ever learn. It is a story that is repeated across a lot of our traditional markets. Meat, Tourism, fishing, Dairy .... Population? If we used our brains and leveraged off the natural advantages we enjoy (and are our undeserved saviours) , we could do so much better than we are.

The solution to our productivity problem also lies in the much needed transition from low value bulk commodity trading to high value product-based business. This would also reduce our reliance on cheap, underpaid foreign labour and increase incentive for dairy farmers to train and upskill local labour to help produce better valued products in return for higher wages.

It would also 'increase incentive for dairy farmers to':

  • Buy more a them Robots
  • Reduce on-farm labour to the immediate family (the article explicitly mentions that this is the case for the Dutch)
  • increase wages to the few highly skilled robot engineers and maintenance crew, leaving the rest to their fate.

Careful wotcha wish for....

Most farmers rely on family labour.

Farmers mainly employ Filipinos on work visas whom they pay next to nothing so it would be no great loss to the employment of New Zealanders. I heard on RNZ that the required annual cost to NZ to reduce the pollution from dairying is equivalent to the amount dairy contributes to NZ's GDP.

Uh, I think the minimum wage still applies?

Only if you observe the law. If you take their passports off them and threaten them with deportation you'll get a much cheaper rate.

Your comment dictator is a slur on Filipinos. In Southland there is a very strong Filipino community. If employers tried what you are implying they simply would move. It has been great to see some of these young couples move up the dairy pathway to sharemilking and farm ownership

Do you think that this isn't happening in New Zealand. There are some appalling cases that have been uncovered. It's not a slur against Filipinos, it's a slur against New Zealanders ripping off foreign workers and treating them like slaves.

There are good and bad employers in every sector dictator. Your original comment implies that Filipinos generally are willing to work under such conditions. Do you know any Filipino farm workers?

Due to non notified Labour Dept inspections on farms, conditions for migrant workers in the Dairy industry have improved.

Nothing to do with them being dumb. I know Filipinos who are being or have been exploited in "reputable" restaurants in Auckland, and fear of having to leave NZ is what paralyses them from taking action or informing on their employers. Multiple cases, multiple different people, none of them stupid but all of them scared.

Ngrrk was referring to farm workers.

Statements and more statements. No sources or facts? I heard......
Filipinos arent dumb. They know what they're entitled to (Usually the recruitment agencies negotiate wage details so to ensure relevant laws are conplied with) and once they are in the country if a farmer threatens them or if they are earning below minimum wage they can move to a new Job (Due to their high demand). NZ Farmers don't import their labor because it is cheap but rather because they don't do the drugs that many farm laborers do. Any NZ farmer that is any good is usually on a contract milking or farm management contract as opposed to laborer.

I hope this is the case. It means that imported workers have a better idea of their rights and are willing to walk away from a crooked employment deal. This is something that our local workers are not good at.

Would milking below sea level also be the case in the USA in the states that the Mississippi meanders thru.

The location rule still applies though? If you draw a circle you capture a large population?

What ever happened to "noMoo" (cultured milk?).

iBut by my calculations, these grants comprise less than seven percent of income on highly productive farms, and they do come with obligations.
I would counter with: Agri-environment payments shall cover the costs incurred and income forgone as resulting from voluntary environmental commitments.
https://ec.europa.eu/agriculture/envir/cap#polluter

So using our QEII covenant as an example it would attract a payment of $36900 per year. 1200kg/ha x $6.15kg/ms = $7380/ha. 5ha x $7380 = $36,900yr in forgone income. I would be happy to take that. :-) But of course I would also get reimbursed for all my costs. But that is only one subsidy I could potentially claim.

Direct payments are granted to farmers in the form of a per-hectare basic income support (the Basic Payment Scheme), complemented by a series of other supports targeting specific objectives or types of farmers (the "green" direct payment, the redistributive payment, the voluntary coupled support, the payment to young farmers and the payments for areas with natural constraints)1 . They are meant to provide a safety net acting as a buffer to farmers' income stemming from sales on the markets, which are subject to volatility, and to compensate for the low profitability of the sector.
https://ec.europa.eu/agriculture/sites/agriculture/files/direct-support/...

If we take a 'less than 7% of income' at 6.5% and use a NZ dairy farm as an example the direct cash subsidy per farm, based on 2015-16 season production average, would be:
156223kgms x $6.15kgms = $960771 x 6.5% = $62450 per farm

The key difference between NZ and EU is that the public of EU value their traditions and food source e.g. farming and are prepared to pay to ensure they remain. In NZ we don't - largely NZ public want cheap food and aren't too worried where it comes from - refer to comments previously made on interest.co.nz re importing milk etc 'because it's cheaper'.

Keith refers to strict environmental rules. EU rules allow 170kg/N/ha from animal effluent - in Southland we are allowed 150kg/N/ha from animal effluent.

"If there is an Achilles heel to Dutch dairying... "

You forgot to add in the ... increasing focus on China .. bit here.