Wageningen University u0026amp; Research publishes study exploring the future of Dutch dairy farming

Among other things, these future scenarios offer forecasts for the year 2030 with regard to the number of dairy farms in the Netherlands, the number of cows per farm and the total milk production in the Netherlands. It is important to emphasise that the scenarios presented in the WUR study are not the ideals of FrieslandCampina, but rather scientifically modelled estimates of what the industry might be like in the future. FrieslandCampina will take the future scenarios that have been drawn up into consideration in its long-term strategy development and decision-making, for instance when evaluating investments in connection with the necessary milk-processing capacity.

Major points of the Wageningen University & Research study

Baseline scenario

The baseline scenario from the WUR study shows that, in the coming decade, the number of dairy farms in the Netherlands is expected to decrease by 33%, from nearly 15,987 in 2018 (baseline year) to 14,852 in 2020 and to around 10,600 farms in 2030. In this baseline scenario, the total quantity of milk produced will remain the same until 2024 and will then increase slightly (by around 4%) as 2030 approaches. While the number of dairy cows will decrease in the next 10 years, in the study it is assumed that the future development in the milk production per cow will be in line with the trend over the last decades. Lastly, the average size of Dutch dairy farms will increase from 101 to 139 cows according to the baseline scenario.

Wageningen University & Research bases this study on data from the Statistics Netherlands (CBS) agricultural census and the Farm Accountancy Data Network (FADN)  of Wageningen Economic Research. The baseline scenario set out in the research assumes that dairy farmers will use available financial means to invest in the growth of their farms. In addition to the dairy farmers who will shut down their operations in the next 10 years due to age and lack of a successor, it is expected that another part of the farmers will be forced to stop because they are no longer able to meet their financial obligations and make the necessary investments.

Only existing and implemented  policies have been taken into account in calculating this scenario. Possible new policies like the external offsetting for ammonia and the proposed new manure policy have not been included. The scenarios also assume that the behaviour demonstrated in the dairy industry in the past will continue in the future. In the baseline scenario, the dairy industry will remain below the phosphate ceiling, and compliance with the nitrogen ceiling and Paris climate agreements appears to be feasible. On the other hand, there still seems to be a challenge in the area of ammonia.

The study also shows that fluctuations in factors such as milk price or applicable interest rate may substantially impact expected outcomes in 2030.

Exploratory scenarios

In addition to the baseline scenario, the WUR study also sets out three exploratory scenarios in response to the question: 'What would happen if...?' These scenarios are based on possible future societal changes and are intended as a way to explore other potential avenues of development the industry might encounter in the coming decade. The first exploratory scenario involves greater attention for 'nature-inclusive' dairy farming from both the market and society. The second scenario – the 'free market' scenario – emphasises the production of reliable and affordable food and entails no additional demands in terms of nature and the environment. In the third scenario, which has a 'focus on social aspects and return on investment', dairy farmers do not pursue maximum growth but rather explore other possibilities for investment within and outside the dairy farm.

In all three exploratory scenarios, the number of dairy farms in 2030 decreases further than in the baseline scenario. These scenarios also lead to an increase in average farm size, with the average farm in the free market scenario being clearly larger and more intensive and the average farm in the nature-inclusive scenario being more extensive. The scenario in which farmers are less focused on growth has the largest decrease in total milk production.

Alfons Beldman, a researcher at Wageningen University & Research, said the following regarding what this study will mean for the Dutch dairy industry:

'Simultaneously improving both the dairy industry's sustainability and its economic prospects is no simple matter and should not be approached in unilateral fashion. It is vital that all relevant stakeholders – such as dairy farmers, banks, dairy businesses and regional and national policymakers – work to develop a cohesive package of measures, direction and economic prospects aimed at the long term.'

Frans Keurentjes, chair of the board of Zuivelcoöperatie FrieslandCampina U.A., had the following to say:

'The baseline scenario of the WUR study shows that FrieslandCampina should assume that the quantity of milk will remain stable in the coming years. When this static yield is set against the rising costs faced by dairy farms, it is clear that FrieslandCampina's task of creating value for our member dairy farmers will become even more relevant in the years ahead.

Through its cooperative strategy titled “The Merits of Milk”, FrieslandCampina strives to create maximum added value for the member dairy farmers. Supplements such as “On the Way to PlanetProof” are an example of those efforts. In keeping with market and societal trends, FrieslandCampina has been working with members to achieve goals in connection with circularity, climate and nature for many years now. This not only enhances the sustainability of the dairy farms but provides the farmers with opportunities to increase their revenue as well.

As far as FrieslandCampina is concerned, all parties associated with the sector (the dairy farming chain, the scientific community and the government) share a duty to invest in the sector's future. Such investments are necessary to meet future requirements with regard to sustainability. Given the current economic reality, dairy farmers cannot do this alone, and a broad base of support is truly essential.

The Dutch dairy industry leads the world and delivers nutrition and health, vital landscapes, biodiversity and innovation. As a result, our industry can look forward to a successful future in which an effective balance is maintained between economic and social interests. Let us work together to achieve that future.'

Read the WUR report (Summary in English).