Given the high density of dairy cattle in the Netherlands, the phosphate contained in dairy cattle manure represents a significant environmental concern, as this can pollute ground and surface water.
To limit phosphate production from dairy cattle manure in the Netherlands and to encourage land-based farming in the dairy cattle sector, and so improve water quality, the Dutch authorities are setting up a trading system for phosphate rights for dairy cattle. In addition to the main environmental objectives, the system also provides some support for young farmers and is intended to have a positive effect on grazing and grassland.
The new system will enter into force on 1 January 2018, when dairy farms will be awarded phosphate rights for free and will only be allowed to produce phosphate from dairy cattle manure corresponding to the phosphate production rights they hold. At the end of each calendar year, farms will be required to demonstrate that they have sufficient phosphate rights to justify the amount of phosphate produced by their dairy cattle manure.
Dairy farms, including new entrants, can acquire phosphate rights on the market, as phosphate rights will be traded.
When a transaction occurs, 10% of the traded rights will be withheld and kept in a so-called phosphate bank. This bank will then serve to further encourage the development of more land-based dairy farming by providing temporary, non-tradable rights to so-called "land-based farms". These are farms that can fully absorb on their land all the phosphate from their own manure production.
The Commission considers that the measure constitutes State aid within the meaning of Article 107 (1) of the Treaty on the Functioning of the European Union. As the measure has a clear environmental objective, the Commission has assessed it under the EU Guidelines on State aid for environmental protection and energy 2014-2020.
The Commission found that, in line with the Guidelines, the system aims to achieve environmental objectives that go beyond the environmental standards that farms have an obligation to meet under EU law.
In particular, the Netherlands has:
- demonstrated that the system aims at limiting phosphate production and achieving a level lower than the ceiling of phosphate production established in the context of the implementation of the Nitrates Directive in the Netherlands;
- put in place the system to stimulate land-based farming. Under current EU law, dairy farms are under no obligation to absorb all phosphate from manure they produce on their own land.
Based on the environmental objectives the system aims to achieve, the European Commission concluded that the system is in line with the EU rules for environmental State aid.
More information will be made available under the case number SA.46349 in the State Aid Register on the competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.