Voluntary Report – Voluntary - Public Distribution

Date: January 07,2021
Report Number: NL2020-0069

Report Name: Dutch Parliament Approves Law to Reduce Nitrogen
Emissions
Country: Netherlands
Post: The Hague
Report Category: Livestock and Products, Dairy and Products, Poultry and Products, AgriculturalSituation, Agriculture in the News

Prepared By: Bob Flach and Marjolein Selten

Approved By: Christopher Riker

Report Highlights:
On December 17, 2020, the Dutch Parliament approved a new law that aims to curb nitrogen emissions
in the Netherlands. The Netherlands Agricultural and Horticultural Association (LTO) -- therepresentative of 35,000 Dutch agricultural entrepreneurs and employers -- stated that even though thelaw will be challenging for the Dutch agricultural sector, it was pleased that some flexibilities wereeventually incorporated. With the absence of concrete compulsory measures for the agricultural sector,
however, it is difficult to determine the full effect the nitrogen law might have on the Dutch livestockindustry.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF
AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICYBackground
In May 2019, the Dutch Administrative Court of the Council of State, the highest administrative body in
the Netherlands, ruled that the Dutch Government’s Nitrogen Action Program (known as the PAS) -- aprogram to limit the effects of nitrogen -- was insufficient. In response the Ministry of Agriculture,
Nature and Food Quality (MANFQ) commissioned an external body, under the lead of Johan Remkes (aformer Deputy Prime Minister of the Netherlands), to propose a number of short- and long-term
solutions in an attempt to comply with the Court’s ruling.
Nitrogen Deposition in the Netherlands as of 2018

Source: https://www.clo.nl/node/35271
The so-called ‘Remkes Committee’ published its initial report at the end of September 2019. For theagricultural sector, the Committee recommended the Government find methods to reduce the livestock
herd in the Netherlands. The advice included looking at ways to buy-out farmers that are operating
livestock enterprises near Natura-2000 areas (areas which are protected under EU law), while
encouraging other farms to install additional emission control measures.
In December 2019, the Dutch Cabinet passed a temporary emergency law through Parliament that aimed
to reduce emissions, in the short term, so that the economy could keep moving forward and necessary
construction projects could be continued. NOTE: This emergency law expired on January 1, 2021.
Subsequently, the MANFQ announced a number of measures that would help reduce agricultural

emissions. One of them, the introduction of a €455 million ($545 million) Voluntary Buy-out Scheme
for the Swine Sector compensates Dutch swine farmers who wish to vacate the industry.1 The measuresalso included proposals to modify livestock feed mixes and mixing manure with water (neither of whichhave been implemented to date).
In April 2020, the Dutch Government proposed a €5 billion ($5.6 billion) support program tofinance investments focused on nature restoration and encouraging farmers, industry, aviation, andshipping to reduce their nitrogen emissions. A significant part of the fund was allocated to agriculture
to buy-out swine, poultry and cattle farmers that operate close to nitrogen-sensitive nature areas,bringing the total cost of the buy-out program (excluding the earlier fund of €455 million) to €1.0 billion($1.2 billion). For additional information, see NL2020-0012: Dutch Government Announces Programs
to Curb Nitrogen Emissions.
In June 2020, the Remkes Committee released is final recommendations which noted the Government’s€5 billion plan to reduce nitrogen-based pollution was unambitious and “there {was} insufficientevidence that it {would} allow nature to fully recover.” In particular, the committee found that theGovernment’s target of a 26 percent cut in emissions by 2030 did not go far enough. Remkes added that
the Government’s proposal to buy-out farmers who want to end production would not be enough toreduce emissions, particularly on livestock farms close to environmentally sensitive areas. For
additional information, see NL2020-0029: Advisory Council Critical of Government Approach toReduce Nitrogen Emissions.
In an effort to further strengthen its efforts, the MANFQ announced that it intended to temporarily limit
the use of proteins in feed as of September 1, 2020 (until the end of 2020) in order to attain a reductionof 0.2 kilotons in nitrogen emissions. Through this measure, the Ministry hoped to create space for theconstruction of 75,000 new homes in the Netherlands (which also generates emissions). The feed
proposal, however, received strong opposition from the farm sector. Moreover, research from theNetherlands’ Wageningen University indicated that the proposed measure would not successfully reduce
nitrogen emissions as more protein would need to be added to cows’ diets in order to make up for lower
levels of protein in grass and ensure animal health. In the end, the MANFQ elected to scrap the feedmeasure due to a recent period of drought in the Netherlands. For additional information, see NL20200041: Dutch Ministry Abandons Controversial Feed Measure to Limit Nitrogen Emissions.
In November 2020, the MANFQ opened a another voluntary buy-out program: the Targeted Buy-out
Scheme. The funding for this initiative has been spread out over the course of three years: €100 million
for 2020, €100 million for 2021, and €150 million for 2022. To be eligible, a farm must be locatedwithin a distance of 10 km (6.2 miles) of a Natura-2000 area and be responsible for a minimum nitrogen
deposition level in the neighboring Natura-2000 area (i.e., 2 moles of nitrogen per-hectare, peryear). The Dutch Provinces are responsible for the implementation of the program, including thedetermination of the compensation, in negotiation with the farmers.

While now closed to new applicants, the funding for this program was increased in stages to allow the MANFQ to honor all
407 applications that met the requirements of the program. Consequently, if all pig farmers who registered for theprogram are determined to be eligible, a total of 910,645 pig licenses will be withdrawn from the market. FAS/The Hague
believes that this would result in a reduction in piglet and slaughter hog exports to neighboring Germany.
1Sufficient Dutch Parliamentary Approval Obtained for Law
On December 17, 2020, the Dutch Minister of Agriculture, Nature and Food Quality, Carola Schouten,
obtained sufficient support in the Dutch Parliament for a new law to limit nitrogen emissions in theNetherlands. The Law amending the Dutch Nature Conservation Law and the Environmental
Law (hereinafter referred to as the nitrogen law), sets limits for nitrogen levels in Natura-2000areas. The law sets three targets:40 percent of the nitrogen sensitive Natura-2000 areas must be below the critical deposition
value (< 255 mole per hectare) in 2025,

50 percent of the nitrogen sensitive Natura-2000 areas must be below the critical deposition
value in 2030, and

74 percent of the nitrogen sensitive Natura-2000 areas must be below the critical deposition
value in 2035.

To accomplish these goals the nitrogen law aims to half nitrogen emissions by construction andagriculture by 2035. Based on the voting of the political parties in Parliament, it is expected that the law
will also be approved by the Dutch Senate in the spring of 2021.
The Minister stated in the accompanying note that the main difference between the new law and theprevious laws is not to steer economic activities based on calculated future nitrogen emissions but on theactual nitrogen levels of the nature reserves. The new nitrogen law contains provisions for local actors,Provinces, and municipalities to achieve these nitrogen levels by curbing emissions from construction
and agriculture. With the new law, a fund of €3 billion ($3.6 billion) will be made available for nature
restoration, €2 billion ($2.4 billion) for measures in the agricultural sector, and €1 billion ($1.2 billion)
for measures to limit nitrogen emissions by construction projects.
The Main Provisions of the New Law
The budget of €2 billion for the agricultural sector will be made available for financing buy-out
programs, innovation, and technical measures to reduce nitrogen emissions. The technical measuresgenerally include the mixing of manure with water, increased grazing, and adaptions to feed and feed
management (e.g., using feed with a lower protein content or a higher uptake of nitrogen). The law
passed Parliament with a number of provisions, which provide some flexibility towards its
implementation:
Besides safeguarding Natura-2000 areas, the nitrogen law also accounts for local economic,social, and cultural requirements. This provision mainly intends to take into account thefinancial position of the farmer and the related feasibility of the measures. These local
requirements are part of the EU’s directives but were not yet included in Dutch law.

The law permits the Dutch Government to discuss measures to reduce the nitrogen emissions
with the European Commission and other EU Member State Governments. This provision
mainly pertains to nitrogen emissions originating from neighboring countries.



Within three years, the law plans to legalize expansion or renovation permits of more than 3,000
farmers which qualified for them before the verdict of the Council of State (see Background).

The prohibition against voluntary bought-out farmers from starting another farm was cancelled.
Farmers who have been voluntary bought out can now start a farm at another location, but must
substantially reduce the nitrogen emissions at their new location.

In addition, the law includes a commitment from the MANFQ to cooperate with the agriculturaland food sector, banks, NGOs, Provinces, and municipalities to agree on an accord to implement
the law, and, at the same time, offer an economically viable and ecologically sustainable future
for the agricultural sector.

Opposition to the Law
Three opposition parties -- the Socialist Party (SP), the Reformed Political Party (SGP), and 50Plus –joined the Cabinet and voted in favor of the law. Several other parties – the PVV (Party for Freedom),Green Left, the Party for the Animals, and the Labor Party (PvdA) -- argued that the law is not
ambitious enough in reducing nitrogen emissions. The Forum for Democracy (FvD) stated that the only
intention of the new law is to decimate the agricultural sector, and voted against it.
The Netherlands Agricultural and Horticultural Association (LTO) stated that the law is a hardship forthe sector, and has an unachievable goal for 2035. However, the LTO stated that some of their lobbying
efforts have been successful. In cooperation with another Dutch farmers’ organization, Agractie, andthe Netherlands Agricultural Youth Board (NAJK), the LTO claims to have lobbied for the flexibilities
listed above. The Farmers Defense Force (FDF) expressed frustration that farmers are being forced tosolve the national nitrogen problem, and that tough procedures to implement the law would
follow. They added that "nothing {had been arranged} for agriculture" except for an increase of thereduction targets.
Implications for the Dutch Agricultural Sector
The effect of the new nitrogen law on the intensive Dutch livestock sector is difficult to determine as themeasures for the agricultural sector have not been agreed upon. The implementation of the law will
depend on the efforts and objectives of the local interested parties (i.e., the farmers, municipalities andProvinces), taking into account the local circumstances and requirements. The only programs available
to date that could have a significant impact on the sector are the previously established voluntary buyout program of €455 million and the new program of €350 million for livestock and poultry farmers.
In 2021, a third voluntary buy-out program is expected to be opened: the National Buy-out Program -which is rumored to become available for farms which don’t reach the level of 2 moles of nitrogen perhectare, per-year. Currently the Government is working on a draft regulation which is anticipated to be
published in the near-term.
With a third planned program, the total budget for buying out intensive livestock farms in theNetherlands for the period of 2020 to 2023 is projected to be nearly €1.5 billion (assuming at least €1.0

billion of the €2.0 billion for agriculture is used to support buy-outs – as initially proposed in April 2020-- and including the Voluntary Buy-out Scheme for the Swine Sector of €455 million).
There is a lot of uncertainty, at present, with regard to how many farmers will voluntarily pursue buyouts. For example, if €1.455 billion were only to be allocated to the swine industry, and the same
payment conditions were applied as defined by the Voluntary Buy-out Scheme for the Swine Sector, as
much as 3 million animals in production2 could be taken out of the market. This would correspond toroughly 2,000 swine farms, and nearly one-quarter of the Dutch swine herd. It must be noted, however,that the last two buy-out programs are also open for cattle and poultry farms. Accordingly, the impact
on Dutch swine production is expected to be lower (potentially significantly) than the numbers notedabove.
Attachments:
No Attachments.

2

A farmer must have a number of production licenses which cover the average number of animals at the farm during
the year. A hog weighing 25 kg or more accounts for one license, a weaned piglet for 0.36, and a sow for 1.96 licenses.