Dutch dairy farms after milk quota abolition: Economic and environmental consequences of a new manure policy

The abolition of the Dutch milk quota system has been accompanied by the introduction of a new manure policy to limit phosphate production (i.e., excretion via manure) on expanding dairy farms. The objective of this study was to evaluate the effect of these recent policy changes on the farm structure, management, labor income, nitrogen and phosphate surpluses, and greenhouse gas emissions of an average Dutch dairy farm. The new manure policy requires that any increase in phosphate production be partly processed and partly applied to additional farmland. In addition, phosphate quotas have been introduced. Herein, we used a whole-farm optimization model to simulate an average farm before and after quota abolition and introduction of the new manure policy. The objective function of the model maximized labor income. We combined the model with a farm nutrient balance and life-cycle assessment to determine environmental impact. Based on current prices, increasing the number of cows after quota abolition was profitable until manure processing or additional land was required to comply with the new manure policy. Manure processing involved treatment so that phosphate was removed from the national manure market. Farm intensity in terms of milk per hectare increased by about 4%, from 13,578 kg before quota abolition to 14,130 kg after quota abolition. Labor income increased by €505/yr. When costs of manure processing decreased from €13 to €8/t of manure or land costs decreased from €1,187 to €573/ha, farm intensity could increase up to 20% until the phosphate quota became limiting. Farms that had already increased their barn capacity to prepare for expansion after milk quota abolition could benefit from purchasing extra phosphate quota to use their full barn capacity. If milk prices increased from €355 to €420/t, farms could grow unlimited, provided that the availability of external inputs such as labor, land, barn capacity, feed, and phosphate quota at current prices were also unlimited. The milk quota abolition, accompanied by a new manure policy, will slightly increase nutrient losses per hectare, due to an increase in farm intensity. Greenhouse gas emissions per unit of milk will hardly change, so at a given milk production per cow, total greenhouse gas emissions will increase linearly with an increase in the number of cows.