Nine Ways Dairy Farmers Can Face Up To New Nitrates Rules

As dairy farmers brace for spring calving, the upheaval caused by nitrates changes is adding a new dimension to business planning.

As each farm and herd has its own specific characteristics, there is no common solution. Apart from herd and physical farm differences, farmers are at different life stages, are carrying varying levels of debt and have different household income structures and expenditure requirements, which influence whether a farmer decides to dig in, reduce or exit.

We cover nine options:

Option 1: Off-loading sufficient stock to bring permitted stock numbers back into line. This can include reducing beef animals and underproductive animals, and is also a legitimate option for farmers who decide to reduce their herd size whilst keeping the most productive and, therefore, profitable cows.

Option 2: Look to contract-rear heifers to displace core animals, an alternative option to consider is switching to beef sires only and buy-in replacements, this may be appropriate where a genetically improved herd can be bought in quicker than bred in.

Option 3: Rent additional land to allow current stocking levels to be diluted sufficiently over an increased land area.

Option 4: Find a farmer who will import a sufficient quantity of slurry to bring you back into check.

Option 5: For farmers not in derogation, it is worthwhile considering opting into derogation such that the higher organic nitrates levels are within permitted levels. Note that by opting in for derogation, you preclude yourself from access to Low Emission Slurry Spreading grants. Derogation is also not available where more than 20% of the farm is under tillage crops.

Option 6: This option is simply to exit dairying. Unfortunately, option 6 might not be so much of an option but rather a squeeze-out – particularly for smaller herds where the reduction in stock numbers and increased costs such as increased land rent brings the farm from an economically viable to an unviable state. 

A review should be carried out to examine the farm’s likely profitability going forward and the likely infrastructure costs to bring the farm into a state of compliance (dirty water storage, open tank covering, etc).

Option 7 is a medium-term play and involves reducing herd output and is particularly apt for farmers looking to move from band 3 (high production) to band 2 (medium production), which will mean for many maintaining a relatively consistent stocking rate to the status quo versus a 15% drop in cow numbers.

Some good news appears to be on the horizon on that front where it appears that farmers may be able to use their previous year’s production as an alternative to their three-year average production in determining which production band they fit into.

Option 8 is to do nothing. A farmer might be tempted to tough it out for a year or two at a nitrates level which technically breaches the maximum stocking rate, but in the medium term, when their band status is revised downwards, their stocking rate will be acceptable for the following year. 

Option 8 should not be mistaken for a long-term strategy. Along with penalties linked to a farmer’s direct payments, being in excess of the permitted nitrates levels might also draw unwanted attention from the Department of Agriculture, and the local county council. It is worth remembering that Department of Agriculture penalties triple in the case of repeated offences and payments are withdrawn totally in the case of continual non-compliance. 

Option 9 is to sell entitlements with a view to avoiding penalties and red tape. This option does not take into account that non-compliance with the Nitrates Regulations (Statutory Instrument) is an offence which can carry a Class A fine (fine of up to €5,000) and or three months prison time or where a conviction on indictment an increased prison term a fine of up to €500,000. As such, selling entitlements doesn’t get one off the hook. 

As spring calving gets underway, spare 15 minutes to work out how you are fixed at your allowable stocking rate for 2023. 

In terms of making decisions, the easiest option is to find and arrange for slurry export, but the rules have changed here for importers, and soil sampling is needed before that option will be available. Next up is opting in for derogation if not already in place. Selling non-core animals such as beef cattle is also an attractive option.

Selling dry cows or culling cows early has the effect of pushing up the average yield per cow and can have the undesired effect of moving the farmer into a more restrictive stocking rate associated with the higher band. Taking the medium-term option, of moving from band 3 to band 2, will cost in terms of milk yield but can be offset by reduced concentrate usage. 

Where the predicted yield is only marginally above the band limits, this approach works well. Contract-rearing and land rent do translate into significant costs, but at least with contract-rearing, one is simultaneously cutting down on workload, though careful management is required to ensure that the arrangement is working.

Each person’s decision matrix will depend on their own particular circumstances. Farmers should obtain professional advice relevant to their own circumstances.

(Source – Irish Examiner – Farming – Kieran Coughlan – 17/01/2023)