Netherlands introduces tradeable phosphate rights for dairy cattle
The European Commission has given the go-ahead to a trading system for phosphate rights for dairy cattle in the Netherlands, aimed at improving the country's water quality by limiting phosphate production from dairy cattle manure and encouraging a move to land-based farming. Dairy farmers will receive phosphate rights for free and will be obligated each year to prove they have sufficient rights to justify the quantity of phosphate produced by their manure. Phosphate rights can be obtained on the market, with 10% of the traded rights held back to promote the development of more land-based dairy farming.
The system came into effect January 1, 2018.

The measure has been introduced to improve water quality in the country by limiting phosphate production from dairy cattle manure and promote a shift to land-based farming.

The EC said that given the high density of dairy cattle in the Netherlands, the phosphate contained in dairy cattle manure represents a significant environmental concern.

In addition to the main environmental objectives, the system also provides support for young farmers and is intended to have a positive effect on grazing and grassland.

Trading rights

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 ‘phosphate bank.’

This is intended to encourage the development of more land-based dairy farming by providing temporary, non-tradable rights to "land-based farms," which can fully absorb on their land all the phosphate from their own manure production.

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.