They are not yet a great success, the government’s buy-out schemes for farmers who are quitting. In November, the cabinet announced that two to three thousand companies that emit a lot of nitrogen must be bought out by 2023, but so far no more than a thousand companies have approached the provinces for an initial meeting. This is what the Interprovincial Consultation (IPO), the umbrella organization of provinces, says after questions from NRC.
The thousand companies, emphasizes the IPO, do not want to talk exclusively about the sale of their company. But also about the possibilities of relocating the company, letting fewer animals graze on more land (called extensification) and limiting emissions in the stables through technical interventions.
In November, the cabinet announced that it was working on various buy-out schemes, including one that generously compensates farmers. The announcement of this scheme, which may reimburse up to 120 percent of the farm value, has not yet led to a rush of farmers who want to stop. At the end of this year, the government will take stock of this regulation: if it is disappointing, coercion will follow.
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The IPO has a comment on the low number of (farming) companies that applied. According to the umbrella organization, it is a “short quick inventory” and no more than “a signal for the moment”. The fact that there are fewer than hoped is because there is currently no scheme for farmers, says the IPO. As a result, provinces cannot ‘concretely discuss’ the purchase of a company.
The buy-out schemes that the government is currently developing must be opened up in April, but whether that will succeed is the question. Before farmers can register, they must be approved by the European Commission and they must be ‘state aid proof’. For example, the government cannot simply give farmers who are quitting a bag of money because they can use it to start a new business elsewhere and other farmers can compete from the market. Last summer, the cabinet received criticism from Brussels because a concept of a buy-out scheme did not comply with European regulations and would constitute a form of unauthorized state aid.
Agricultural agreement
Another reason for the low level of interest is that companies can register not only with the provinces, but also with the municipalities. This group does not come into the picture with the provinces, says the IPO. Companies are also said to be hesitant because the cabinet is vague about how it envisages making the agricultural sector more sustainable. This should be reflected in the agricultural agreement of Minister of Agriculture Piet Adema (Christian Union), according to the IPO. At the end of February, Adema hopes to conclude such an agreement with farmers’ organisations, supermarkets, banks and environmental organisations.
According to the IPO, if the agricultural agreement is in place, this is a “logical moment when companies report (again)” for a discussion about selling their company.
Largest expense
Voluntary buying out of farmers is one of the most important ways (and the largest cost item) for the government to halve nitrogen emissions by 2030 at the latest. The cabinet is allocating more than 24 billion euros to solve the nitrogen problem, of which 7.5 billion is reserved for buying out farmers.
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An analysis by the Netherlands Environmental Assessment Agency (PBL) of October 2022 shows that the government expects far too much from buying out farmers. The PBL analyzed 25 years of buy-out schemes: this shows that there are only ‘a few percent’ fewer animals after a scheme. In other words: ‘The high expectations of ending livestock farms do not appear to be based on a systematic understanding of the effects of termination schemes’.
A spokesman for Minister Van der Wal (VVD, Nature and Nitrogen) says he is not disappointed with the number of farmers who have registered so far. He expects this number to increase once the schemes open in April. He does not want to answer further questions about the squeeze-out arrangements, including whether they pass the state aid test. The generous scheme “is for consultation” in Brussels, which would make it too early for “detailed questions”.