Farmers hardly seem to be interested in buy-out schemes, why is that?

Not only is the resistance among farmers increasing, but the failed buy-out schemes for farmers are also piling up. This brings coercion closer and closer.

The government’s strategy to buy out farmers in order to quickly reduce nitrogen emissions has so far been a major disappointment. An earlier attempt to buy out pig farmers was also unsuccessful. And buying out farmers who emit a lot of nitrogen in the vicinity of vulnerable nature areas – via a provincial scheme – is now also in the soup.

With the latter arrangement, provinces have been trying to entice farmers to sell their farms for a year and a half. They had numerous conversations, but to no avail. Zero farmers have so far signed up for the scheme, which will close at the beginning of September.

There was originally no lack of enthusiasm. In total, about eight hundred ‘peak loaders’, farmers who emit a lot of nitrogen in the vicinity of vulnerable nature areas, were eligible for this scheme. When the scheme started, at the end of 2020, almost 180 farmers registered. There was also enough money: the available budget was increased halfway through to almost 230 million euros. The provinces tightened the farms, the central government would bear the costs.

The cabinet longed for success. At the end of 2019, the cabinet already opened a buy-out scheme for pig farmers. That failed: the number of participants and the achieved reduction in nitrogen emissions were disappointing, as it turned out at the end of 2020. And that while nitrogen emissions must be reduced quickly.

In May 2019, the Council of State ruled that the Netherlands had done too little for years to reduce nitrogen emissions. The emissions deteriorate nature: plants die and insects disappear. In the coalition agreement, Rutte IV promised improvement: by 2030, the Netherlands should have halved its nitrogen emissions compared to 2019.

Buy out as the most important asset

Last month, Minister Christianne van der Wal (Nature and Nitrogen, VVD) presented the nitrogen reduction percentages per province. Voluntary buyout of farmers is the most important asset to reduce emissions. Of the available 24.3 billion euros for tackling the nitrogen problem, 7.5 billion has been reserved for buying out farmers.

But buying out is therefore sensitive in the agricultural sector. In Friesland, Flevoland and Overijssel, farmers’ organizations have withdrawn from agricultural consultations with, among others, the provinces in recent months, because they believe that government policy focuses too much on buying out.

In the meantime, the enthusiasm among farmers to be bought out via the provincial scheme is declining. Of the above 180 farmers who registered for the provincial scheme at the end of 2020, more than seventy were left in May of this year, according to internal documents from the Netherlands Enterprise Agency (RVO). NRC† RVO monitors the progress of the provincial regulation for the Ministry of Agriculture, Nature and Food Quality (LNV). The documents provide an interesting insight into the course of the scheme and the mounting tensions between the provinces and the central government.

The same report shows that the provinces of Limburg, Brabant and Overijssel in particular are holding talks with farmers who are considering stopping. In Utrecht, Noord-Holland and Zuid-Holland (almost) all talks have been discontinued: the farms appear to be emitting too little to qualify for the scheme, or the farmers do not want to stop their business.

The farmers who do consider stopping have had a visit from an appraiser. Two farmers have received an offer, according to RVO documents. The amounts are not stated. The budgets per province are known: Limburg and Brabant have been allocated the largest budget: 58.5 and 57.5 million euros. Not all of this money is likely to be spent.

The government is largely responsible for the disappointing interest, according to agricultural deputies. The provincial arrangement comes with countless small rules and conditions and is therefore unworkable, they say. According to Brabant nitrogen deputy Erik Ronnes (CDA), ‘The Hague reality’ provides ‘a simplified picture of the often complex and diverse reality of farming practice’.

‘Stoppers regulation’

In addition, a professional ban applies to the provincial regulation. This means that farmers who make use of the scheme are not allowed to continue their business elsewhere; production rights expire and licenses are revoked. This is “really a stopper scheme and not intended for entrepreneurs who want to be relocated,” said a spokesman for the Ministry of Agriculture.

But many farmers do not want to stop at all, says the Gelderland agriculture deputy Peter Drenth (CDA). “In my province there are about a hundred farmers from the Gelderse Vallei who would like to participate in the scheme, but they want to continue elsewhere.”

Further criticism is apparent from the internal RVO documents: the model that calculates nitrogen emissions per farmer has been adjusted in the interim by the government. As a result, some farmers are no longer covered by the scheme, says Ronnes.

This ‘bumpy trajectory’ leads to ‘a lot of frustration with both the livestock farmers and the province’, according to RVO documents. Trust in government is dwindling. And livestock farmers tend to “cut off the purchase talks” because of this. In Brabant, for example, a farmer recently dropped out because it took too long.

More than twenty appraisals have been carried out in Limburg by civil servants, says Agriculture deputy Geert Gabriëls (GroenLinks), but no agreement has yet been concluded. “I hope that an agreement is reached before the deadline, otherwise it will be a waste of money.” According to Gabriels, a lot of money has been spent on appraisals. According to RVO documents, the province of Overijssel has also invested “hundreds of hours” in conversations with farmers and valuing their company; that cost a lot of money.

There was another reason that the enthusiasm among farmers was declining. In March of this year, Minister Van der Wal announced a new “wildly attractive” scheme: farmers who had stopped would be compensated more generously. She did not say how much money quitting farmers would receive. But the announcement backfired: dozens of farmers who considered quitting through the provincial scheme withdrew.

It remains to be seen whether the new scheme will really become more attractive. The scheme will be “in the coming months” for consultation in Brussels, according to an LNV spokesperson. According to European rules, the cabinet is not allowed to give farmers that stop unnecessarily a lot of money, because this could lead to unfair competition. For example, with the money they receive, they could continue their business in Hungary or Poland and compete unfairly with the local farmers there.

Brussels checks whether the new scheme complies with the state aid frameworks, says the spokesperson. If that is the case, then this constitutes ‘lawful state aid’. If ‘Brussels’ does not approve the scheme, the minister will have to go back to the drawing board and it will take several months before the scheme is adjusted.

The provinces hope to be able to ‘purchase’ another thirty companies before the provincial scheme closes in September, according to RVO documents. That is very optimistic, when you consider that not one farmer has signed his name in the past year and a half. The protests of recent weeks will make farmers less likely to sign.

Also read: Conflict of interest of States members in votes on nitrogen policy

Successor to provincial regulation

Work is now underway on a successor to the provincial regulation for ‘peak loaders’. This should replace the current scheme, which expires in September. The second version of the provincial regulation will be adjusted on a number of points, LNV says. For example, the new scheme has been formulated more broadly, so that many more farmers meet the conditions, about 3,900. Under the current scheme, this was 800. And the professional ban is being relaxed: a farmer may continue elsewhere under certain conditions. This scheme will also be submitted for verification in Brussels.

But the successor also has weaknesses, says Gelderland deputy Peter Drenth. For example, the tax side of the new provincial scheme has not yet been properly arranged, he says. For example, a farmer has to pay a premium of tens of thousands of euros to the tax authorities if he ends his business. As a result, it is uncertain what a stopping farmer will ultimately end up with. Some provinces seem tired of the problems with the squeeze-out schemes. It “certainly is not automatic” that Overijssel will use the new provincial arrangement, says a spokesman for the province.

The coming months will be exciting. If the squeeze-out arrangements continue to attract little enthusiasm, this may pave the way for expropriation. This is a scenario that farmers fear and that the cabinet, for fear of resistance, prefers to use as little as possible.