With the nitrogen crisis, companies and banks are side by side with farmers. For many years, they steered toward upscaling farms. But they primarily benefit from it themselves, says economist Kees Klomp. “They use the peasants.”
He no longer has an average business, dairy farmer Dirk Jan Schoonman in Brummen. With 55 cows, he is an exception when he looks at the farmers around him. “Companies and banks urged them to scale up and said, ‘If you do not increase your barn, you will not manage it’.”
More cows and a larger barn
Schoonman knows how it is. A representative of Rabobanken also visited him years ago. “He put a bag of money on the table, so to speak, and asked if I wanted to grow. I had to make a big investment in a bigger barn and more cows.”
“After some calculations, I knew that taking that loan would not ensure that I would make more money. At most 1 or 2 cents more per liter of milk. But I would have to work much harder for it and invest a lot of money” Would you do it? “I asked the representative of the bank. Then he remained silent and I knew enough.”
‘If you grow, they can earn more’
Schoonman explains that parties around the farmer have an interest in you growing as a farmer. “If you have a larger business, you need more concentrate, a contractor, a consultant and you need financing. And in the end, it produces more milk for the processing business. Everyone benefits and makes more money from it, but the Farmer do a little economics with it and do all the work. “
“The farmers are of course signing a contract for a loan for, for example, a stable extension. But because they got a loan earlier if they took more cows, you can see that for years there has been a focus on upscaling. It has resulted in we now have it here nitrogen problem. ” , says the milk producer.
Goodbye to the milk quota
In 2015, the European milk quota was abolished after 31 years. It felt like a day of liberation for the farmers. They were no longer limited by quotas and were therefore allowed to keep more cows and produce more milk.
Schoonman, then chairman of the Dutch Dairy Farmers’ Association, warned its members. “I told them to be careful to expand and not become too dependent on financiers. Before you know it, you’re in a trap and you’re swimming farther and farther. More queues, new machines to make money. . “
Unlike his colleagues, Schoonman has not chosen to expand his business. Instead of a new barn, he bought a piece of land. It was also possible because he knew there was no son or daughter to take over the business.
“It’s possible right now. It would be easier if you kept more cows in this place, but then my barn is too small. If I invest in it, I can do no more. Now I continue this way.” , says the farmer.
With the extra piece of land he can now feed his cows with his own grass. “For me, we have to go in that direction: land-based agriculture,” he says.
“Then you get fewer farmers with more land, who cultivate more extensively. And with the land they have, they can supply their own livestock with food,” says Schoonman.
‘Farmers are not alone in the farmer’s protest’
“Banks, animal feed companies, supermarket chains: they all make billions the way farmers farm today. If farmers all stopped tomorrow, the whole system would collapse,” said opinion economist Kees Klomp of Rotterdam University of Applied Sciences. He is preoccupied with economic system changes.
According to him, it is a misconception that farmers are independent. “A lot of money is involved with farmers. Buying land, equipment, feed and fertilizer. Consumers do not want to pay too much in the supermarket. It is a spiral that the Dutch sector has been trapped in for decades. Farmer. Banks and businesses use the farmers. “
Can a small farm with 55 cows like the dairy farmer Schoonman still do that? For Klomp, it is difficult in this system. “There are many parties who do not find an organic farmer a nice farmer.”
“These farmers do not buy animal feed and manure, something the industry wants to sell. Sustainable agriculture in the system as we have it now is difficult.”
See even more critically
In a reply, Rabobank says that the bank will continue to assess each individual financing application individually. “Loans that we provide should contribute to an entrepreneur’s perspective and earnings model and to make his or her business more sustainable.”
The bank also points out that in the interest of their customers, it is wise to look even more critically at financing applications for expansion and company acquisitions. “We are looking at the additional risks of the government’s nitrogen approach to the business model and future-proofing of the business.”
See the report here