The Bottom Line 2023: A Business analysis into nature-inclusive livestock farming

Client:Ministry of Agriculture (LNV)

CategoryRural Areas

More and more dairy farmers are opting for nature-inclusive farming in the name of circular agriculture: a more ecological-bound practise that focuses on a closed-loop system and healthy soils. This is often accompanied by the ‘extensification’ of farms, which leads to cows producing less milk per hectare. This in turn results in lower yields and also lower costs for inputs and opportunities for subsidies, such as from the eco-scheme. How does this translate to achieving a balance within nature-inclusive farms?

Methodology

In 2021, Nature^Squared together with Wij.land, Living Lab, Alan Accountants, and Advisors developed a new methodology that provides more insight into the earning potential of nature-inclusive farming. This method was applied to an initial group of 13 nature-inclusive dairy farmers. The results showed that a good income can be accomplished with nature-inclusive farming in a variety of ways. . You can read the results of that research and the methodology here.

Due to the small number of dairy farmers and limited time period, no broader conclusions could be drawn about the economic perspective of nature-inclusive dairy farming. For example what about dairy farmers who are just starting out in the transition? Or more intensive farmers and farms of other soil types? That’s why in 2023 we expanded the number of study groups, with 45 dairy farmers now participating from not only the western peatlands and Friesland, but also from Gelderland and North Brabant. In the study groups, farmers learn from one another alongside expert support to improve their practice and economic performance. While simultaneously, the opportunities and challenges of the transition were identified. This is essential knowledge for farmers to create a plan for the future and for policy makers to develop better tailored instruments and regulations for different farm types and soil types going forth.

Business analysis

The business analysis into these different groups provides insight into the various challenges and opportunities for a high-earning model into nature-inclusive dairy farming. Based on this baseline, we have identified the main opportunities and challenges related to the earning potential of nature-inclusive dairy farming:

Extensive dairy farms operate a variety of earning models, which requires careful decision-making and entrepreneurship. While it is certainly possible to achieve good results as an extensive farm, it can also be a challenge. Access to land remains crucial, and dependence on leased land brings uncertainty, in which increasing competition for land and higher land costs can exacerbate this situation. Extensive farms can save costs through their feeding strategy, for example by feeding less concentrate feed to focus on more grazing. They also save costs through reducing fertilizer use and lowering costs for contract work. In addition, most extensive farms receive a high milk price for their lower milk production because they produce it organically or certify the product by other means. However, unallocated costs such as labour, machinery and land remain a challenge, especially for farms that wish to extensify. By contrast, side branches offer an opportunity for an extra source of income on the farm.

Webinar and report

To communicate the results of the analysis, we organised a webinar in collaboration with Wij.land, in which we shared the main results and engaged in a joint discussion about the relevance of this research for nature-inclusive dairy farming. With more than 400 online spectators, we look back on a successful webinar.

The report explains in more detail what results can already be observed regarding the earning potential of nature-inclusive dairy farming. In addition to this report, a methodological memo has been developed with a further explanation of the methodology used to allow people to utilise the method themselves.

Read the methodology here
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