More and more farmers are started to opt for a form of regenerative, nature-inclusive way of farming. There are, however, doubts: is it financially viable? On the hond hand, a more extensive way of farming reduces production, while on the other hand, costs are reduced by lowering the amount of artificial fertiliser or concentrate used. How does this play out?
Regenerative business model
Recent studies have concluded that extensive dairy farming is less profitable than intensive farming. However, these studies have not looked explicitly (or on a prudential level) at regenerative and nature-inclusive businesses. These type of businesses often have another type of business model than intensive farms.
For this project, we work together with Wij.land and Alan Accountancy and Assurance to answer this question: is there a market for the business case of nature-inclusive dairy farming? If not, then this provides pointers as to how the ecosystem services provided can be rewarded with public funds. If yes, then it is a message to conventional farmers: dairy farming has a future if you start engaging with nature.
Apples and pears
To research if regenerative farming is profitable is not an easy task. For starters, not much is written on when a farm might even call themselves ‘regenerative’ or ‘nature-inclusive’. Also, there are not yet many farms that have already made the transition to regenerative farming. Another issue is that straightforward methodology to compare parameters like cashflow and balances is lacking. A care function is sometimes believed to be an integral part of business operations, while these side activities in reality have nothing to do with dairy farming. This causes comparisons between farmers with different business models to appear like comparing apples and pears.
Openness in business operations
For this project, we have developed a methodology that computes different balances that can also be utilised for future studies investigating larger groups of businesses. The methodology enables us to give a quick glance at costs, benefits and income related to regenerative farming practices. To achieve this, 16 farms have agreed to share their bookkeeping and insights into their business operations with us. It is a diverse group of farmers, farming on peat, clay and sand soils. The farmers from the Western Netherlands are all members of Wij.land, and the northern farmers are all represented in Living Lab Fryslân.
The coming two months, we will execute the various balance and cashflow computations based on the participating farmer’s bookkeeping. Side activities and subsidies related to nature will be thus be viewed separately.
To ensure that useful insights from different work fields are all included in the analysis, a diverse focus group has been put together. Members are employed at:
- Wageningen University & Research
- RVO / Ministry of Agriculture, Nature and Food Quality
- Vogelbescherming Nederland (Dutch Audubon Society)
- Deltaplan Biodiversiteitsherstel
- Dairy farmers