Memorandum submitted by Dairy UK
DAIRY UK
1. Dairy UK is the trade association that
represents the dairy industry supply chain in the United Kingdom.
Dairy UK's remit covers dairy farmers, producer co-ops, dairy
processors and doorstep delivery men.
2. The milk processed by Dairy UK members
equates to 90% of the milk produced in the UK.
RESPONSE TO
QUESTIONS
Has Defra's implementation of the 1991 Directive
been adequate?
3. It is clear that the implementation of
the Directive has not been sufficient to satisfy the European
Commission and some other EU Member States. However it is not
clear whether the Commission's aspirations for the Directive are
proportionate and appropriate to the situation in the UK.
How have levels of nitrate pollution changed since
the Directive came into effect? How effective has the current
Action Programme been in reducing nitrate pollution?
4. Dairy UK understands that there is some
evidence available to Defra and the Environment Agency of significant
progress being made in meeting the objectives of the Directive
in England.
Defra says that the area designated as Nitrate
Vulnerable Zones needs to increase from 55% to 70% of England:
is it right?
5. The industry does not have access to
the type of scientific data that would be required in order to
challenge Defra's assessment of which areas of England should
be designated.
Whether the proposed Nitrates Action Programme
measures should apply throughout the whole of England, rather
than only on land designated as Nitrate Vulnerable Zones
6. The logic of targeted and proportionate
regulation would require that only selected areas of England should
be subject to an NVZ Action Plan. Arguments about simplicity and
equity would not justify the needless imposition of costs on a
large number of farmers when this would not achieve a meaningful
contribution to the reduction in pollution from agriculture.
7. A targeted approach also inherently justifies
de-designation when the evidence no longer warrants the inclusion
of an area within an NVZ.
What should be the timetable for introducing any
changes in the way the Nitrates Directive is implemented?
8. There should be a four year transition
period. The proposed two year period is inadequate. Many dairy
farmers will have to undertake lengthy planning applications for
new slurry storage facilities which could take a minimum of 12
months if granted and longer if appeals procedures have to be
invoked. This would concentrate the construction of additional
storage capacity into a single year. This would inflate prices
and the capacity may not exist to meet demand.
What are the costs and benefits of Defra's individual
key proposals for the revised Action Programme, namely:
— Whole farm manure nitrogen
loading limit;
— Closed period (organic manures);
— Closed period (manufactured
nitrogen fertilizers);
— Crop nitrogen requirement
limit;
Should any of these be abandoned or modified?
COSTS
9. Dairy UK commissioned the farm consultants
Promar International to undertake a study of the practical and
financial implications to dairy farmers of Defra's proposals.
A copy of this report is attached for convenience.[14]
10. Based on a representative sample of
farms and assessed over 10 years Promar's estimate of the average
annual cost of compliance for dairy farms is presented in the
table below.
|
| Cost of compliance (ppl per year)
| Cost of compliance (£ per farm per year)
|
|
| Additional storage requirements | 0.80
| £9,366 |
| Additional costs of extra land or of loss of nutrient value
| 0.24 | £2,798
|
| Additional spreading costs | 0.30
| £3,505 |
| Additional administrative costs | 0.03
| £309 |
| Additional nutrient value | -0.01
| -£172 |
| Total Additional Costs | 1.34
| £15,806 |
|
11. The above figures are an average and costs for individual
farms could range from 0.93 pence per litre to 2.17 pence per
litre.
12. Promar's analysis does not separately identify the
cost impact of the individual components of Defra's proposal with
the exception of additional storage costs.
BENEFITS
13. Defra's own estimate is that the measures relevant
to the dairy sector will reduce losses of nitrates from agricultural
land by between -1.0% to -1.5% per year. Given that the total
cost to dairy farmers over 10 years would amount to £678
million according to the Promar Report, then the costs incurred
would seem to be disproportionate to the potential benefit.
ABANDONMENT OR
MODIFICATION
— Whole farm manure nitrogen loading limit
14. It is important that Defra obtains a derogation to
allow the whole farm limit to be kept at 250kg per hectare of
total nitrogen. Similar derogations have been granted to other
EU Member States including Denmark, the Netherlands, Germany,
Austria, Republic of Ireland and most recently to Northern Ireland.
15. It is estimated that the loading limit proposed by
Defra will affect about half of all dairy farmers in Nitrate Vulnerable
Zones, some of them severely. Farmers that cannot meet the whole
farm limit on livestock manure production will either have to
acquire more land or reduce their stocking density. Acquiring
more land will impose additional costs, whilst de-stocking will
undermine cost efficiency because fixed costs will have to be
spread over smaller output.
— Closed period (organic manures)
16. Consideration should be given to an effective reduction
in the length of the proposed closed periods so that, following
a risk assessment, a farmer may apply slurry during December and
January during the closed period, when the risk of nitrate leaching
is substantially lower. This would avoid the risk of a national
slurry spreading day (or days) and allow farmers to use periods
of drier weather within the closed period when the risk of soil
damage would be lower.
17. The inflexibility of Defra's proposals will also
put a considerable strain on the resources of the sector when
it is permitted to spread slurry. This is because dairy farmers
are now heavily reliant on external contractors. There are serious
concerns as to whether there is sufficient capacity available
from contractors to meet industry demand when the closed season
comes to an end.
18. There should be a closer alignment between the storage
capacity requirement and the proposed closed period. The proposal
for dairy farmers is for five months capacity whilst the closed
period for grassland ranges from three to four months. This represents
an excessive and costly level of insurance.
19. There also needs to be a closer match of storage
requirements to the conditions on individual farms. Soil, land-use
and rainfall needs to be factored in.
What advice and support farmers will need from Defra to implement
a revised Action Programme?
20. More than is being proposed. The Government should
provide grant aid to help farmers meet the significant capital
expenditure obligations entailed by these proposals. Grant aid
was provided under previous NVZ Action Programmes in 2002 and
in other Member States and in Northern Ireland.
21. At the very minimum Defra must undertake a concerted
education and training programme to alert farmers to how these
proposals will affect their operations and how they can respond
in the most cost effective manner. The advice and support programme
proposed by Defra is inadequate because it is largely passive.
22. The most effective way of educating farmers into
changing managerial practices is through one to one communication.
The programme of seminars organised for Defra by ADAS can contribute
to his process but on its own it is insufficient to the magnitude
of the task that has to be addressed. The most effective mechanism
available to the government to communicate on changing management
practices is the Catchment Sensitive Farming (CSF) Initiative.
It is important that this programme is retained and the network
of advisors under this programme is built on to provide advice
and guidance to farmers caught within NVZs. The grant assistance
programme developed under the CSF could also provide the basis
for developing a similar programme to address some of the capital
expenditure requirements arising from the Action Plan.
23. Consideration also needs to be given to how the planning
application process could be streamlined and improved to speed
up the granting of applications by farmers undertaking building
work intended to meet the obligations arising from Defra's proposals.
24. The Treasury should also consider the abolition of
the Agricultural Buildings Allowance, which is to be phased out
following last year's budget. The allowance gives relief in tax
computations for capital expenditure incurred on the construction
of agricultural buildings. The allowance is given at the rate
of 4% per annum, with the result that qualifying expenditure is
written off against taxable profits over 25 years.
How can Defra encourage greater adoption of anaerobic digestion
as a way of managing manure?
25. Dairy UK strongly supports the adoption of anaerobic
digestion as part of a range of renewable energy technologies
that farmers and growers can adopt. This technology can also make
a contribution towards addressing nitrate leaching and the NVZ
Action Programme.
26. There are significant obstacles to be overcome in
securing greater adoption of anaerobic digestion. In order to
be viable low-energy cattle slurry will have to be supplemented
with higher energy feedstocks from other sources. The nitrogen
in these additional inputs can create difficulties in the recycling
of digestate from the anaerobic digestion process to agricultural
land and the NVZ rules will complicate this problem.
27. Investment in anaerobic digestion is further complicated
by the compliance required from several regulatory regimes including
Pollution Prevention and Control, Waste Management Licensing,
Animal by-products and NVZs. There are also difficulties created
by infrastructure requirements for connecting into the national
grid, and the pricing arrangements for small generators.
28. The investment costs for AD plants are high and consideration
needs to be given to providing additional incentives and a stable
regulatory environment to ensure that farmers are confident they
will receive secure return on their investment.
January 2008
14
Not printed. http://www.dairyuk.org/publications/NVZ%20Report%20Final%20All%20Sept%2025.pdf Back
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