The Potential Unintended Consequences of Nitrates Banding
was an exceptional year for the agricultural land market. According to the Sherry Fitzgerald Agricultural Land Barometer published in February, land values grew by 11.5% over the year on the back of bullish growth of 10.5% witnessed in 2021. This growth marks the largest increase in agricultural land prices since the Sherry FitzGerald Agricultural Land Barometer began recording prices in 2013. This trend looks set to continue with national farmland prices forecast to rise by 8% on average in 2023 according to Independent.ie.
This demand for agricultural land was reflected in the research that Opinions conducted for ICOS in January ’23, which highlighted that 73% of dairy farmers agree that the availability of land is a barrier to growth for their farming enterprise.
So, what’s been driving this growth in prices?
Beyond the natural desire for some dairy farmers to grow herd size, according to a piece written by Matt Dempsey in the Irish Farmers Journal on April 19th, high dairy prices and announcement of Nitrates banding have been two of the main factors driving this growth in agricultural land prices.
Firstly, what is the Nitrates Regulations & Banding?
According to the Department of Agriculture, Food and the Marine, the purpose of the Regulations is to provide a basic set of measures to ensure the protection of waters, including drinking water sources, against pollution caused by nitrogen and phosphorus from agricultural sources, with the primary emphasis on the management of livestock manures and other fertilisers.
For dairy farmers, the nitrates bands for dairy cows was introduced from the 1st of January 2023. This means that the excretion rate is determined by the milk yield per annum per cow meaning that a high yielding cow is calculated as excreting more nitrogen than her lower yielding sister.
For dairy farmers, this will mean that their herd will be assigned to one of three bands each year based on the average milk yield of their herd. Details of the bandings can be found at the Department of Agriculture and Marine's FAQ page.
Based on these bandings, it is forcing some farmers to reduce their stocking rate. This is resulting in dairy farmers seeking to buy or rent more land which is driving demand for ground and impacting prices.
Dairy farmers have had increased purchasing power over the last year due to a buoyant milk price. This has led to increased competition for ground in ‘dairying areas’ at the expense of ground that had been or could have used for other sectors. This is highlighted by a recent piece written in the Irish Farmers Journal on May 6th which predicts that Grain and Straw supplies are set to ‘nosedive’ as the cereal area plummets.
Why the Dairy Sector Should be Protected
Minister for Enterprise, Trade and Employment Simon Coveney recently backed Irish dairy when he highlighted that the sector contributes more to the economy than foreign direct investment. He insisted that that the dairy sector is a significant driver of the Irish economy (contributing more than multinationals such as Google) and should be protected and nurtured.
However, despite the value of the dairy sector to the Irish economy, there has been increased focus on the dependence on feed imports such as soya on our sustainability credentials despite supports such as the Protein Aid and Protein/Cereal Mix Crop Scheme being introduced to encourage incentivise the growing of protein crops, to reduce the dependency on imported feed material. Surely such a loss in absolute tillage ground is a blow for the sustainability, sufficiency and security of our agricultural sector.
So, how do we balance the sector’s obligation to become more sustainable and sufficient while continuing to promote one of our most important indigenous industries? And crucially, what may be the unintended consequences of failing to take a holistic view when applying measures such as Nitrates Banding?
A look across the water
Firstly, let’s take a look at the continent to see the ructions that Nitrates are causing for our European neighbours.
In Netherlands, the ‘Nitrates Crisis’ has led to a situation where the country will be forced to choose between agriculture or building new homes and infrastructure in order to meet its climate targets, unless the farming sector can cut its nitrogen-based emissions. According to a piece written by the Financial Times in 2023, negotiations are at an impasse and angry farmers worried about their livelihoods last year staged multiple protests, picketing supermarket distribution centres, blockading roads, airports and train stations and dumping slurry at the country’s minister for nature Christianne van der Wal’s home.
With a persistent housing crisis on our own shore, we need to do everything in our power to avoid a housing Vs agricultural war developing in Ireland.
So, what are the potential solutions available to us that could help us avoid a Nitrates crisis in Ireland? Like most issues, there is no silver bullet but instead a number of solutions that could be employed. Crucially, there needs to be the application of joined up thinking across all sectors and at policy level in order to harness the potential of nitrates to benefit the Irish economy and the stakeholders within it.
2. Use of additives in slurry
3. Activation of the Bioeconomy
As Matt Dempsey highlighted in his piece on Other Options for Dairy Farmers in the Irish Farmers Journal on April 19th, one practice solution would involve recognising the ‘reality of excess nitrogen being produced on some farms, while providing the option of moving some or all of the excess nitrogen- containing slurry off the farm to where it is needed.
Dempsey points out that the slurry could be moved to either lowly stocked grass farms or tillage farms where organic fertiliser is precisely what is needed.
Use of Additives
Novel additives have shown their potential to reduce gaseous emissions in storage and thereby improving renewable energy and fertiliser potential in a piece of research conducted by Thorn et al., 2022.
If such improvements are achievable at farm level, there must be a mechanism under which these improvements are recognised and reflected in the Banding parameters.
Activation of the Bioeconomy
In 2022, the Irish government outlined plans to develop 20 large scale anaerobic digestors in rural Ireland by 2025. This is positive for the agricultural sector as it will allow an outlet for excess slurry produced on farms, assuming that farmers can transport their slurry to the digestors in a cost-effective manner.
Anaerobic digestors have huge potential in terms of our country’s ambition to reduce our reliance on fossil fuels. According to a piece by Stephen Robb in the Irish Farmers Journal, the end of the 2022, approximately 34% of Denmark’s gas demand was met by biomethane from anaerobic digestion plants with the ambition to increase this figure to 100% by 2030. This is made possible by government support schemes which are in place in virtually every other country where there is a successful AD sector (and currently in place for Irish wind and solar farms).
This need for support was highlighted in the research that we conducted for ICOS which highlighted that the top two factors that would make farmers more likely to consider trialling or implementing anaerobic digestor on their farm were ‘Grant funding toward upfront investment and Funding support on a phased basis over a number of years.
Aside from the production of biomethane, Anaerobic Digestors also have the potential to produce carbon dioxide for industrial uses as well as biofertilisers which could yield cost savings when compared to inorganic fertiliser.