The next subject that will be discussed is the economic factors. The sub-question belonging to this theme is: How do economic factors relate to the business prospects of dairy farms and to what extent is nature inclusive dairy farming profitable? The non-existence of a clear revenue model for nature inclusive farming was mentioned as a bottleneck for the upscaling of nature inclusive farming in almost every interview. The economic factors can therefore be considered as crucial for farmers.
Farmers
Although ecological factors appear to be important, farmers do need to be able to pay all their bills at the end of the year. Multiple farmers stated that they “do not have to become rich” from farming.
However, a farm remains a company that needs to make at least a little profit to keep existing.
Therefore, the economic factors seem to be leading in a farmer’s choice to integrate more nature inclusive practices or not.
When respondent 5 was asked what would motivate a farmer to adopt a more nature inclusive approach, he replied: “That is either law and regulation, or money. If you would take a lot of extra effort voluntarily, without increasing your earnings with it then why would you do it?”. In general, farmers did not choose this profession to earn a high income. However, their families and possibly employees are dependent on the farmer, and it is therefore quite a large responsibility. As the difficulties to generate an income for dairy farmers are still present, this influences the way they practice their job: “Most farmers are at this moment only working to keep existing and they do not
39 have time and energy to think of biodiversity and what not. Most people are just considering how they
can keep paying their bills” (respondent 6). As the financial space to breathe is often so little, it is for some farmers necessary to produce with more cows to keep existing.
One of the largest issues mentioned by almost all respondents is the overall market circumstances. As dairy farming is the focus of this research, this will firstly be discussed. Dairy farmers are very dependent on the milk processor, which is for all interviewed farmers Friesland Campina. The price for one litre of milk is a set amount for all dairy farmers. This has been quite stable for a couple of decades now, while the costs to produce milk keep increasing. The margin or profit for dairy farmers is therefore very small. Respondent 6 is the only dairy farmer that is a supplier for ‘On the Way to Planet Proof’
milk from Friesland Campina. He enjoys improving the conditions that are important for the ‘On the Way to Planet Proof’ line and the 2 cents extra per litre are a welcome addition to his usual earnings:
“Maybe I take a holiday and then I can hire someone that takes over for one week. And farming is just a way of life, you should not do it for the money. No, for me the most important is that I can pay my bills and if you have 40.000 euro extra to spend that really makes a difference” – respondent 6
Remarkable is that all dairy farmers had some remarks on what could be improved in the system, except for respondent 8. He spoke very highly about Campina and their ways of doing business:
“Campina is just a very well doing corporation. There is a lot of critique on it nowadays, but the market is just difficult at the moment”. The farmer owns the lowest position in the chain of food production and processing, and thus is very dependent on the ones with a higher position: “It is actually not a margin, because we cannot say to the milk factory: tomorrow we want one cent extra for our milk, because we need a larger margin. The margin is actually our cost price” (respondent 4). This low position in the chain is recognised by the interviewed farmers. The ‘On the way to Planet Proof’
concept appears to be beneficial for everyone and nature. However, as respondent 7 points out, the farmer itself is left out of the focus points, although he is the one making an extra effort to produce milk that can be labelled ‘nature inclusive’. Respondent 6, who produces milk for ‘On the way to Planet Proof’, adds that there are very strict conditions for farmers that want to deliver to this line: “You can immediately be thrown out and you will never be able to return”.
Realising a higher price for agricultural products is also difficult through the consumer: “If you are dependent on the consumer to pay for the transition, there are so many steps in between that also want to make a profit. So, if the consumer pays 5 cents extra for one litre of milk, you will be lucky to receive one cent of it as a farmer” (respondent 4). Besides, nature is seen as something self-evident, which decreases the willingness to pay extra for consumers. Therefore, respondent 5 (woman) is opinionated that the consumer is subsidized, as prices are relatively low in the Netherlands for a very high-quality product: “Everyone wants a fairy tale farm, but no one wants to pay the entrance tickets”.
The products that are left in supermarkets are often biologic or any other type of more expensive brand, as there are many other cheaper options to choose from. “The citizen and the consumer are two different people, united into one person” (respondent 3). This sums up the friction between the demand and offer of nature inclusive products at the moment. An extra difficulty is the dependency of the world market and export that Dutch farmers have to deal with: “We are not on an island here in the Netherlands. We have to deal with the whole world, with the world market” (respondent 3), “In France, and Italy, and Spain, and China the most, they will not pay for it. They just want cheap products and that is a different way of farming” (respondent 6).
Going deeper into the market conditions and their effect on local networks and food providers, we can see a large difference between the two different cases. Respondent 8 is in Altena involved in a local initiative ‘Puur uit Altena’, that enables inhabitants to buy local food boxes. The main goal of this
initiative is to gain more notoriety for the farmers in Altena. Respondent 8 did share that sales are decreasing, as it is easier for consumers to buy their agrarian products in the supermarket, rather than directly from a farmer: “And it has to be cheaper as well, straight from the farmer. Well, that is not going to work because we cannot compete with those large manufacturers” (respondent 8). Tilburg has a larger direct market of many consumers, as it is a relatively large city. The Goei Eete network of respondent 9 is therefore quite successful, and it aspires to expand to 150 orders a week. He also manages a store at his farm, where different products from other farmers are sold. The local housewife of Goirle and Tilburg is the desired customer for the store, that will walk in daily or weekly. Respondent 9 does however mention that it is becoming more popular to offer local products directly at a farm. He therefore hopes his system can continue to survive. Multiple farmers mention that not every farmer should start offering nature inclusive or local foods at his farm. The supply then rises, which makes it impossible to keep pricing high, causing only a little extra income for much more effort. As respondent 2 words: “It should not be too much, because if you can buy potatoes or eggs at every corner of the street, people will pass it. It should stay a bit exclusive”. The market for nature inclusive products is in short still too small to enable everyone to make the transition to a more nature inclusive approach.
Next to selling your products directly, farmers can increase their income in other ways as well. One option is the subsidies or compensations farmers can request if they take nature inclusive measures.
Respondent 1 receives subsidies for letting his animals graze and for his grassland full of herbs. He also pays a lower land rent, just like respondents 3 and 7. Another plausible way to make a living is through side activities. What was apparent in all farmer families is that other family members often help with work on the farm, but also have side jobs as the revenue of the farm is not enough to provide for the family. Both cattle farmers (respondents 1 and 7) sell their own meat packages from home. They advertise through signs at their farmland, of which respondent 1 claims to gather 90% of his customers, and both mention that the main advantage is to be able to set their own price. For dairy farmers this is more complicated, as they need to invest a lot if they want to set up their own processing line. Selling unprocessed milk is also not a popular option, as consumers are not used to this type of milk.
Respondent 8 makes his own ice cream from goat milk, which is quite successful. He sells this ice to another farmer, companies, at events, and his own farm.
Other actors
Respondent 10 emphasises the difficulty for dairy farmers to find financial space for a transition in these market circumstances: “If the milk price fluctuates one or two cents, it can already shatter the nature inclusive business model. That’s how fragile it still is”. For now, farmers are “bound to the financial sector, banks” (respondent 11), and many farmers “have financial problems […] they think:
more nature, then our income goes back even further” (respondent 10). To generate some extra income, a new, personal product is something that respondent 10 has supported multiple farmers with. They sometimes have their own little store or are looking for other ways to sell their product.
Respondent 10 mentioned that either the consumer should pay more for agricultural products, or that some steps should be cut out of the chain to create more transparency and a larger revenue for the farmer. “An example is the Planet Proof quality mark of Friesland Campina, but we immediately see there that they are very hesitant to allow new farmers because the sales apparently do not grow as quickly and farmers have to be dependent on a stable situation” (respondent 10). Respondent 11 added that the higher price of nature inclusive products is mostly dependent on the consumers that can afford it, as not everyone can.
41 Municipalities
The often-used statement: “You can’t do green if you are in the red” was also brought up by respondent 13. It means that you cannot adopt measures to become more sustainable (green) if you do not have the money for it (red). The unwillingness of consumers to pay extra for nature inclusive products is however also seen as a bottleneck by the municipalities: “I think that a large obstacle is that the market is not paying for it. If we walk into a supermarket, we become a consumer and we go for ease and affordability” (respondent 13). The municipality of Tilburg is, therefore, more than willing to compensate farmers for their services, to make nature inclusive farming more attractive. For example, when realising a walking path through their meadow: “If we may walk through his meadow, he should be able to earn something on this too” (respondent 15).
However, it would be more ideal if the system carries itself, instead of farmers being dependent on subsidies or compensations. Respondent 15 therefore states that “The trick is to attract the inhabitants of Tilburg to the rural areas and let them cycle there, buy an ice cream. And if you cycle there you can take meat from one farm, or milk or cheese. That would be nice”. The municipality of Tilburg would prefer if farmers broaden their practices and start offering local products, but they are thus willing to stimulate the market to make this more attractive for farmers. They also try to involve the citizens of the area more, in the form of a newsletter with information about the different projects and best places to visit in the areas around Tilburg, according to respondent 14.