How nitrates rule changes will act as a new quota for Irish livestock farms

Common to all farms, constraints of labour availability, physical infrastructure, land type, access to credit and possession of relevant skills and knowledge at individual farm level set the tone for the profitability that could be derived from each holding.

Farmers for the most part have always strived to address these constraints, such as investing in machinery and automation to overcome labour issues, investment in buildings and facilities to improve physical infrastructure issues along with engaging in land drainage and improvements.

New constraints have entered the fray over the past decades, including the nitrates regulations which following revision are set to act as a significant constraint to expansion and increased production going forward.

For the uninitiated, the nitrates regulations govern the maximum number of animals a farmer is allowed to carry on their holding. Breaching the regulations will result in penalties to the farm's direct payments. 

A standard limit of 170kg of organic nitrogen is allowed per hectare. Organic nitrogen in this context means nitrogen in an organic form as opposed to chemical nitrogen. The organic nitrogen deemed to be produced per dairy cow has increased from 85kg per cow to 89kg per cow for 2021.

Under the old rules, effectively a farmer could carry 80 cows on 100 acres whilst remaining within the 170kg/hectare limit, i.e. staying within the rules without requiring a nitrates derogation.

Where the farmer applied for a derogation from the rules, fulfilling additional requirements such as soil testing and nutrient management plans, the farmer was entitled to increase their stocking rate.

However, the new Nitrates Action Plan commencing from January 2023 will increase the deemed organic nitrates produced per cow with a new banding limit brought into effect for higher-yielding herds.

The following table demonstrates how the nitrates regulations will affect the number of animals that can be carried whilst remaining within either the standard nitrates regulations or the derogation.

Higher yielding herds giving more than 6,500kg milk/cow will be hit most significantly. As can be seen in the accompanying table, such a farmer currently not seeking to avail of a derogation will need to reduce cow numbers by 16 cows. For farmers in derogation, the drop is even more significant at 23 cows.

Where the water quality in the catchment area of the farmer is polluted or at-risk-of-pollution or presenting worsening trends, then the acceptable maximum nitrates can be reduced from 250kg/hectare to 220kg/hectare from January 1, 2024.

Taking the above example, a farmer with 117 high-yielding cows pre-year 2021 would need to drop to just 83 cows after January 1, 2024, were the derogation levels to be tightened due to water quality issues, and could face a drop to just 64 cows if the derogation were to be removed entirely.

When examining the constraints that affect farm production one would be forgiven for failing to recall the quotas that applied pre-2015.

The adjustments to Ireland’s Nitrates regulations will serve effectively as the new quota. One element that may come as a nasty surprise is that the calculation of Organic N and P production on each individual holding using the new excretion rate bands shall be calculated on a rolling three-year average according to the Government-published overview of Ireland’s fifth Nitrates Action Programme.

The first calculation period for farmers is 2020-2022 inclusive, and from the start of 2023, this new methodology shall be employed to calculate annual N production on farms.

As a result of this rolling average, farmers with higher-yielding cows giving more than 6500kg/cow are effectively locked into the higher banding rates meaning they will need to reduce cow numbers for 2023 or take additional land regardless of how much milk yield is actually obtained from their cows in 2023.

The application of the rolling average and the subjectiveness of a specific threshold of 6,500kg will result in farmer fury once the realities of the new rules sink in.