Dutch government's farmers buyout scheme may be illegal state aid: report

A new buyout scheme intended to more generously compensate farmers who close their business is on shaky ground, sources told NRC. The scheme may not comply with European regulations and could therefore be considered illegal state aid, the sources said.

Minister Christianne van der Wal for Nature and Nitrogen announced the “wildly attractive” buyout scheme in March. The MGA2 scheme - the measure for targeted purchase and termination of livestock farms near nature reserves version 2 - would replace the existing MGO buyout scheme with more generous compensation for farmers who agree to close their livestock farms.

The voluntary buyout of farmers is an essential pillar of the Cabinet’s current nitrogen policy, which aims to cut nitrogen emissions by half by 2030. The Cabinet set 24.3 billion euros aside for solving the nitrogen problem, of which 7.5 billion euros is for buying out farmers.

MGO and MGA2 are both aimed at buying out dairy, poultry, and pig farms that emit a lot of nitrogen close to vulnerable nature areas. The agriculture sector criticized MGO because farmers who signed it could not continue their business elsewhere. MGA2 gives farmers the space to start up an agricultural business elsewhere.

But that is causing concerns in the European Union, according to NRC’s sources. Brussels is worried that bought-out Dutch farmers will go abroad to Hungary or Poland, for example, and push the local farmers out of the market. That disrupts the European market and is not allowed.

If the EU later rules that the bought-out farmer received illegal state aid, he will have to repay the excess money from his own pocket.

MGA2 has been up for public consultation in recent months. After that, the scheme would be submitted to the European Commission for inspection. That has not happened yet, a spokesperson for the Ministry of Agriculture, Nature, and Food Quality said to the newspaper.