The European Commission has given the green light to two new schemes in the Netherland to pay farmers to stop breeding cattle, pig, poultry and veal calves in a bid to 'reduce nitrogen deposition on nature conservation areas'.

The new schemes have a total budget of €1.47bn (£1.3bn) which is to be used to compensate livestock farmers in certain areas to voluntarily stop production. Farmers signing up to the scheme must agree to stop breeding livestock and can not start a similar business in the Netherlands or in the EU.

There had been questions about the ability to run the scheme in light of state aid rules, however the EC said it was permissible to fully or partially close ‘production capacity for environmental reasons’.

Only small and medium-sized livestock farmers in the Netherlands will be eligible for the scheme and their nitrogen deposition load must exceed certain minimum levels.

Margrethe Vestager, executive vice-president in charge of competition policy, European Commission, said:

“The €1.47bn Dutch schemes we approved will facilitate the voluntary closure of livestock farming sites with substantive nitrogen deposition on nature conservation areas. These will improve the environment conditions in those areas and will promote a more sustainable and environmentally friendly production in the livestock sector, without unduly distorting competition.”

The schemes are split into two – LBV and LBV-plus schemes. LBV is worth €500m and farmers will be directly compensated for 100% of the losses incurred by the closure of their dairy cattle, pig and poultry breeding sites, in particular relating to the loss of production capacity and of production rights.

The larger, LBV-plus scheme has a pot of €975m and will only be open to 'peak-load emitting breeding sites' which emit a high level of nitrogen per year. Farmers who qualify for this will also receive 100% compensation for all losses incurred as a result of closing breeding sites, in particular in relation to the loss of production rights as well as to demolition costs.

The scheme details mean that under LBV-plus scheme, farmers can be compensated for a loss of production by 120%.