DCA-Markets has been listing phosphate rights since 2016. A phosphate right, as defined by the Netherlands Enterprise Agency (RVO.nl), stands for 1 kilo of phosphate produced by dairy cows, calves and heifers kept commercially.
Under European agreements, the Netherlands is obliged to limit phosphate emissions in the agricultural sector, so that the phosphate ceiling is no longer exceeded. Since 1 January 2018, no more cows may be kept on dairy farms than the number of phosphate rights allocated to the company by the government at the time. The rights were allocated on the basis of the farmers' dairy herd on 2 July 2015.
Phosphate rights can be transferred to another entrepreneur. There has been a brisk trade in those rights. The transactions are effected in different ways. The price level at which this happens is important to the market, but is not transparent. That was the reason for DCA-Markets to make a phosphate listing. This already started in 2016, when the granted rights were already known but had not yet been officially granted. In that period of pre-trade, DCA already explained the market.
This price is drawn up and published every Wednesday. DCA contacts a large group of traders who report the prices they realized that week. At the start of the pre-trade (2016), a right was quoted at 100 euros. The official trade (January 2018) started at 195 Euro. Because many dairy farmers were short of rights, prices rose to almost 275 Euro in the autumn of 2018. Now, in mid-2020, the market is at 140 Euro.
It is clear that the market is influenced by politics when it comes to the environment and the expansion of livestock. In the meantime, phosphate rights are skimmed off 20% instead of 10%. The level of the milk price is also a determining factor for the market. The quotations of DCA-Markets provide insight into price levels, so that business-economic decisions can be made more well-founded. When it comes to expansion, for example, but also for lease and completion.
The exact specifications of the DCA phosphate quotation can be found here: https://www.dca-markten.nl/Fosfaatrechten.pdf
Are you curious how we as DCA approach and guide the above? Or would you like to spar with us about the use of benchmarks in your "supply chain". Call 06 46 26 58 74 or mail to R.vantRiet@DCA.nl