Loose housing-nothing to lose? Exploring the on-farm profitability, risk and agricultural policy consequences associated with a tie-stall ban on dairy farms

Due to stricter animal welfare regulations, in Norway tie-stalls for dairy cows are banned from 2034 onwards. The aim of this paper is to explore the profitability, risk and agricultural policy consequences associated with the transition from tie-stalls to loose housing. Data on farm economics and investments were collected from farm enterprise budgets on 66 farms that have built new cowsheds in recent years in Vestland county. Vestland was chosen because on average it has the smallest dairy farms in Norway, with 45 percent of the herds having less than 20 cows. To analyze profitability and risk we used net present value and stochastic simulation. The findings show that irrespective of herd size, to continue farming with an upgraded tie-stall is more profitable than to invest in new loose housing. For farms with less than 30 cows, investment in new loose housing is on average not profitable and involves a high risk. Unless the Governmental investment grant is significantly increased, the tie-stall ban will have large consequences for farm structure and conflict several agricultural policy goals. Farmland in less favored districts may go out of production, making it more difficult to reach the policy goals of increasing food production, agriculture across the country, biodiversity and rural viability. Our findings are of interest to politicians in countries where one considers stricter animal welfare regulations, as well as planners and farmers who consider investing in new loose housing dairies.