What lessons can the organic sector learn from the economic downturn?

The economic downturn has effected different European organic markets differently. The UK and Italy have seen significant weakening in demand for organic products. In these countries consumers perceive organic products as expensive and the benefits they provide have not been considered sufficient to continue to pay this premium.

Although this trend seems to be reversing thankfully, other European countries such as Sweden and France have continued to see double digit growth through the recession. They have more effectively informed consumers of the benefits organic food provides. But how?

We need to understand the dynamics in these markets. How have they sold the benefits of organic produce to their consumers and how does this differ from what we do in the UK? To learn from them will make our market more robust through future economic downturns and therefore more financially sustainable.

Perhaps some of the Organic UK promotional budget should be invested in understanding these markets better to see what can be learned.

Recession impact on organics varies across Europe

Can the EU curb commodity speculation?

Hooray for the EU! Perhaps unusual for UK farmers to be cheering on the work of the EU but steps to control speculation on commodity markets should be welcomed.

Speculation does not put money in farmer's pockets but rather in the pockets of the speculators - otherwise they wouldn't do it. It increases volatility in the market, puts millions into food poverty and weakens structures which should assist farmers in marketing their grain.

Whilst the organic sector does not have a futures market we are indirectly affected by it and the immaturity of the organic grain market and small volumes involved make it particularly susceptible to external influence. Stable prices providing farmers a sufficient return would help build confidence in the UK organic grain sector and allow the development we all need to see.

UPDATE 2-EU unveils drive to control commodity speculators | Reuters

GM canola contaminates organic farm | Australian Food News

A case of GM contamination in Australia raises questions about segregation for organic farmers. This case raises two interesting questions. Firstly, whether a polluter pays principle will be followed in Australia and how consumers wishing to buy GM free produce will respond should organic supplies become contaminated.

If a "polluter pays" principle is adopted the likelihood of GM being grown in close proximity to organic land is reduced. However, how far will the principle extend? Over time if GM genes spread far beyond the farm they originated from and contaminate an organic farm will that organic farmer be able to trace the contamination back to source and seek compensation?

If GM free is a major motivation for consumers as the article suggests we should understand how important this is to them. If it is a significant factor in consumer buying decisions, we should rigourously ensure that any contaminated imported supplies are kept out of the UK organic market in order to protect consumer trust in our organic products.

GM canola contaminates organic farm | Australian Food News

Look before you Leap!

With the recent surge in the price of conventional grain and with Organic Entry Level Scheme agreements coming to an end in the next 12 months some will be questioning their future and whether to remain as organic producers.  3 producers have recently indicated their intention to de-certify and so about 700 tonnes of organic grain is lost.

The view of many farmers is that organic farming is more fun and more challenging but most importantly more profitable; with the additional risk of more variable yields and an immature market providing better rewards. However does this remain so when conventional cereal prices have strengthened so strongly and seem likely to remain strong for next harvest too?

Can the organic market provide sufficient premium over the conventional market when the economy is struggling and consumers are facing inflation and tax rises?  But perhaps the premium does not need to be as great as it has been historically as it is margin and profitability which is important not simply the level of the premium over the conventional price. Whilst conventional farmers are seeing higher percentage increases in prices they are also facing increases in the costs of their major inputs.

Ammonium Nitrate prices.  Source: www.dairyco.org.uk

The graph above shows how fertiliser prices have risen significantly since the higher prices grain has been available rising 10% between October 2010 and November 2010 and about £100 between November 2009 and November 2010.  When such increases occurred in 2008 the cost of oil was also rising significantly (see graph below) which gave a reason for the high fertiliser prices.  This year the fertiliser price seemingly has been driven higher by the strength of the grain market.



Higher grain prices have pushed input costs higher which impacts negatively upon farm profitability and more worryingly as a conventional farmer these input prices are beyond your control and so a weakness within your business model.  

In volatile times perhaps better to be in control of your cost structure than to see your input costs rising and being unable to do anything about it.

BQP Producers Annual Awards

Congratulations to Hall Farm organic pig producers for winning the BQP Waitrose Select Farm Highest Scoring Unit 2010.

How do a group of organic cereal producers end up at an awards dinner for the country's best pig producers?  Accept an invite and head off  to meet the customers for your grains.  A group of Organic Arable producers in the Eastern Counties now supply between 80% - 90% of the cereal requirements of BQPs organic pig producers and so were keen to understand how their businesses are fairing and how this might effect future sales of cereals.  Hall Farm is based at Rushbrook Farms one of our members supplying grain into the Waitrose / BQP grain supply initiative.  This initiative has localised the supply of feeds by relying less on imported cereals and now sourcing from local farms.

BQP are the sole supplier of pig meat to Waitrose and it was very interesting to hear how Waitrose see their market developing over the next few years and imagine how that might effect the organic grain supply into BQP. The last 18 months have been good for Waitrose who have seen impressive growth in sales but we heard that they see further expansion ahead.  They estimate that only 39% of their potential customers have access to a Waitrose store and so have an ambitious store building programme ove the next 5 years in both the supermarket and convenience store sectors.  This aligned with various partnerships to put Waitrose products into concessions in other retails' stores should provide continued sales growth.

We are glad to be working within a progressive and dynamic supply chain with BQP and wish Waitrose well in their continued development and expansion of their business.  Their success in accessing additional customer will build their organic pork sales and develop the market for our members to supply their pig feed.

Any organic grain producers in the Eastern Counties looking for supply opportunities should leave a comment below and we will contact you to discuss working together

Andrew Charlton praises the long-term strategy of Norfolk County Council

Organic Arable member Andrew Charlton appeared on Farming Today this morning to discuss his relationship with his landlord, Norfolk County Council.  He suggests they are more flexible and will have a role in supplying local communities once resource scarcity impacts upon agriculture.  Also interesting that they helped fund his agroforestry enterprise as a carbon offset.  Perhaps other councils may follow suit if asked.  (Listen from 10 minutes onwards if you don't have time for the whole programme).

http://www.bbc.co.uk/iplayer/episode/b00w7c3q/Farming_Today_01_12_2010/