Food Trends for 2012

Leatherhead Food Research have released their thoughts on likely trends in food consumption during 2012. There seem to be 3 key projections which will have an impact on the organic sector:

1. Health & Wellness, Natural, Locality and Provenance

Organic Products can provide customers with each of these attributes but they are often lost or misunderstood as part of the matrix of understanding that consumers have about organic products. We need to get better at communicating both the specific benefits organic products provide and the breadth of these.

2. Softer Claims

The increasing regulation of claims made about food products makes manufacturers cautious about making specific claims and how they "sell" their products. Instead they seek to infer benefits and though packaging and phasing that is less specific. This is a threat to organic products as it allows for greater "muddying of the water" and so potentially greater consumer confusion.

3. Budget

Continued "tightening of belts" is predicted however there are opportunities despite this. With more meals being eaten in the home the demand is there for "treats" to be bought particularly if these are perceived as good value for money, thereby providing the consumer with plenty of bang for their buck. 

Leatherhead reveals 2012 food and drink trends

Going forward it does not look as if organic food is going to have an easy market but with good products which meet customers demands will find a willing buyer.  The more able these products are to fulfill the aspirations referred to in "1" above perhaps the less they will be restrained by budget.

Pricing Organic Milling Wheat

How should Organic Milling Wheat be Priced?


Organic Arable have been asked by one of it's milling customers to propose some ideas as to how a pricing structure for organic milling wheat could be developed.  Can we develop a scheme that could give producers some understanding of what they'll be paid for the crop and evaluate whether a milling crop or feed wheat crop is the best option for them.  At the same time allowing the miller and baker understand the price they will pay for grain and a mechanism which allows them to reward the best quality.


The reason our feed grain project with BQP has been successful is because the producers involved have been involved in developing the project and so have had some control over it.  Based upon this experience I want to ask you to give us some feedback as to how an organic milling wheat pricing structure might work.


Some assumptions that you may like to mull over when thinking up your ideas.

• Spring wheat generally produces a higher protein sample than winter wheat.
• Spring wheat yield approximately 0.75t /Ha lower than winter wheat
• Average organic feed wheat price 1.9x conventional wheat price

Here's an idea.


Conventional feed wheat price x 2  for a 10% protein organic milling wheat plus £20 for a 11% and £40 for a 12%.  That seems fairly simple.  Based upon a Liffe feed wheat for Nov 12 that would pay about £240 ex farm for Nov 12 delivery for a10% wheat plus premiums for stronger protein. 


Please let us have your thoughts on the above or propose an alternative.  We need to engage in a discussion with the millers so the more they know about you thinking the better.  Thanks

We're giving away money!

At the Organic Arable Board meeting on Tuesday it was decided that we would give money away!

We work with some great organic producers who have supported our philosophy of being a business run by farmers for farmers and we wanted to thank them for their loyalty and prove that being loyal and collaborative is beneficial.

To that end we are paying a tonnage related bonus to our members.  We have set a minimum of £50 for those who perhaps only market a few tonnes with some of the bigger producers getting in excess of £900.

Our business is not about generating profit for the company and its shareholders but is about supporting our farmer members.  We're proud of our business, the philosophy we work to and the way in which we are different to other grain merchants.

If you'd like to know more about how we do business or get involved with a business that is proud to do things differently and better - we'd love to hear from you.  Call us on 08456 521 706 or email enquiries@organicarable.co.uk

Visit www.organicarable.co.uk to find out more.

Cows eat weeds!

Nothing to do with grain production but an interesting example of lateral thinking.

A project in the US has been teaching cattle to eat weeds.  Those of you with mixed systems may be like to see how they did it.  Click here to link to the video

Italian Organic Market Continues to Grow

A further report of continued growth in the organic market in Europe. Italy saw growth of 10.5% through 2010 it is seeing continued double digit growth through the first 4 months of 2011. The star performer being dairy produce which is growing by just over 20%. The Danes reported continued growth of between 6% & 10% recently and we have had enquiries from European buyers seeking supplies as their domestic supplies are tight.

Why is the UK market so dramatically different?

Development of sales in Italy

(Source: Ismea for supermarkets sales, Assobio for other channels)

Significant growth in Italy has come from the independent and food service sectors in Italy as shown in the table above and perhaps this diversity of marketing channel provides greater robustness for the organic sector as sales volumes are less reliant upon the views or whims of a few supermarket buyers.

Recently Sainsburys have been out of stock of organic milk and sausages when I've tried to buy them and without the produce available it is buy it and so I am sure that the influence of the supermarket buyer is significant but this alone cannot be the answer. The fact that food service growth in Italy is so significant indicates to me that the Italian consumer is now expecting better quality food wherever and whenever they are eating.

Not for them the "oh well if that's all there is available" attitude but an expectation that high quality, organic food will be available and it is this consumer demand that is driving the growth they report. Perhaps then it comes back to the much lamented "lack of food culture" we have in the UK.

Perhaps this is the easy excuse. Time and again premium priced food products are being successful sold in the UK in large volumes, for example Dorset Cereals, Tyrells Crisps, Cravendale milk, Anchor butter, Premium own label sausages. The evidence indicates the consumer is not afraid of paying for food where they perceive value and yet organic is failing to persuade enough consumers it is providing very good value when one considers the multiple benefits that organic farming systems and so foods deliver.  


Currently organic delivers most of the requirements consumers have when considering ethical purchases.  It delivers lower chemical contamination, improved animal welfare and environmental enhancement and there is increasingly evidence of improved nutrition.  In some European countries organic is understood to be a "shortcut" encompassing all of these values in a world of increasingly confusing labelling of food packaging.  Rather than searching for a particular ethical criteria shoppers look for the catch-all organic label and buy this.


We need organic to be repositioned along similar lines within the UK so a whether a shopper is looking for for "high welfare", "great tasting", "improved nutrition", "less nasty chemicals" it is organic they chose to fulfil all of these aspirations and more besides.

In Praise of Hauliers

We sometimes get minor gripes about the hauliers we use although the vast majority of loads hauled run very smoothly.

I recently had a problem with a courier moving a sample of wheat from a farm to a watermill for the watermill to test. This was organised as a "next day" service and cost over £2 per kg delivered. It was not collected the next day or the day after but on the 3rd day after it should have been. I still don't know when or if it will be delivered.

Fuming on the phone to the courier I made a few calculations and reported to the courier company that:

"As a business we deliver in excess of 20,000 kg of material each year. Sometimes this needs to fit in with the specific collection requirements of the farmer loading and often needs to meet a specific tipping time at the delivery point. This is done for a charge on average of about £0.01 per kg.

Sometimes our hauliers don't get it right but they are all far better than the courier company I have recently had dealings with at a fraction of the cost - about 1/200th of the cost to be precise.

Thankfully we don't use couriers too often. Remember it's two sugars in his mug of tea next time your haulier turns up!

In short, organic soil hangs onto more of its “good stuff” for a longer period of time, while chemical systems can lose the “good stuff” more quickly

What a brilliant synopsis of how a healthy soil works. This report by the Rodale Institute is the culmination of a 30 year trial comparing organic and conventional farming systems in the US and shows that organic systems outperform conventional ones over a wide range of parameters both environmental and financial. It gives a positive view of the benefits organic farming systems deliver in making farming systems more robust in sub-optimal conditions and should be read and taken seriously by policy makers and agriculturalists as we look at making food production better suited for the 21st centuary.

The US systems studied are directly comparable to those employed in the UK but the principles of healthy soils are surely universal. Improved soil carbon levels act as a reservoir of both moisture and nutrients and a biologically active soil can make these available to growing plants. Whether the soil is lacking moisture or inundated with moisture the higher carbon levels seen in organic soils makes them better able to cope with both scenarios.

Read the full report. It is an excellent arguement for greater focus on organic and agro-ecological farming systems. The Rodale Institute 30 Year Trial Report

Organic Arable member hails a fine harvest

Congratulations to Carl Gray on his yields as declared in last weeks Farmer's Weekly article.

Interesting to see Invicta doing so well. Claire has been a mainstay of organic wheat production for a number of years as it has performed consistently well in trials. Perhaps Invicta is set to topple it but remember this is one year on one farm and quite an extreme year in terms of weather.

Let's hope Invicta can perform well in future years to help improve organic yields more broadly.  Was the care and attention Carl gave to growing a seed crop responsible for the additional yield or is the variety itself that much better?   Perhaps Carl could share with us all how he managed it

Organic wheat thrills near Tewkesbury - 9/7/2011 - Farmers Weekly:

Green shoots of the green recovery?

Much of the media claimed the recent Defra stats about the organic farming sector as evidence that the sector was in terminal decline.

Well here's the good news to contradict this analysis. Whole Foods Market, the US organic retailer, announced it would be opening a further new store in Cheltenham.

As a major retailer of organic products this is not a business that invests where it cannot see a return on that investment and so to announce this decision shows they believe that there are still plenty of people who are looking for organic products to buy.

Rather than looking at rather historic data about the sector and drawing rather hackneyed conclusions they are analysing their retail data and looking at opportunities to expand their business.

Despite what some may feel about large organic retail businesses this is a new opportunity for shoppers to buy organic products and for suppliers to expand their sales and should be welcomed.

New store announcement Cheltenham UK:

Harvest Reports August 2011

It's still early days and many organic farmers still have a way to go with harvest but here are a few early thoughts on how the harvest is progressing.


Yield
Reports are mixed but generally yields are better than most had been feared.  Reports of 5t/ha for wheat in the western counties would put yields at about par.  The story in the eastern counties is generally less encouraging with yields down about 5% on budget although this is better than was predicted back in the spring.  Best yield reported was over 7t/ha for some Tybalt spring wheat on un-irrigated land in Suffolk where it out-yielded the irrigated field next door.  This crop followed a vetch green-manure which it is assumed meant moisture retention in the soil was good.


Interesting comment from some trial sites of rye out-yielding wheat.


The variety trial data for the Organic Seed Producer trials will be available shortly.


Quality
So far hagberg levels seem good.  Protein levels are the usual mixed bag with levels between 9.5%and 11% being tested.    First sample of Panorama has reported at 9.5%, Hereward ranging from 9.5 to over 11% and Magister at 11%.  I am yet to be convinced that variety has a huge influence over protein level and am of the opinion that the soil and season have a far greater influence.


Bushel weights do seem good.  Several samples of wheat are testing at 83kg/hl, barley at 67 kg/hl and oats are testing at 54kg +.


This is an early refleaction on the 2011 harvest and I'd be glad to hear from anyone with either yield or quality comments to get a broader picture of how things are progressing.


Happy Combining!

Farmers turn away from organic as sales drop | Environment | guardian.co.uk

As interesting as the article is, it does not perhaps tell us anything we weren't aware of. Read the comments too. They give an insight into the fractured view of organic production that persists.

Responses seems to be very emotional rather than rational and show the work that needs to be done to show sceptical buyers the benefits of organic farming systems.

The debate within the comments section focuses mostly on pesticide residues and taste with minimal comment on environmental benefit or animal welfare.

The Why I Love Organic campaign has a lot of work to do to get these messages across to our customers.

Farmers turn away from organic as sales drop | Environment | guardian.co.uk

The Prince and the Porker

Organic Arable Chairman, John Pawsey has written up his Wednesday meeting with HRH Prince Charles.  And we now have the photographic evidence! Read all about it The Prince and the Porker

Sowing the seeds of market stability - 7/24/2011 - Farmers Weekly

Great write up in Farmers Weekly our our work with our customers developing the supply chain.

Sowing the seeds of market stability - 7/24/2011 - Farmers Weekly

Buckwheat could perform a weed suppression role | News | Farmers Guardian

Interesting sounding project on weed suppression. Widely used by organic gardeners buckwheat may be a useful tool for organic farmers too. Volunteers may be an issue - hopefully this research will provide some answers.

Buckwheat could perform a weed suppression role | News | Farmers Guardian: "Lynn Tatnell"

How profitable is organic cereal production?

With significant price changes in the last 7 months the greater profitability of organic grain production compared to conventional systems has been questioned. For several years it has been generally understood that organic cereal production provided a better return because of the greater risk (of a crop failure) taken by the producer.  


However the strength of the conventional market has called into question this assumption and organic producers are questioning whether they should remain organic or return to conventional production.


In order to better understand the dynamic interaction between organic cereal values and conventional cereal and to seek to make a comparison between the two I undertook the following exercise.  To plot the organic feed wheat price a stockless arable producer would require to achieve a similar Gross Margin (GM) to a conventional arable producer.


In order to do this a "typical" stockless arable rotation was required and a "typical" conventional rotation.  The conventional rotation was simple.  OSR>Wheat>Wheat.  The organic rotation is far more variable in practice but for this exercise the following was used.  Wheat>Barley>Beans>Wheat u/s with red clover>Red Clover.


Rising input prices are also a variable over which conventional producers have little control and so these too are brought into the matrix as they have an impact upon the conventional gross margin and so the relative Gross Margins of the two approaches.


So here goes.  What price does organic feed wheat need to be to provide a similar Gross Margin to conventional wheat?

With a conventional wheat price of £190 per tonne and with Ammonium Nitrate at £320 per tonne a price for organic wheat of £345 would be required to give a similar Gross Margin.


However since this analysis was done a couple of weeks ago the cost of nitrogen has increased by perhaps £25 per tonne and the wheat price has slipped (with Russia announcing its resumption of exports).  Perhaps today a price of £322 would be more realistic.


The model also indicated that the machinery costs for the organic rotation was about £50 per ha lower and with an additional £30 per ha in OELS payment a value of about £20 per tonne accrues to an organic rotation.


So perhaps a wheat price of £300 per tonne is approaching a comparable Gross Margin?


So will organic farmers see £300 per tonne this season?  Probably for milling wheat but less likely for feed grains.  Is organic cereal production less profitable than conventional arable farming?  Perhaps slightly, but perhaps not so far away from it as many might think.  


Before rushing out with the Roundup and ringing your certification body think carefully ...

• no organic input has risen £25 per tonne in the last two weeks.
• you've not spend well over £400 per ha on establishing a crop and watching it suffer in this drought
• you're not competing for inputs (nitrogen) in a global market against countries with rapidly growing populations and booming economies.

Organic farming may not be providing the higher returns in has for so long when compared to the current strong conventional market but is perhaps not as far behind as it may appear and is certainly more robust.


A copy of the model used for these calculations is available to Organic Arable members free of charge if they'd like to look at the comparison in more detail for their own farming system.


Price and yield assumptions are shown below 


Conventional Assumptions:

• First wheat yield 9 t/Ha
• second wheat yield 7 t/Ha
• OSP yield 3.5 t/Ha
• OSR valued at £400 per tonne
• TSP costed at £425 per tonne

Organic Assumptions

• First Wheat yield 5 t/Ha
• Second Wheat yield 3.5 t/Ha
• Barley yield 4 t/Ha
• Bean Yield 3.5 t/Ha
• Barley price assumed to move with wheat price and valued at a £15 discount to the wheat price
• Bean price assumed to move with wheat price and valued at a £50 premium

Clover Management Events

Institute of Organic Trainers & Advisers (IOTA) are running two training events focussed on the growing and utilising clovers in the West Midlands. The events are open to all but is discounted for farmers in the West Midlands thanks to RDP West Midlands funding.

Improve your fertility building by learning more about clover use and management.

Click here for more information and for a booking form

Grain Storage Workshop

I recently attended an event run by Agricultural Supply Services at which Ken Wildey spoke about grain conditioning and storage.  Grain storage may not be as exciting to farmers as large shiny machinery that steers itself but keeping grain well and bug free may save you claims, redirection charges and additional cleaning bills of perhaps £20 per tonne and there aren't many tractors that can do that.

Ken is a knowledgeable and entertaining speaker who has worked in both research into grain pests and  commercial storage and grain store management and made the topic interesting and kept things fairly simple.  Below are a few rules of thumb:

Mycotoxins
Mycotoxins are produced by grains as a defence mechanism against infection by moulds.  The greater the incidence of the mould the greater the level of mycotoxin.  There are two major potential problems, the mould species which occur in the field and those which occur in the store.
Those which occur in the field are predominantly caused by Fusarium spp. and produce the Deoxynivalenol (DON) mycotoxin whilst those which occur in store are caused by Pennecillin type moulds and result in zearalenone (ZON) mycotixins.

They are mutually exclusive and so a high field risk mycotixin does not mean there is a high risk of a storage mycotoxin and a low DON risk does not mean that stored grain is at low risk too.  The risk factors associated with DON mycotoxins are reasonably well understood with the biggest hazard being maize in the rotation.  Ploughing helps reduce possible passage from season to season by burying trash and other than that rain at flowering can increase incidence but little can be done about that.  As a consequence DON tends to be regarded as having a seasonal effect and it is seen as being a "bad DON year" if poor climatic conditions occur.

For ZON the easy fix is to ensure grain is stored at below 18% moisture which will cease production of the mould.

Grain Temperature
Grain temperature is important because warm grain has the potential to generate moisture through condensation within the store.  Condensation can create small areas within the store that have a higher moisture content but can be difficult to detect and these can become a source of problems.  Grain should be cooled once in store with an target of a maximum temperature of 15 degrees centigrade within 2 weeks of harvest and a maximum temperature of 10 degrees centigrade four weeks later.

Provided air is cooler than the grain it will cool the grain and moist air is unlikely to make grain damp provided the air temperature is below the temperature of the grain as the air will warm as it passes through the grain and warm air can hold more water than cold air.  Therefore the air entering the grain is likely to be dryer than the air leaving the grain.  However, be aware that fans can raise the temperature of air by 2.5 degrees centigrade and reduces the relative humidity.

Storage Pests
Storage pests are sub tropical in origin and don't like cool temperatures which is another good reason to cool grain.
Sawtooth Grain Beetle will complete its lifecycle every 28 days but cannot do so at temperatures below 15 degrees centigrade.
Grain Weevil will take 4 - 5 months to complete its lifecycle at 15 degrees centigrade and will fail to do so at temperatures below 10 degrees centigrade.

Wild thoughts and wild oats

We had a Board meeting yesterday and John Pawsey and Lawrence Woodward have agreed to contribute to our blog which is exciting.  Look out for their posts!

Also had a very interesting conversation with Adrian Steele and John Pawsey about Wild Oat control.  They both have some interesting experience and comments about the subject.  Hand Up if you'd like to know more and I'll work out how best to share their knowledge.

Where are organic grain prices headed?

I was asked an impossible question last week by someone doing a budget to rent some additional land . "What will the organic feed wheat price will be in 2012?"  As I don't know what it will be in Nov 2011 this was a tall order.


We have a guide as to what the conventional wheat market will be from the wheat futures prices which are available for Nov 2012 so can we work something based on this?  Below is my reply to the email.  

Historically the organic value has been roughly twice the conventional market but I don't feel that is a trend that will be continued given the strength of conventional grain prices and so perhaps we need a new rule of thumb to work on.  I believe there is significant demand side price in-elasticity at the moment and high prices could significantly reduce demand.  Given this can we continue to expect a premium of twice the organic price?  No. 

If we assume organic yields are 60% of conventional yields the market should pay the conventional price divided  by 0.6.  According to the futures market Nov 2012 wheat is £153.50.  Knock of the transaction charge for the futures of about £5 and we have a delivered price of £148.50 divide this by 0.6 and we have a price of £247.50.  From this point we have to then look at pricing the fertility building phase of the rotation.  This would indicate a figure higher than £247.50.  However ....  Now comes the less positive bit. 

A reasonably accurately calculated Cost of Production figure comes out at just under £200 and so it could be argued that you could sell below £247.50 and be profitable and some will I'm sure. 
Where is organic demand heading?  The Soil Association Market Report 2011 which was published recently suggests continued pressure in the market; only Waitrose and M&S anticipating growth and others multiples seeing the market as static.  The bakery and breakfast cereal segments (sorry horrid marketing jargon) saw significant falls in sales.  The livestock producers I speak to are suggesting that prices above £250 are difficult to live with.

Looking at it from both the production and the demand side there seems to be a convergence at a figure £240 - £250.

Perhaps the question should be reversed.  With conventional wheat at £148.50 and organic wheat at £247.50 which would you grow?  Looking at the sensitivity of this price how much would each have to move to get you to reverse that decision?

Do you agree?   I'd welcome your comments.

Danes continue to see their organic market growing

The Danes continue to see increases in the sale of organic food despite these straitened economic times.  As our domestic market feels the pinch it seems the Danes have effectively positioned the "organic label" as the short-cut for the values demanded by the time-poor, conscientious consumer.  If the "Love Organic" campaign can do the same for the domestic market we will hopefully see greater loyalty from the UK organic consumer.

45 % of Danes already buy organics every week, and 70 % buy them at least once a month, a recent study of the market research company GfK has revealed. "We see that the Danes are increasingly interested in buying products that meet their demands for clean and healthy food," says Henrik Hindborg, Marketing Manager at Organic Denmark. In 2010, Danes bought organic products worth DKK 6.7 billion (close to 900 million euros) - equal to a consumption of approx. DKK 1,200 (about 160 euros) per capita and a doubling on 2006. This makes Denmark the country in the world with the highest spending on organics once again.  Consumers in Denmark are even becoming more health-conscious, and many Danes still plan to increase their wholesome purchases, a new FDB survey has revealed. The high demand of organics is due to various reasons: consumers are more and more concerned about harmful substances, and they buy organics for more household members. Matters like the environment and climate also become increasingly important when they shop. A further reason is that the offer of organic products is increasing, according to Thomas Roland of FDB.   Organic flour, muesli and pasta are highly demanded, as well as fruit and vegetables. Even products such as wine, cheese and desserts have grown significantly. The FDB survey also indicates that there is an increasing need to guide consumers through the "food jungle", as requirements of conscious consumers have grown. The organic label is considered to be a safe guideline that helps consumers and saves them time. Time-pressed families especially appreciate this label, as organic regulations are comprehensive and well thought out. 

Organic Denmark (it may need translating)

Ever wondered how much energy was in your grain store?

The grain we grow converts solar energy into chemical energy which is then digested to feed livestock or humans.  But what does that energy look like?  Watch this clip to see how much energy a bowl of cereal contains - it's surprising.

Please don't try this at home or near your grain store!

BBC News - How much energy is there in breakfast cereal?

New Seed Testing Service Launched

In association with Suffolk Seed Laboratories we are now offering a comprehensive and competitive seed testing service.  This allows organic farmers to be confident that the home-saved seed they are using is of good quality and will perform without problems of low germination or seedling blight.

For more information and to see the pricing for this service please click here.

The Wheat Movie | Farmer to Miller to Baker

Who'd have thought there would be interest in a movie about wheat?  What a fascinating project we look forward to seeing the final version.

The Wheat Movie | Farmer to Miller to Baker

ADAS Crop Report

ADAS reports winter crops have survived the cold winter conditions well. Some crops of winter oats and winter beans have seen plant losses but generally the picture is positive. The cold conditions have reduced both pest and disease pressures.

Milder February temperatures have led to more advanced crops than last season.

See report here

USDA Uncovers Plot to Import Fake Chinese Organic Food

"We call upon responsible industry players, farmers, feed mills, processors and retailers, to place an immediate moratorium on commodities imported from China."

Strong words but ones that should be listened to when they come from Mark Kastel, Co-Director of the Cornucopia Institute a farming research and lobby organisation from the US.

USDA investigations have revealed that a fraudulent NOP certificate was in use by a Chinese exporter. Whilst there is no evidence that this certificate resulted in any produce sold as organic it is hugely concerning that the certificate was found. Is this an isolated incident?

Cornucopia report their domestic market has been damaged by cheap imported soya which perhaps was not all it should have been. Are there parallels here with the UK? Here the market for cereals is usually set by cheap imported supplies the integrity of which have been called into question. Have these supplies ever been investigated by the UK certification bodies or Defra in the way USDA has acted for Chinese soya?

Cornucopia story

USDA Story

Are you staying organic?

I had two interesting conversation yesterday.  The first informed me that £200 had been paid for conventional "new crop" wheat.  This is not entirely surprising given the strength the conventional market has shown in recent times but is does raise the interesting question for the organic sector.  How much premium can the organic sector pay for organic grain?

I then spoke to someone involved in the dairy industry and speculated that organic grain would continue to remain high and that, given the conventional price, organic wheat was likely to remain over £250 per tonne.  To this I was given a very straight response that no dairy farmer would or could afford to pay that without a significant rise in the milk price which did not seem likely.  I was then told that roughly 1 organic dairy farmer per week is leaving the industry.  They are either retiring or decertifying and producing conventional milk (although some are keeping their land organic).  If this loss of dairy farmers is extrapolated could mean the dairy sector would require 15000 tonnes less organic grain next year.

Given these pieces of information the question for organic cereal farmers is "How low can your premium go?" and "What level of organic premium do you require to stay organic?"  Cereal prices above £200 make organic grain production profitable but there is an "opportunity cost" to remaining organic if one could make more money as a conventional farmer.  However, if you are profitable any decision becomes one of attitude and the longer term view taken by the farmer.

For most farmers organic systems are slightly more profitable than conventional ones.  An organic farmer takes more risk (in terms of yield and market) but is better rewarded for taking this risk.  Attitude and technical concerns have held back greater arable conversion rather than financial considerations.  Currently this is open to challenge as conventional arable farming seemingly provides a better return.

However, perhaps this new assertion should be put into a broader perspective.  Firstly, input prices always rise as conventional farmgate prices rise, thus reducing profitability.  Secondly, diffuse pollution form agriculture will remain a significant policy driver and a profitable farming industry is more ripe for "polluter pays" type legislation than one that is unprofitable.  This could also result in additional costs being levied against the conventional producer.

Finally, I have recently heard of approximately 1800 tonnes of organic cereal production being de-registered. It is difficult to extrapolate what this might be across the whole sector but if others are getting out and reducing the supply of organic cereals at a time when provenance is becoming a stronger driver in the market perhaps there are opportunities for margins over the conventional market to be maintained. The old adage to do what everyone else isn't may once again prove true. These are interesting times whichever market you are in and will continue to remain so for the foreseeable future.

Let us have your thoughts by completing the poll to right of this piece or leaving us a comment.

15% of US households re now "food insecure"

15% of US households are now "food insecure" which means that every month they will be forced to miss meals or seek assistance to feed themselves.  This is a shocking indictment of a developed economy but a comment too upon the misguided approach to food and nutrition we see in developed economies.  As food prices increase feed through the supply chain to consumers this situation can only get worse.

5 Myths about hunger in America | Cornucopia Institute

"a speculative bet that a greater fool will one day buy from you at a higher price"

One hedge fund reported having made £71 million on the grain market since the beginning of 2011.  This is a fascinating commentary on the commodity market and the seeming enthusiasm there is to "invest" in this market.

Perhaps we need to see "investment" capital leave this market so we can see a return to a market driven by the fundamentals that drive the market rather than a high stakes playground.

Commodities and the 130+ Year Bear Market - Seeking Alpha