The trouble with organic farming

Overnight, the UK has developed a seemingly insatiable appetite for organic food, with sales over the last few years rocketing. But suppliers are having difficulties keeping up with demand.

Chloe Smith heads out to find out why

Barely five years ago the organic sector was a small niche market, and those who championed organic food were still seen as either foodies with a bit too much money, or slightly eccentric eco-warriors. How times have changed.

Organic food is now fighting its way into the mainstream and meat is the fastest-growing organic sector. According to a report by the Soil Association (SA), retail sales of organic products totalled £1.6bn in 2005, up 30% on the year before.

The organic beef market is up by 44%, organic lamb is up by 29% and organic pork is up by 20%. Yet in this same period of rapid growth, the total land area under organic management actually fell by 8%. Our farmers cannot keep up and supermarkets will soon be forced to look abroad, we are warned.

So what is going on? Demand for British food is flying high, so why can our farmers not supply the demand with home-grown produce? For many, the costs are just too high. Deciding to convert to organic is a big business decision, which requires considerable expense at first. The usual length of conversion is two years, during which time farmers must farm according to organic principles, but sell their produce at conventional prices. Organic farmers must also pay the SA an annual fee for membership and inspections, which cost on average £400 a year. Many decide it is not worth it.

For farmers who do want to convert, the common agricultural policy (CAP) reforms, which have de-coupled subsidies from production, have taken the pressure off farming intensively. This may be an aid to the organic sector, but there is still the problem of the industry's long-term sustainability.

Organic farmers are not being richly rewarded for their efforts by the supermarkets, and the low-input, low-output principles of organic farming take time to become profitable. The market is growing quickly now, but there is nervousness about the sustainability of the organic bubble. If farmers rush to convert, will that bubble burst, flooding the market with tonnes of expensive, slow-grown produce that no-one will buy?

Memories of the organic milk flood of 2002 are still potent, even though that market recovered quickly from the mistake of over-production and prices are now strong and reliable. "The milk story is salutory," says Helen Browning, SA food and farming director, who, despite a 42% surge in enquiries about converting last year, thinks the milk story may be why livestock farmers are cautious.

So what is being done to ensure supplies are available? Peter King, chief livestock adviser of the National Farmers' Union (NFU) thinks the new 15- to 18-month supermarket contracts for organic suppliers are a step in the right direction: "We hope this is the start of an improved trading relationship between farmers and their customers. We support the move to contract arrangements to provide farmers with a fair return on their investments. We fully support initatives from Tesco and Sainsbury's with their supply base to provide contracts for organic produce."

The SA also welcomes the contracts. Sainsbury's was the first to commit to its suppliers in April this year, which Phil Stocker, of the SA food and farming department, is pleased about: "Livestock production is a long-term business where, for too long, farmers have paid all their production costs before they have any indication of what the end product is worth or whether the product will be in demand. This is why the SA is delighted to see Sainsbury's and Anglo Beef Processors (ABP) starting to commit to contracts, offering longer-term business relationships and allowing all parties to build trust and work towards a sustainable future."

Bob Kennard, of the Graig Farm Producer Group, echoes this sentiment and believes organic producer groups such as his are crucial to the process - not only for negotiating on price, but also for determining what the market requires and producing appropriately to meet the demand.

Kennard and his wife Carolyn started farming organic chickens in the '80s, when it was seen as a rather odd pursuit. "Our neighbours considered us slightly strange and not particularly professional," says Kennard. "They thought we were making hand-knitted yoghurt, when we just wanted to make really tasty food."

They set up the producer group with organic beef, pork and lamb farmers to provide security and strength in numbers. "When it looked like the supermarkets were getting interested in organic food in the mid-'90s we became proactive and sought to join up as many members as possible," says Kennard, who now works with over 250 farmers to market their food. The group is active in Wales, throughout the West Country and in Scotland, where the Graig Farm Producer Group manages the Caledonian Organics producer group.

Sustainability does not just come in the form of contracts, though. Fair pricing is also essential if supply is to be maintained and increased. Some think the price of organic meat in supermarkets is artificially low because producers are being paid too little. "There is evidence of that," agrees Kennard. "As far as producers go, they are not being paid a sustainable price. Farmers must start receiving a price that allows them to stay in organic farming, otherwise farms will start to revert to conventional farming."

If the industry needs more organic farmers, rather than less, farmers will have to be paid more. But even with the supermarket contracts, the incentives are not firm enough for many conventional farmers to convert. So what do they think about the organic meat industry?

"I have considered organic farming," says Stuart Hutchings, whose farm lies between Lempster and Ludlow on the Welsh borders in Herefordshire, "particularly for livestock because, in terms of a brand, it is a good status. It's well-recognised and there is potentially a higher price for premium cuts."

Gatley Farm has been run conventionally for 20 years by Hutchings, who rejected the option of organic farming. "It's a reduced-output, reduced-input system and that has to be balanced against the price per kilo of meat. Our outputs would reduce a lot more than the increase in price we could get. It was a business decision," he says.

For Hutchings, who is proud of his high welfare standards and the taste of his meat, the label 'organic' is a marketing term, rather than a guarantor of best standards.

Organic farming guarantees animals access to pasture, allows them to exhibit natural behaviour and provides them with a natural diet. Hutchings accepts this but argues, "The one thing it doesn't guarantee is better standards of animal husbandry. They aren't allowed to vaccinate, so animals aren't protected from diseases. Our system is totally natural. Calves stay for the natural length of lactation with their mother. They have a good diet and we give them plenty of deep straw. That might be a problem for organic farmers, as lower intensity means the price of things like straw really matter.

"The meat-to-bone ratio isn't great on organic meat either," he says, raising the issue about the profitability of rearing organic animals. "Fillet steaks and topside might get a premium price, but the loins don't fill out on animals during finishing and the whole carcass is sold, so some cuts don't fetch much more than conventionally farmed animals.

"I am very happy with the quality of my food. The pesticides we use are all well-screened, there is diligence in the withdrawal if drugs are used, and our meat is tasty and wholesome.

"We need to blow our own trumpet on the quality and taste of our products," adds Hutchings, who will finish 240 cattle and 1,500 lambs this year. He also farms potatoes and grain. "We integrate livestock with cropping," he explains. "This minimises pest production, but I also use modern resources in terms of fertilisers and the latest pesticides, herbicides, fungicides and insecticides in order to produce the largest quantity of food."

Organic farming, of course, bans the use of pesticides and artificial fertilisers, which allow a farm to be more productive and enable the farmer to make more money. Kennard, naturally, supports the organic stance: "Since the Second World War, the price of food has come down. This has only been possible because of pesticides, artificial fertilisers and drugs. If, as a consumer, you don't want those chemicals, you've got to make your mind up."

"There seems to be some confusion over chemicals," retorts Hutchings. "If you took all the chemicals out of food, you'd have nothing. Food is made of chemicals. It seems to be okay to use products available in the '40s and '50s in organic farming, but nothing more modern. So they use products derived from copper sulphate - heavy metal products for potato blight! Organic is a lovely label, I'm just not sure what it means."

Whatever business decisions individual farmers make about organic farming, the future seems solid for organic food. It is the only quality standard with a legally enforceable set of guarantees about animal feed, lifestyle and welfare, and the growth of sales suggests this is exactly what consumers want. But in order to ensure a sustainable supply and a fair price for producers, the industry needs to communicate. "Retailers are telling us they want to use British," says NFU livestock advisor King. "Unfortunately, if we can't supply the product, they will look abroad."

Opinion is split on just how much the organic market will grow. It currently accounts for around 1% of the UK's meat industry and, although no-one is claiming it will ever hold a majority share, the SA's Peter Douglas is confident that, for farmers, it is a viable alternative. "Shelf space is growing all the time," he says.

"Organic food is here to stay," confirms Hutchings, "but I don't think it will become mainstream."

"The future is very good," insists Kennard, who believes producer groups are the best way to ensure good communication and a reliable supply. "It is a partnership. It ensures a fair deal and is beneficial on all sides because it helps to ensure the food produced fits what the market wants."

And it seems to be working. Last week the Graig Farm Producer Group negotiated a deal to supply Sainsbury's with organic beef. The message from producers: More of the same, please.

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