Positive Financial Outlook for Organic Farmers
Two reports published by the University of Wales, Aberystwyth (UWA) this week show that organic farmers have been achieving good incomes relative to conventional producers, although neither group was well off in absolute terms, and that the expansion in the organic market since 2005 is offering the potential for significant improvements in organic farming's financial performance in 2007.
Nic Lampkin, co-author/editor of both reports and Director of Organic Centre Wales based at UWA, said: 'The organic sector, like agriculture generally, has been through some tough times financially in recent years, exacerbated by the growth of supply ahead of demand in 2001-2002 and significant competition from imported organic products. The revitalized market, with a higher share of the market covered by domestic products, is offering real potential for good financial returns from organic farming, provided that producers plan conversion carefully and ensure early attention to marketing issues.'
'Organic farm incomes in England and Wales 2004/05' (the latest in a Defra-funded series of annual reports based on Farm Business Survey data available at http://statistics.defra.gov.uk/esg/index/list.asp?i_id=130 ) provides detailed financial information on the performance of different organic farm types, compared both with the previous year and with similar conventional farms. The latest data (see Table) show most organic farm types maintaining or improving incomes in 2004/05 compared with 2003/04, and performing better than comparable conventional producers, whose performance slipped back in 2004/05. The main exception to this was lowland dairy producers whose results show the impact of low organic milk prices in the period before the recovery in the organic market in 2005/06.
The substantial recent growth in the organic market has been well documented by the Soil Association's Organic Market Report published earlier this year, which showed that UK retail sales of organic food grew by 30% in 2005. The increase in demand has resulted in strengthening prices for producers, particularly in the dairy sector.
The '2007 Organic Farm Management Handbook' documents the improved financial prospects for organic producers resulting from this market growth. The Handbook is unique in being the only source of detailed financial management information for organic farmers. The 7th (2007) Edition of the Organic Farm Management Handbook has involved a complete review of the organic market, farming costs, prices, grants and sources of information, involving numerous specialists throughout the organic business. It now offers the latest information to help organic and converting farmers budget, analyse their business and identify new opportunities. It provides advisers with invaluable information and it provides researchers, students, policy makers and the market with an in-depth understanding of the organic business.
This edition incorporates the introduction of the Single Payment Schemes (SPS), which has changed the financial picture of individual enterprises by decoupling support payments from production and removing quotas on cattle and sheep production, highlighting the need to cover all costs from the market. By removing the link between production and subsidy, the changes also provide new opportunities for farmers to reduce intensity and convert to organic. This fundamental policy change has been dealt with in this edition by strengthening the coverage of whole farm profitability, including the farm survey results from 2004/05, financial projections for 2007, the support available for organic production and conversion, and SPS implementation details in all four UK regions.
As John Nix says in the foreword "This book is invaluable both to those already farming organically and to those who are contemplating moving into it. It is packed with up-to-date information both financial and technical. It has been prepared by researchers steeped in the subject, backed by factual data provided by producers. It has become an excellent and essential part of current agricultural literature."
