Making Organic Farming Work Financially
This session pulled together about 25 - 30 people looking to find out how they can make organic farming work financially, four presentations were given on the use of benchmarking and the financial performance of organic farms compared to conventional. The final presentation was an interesting take on money recycling and how to keep this within the organic system. A number of questions were then taken that ranged from ‘How much will the consumer be prepared to pay for organic food?' to ‘The biggest cost to my business is the cost of certification can this be justified?'. The conclusion from the discussion was that we must not be despondent as co-operation is working within different sectors. However, we need to co-operate more and be willing to commit to a price.
Following the presentations a discussion took place and then questions were taken: Farmers need to be aware of their costs, to many farmers have not looked closely enough at these. Companies are finding that market volatility, especially in crop sales, is the biggest barrier to developing the sector. This is due, in part, to organic being a very small percentage of the overall market and it is a relatively immature sector.
Q1 - What will the customer be prepared to pay for organic food?
A1 - Nobody came forward with an answer to this question, however one representative felt that there may not be a need for a premium in the future. Supply trends show that in some sectors this may actually be the case but analysis has shown that a premium is currently and will still be essential for continued crop production and the pig/poultry sector.
Q2 - If we are to continue production without any premium in the future how can the cost of production be reduced to compensate?
A2 - One way to look at this is not to focus on a particular crop but to look at the whole rotation as one crop.
Q3 - Is there a benefit to concentrating on increasing output by focussing on the management of inputs?
A3 - This type of approach would be sector specific, the poultry sector would find this easier to do than other sectors without them having to cut fixed costs.
Q4 - What will the impact of energy costs and ‘conventional' inputs?
A4 - It is felt that input costs will rise as we live in a world of limited resources. Organic farmers will be able to fare better than their conventional counterparts as organic farming requires a greater control of the inputs and this will enable easier management of the risk.
Q5 - My biggest cost is the cost of certification!
A5 - Each business has to look at the cost of certification and whether this is viable. They have to be aware that in order to sell product as organic all parts of the chain must be certified, will your customers still buy the products if they are not certified organic?
Conclusion: Organic farmers need to work together, collaboration between sectors is important if we are to become more efficient. Farmers need to commit to prices to reduce market volatility. We must not become too despondent, collaboration is already taking place and this will become more widespread.