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Organic Farm Incomes remain competitive

Category: Press Releases
23 July 2012

The latest report on Organic Farm Incomes in England and Wales, published this week, found that income for organic farms remain competitive with those of comparable conventional farms, despite challenging organic market conditions.

The report for the Defra funded Organic Farm Incomes project has been jointly published by the Institute of Biological, Environmental & Rural Sciences, (Aberystwyth University) and Organic Research Centre.

The 2010/11 report includes farm business data for 212 organic farms across England and Wales. The analysis found that Farm Business Income for most organic farm types was higher or similar to that of comparable conventional farms.

Farm Business Income was significantly higher for organic farms than comparable conventional Less Favoured Area cattle and sheep holdings, whilst profitability did not differ significantly between other organic and conventional farm types.

Prof. Nic Lampkin, Director of the Organic Research Centre, said: ‘The fact that organic incomes remain competitive with conventional, and that we have seen an increase for cropping and horticultural holdings, is very encouraging. Many farmers have been looking at the statistics on retail sales and premium prices and wondering whether they should stop farming organically – these figures show it still pays to look closely at the bottom line for both organic and non-organic farming before making a decision.’

The project also assessed year to year changes, by comparing profitability for an identical farm sample in 2010/11 with results for 2009/10. Substantial increases in profitability were observed on organic and conventional cropping and horticultural holdings, with some increase also seen on LFA dairy holdings. Profitability decreased for other organic dairy and livestock farm types, though not significantly, whilst conventional cattle and sheep farm profitability decreased significantly.

Gross and net margins were also calculated for organic and conventional systems. Simon Moakes, a research associate in sustainable agriculture at IBERS, Aberystwyth University said that: “Organic livestock net margins were characterised by similar financial output, with less physical output but higher prices, lower variable costs such as feed and fertiliser, but higher fixed costs per head due to lower output, reflecting the need for organic producers to look at ways of reducing overheads.”

Both organic and conventional net margins tended to be negative once the value of farmers’ own resources was included, with similar performance for beef and sheep but a lower organic margin for dairy cows. However, the addition of support payments results in a superior organic financial performance. Crop net margin results were generally higher in 2010/11, with organic enterprises out-performing their conventional counterparts. Similar output, lower variable costs and higher support payments resulted in substantially higher organic net margins.

ENDS

Notes for editors

For further details please contact:
Simon Moakes, Research Associate, IBERS, Aberystwyth University svm@aber.ac.uk; 01970 621603
Professor Nic Lampkin; nic.l@organicresearchcentre.com; 01488 658298 - extn. 541

Organic Farm Income Project
The Organic Farm Income project has been funded through Defra since 1996 and utilises data collected through the Farm Business Survey in England and Wales. Farms identified as “in-conversion” or those with less than 70% fully organic certified land were excluded from the analysis, providing a sample of 212 organic holdings.

The data was analysed as two samples; a full sample and an identical sample. The full sample analysis utilised data from all 212 organic farms and provides the best comparison of organic and comparable conventional farm income data in 2010/11. The identical sample identifies year to year changes within systems, though the sample sizes are smaller as not all farms will be part of the FBS dataset for two years.

The Organic Research Centre based at Elm Farm near Newbury is the UK’s leading independent research centre dedicated to the development of sustainable food systems based on organic/agro-ecological principles. Further information on our activities can be found at www.organicresearchcentre.com

IBERS, based within Aberystwyth University is an internationally recognised centre of excellence for the study of biological, environmental and rural sciences. It is a unique institution within Higher Education the UK which draws on academic expertise to undertake groundbreaking research to improve agricultural practices and to inform policy. The extensive range of work undertaken covers teaching, research, enterprise and knowledge transfer which enables IBERS to play a valuable role in the global drive to tackle some of the world’s most urgent challenges. IBERS employs 350 staff, has an annual turnover of £26 million and represents the largest land-based science department in the UK. A major investment of £25 million is nearing completion to help realise this vision.

Table 1 Farm Business Income (£/farm and £/ha) by farm type, 2010/11 and 2009/10

Table 2 Organic and conventional livestock enterprise net margins (£/head), 2010/11

Table 3 Organic and conventional crop enterprise net margins (£/ha), 2010/11

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