Laws of economics and EU's wooly Farm to Fork aspirations

Laws of economics and EU's wooly Farm to Fork aspirations
The word "ORGANIC" written in vintage metal letterpress type sitting in a wooden drawer.

If dairy, beef, pig, sheep or tillage farmers were told the EU has a plan to increase their production three-fold, many of them would decide it’s time to get out of the business.

Anyone operating in any kind of business knows that the market is unlikely to absorb a 300% increase in supply without the business becoming unprofitable, due to prices falling in response to over-supply.

However, that is the prospect facing organic farmers, in the EU’s Farm to Fork proposal for a fair, healthy and environmentally friendly food system.

The Farm to Fork Strategy sets targets to transform the EU’s food system, including a reduction by 50% of the use and risk of pesticides, a reduction by at least 20% of the use of fertilisers, a reduction by 50% in sales of antimicrobials used for farmed animals and aquaculture, and reaching 25% of agricultural land under organic farming (compared to 7.7% now).

Not even dairy farmers, our most profitable sector, would welcome an EU plan to treble milk production.

It would even put off dairy farmers in other parts of the world, because the EU is the world’s largest food exporter.

As for our other main farming sectors, cattle, pig, sheep or cereal farmers would be running for a place to hide if the EU intended to treble their production.

There are a number of laws of economics that organic farmers will have to beware of, in the EU’s plan to increase the hectares they farm three-fold (which probably means a 300% produce supply increase, unless the EU limits the farmers’ production in some way}.

The main law of economics is that when supply goes up, price falls.

Other proven laws indicate that existing fans of organic food probably already buy all the organic food they can eat, and cannot buy much more, even if prices are lowered.

There are unlikely to be organic food fans among that large consumer segment that is very price sensitive, and tends to buy whatever is cheapest.

The majority of consumers are “somewhat” price sensitive. They will buy some foods at high prices, but they will buy increasingly more at lower prices. They will have to be persuaded to eat organic.

There are laws of economics on the farms as well as in the supermarkets.

For farmers newly drafted into organic farming by the EU, there’s an even bigger commitment than for the average non-organic farmer.

For example, to increase production of non-organic beef, you first have to raise cattle, build sheds, or acquire more land.

The farmer has to be confident enough to take the gamble that by the time he has more cattle to sell, prices will still be sufficient to generate profits.

The same applies to new organic farmers, on the double, because a two-year conversion period is required before a farm is given organic status.

As well as trebling organic farming by 2030, the Farm to Fork Strategy is designed to reduce use of pesticides by 50%, use of fertilisers by at least 20%, and sales of antimicrobials used for farmed animals and aquaculture by 50%.

The question arises: will it be harder to market organic food, when non-organic farming is being cleaned up to this extent, bearing in mind that the pesticides, fertilisers, and antimicrobials had all been proven by scientists to be safe, and bearing in mind that annual testing shows very little dangerous residues in EU foods.

None of these troubling questions are allowed intrude on the EU’s Green Deal, Biodiversity Strategy, and Farm to Fork Strategy, because they are as of yet only the typically wooly aspirations which 27 member states could be expected not to object to.

It’s all about a plan for fair, healthy and environmentally friendly food, bringing together nature, farmers, business, and consumers for a competitively sustainable future. Who could object to that?

The only mention of markets is that sales of organic food are set to continue growing.

The EU says organic farming needs to be further promoted, because it has a positive impact on biodiversity, it creates jobs, and attracts young farmers.

Consumers recognise its value, says the EU, and more needs to be done to shift to this type of farming.

In addition to CAP measures, such as eco-schemes, investments and advisory services, and the Common Fisheries Policy (CFP) measures, the Commission will put forward an Action Plan on organic farming.

This will help Member States stimulate both supply and demand for organic products.

It will ensure consumer trust and boost demand through promotion campaigns and green public procurement.

This approach will help to reach the objective of at least 25% of the EU’s agricultural land under organic farming by 2030, and a significant increase in organic aquaculture.

However, such measures sound like the standard financial support offered by the EU and other developed nations to reduce the risk of farmers not being able to make a profit, and going out of business, because prices are too low.

Nevertheless, the target to reach 25% organic land in Europe by 2030, and other elements of the EU Biodiversity and Farm to Fork strategies are welcomed by IFOAM EU, which represents more than 210 member organisations across the organic food chain.

The organisation said that the EU target for organic land is a landmark decision in a transition towards agroecology.

IFOAM EU called on the European Parliament, the Council and the Commission to even raise the level of ambition, and make the CAP an effective tool to incentivise and help farmers to transition, rewarding them for their contribution to public goods such as the preservation of natural resources.

“A reformed CAP, a solid action plan including quantitative time-bound objectives, and a dedicated budget, will be a good basis to increase organic land and reach the target for 2030,” said IFOAM EU.

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