Organic farms deliver higher financial performance
That’s according to research presented by Teagasc’s Dan Clavin and Brian Moran at the recent Teagasc organic conference.
Clavin and Moran pointed out that direct costs per hectare are 53% lower, and farm family income per hectare is 30% higher, on organic farms. Organic farms also have a more viable socio-economic profile. And greening of the CAP and flat rate payments may work well for organic farmers — if these European Commission ideas find their way into the eventual CAP reform.
These were some of the key take-home messages from the presentation (which you can download from my olivermoore.blogspot.com blog).
Figures from 14 organic and 507 conventional cattle farms were examined in 2010 for Dan Clavin and Brian Moran’s research. The organic farms were larger — 55 ha compared to 32 ha, on average. A significant difference was the amount of forestry on the organic farms — 12.5% versus 2.5%. Stocking rate was a little lower on the organic holdings — 0.91 vs 1.18 livestock units per hectare.
Mining deeper into the data, the future looks quite bright for organic farmers. In key areas, the organic model seems robust. While there was little difference in direct payment rates, less of the overall organic farmers’ payments came from the Single Farm Payment — an important advantage, with CAP reform in mind. That said, the high percentage of organic farmer payments that were from REPS and the Organic Farming Scheme is a worry, with REPS being wound down, and cutbacks likely for the OFS.
However, the proportion of direct payments retained as income is significantly higher on organic farms — 71% as opposed to 57%.
The lower direct costs on organic farms reflect less spending on concentrates and winter forage. Feed costs will most likely continue to rise — because producing feed is fundamentally an energy-intensive practice. Global wheat prices, though lower than the 2008 peak, increased by about 70% in the last year, partly spurred on by speculators operating on commodity markets — and very big trades like the 225,000 tonnes of feed wheat worth about £40m, which Frontier Agriculture in Britain reportedly took in last August.
Organic farmers are affected by the grain price volatility caused by such market moves, and organic feed is more expensive pound-for-pound, but the figures presented by Clavin and Moran suggest that organic farmers are slightly more secure because they spend a lower proportion of their cash on concentrates.
Socio-economically, organic farmers were found to be lightly younger, more likely to be married, and have spouses with an off-farm income.
Taking all the data together, it was found that organic farms were more viable: just 14% were classed as vulnerable, compared to 42% of conventional farms.
As with all research, there are limitations, such as the small number of organic farms in the study. Moreover, the data may be skewed towards better performing organic farms, because half of the organic farms included were demonstration farms.
The researchers used 2010 Teagasc National Farm Survey data, which is quite recent. But the terrain is fast changing. Prices achieved conventionally are rising, with cattle prices almost matching organic, and summer milk prices sometimes surpassing organic.
John Purcell of organic processors, the Good Herdsman, however, remains upbeat. “Organic cattle prices are on a par with the UK”, he says.
He discusses trends but not prices twice a week with cattle buyers from Slaney and AIBP, and refutes notions that there is a lack of competition in the Irish market. “Even the AIBP factories compete with each other on price,” he says.
On current cattle prices, he states, “€4 off grass is better than €4.40 out of a shed”, and adds prices have remained stable, in contrast to the normal trend of 20c/ kg fall in September.
Having made investments at the Good Herdsman plant, and developed new export markets, his main concern is that organic cattle stay in the organic system at the upcoming organic cattle marts.
