UK organic food production in a critical condition - report
highly uncertain, but those operating in the industry must show
greater self-reliance and better marketing know-how, according to a
new report.
The future viability of organic food production in the UK is a serious concern if the results of a recent survey are to be believed. The report from Organic Farmers & Growers (OF&G) revealed that 63 per cent of organic farmers rate their profitability as low or borderline, while a further 12 per cent said that their business is unviable at current prices.
The OF&G survey suggests that the milk sector is most under threat. Indeed, it has been well documented that production has exceeded national demand for the last three to four years.
"Situated at the bottom of the supply chain with relatively little bargaining power with those above, farmers feel that they are predominantly price takers rather than price makers," says the report.
In addition to business viability, the data also begs the question of how future investment can be funded. In the absence of sufficient profitability, farm businesses will not generate funds that can be invested, nor can they justify borrowing. Yet as OF&G points out, investment is necessary at each stage of the supply chain in order to drive new product development.
The organisation is also concerned that a third of farmers questioned are as yet undecided about what the next five years holds for them. Long-term planning is needed because organic crop rotations can last several years. This, therefore, is a rather alarming statistic about how organic farmers view the future of their sector.
But OF&G is also concerned that the sector is not taking advantage of new marketing opportunities. Half of the farmers questioned do not see themselves as having a major responsibility for generating better prices, and that a significant number believe that supermarkets should be responsible.
But as OF&G points out, "codes of practice notwithstanding, the important priorities for supermarkets of dividends and share growth, reputation enhancement and competitive pricing mean that sharing margin with primary producers, often several steps removed down the supply chain, is not even on the perimeter of their radar.
"So half our sample will wait a long time and still be disappointed if they truly believe responsibility for getting them better prices resides with supermarkets… or indeed anywhere else but themselves".
OF&G suggests that the issue of marketing is something that the organic food production sector has yet to come to grips with. "Perhaps this is a legacy of the dependency culture fostered by 40 - 50 years of post-WW2 government policy under which production was the only priority for farmers, with no need to attend to marketing," says the report.
A concern therefore is whether organic food production in the UK has sufficient self-reliant entrepreneurs to take advantage of the opportunities arising from consumer trends.
"It is OF&G's contention that positive trends in the organic retail market ought to present growth opportunities for home-produced products. Each organic farm proprietor has a responsibility for developing their own business to attain the goals they set for themselves."
The OF&G acknowledges though the power of the big four supermarkets, through which more than three quarters of all food sales pass. "Foremost among the challenges for organic farmers is the imbalance of bargaining power along the supply chain, with (as farmers see it) supermarkets in the driving seat and farmers in the begging seat."
Organic Farmers & Growers (OF&G) inspects production systems against published standards and certifies the resulting produce as being genuinely organic. There are about 4,000 organic farmers in the UK at present, with the total national organic area estimated to be 600,000 hectares.
