What part can organic farming play in sustainable food systems?
High hopes and expectations from organic farming
The EU’s Farm to Fork strategy, which applies the EU Green Deal to agriculture and farming, makes the development of organic farming a central plank in improving the sustainability of European food production systems.
The idea is that organic farming “has a positive impact on biodiversity, it creates jobs and attracts young farmers”, and that “consumers recognise its value”. The promotion of organic farming also fits with the Strategy’s aim to reduce pesticide use and nutrient loss by 50%, and fertiliser use by 20% by 2030.
The EU Commission, predicting that demand for organic products will continue to rise, wants to see member states use the CAP to increase the area under organic production to 25% of EU agricultural land by 2030 (with similar ambitions for aquaculture), from a current average of 8.5%.
Here in Ireland, Food Vision 2030 sets out under its third Goal, Mission 2 “Viable and Resilient Primary Producers, with Enhanced Well-Being” a national target for organic farming to 7.5% of UAA by 2030 – from an existing level of 1.6%.
Both the EU and Irish targets appear very optimistic, disconnected as they appear to be from actual increases in market demand.
Can organic farming deliver economically for farmers?
There has been significant growth in land devoted to organic production in the EU, + 46% between 2012 and 2019 to 13.8m ha, with Ireland’s surface rising by 40% from a low base to 74,000 ha, and France, where demand for organic produce is exceptionally high, more than doubling to 2.43m ha. Theoretically, organic farming allows farmers to improve their profitability through higher margins (rather than volumes), capitalising on the perception of their system as more socially equitable and eco-compatible. Conversely, conventional systems allow for greater yields, but at higher input costs, with a profitability based on volume and scale rather than margin, and with lower positive perceptions. The graph below, from a literature review carried out by Timothy C. Durham, and Mizik Tamás and published in the journal Economies in 2021, illustrates this.
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It also shows that conventional farming, where biotechnology (GM) and/or integrated pest management is used, can also achieve better profitability and real as well as perceived social and environmental improvements.
Organic farming is associated with lower levels of inputs, lower yields and productivity, and higher labour requirements. On the other hand, it attracts higher prices, demand for organic products is on the rise, and the EU’s Common Agricultural Policy encourages organic farming as a desirable option through financial supports. So how does this all tally, and does it add up to an economically realistic option compared to conventional production for farmers?
Lower yields and productivity, higher labour costs
An academic review of 362 studies carried out in 2018 by Plant Production Systems researchers from Wageningen University showed crop yield gaps of around 20% between lower productivity in organic farms and their conventional equivalents, but with significant variability – a standard deviation of 21% – between crop groups and regions.
A further study by Samuel Knapp of Munich University and Marcel van der Heijden identifies 15% higher volatility in yields from organic agriculture compared to conventional.
While pesticide and fertiliser costs are lower in organic farming, due to lower use, costlier organic feed ingredients and additives, and their lack of availability have been identified as a disadvantage to organic livestock farming in a literature review by independent Spanish researcher Alfredo Escribano.
Organic farming is more labour intensive than conventional: a study of over 1000 organic farms in the UK and Ireland published in the International Journal of Agricultural Sustainability showed that they employed on average 135% more FTE (full time equivalent) than their conventional counterparts. So, while the figures vary considerably between enterprises, sectors and regions, where a conventionally run enterprise might require 1 labour unit, the same enterprise run under an organic system would require 2.35 labour units.
Some of that labour can also be physically hard and unappealing: organic vegetable producers have to resort to repeated non-chemical weeding, several times per season, using mechanical or flame weeding equipment, or back-breaking manual labour. While margins per unit may be better than in conventional, they remain a limiting factor when it comes to remunerating unskilled wages and competing within the labour market.
The Irish agriculture sector, especially dairy, horticulture and pig farming, have suffered pre-COVID-19 from significant labour shortages, well documented in the 2018 Teagasc’s People in Dairy Project, the Bord Bia Labour Review of Horticulture in Ireland 2016 and the Teagasc Horticulture Labour Force Survey Report in September 2018.
Recent reports from those sectors suggest that the post COVID-19 lockdown economic recovery has worsened the labour shortages for the agri-food and some other sectors.
The need for good technical support
There are fewer than 3,000 organic farmers in Ireland (see graph). Conversion from conventional to organic farming takes two years. Transitioning to growing crops or raising livestock without recourse to herbicides or most pesticides requires significant technical support, whether it is to deal with complex crop rotations to avoid diseases, or in managing animals to optimise health and welfare.
Teagasc runs a QQI accredited 25-hour training programme to enable farmers to convert to organics. Having completed the course and passed the exams, they have to join an organics certification body, then carry out conversion over 2 years, before being able to sell their output as organic. Some of the capital expenditure necessary may be grant aided under the EU funded, Pillar 2 TAMS scheme, and there are also subsidies available under the Organic Farming Scheme run by the Department of Agriculture, which in its most recent instalment paid €220/ha during conversion, and €170/ha thereafter. Teagasc has a useful step-by-step guide which outlines what is required of farmers deciding to convert.
Teagasc has two full time organic specialists, and 15 advisors to support organic farming. It runs five organic discussion groups for beef, one for dairy, and aims to have five organic farms in the SignPost Farms Programme.
Finally, the above-mentioned Food Vision 2030 strategy also aims to support the development of organic farming.
Consumer demand is niche, but rising
Organic food is big business, with global demand valued at over €106bn by FiBL and IFOAM in their 2021 report on the World of Organic Agriculture. The biggest market for organic food is the US at €44.7bn, followed by the EU at €41.4bn. But Germany comes second to the USA with €12bn, France at €11.3bn and China in fourth position at €8.5bn. The same report flags strong market growth, with many countries in double digits. (E.g. France +13.4% between 2018 and 2019).
By comparison, the Irish retail market is valued at €162m with an additional estimated €44m generated from direct sales.
The average spend per capita on organic food in Europe is reported at €58, with the highest (worldwide) spend record held by the Danes at €344. France is at €174, and Ireland €43.
But demand appears to be growing rapidly – by 128% in the last decade in Europe alone – as consumer perception is positive and increasingly transformed into purchase decisions. A 2020 Eurobarometer survey of public opinion on CAP revealed that 82% of consumers perceive organic food to give better guarantees of compliance on pesticides, fertilisers and antibiotics, with 81% taking the view that it is more environmentally friendly, and 80% that it is better for animal welfare.
However, another 2020 Eurobarometer survey on “making our food fit for the future” shows that consumers prioritise taste, food safety and cost over sustainability when making food purchasing decisions. And organic only comes 9th in the order as a characteristic linked to sustainability in food, well behind “nutritious and healthy”, “little or no use of pesticides” and “affordability of food for all”.
Consumers are willing to pay more… or so they say
According to a Bord Bia survey carried out in September 2020, consumers state they are willing to pay more, but the willingness is in reverse proportion to the size of the premium. The greater the premium, the more consumers’ willingness to pay extra it is related to their perception of greater healthfulness. I emphasize that we are talking about perception: numerous scientific studies have shown no greater health benefits from consuming organic products compared to conventional. Organic foods being seen as better for the environment, and tasting better, are the next two reasons consumers put forward as influencing their decision to purchase organic products.
Interestingly, the same study shows that more consumers would prioritise purchasing locally produced food over organic. On the other hand, the study does not provide any correlation between declared intentions and actual purchasing decisions – and we know that consumers don’t always act in accordance with their declared intentions.
The dangers of leakage and devaluation
One of the problems facing organic farmers is that, even if demand is growing, unless supply lags or matches that growth, surplus product may end up having to be processed as conventional, and be paid for at conventional prices.
Another danger, which is inherent in the type of target set out in Farm to Fork, is that aiming for an arbitrary increase of 25% in agricultural areas under organic farming systems in the absence of an equivalent promotion of market demand could lead to oversupply of markets, which would erode the margins necessary for organic food production to be profitable and therefore sustainable.
Matching supply and demand is difficult when supplies and ranges are limited: it is difficult to create the logistics, distribution and food chain infrastructures required. Specialist retailers may be better able to ensure strong margins are returned, but with mainstream supermarkets keen to gain a competitive advantage by developing private label offerings, many of the problematic dynamics which affect the erosion of margins for conventional food products apply here too. A 2018 study of the Polish market for organic foods examines those issues.
Organic farming is not answer to all the sustainability challenges of agriculture – it can only play the part that the market it services will justify, even if that market is growing, and it can present farmers with much higher economic risks.
Organics: a well-supported part of food systems, but fraught with market risks
Organic food production will undoubtedly play a part in food systems, possibly even a relatively important part, as market trends at least in developed countries show a strongly rising trend in demand. For farmers, if demand remains just ahead of supply, it can yield attractive outlets and return strong margins, while helping deliver on biodiversity and many of the pesticide, fertiliser and other chemical targets set out in the Farm to Fork strategy.
However, it is not for every farmer: it is a complex, challenging production system which will remain highly dependent on strong policy, technical and financial supports to help farmers convert and remain engaged in the face of the higher risks involved, and the margin squeezes imposed by the retail food chain.
From a consumer perspective, it is a consumption choice for the relatively affluent, while less well-off consumers will always need to prioritise value (price) over values (ethics). Organic products are in far greater demand in developed countries than in emerging markets. Organic food production can only make a marginal contribution in feeding increasing global populations, especially in poorer countries.
Nor is it the panacea for the environment or climate: a focus on minority organic farming cannot distract from the necessity to improve the sustainability of majority conventional, productive farming – in all the understandings of sustainability, i.e. economic and social as well as environmental.
Finally, it is impossible to talk about organic food production in Ireland without mentioning the tragic fire which has devastated the Glenisk yoghurt making facility in recent days, thankfully without casualties among its 90-strong staff. Glenisk processes 90% of Ireland’s organic milk, supplied by 50 dairy farmers. Here is hoping for the Glenisk owners and personnel, milk producers and for us consumers who appreciate their fantastic products, that they can get back on their feet rapidly.
© Catherine Lascurettes, Cúl Dara Consultancy
