Organic Farming and the European Union
Memorandum of Evidence to the House of Lords Select Committee on the European Communities Sub-Committee D (Agriculture, Fisheries and Food)
Nicolas Lampkin and Peter Midmore †
Introduction
Agricultural Economics at Aberystwyth, recently consolidated within the inter-disciplinary framework of the Welsh Institute of Rural Studies, has a longstanding academic research interest in the economics of organic farming. An initial exploratory study by Anne Vine and David Bateman, published in 1981, analysed the economic performance of a significant number of organic farms existing at that time, and provided the foundation for this interest. Since then, the scope of research has developed considerably. It has embraced agronomic issues (nutrient cycling studies); rural development (proposals for a pilot programme in the Teifi Valley); policy reform (during major reviews of the CAP in 1988 and 1992); analysis of the economics of the conversion period (especially dairy farms); and sectoral studies on organic poultry and beef.
EU-funded work is currently in progress on the contribution that organic farming might make to future CAP reform and MAFF is funding a series of economic monitoring studies, and an investigation of factors influencing the profitability of organic farms.
Postgraduate researchers, working for higher degrees, are also undertaking complementary investigations: current projects include improvement of extension services; marketing of organic products and rural development; development of environmental indicators for organic livestock farms; and parasite control.
A recent further development within the Institute has been the establishment of an Organic Farming Unit, which has converted part of the University farms estate to a lowland organic livestock system, and also provides consultancy and advisory services.
The Institute has collaborated widely with other academic researchers and scientific research institutes. The substantial experience and involvement of the Institute in organic farming issues provides the basis for the evidence submitted in this memorandum.
The issues that we wish to stress are as follows. Firstly, that farming organically can achieve considerable resolution of the public and scientific concerns related to agricultural land use in Europe, such as the quality of the environment, health and more general issues of sustainability. Secondly, it provides the farming community with an opportunity to transcend present serious economic difficulties. Whilst both are recognised policy aims of the UK government, and the European Union (EU) as a whole, such benefits from the expansion of organic practices are constrained in a number of ways.
The following paragraphs deal with organic standards, aids made available for conversion and maintenance of organic farming systems in the EU; summary insights into our monitoring of the economic performance of organic farms in the UK; and the benefits and disadvantages of farming in this way.
Growth of organic production
Recent years have seen very rapid growth in organic farming in Europe. In 1985, certified and policy-supported organic production accounted for just 100,000 ha in western Europe (EU and EFTA), or less than 0.1% of the total agricultural area. By the end of 1997, this figure had increased to 2.3 million ha, more than 1.6% of the total agricultural area (see Appendix 1). It is likely that by the end of 1998, nearly 3.0 million ha was managed organically, representing a 30-fold increase in 13 years.
70% of the expansion in the land area has taken place in the last five years, following the implementation of EC Regulation 2092/91 (defining organic crop production) and the widespread application of policies to support conversion to and continued organic farming as part of the agri-environment programme (EC Reg. 2078/92). The former has provided a secure basis for the agri-food sector to respond to the rapidly increasing demand for organic food across Europe. The latter has provided the financial basis to overcome perceived and real barriers to conversion.
These figures hide great variability within and between countries. Several countries have now achieved 5-10% of their agricultural area managed organically, and in some cases more than 30% on a regional basis. Countries like Austria, Italy, Sweden and Switzerland, and last year the UK, have seen the fastest rates of growth. But many others still languish below the 1% level. A detailed statistical report covering the period 1993-1996 has been prepared by the WIRS team as part of EU-funded research. An update for 1997 is in preparation.
The UK had only 0.31% of total agricultural area in conversion or under organic management by 1996, one of the lowest shares in Europe. Growth rates of around 100% per annum since then have led to nearly 200,000 ha (1.2% of total UAA) on 1,500 farms (including holdings registered by certification bodies but not yet notified to UKROFS). In contrast to some other European countries, this growth has been stimulated more by strong market demand and low conventional prices than by policy support, although the Organic Conversion Information Service has played a key role in communicating information on organic farmers to potential converters.
Alongside the increase in the supply base, the market for organic produce has also grown, but statistics on the overall size of the market for organic produce in Europe are still very limited. Recent estimates have suggested that the retail sales value of the European market for organic food was of the order of £3-5 billion in 1997. A report providing an overview of the organic market in Europe is in preparation by one of our partners in the EU-funded research on organic farming and the Common Agricultural Policy.
In the UK, demand is still growing ahead of supply. Mintel and the Soil Association estimated retail sales value to be worth £250-270 million in 1997. It is likely that the current market is worth over £400 million, with growth rates of 50% in 1999 a distinct possibility.
It is very difficult to obtain reliable data on the imports and exports of organic products in the EU or the UK – the Soil Association’s report3 provides the best evidence to date for the UK.
Government support for organic farming
The EU’s agri-environment policy (Regulation 2078/92) permits, and co-funds, member states’ support for organic farming. By 1998, all member states had introduced such measures, although payment rates, eligibility and other conditions vary widely, leading to distinct unevenness in the level playing field originally intended by the EU regulation defining organic farming. Some countries see the role of organic farming support primarily in the context of meeting consumer demand and surplus reduction, while others place greater emphasis on the potential environmental benefits. Most countries offer payments for continuing organic production, although at a lower rate than for conversion. In Ireland and Finland, participation in the main agri-environment programme is a pre-condition for aid. Details of payment rates are contained in Appendix 2.
By October 1997, more than 65,000 holdings and nearly 1.3 million ha were supported by organic farming support measures at an annual cost of more than 260 million ECU. Organic farming’s share of the total agri-environment programme amounted to 3.9% of agreements, 5.0 % of land area and nearly 11% of expenditure, the differing shares reflecting in part the widespread uptake of baseline programmes in France, Austria, Germany and Finland. Further details are contained in Appendix 2.
Initially, the UK paid the lowest rates of support, and continues to restrict support to conversion only. This, together with uncertainties about the enhancement of conversion aid, helps to explain why the UK had one of the lowest percentages of its land area certified or in conversion to organic standards. The proposed new rates of payment under the Organic Farming Scheme are likely to significantly improve the situation, although the funds allocated for 1999/2000 are wholly inadequate to meet demand from producers now interested in conversion.
The Organic Conversion Information Service has been a major innovation which has significantly improved the flow of information to producers considering conversion. However, this service should be extended to include the conversion period itself, so that damaging financial and environmental impacts can be avoided.
Some aspects of mainstream policies have supported the growth in organic farming, such as set-aside (allowing fertility-building rotations) and the extensification programme (compensating for loss of livestock premiums due to a lowered stocking rate). The Agenda 2000 process of policy reforms will undoubtedly affect these, although as yet its outcome is not clearly known. Some key issues have been identified in our response to the MAFF consultation on Agenda 2000 (Appendix 3).
A diverse and complex range of additional support measures, distinct from mainstream agricultural aids, are made available by national governments. These include investment aids for marketing and processing systems (particularly, and not always recognisably, through the Commission’s LEADER II programme), advisory services, training and research activities. Such commitment also varies widely between EU member states. However, a common feature is their lack of integration, paralleling that of the Agenda 2000 process itself.
A number of countries have action plans for the development of organic farming, co-ordinating disparate policy strands into a coherent framework. This could be encouraged at a European level, but could equally well be developed independently in the UK context. Recently, the Welsh Office has taken a lead by promoting an Organic Action Plan as part of the Agri-Food Partnership launched on 8th March 1999.
Advantages and disadvantages of organic farming
The main basis on which policy support and consumer demand both rest are the favourable environmental and welfare impacts of organic farming systems. In overall terms, scientific research supports this case, albeit with some qualifications. In terms of ecosystem integrity, organic farms have more diverse flora and fauna. The system itself provides potential biodiversity and landscape improvements, although direct benefits depend very much on the management of the individual farmer. The measurement and improvement of biodiversity is problematic in general terms, but where a system such as organic farming has explicit environmental goals, development of a simple yet effective scoring system to assist decision-making is an important priority.
Soil topics have been studied in some detail, with the exception of erosion. Organic farms have been found to conserve or promote soil fertility and structure more effectively than conventional counterparts. Unsurprisingly, soils on organic farms have a higher organic matter content. The use of manures, composts and legumes as part of rotations lead to rates of nitrate leaching per hectare that are lower or, in some cases, similar to those experienced on conventional farms. Developments in organic farming practices, particularly manure management, the timing of cultivation operations and crop rotations are being promoted in order to overcome this problem. Since organic systems are prohibited from using herbicides, fungicides and pesticides, runoff and spray drift pose no problems. In terms of materials and energy throughput of organic systems, nutrient balances have been found to be at or close to zero, and published studies suggest that their energy use is lower than that in conventional farming.
The study of animal health and welfare on organic farms has been limited, although such research that has been completed suggests that again, much relies on the management skills of the individual farmer. For example, within dairy systems, some evidence exists that cows have more lactations and longer life expectation. The restrictions that some national standards (including the UK) impose on antibiotic use provide a stimulus for organic farms to adopt husbandry methods that are health and welfare friendly. The holistic approach implicit within the overall organic philosophy should foster humane and enlightened practices, satisfying both producer and consumer aspirations. Nevertheless, without explicit integration of best practice into standards, competitive pressures may erode many of these potential benefits.
Organic farming standards
The issues of organic standards and marketing are closely connected. With increasing anxieties and concern related to these issues, the demand for organic foods has outrun domestic supply, and imports satisfy an increasing proportion of demand. The lagging development of marketing and distribution in organic products contributes significantly to this shortfall.
Standards protect bona fide producers from sub-standard or fraudulent competition and provide the quality assurance that consumers seek in terms of satisfying their health, environmental and animal welfare aspirations. However, it should be remembered that the market for organic food has been developed as a means to an end, supporting the environmental, social and animal welfare objectives of organic farming by maintaining the financial viability of farming businesses. In this sense, standards can also be seen as codes of good agricultural practice with respect to environmental and animal welfare issues. The market was not, and should not become, an end in itself, or consumer confidence in the integrity of organic products may be undermined.
Because of the clearly delineated internal market of the EU, the need for a comparable set of quality assurance standards governing both imports from third countries, and the considerable trade within the Union itself, has been met by two Council Regulations. The initial regulation set standards for crop products (2092/91); recently, the principles of a new regulation governing livestock husbandry has been approved by the Council of Agriculture Ministers (in December 1998), although it has not yet been officially adopted. This minimum regulatory structure influences the UK standards through the United Kingdom Register of Organic Standards (UKROFS), although within this framework the control over allowable practices can be (and is) more stringent.
Whilst the overall European framework of standards is essential in terms of consumer assurance, it is deficient in several respects. The arable crop standards regulation (2092/91) contains inadequate provision for environmental standards to be achieved, which is ironic considering that this is one of the main motivations for organic husbandry. The draft livestock standards regulation provides even more cause for concern. It grants extensive derogations for tethering of livestock (in opposition to another important consumer motivation) and it provides permanent sanction for the conversion of non-organic animals to organic status (for instance, conventionally produced weaners). We feel that it is essential that the European regulatory base for organic standards needs to be considerably strengthened. Otherwise, countries with more stringent organic standards, such as the UK, will have absolute cost disadvantages, and there is a danger that developing consumer scepticism will further undermine the existing quality assurance system. However, it is also very important that disagreements on the livestock regulation do not further delay its already seriously overdue implementation.
Organisation of organic produce supply chain
Market shares for organic produce in the UK have been grow rapidly since 1996. However, domestic production is under-represented in supermarkets, a consequence of a major gap between supermarket demand and national supplies in terms of quantities and quality of products. Whilst organic farmers have a good share of the domestic milk market, only a small proportion of vegetables are produced in the UK, despite strong demand in the market, suggesting a possible split in cultures. Organic farming organisations up to now have only had few alliances with environmental organisations and farmers’ associations. Disagreement is also evident among organic farming associations on the overall development of the sector; some prefer to promote as much production as possible, whilst others favour promotion of good organic practices rather than growth.
However, since the BSE crisis and other food scares, market demand is clearly driving development and is encouraging mainstream multiple retailers to see the organic market as a serious opportunity. Supermarket managers expect organic products to play an important role in the general marketing profile. They are less motivated by public opinion on agri-environmental problems than by interest in presenting products with a green profile. Direct marketing (such as box schemes for fresh fruit and vegetables) have developed significantly in the 1990s, partly in response to supermarket requirements which were inflexible to the special circumstances of organic production. Unlike many other EU countries, organic food is not marketed extensively outside conventional channels, although there is significant interest from organic producers in the development of local markets.
This may well be due to the fact that poor availability restricts purchases of organically produced food. In order to build up a supply base and encourage conversion, farmers need to have confidence in the long-term future of the market, and above all need secure marketing channels through which they can successfully market their produce. It is of crucial importance to avoid the situation where both demand and supply are increasing, but bottlenecks prevent the increased supply from reaching the consumer. If adequate marketing channels do not exist for this increased production, the excess supply puts pressure on prices, putting a greater financial burden on an already stretched sector. The excess supply ends up being sold through conventional channels at conventional prices, which in turn inhibits further development of organic marketing channels.
A 1996 survey carried out by MORI found that among non-purchasers of organic food, 38 per cent were deterred by the cost, but 34 per cent by lack of availability. Given the scenario that consumers could buy organic food where they normally did their food shopping and at the same price, 61 per cent said they would prefer organic (37 per cent strongly) and only 4 per cent said that they would choose non-organic. The report concludes that price and availability are the key issues that need to be addressed in order to develop the organic market. Particularly in the UK, failure by government to implement an appropriate, enabling policy framework has contributed to the comparatively poor (in EU terms) performance of the organic sector.
Economics of organic farming
To the extent that the organic farming philosophy is driven by ethical motives such as environmental sustainability, animal welfare and social justice, the role of the market in the development of organic farming has been to provide consumers with a mechanism for compensating producers for internalising external costs. Although the division of influences between policy and consumer demand is difficult to evaluate, growth in the latter is largely responsible for the "decoupling" of organic premiums from conventional prices. Decoupling, in this sense, refers to the fact that organic prices have remained firm despite substantial current depression in returns to conventional producers.
Our analysis of the overall economic performance of organic farms in England and Wales, the first in a series commissioned by MAFF, suggests that some converted organic farms compare favourably with selected conventional counterparts. This is particularly the case for dairy and cropping farms, with mixed and other livestock farms performing less well on average. The dataset from which this information is drawn is limited due to the small total population base of organic farms, and average levels of performance themselves conceal considerable variation. However, on the basis of considerable familiarity with the farms involved and (as yet unpublished) income results for 1996/97, it may be concluded that organic farms have the potential to equal or outperform conventional systems, given the interim development in market conditions. At current price premiums, (due mainly to the fall in conventional prices) organic farming may be substantially more profitable.
The remaining major economic obstacle to increased organic production is the conversion period, in which output is depressed due to reductions in inputs and stocking rates, and adjustment to the new system often involves significant learning costs (the latter, particularly, can be offset by effective extension advice). Loss of revenues are uncompensated for by premiums (although in some instances, interim premium payments are being made in order to encourage greater levels of conversion to meet rising demands). A comprehensive study of dairy conversion, monitoring a range of aspects apart from the narrowly economic, has recently been completed in Aberystwyth. It concluded that the conversion process could be carried out with few long-term detrimental effects on herbage or animal production, and relatively small effects on farm incomes, due in part to the ability to lease quota on favourable terms. On average, the cost of conversion was £50 per hectare, although this varied significantly between the farms studied. These conclusions are broadly supported by a more extensive study of extensive livestock farms throughout North-western Europe.
Models of the conversion process for different farm types based on current (1999) prices and potentially adverse scenarios confirm that costs of conversion are now very low due to the poor performance of conventional farms and the high organic premiums obtainable. If conventional prices were to recover and organic prices to fall slightly, organic farms would still remain profitable, but the Organic Farming Scheme payments might not fully compensate for the costs of conversion. For some farm types, the need for maintenance payments remains and issue, particularly on livestock farms that rely heavily on headage payments.
Future developments
It could be argued that the standards framework, itself a critique of conventional farming methods, is over restrictive in terms of achieving the general aims of agricultural and rural policy within the European Union. Particularly because of the difficulties in psychological acceptance of the concept by mainstream farmers, might not a carefully designed agri-environment scheme achieve similar, but more widespread impacts, minimising although not prohibiting altogether the practices that cause environmental degradation? We would question this view, particularly since any alternative would not produce (without very substantial additional costs) the unique bundle of effects, in terms of product visibility, system verification and benefits for agro-ecosystems.
Rather, we would advocate a number of measures to strengthen its performance. The EU framework for organic standards should incorporate environmental performance criteria for arable and grassland management, and should require improved animal welfare criteria (in particular, more limited derogations for tethering of livestock would register a serious intent in this respect). There should be a stronger scientific basis to the development of standards.
This reinforcement of standards should be supported by a fuller integration of organic conversion and maintenance payments into the general agri-environment framework. The base and optional tier framework has become increasingly adopted in the UK implementation of agri-environment schemes (for example, in the Tir Cymen scheme in Wales). Making payments for organic farming the highest tier, dependent on adoption of lower tiers, would reinforce the potential improvement to environmental quality of which the system is capable.
Finally, the shortfall between domestic output and demand might be ameliorated by a strengthening of the supply chain for organic produce, with specific objectives integrated into the operation of the structural dimension of FEOGA support. Government support, in terms of payments to producers, regional market development, and legal definitions also needs to be reinforced by information provision, which in turn requires an adequate extension, training and education, and research base. As noted above, all of these elements can be expedited and strengthened if combined into a co-ordinated framework, an Action Plan for organic farming. Evidence from Denmark, Finland, France, the Netherlands, Norway and Sweden, all of which have adopted this approach, suggests that it promotes a more significant and effective expansion of the overall organic supply chain.
Appendices
Statistical data on land area and number of holdings managed organically in western Europe (1985-1997)
Organic farming payment rates, expenditure and uptake data under the agri-environment programme (1997)
Response to the MAFF Consultation on Agenda 2000 CAP Reform
|
Certified and policy-supported organic and in-conversion land area in Europe (ha) |
Utilised agric area |
|
Year end |
85 |
86 |
87 |
88 |
89 |
90 |
91 |
92 |
93 |
94 |
95 |
96 |
97 est |
'000 ha |
% organic |
|
European Union |
|
|
|
|
|
|
|
|
|
|
1995 |
1997 |
|
Austria |
5880 |
7000 |
8400 |
12320 |
16674 |
21546 |
27580 |
84000 |
135982 |
192337 |
335865 |
309089 |
345375 |
3449 |
10.01% |
|
Belgium |
500 |
700 |
972 |
1000 |
1200 |
1300 |
1400 |
1700 |
2179 |
2683 |
3385 |
4261 |
6418 |
1336 |
0.48% |
|
Denmark |
4500 |
4800 |
5035 |
5881 |
9553 |
11581 |
17963 |
18653 |
20090 |
21145 |
40884 |
46171 |
64329 |
2715 |
2.37% |
|
Finland |
1000 |
1200 |
1400 |
1500 |
2300 |
6726 |
13281 |
15859 |
20340 |
25822 |
44695 |
84555 |
102335 |
2605 |
3.93% |
|
France |
45000 |
50000 |
55000 |
60000 |
65000 |
72000 |
81225 |
85000 |
87829 |
94806 |
118393 |
137084 |
165405 |
30277 |
0.55% |
|
Germany-cert |
24940 |
27160 |
33047 |
42393 |
54295 |
90021 |
158477 |
202379 |
246461 |
272139 |
309487 |
354171 |
389693 |
17344 |
2.25% |
|
Germany-other |
0 |
0 |
0 |
0 |
0 |
15000 |
15000 |
96742 |
181382 |
173128 |
152062 |
121575 |
47645 |
17344 |
0.27% |
|
Greece |
0 |
0 |
0 |
50 |
100 |
150 |
200 |
250 |
591 |
1188 |
2401 |
5269 |
10000 |
5741 |
0.17% |
|
Ireland |
1000 |
1100 |
1300 |
1500 |
3700 |
3800 |
3823 |
5101 |
5460 |
5390 |
12634 |
20496 |
23591 |
4444 |
0.53% |
|
Italy |
5000 |
5500 |
6000 |
9000 |
11000 |
13218 |
16850 |
30000 |
88437 |
154120 |
204494 |
334176 |
641149 |
17294 |
3.71% |
|
Luxembourg |
350 |
400 |
412 |
450 |
550 |
600 |
634 |
500 |
497 |
538 |
571 |
594 |
618 |
127 |
0.49% |
|
Netherlands |
2450 |
2724 |
3384 |
5000 |
6544 |
7469 |
9227 |
10053 |
10354 |
10975 |
11486 |
12385 |
16660 |
1981 |
0.84% |
|
Portugal |
50 |
200 |
320 |
420 |
550 |
1000 |
2000 |
2000 |
3060 |
7267 |
10719 |
9191 |
12193 |
3981 |
0.31% |
|
Spain |
2140 |
2500 |
2714 |
3000 |
3300 |
3650 |
4235 |
7859 |
11675 |
17209 |
24079 |
103735 |
152105 |
25092 |
0.61% |
|
Sweden-cert |
1500 |
2500 |
4870 |
8598 |
23600 |
28500 |
31968 |
33267 |
36674 |
48039 |
83490 |
113995 |
118175 |
3438 |
3.44% |
|
Sweden-other |
0 |
0 |
0 |
0 |
5092 |
4890 |
5775 |
7161 |
7916 |
6930 |
3334 |
48317 |
87010 |
3438 |
2.53% |
|
U. Kingdom |
6000 |
7000 |
8500 |
11000 |
18500 |
31000 |
34000 |
35000 |
30992 |
32476 |
48448 |
49535 |
54670 |
15852 |
0.34% |
|
EU 15 |
100310 |
112784 |
131354 |
162112 |
221958 |
312451 |
423638 |
635524 |
889919 |
1066192 |
1406427 |
1754599 |
2237371 |
135676 |
1.65% |
|
Norway |
90 |
114 |
246 |
312 |
534 |
1578 |
2444 |
3225 |
3778 |
4520 |
5768 |
7897 |
11796 |
1005 |
1.17% |
|
Switzerland |
4830 |
5520 |
6630 |
7275 |
10080 |
12045 |
14100 |
17300 |
20784 |
25230 |
31815 |
58741 |
71790 |
1083 |
6.63% |
|
Number of certified and policy-supported organic and in-conversion farms in Europe |
Numbers of farms |
|
Year end |
85 |
86 |
87 |
88 |
89 |
90 |
91 |
92 |
93 |
94 |
95 |
96 |
97 est |
'000 |
% organic |
|
European Union |
|
|
|
|
|
|
|
|
|
|
1993 |
1997 |
|
Austria |
420 |
500 |
600 |
880 |
1191 |
1539 |
1970 |
6000 |
9713 |
13321 |
18542 |
19433 |
19996 |
267 |
7.49% |
|
Belgium |
50 |
70 |
103 |
125 |
150 |
160 |
170 |
176 |
160 |
168 |
193 |
228 |
291 |
76 |
0.38% |
|
Denmark |
130 |
150 |
163 |
219 |
401 |
523 |
672 |
675 |
640 |
677 |
1050 |
1166 |
1617 |
74 |
2.19% |
|
Finland |
60 |
70 |
82 |
160 |
373 |
671 |
950 |
1305 |
1599 |
1818 |
2793 |
4452 |
4381 |
192 |
2.28% |
|
France |
2500 |
2600 |
2660 |
2700 |
2700 |
2700 |
2730 |
2968 |
3231 |
3556 |
3538 |
3854 |
4784 |
801 |
0.60% |
|
Germany-cert |
1610 |
1720 |
2006 |
2330 |
2685 |
3438 |
4274 |
4750 |
5091 |
5866 |
6642 |
7353 |
8184 |
606 |
1.35% |
|
Germany-other |
0 |
0 |
0 |
0 |
0 |
2500 |
5000 |
5475 |
6197 |
8773 |
8146 |
6757 |
1381 |
606 |
0.23% |
|
Greece |
|
|
|
5 |
10 |
25 |
50 |
75 |
165 |
469 |
568 |
1065 |
1100 |
819 |
0.13% |
|
Ireland |
8 |
21 |
52 |
75 |
97 |
150 |
200 |
195 |
162 |
198 |
378 |
696 |
808 |
159 |
0.51% |
|
Italy |
600 |
700 |
800 |
1100 |
1300 |
1500 |
1830 |
2500 |
4656 |
8597 |
10630 |
17279 |
30844 |
2488 |
1.24% |
|
Luxembourg |
10 |
12 |
13 |
12 |
11 |
10 |
13 |
12 |
12 |
12 |
19 |
20 |
23 |
3 |
0.77% |
|
Netherlands |
215 |
278 |
300 |
300 |
359 |
399 |
439 |
490 |
455 |
512 |
561 |
656 |
810 |
120 |
0.68% |
|
Portugal |
1 |
4 |
7 |
20 |
34 |
50 |
80 |
90 |
90 |
213 |
331 |
250 |
278 |
489 |
0.06% |
|
Spain |
264 |
300 |
320 |
330 |
350 |
350 |
346 |
585 |
753 |
909 |
1042 |
2161 |
3526 |
1384 |
0.25% |
|
Sweden-cert |
150 |
321 |
466 |
665 |
1607 |
1588 |
1530 |
1489 |
1507 |
1695 |
2473 |
2741 |
2733 |
92 |
2.97% |
|
Sweden-other |
0 |
0 |
0 |
0 |
352 |
271 |
327 |
378 |
390 |
386 |
1733 |
5527 |
8136 |
92 |
8.84% |
|
U. Kingdom |
300 |
500 |
600 |
600 |
620 |
700 |
829 |
800 |
655 |
715 |
828 |
865 |
1026 |
244 |
0.42% |
|
EU 15 |
6318 |
7246 |
8172 |
9521 |
12240 |
16574 |
21410 |
27963 |
35476 |
47885 |
59467 |
74503 |
89918 |
7814 |
1.15% |
|
Norway |
15 |
19 |
41 |
52 |
89 |
263 |
410 |
473 |
501 |
551 |
728 |
946 |
1310 |
90 |
1.46% |
|
Switzerland |
322 |
368 |
442 |
485 |
672 |
803 |
940 |
1160 |
1405 |
1630 |
2121 |
3721 |
4278 |
80 |
5.35% |
Agenda 2000 CAP Reform
‘Toward a New Direction for UK Agriculture’
A response to the MAFF consultation document from the
Organic Farming Unit, Welsh Institute of Rural Studies,
University of Wales, Aberystwyth.
- Scope of response:
The focus of this response is specifically on the contribution of organic farming to Agenda 2000, and the possible impacts of Agenda 2000 on organic farming, because:
- Organic farming has the potential to meet most, if not all, key policy objectives, namely profitable farming, environmental protection, resource use sustainability, animal welfare, product quality and safety, surplus reduction, and rural development by adding value and satisfying consumer demands.
- Organic farming is expanding rapidly – at 25% per annum on average across the European Union, and currently at 100% per annum in the UK. At current rates of growth, organic farming is likely to account for 10% of EU agriculture by the end of the Agenda 2000 planning period.
- Organic farming is the only major farming approach which has demonstrated the potential to utilise markets to support environmental and social objectives.
- Organic farming is not specifically mentioned in either the Agenda 2000 draft regulations of March 1998 or the consultation document.
- Organic farming genuinely represents a new direction for UK agriculture.
- European level issues:
Recognising that room for manoeuvre at the European level is limited, most of the following suggestions are focused on what may be possible at the UK level. However, there are some issues that justify consideration at the European level, even in the final stages of the EU negotiations.
- Organic farmers should be exempted from compulsory set-aside, if and when the rate is varied from the currently proposed normal level of 0%. Organic farmers, by reducing crop yields per hectare and by reducing the proportion of surplus crops in the rotation, are contributing more to surplus reduction than set-aside achieves on conventional farms. At the same time, it makes no sense to reduce further the output of crops that are in very high demand from consumers by imposing a set-aside requirement.
- Voluntary set-aside should be retained as an option for organic farmers, as it represents an important means of supporting the fertility building phase of the rotation during conversion to organic farming, and in organic arable systems. The current UK derogations permitting the use of legumes and relaxing weed control constraints in set-aside land on organic farms should be retained.
- Organic farmers should be considered a high priority case for the allocation of the proposed 2% additional milk quota (and the existing UK provisions to allocate beef and sheep quota to farmers converting to organic farming should be retained and allocated a higher level of priority). The issue of discrepancies between the quality components of milk quotas and the quality requirements of organic milk buyers and processors also needs to be addressed.
- Organic farming should be included in the new proposal for a higher tier area payment in less-favoured areas, in addition to those covered by the Natura 2000 network. Organic farming in less favoured areas faces particular constraints, including the high costs of organic feeds produced off the farm, and the impacts that reduced stocking rates due to organic management have on eligibility for headage payments, which contribute a high proportion of farm incomes in less favoured areas. These additional constraints justify the payment of a higher level of compensatory allowance, as is already possible under EC Reg. 950/97.
- The possibility of including organic farming within the priority categories eligible for an additional 10% Commission co-financing should be seriously considered.
- Areas of national discretion:
As far as the areas of discretion are concerned, the following should be considered:
- Beef:
Should the concept of national envelopes survive the current negotiations, then an ‘organic extensification’ payment could be paid to organic beef producers who do not qualify for beef extensification payments or other forms of support for extensive production. In the past, it has been possible for organic producers to qualify for beef extensification payments by not claiming for all animals present on the farm in order to come below the 1.4 LU/ha limit. This will no longer be possible under the proposed rules and many organic producers will just be excluded from these payments. The area rate could therefore be based on the equivalent beef extensification payment for 1.4 LU/ha. It may be necessary to impose a maximum stocking rate, e.g. 1.6 LU/ha for eligibility. The concept of an organic extensification premium could be extended to dairy producers and also to sheep producers in due course. A flat-rate area payment for all types of grazing livestock would be preferable, leaving the market to determine the appropriate balance between different classes of livestock.
- Dairy:
As for beef, an ‘organic extensification’ payment would be appropriate. Transfers of quota for organic milk production should be excluded from any siphon arrangements.
- Arable:
Set-aside management rules should be applied flexibly so as to accommodate the needs of organic producers and not discourage appropriate activities. This would include maintaining the current UK derogations on clover use by organic farmers. (Indeed, the use of legumes in set-aside on conventional farms could also be encouraged if tied to restrictions on fertiliser use in the year following set-aside.)
- Horizontal measures:
Environmental cross-compliance rules should be drawn up so as not to unwittingly deter the development of organic farming. Modulation with respect to the labour force should recognise the contribution which organic farming makes to increased on-farm employment, and, arguably, a ‘reverse modulation’ could be applied, although there may be better mechanisms for achieving the same effect.
- Rural Development Regulation:
The proposed Rural Development Regulation represents a unique opportunity to develop integrated action plans for organic farming, as has already happened in many EU member states and Wales. Such integrated action plans usually include direct support payments under the agri-environment programme, support for marketing, processing and rural development initiatives, and support for training, advice and research. To the extent that organic farming also represents an important business opportunity for young farmers and for hill and upland farmers in the less favoured areas, it is clear that many aspects of the Rural Development Regulation could be drawn on to support organic farming. A specific chapter or section of the national/regional Rural Development Plans should be allocated to organic farming. Some specific aspects need to be considered:
- Agri-environment programme:
The new rates of payment for conversion to organic farming under the Organic Farming Scheme should be subject to early review to establish whether some farm types are under-represented and payments need to be restructured. The case for maintenance payments to existing organic producers on the grounds of equity and environmental services provided remain as strong as ever, and the UK remains almost alone in Europe in failing to provide this type of support. If, as is proposed, the mainstream arable and livestock support programmes are to be made degressive over time, then the case for diverting some of these resources to maintaining existing organic producers is even stronger.
- Interactions with other agri-environmental schemes:
Serious consideration should be given to integrating organic farming with other schemes at all levels in order to maximise the environmental and other benefits which can be obtained. At the very least, steps need to be taken to ensure that alternative schemes are not competitive with organic farming with respect to the levels of payment and requirements that have to be met. In addition, the requirements for schemes need to be reviewed to ensure that constraints are not imposed, for example on the use of livestock manures, which prevent the development of effective organic farming systems (subject, of course, to meeting the objectives of the scheme).
- Less favoured areas:
As mentioned above, consideration should be given to a higher rate of area compensatory allowance for organic farming in less favoured areas.
- Investment aids:
Serious consideration should be given to aids for environmentally appropriate manure and slurry storage as well as other capital investments such as livestock housing that may be subject to significant changes during the process of conversion to organic farming.
- Marketing and processing grants:
These should be specifically targeted at organic producers and processors, with flexible eligibility requirements to avoid discrimination.
- Other measures:
Organic farming projects should be given high priority with respect to aid for young farmers, support for vocational training and information services, and measures to promote the adaptation and the development of rural areas.
- General:
As resources are diverted from mainstream support measures to the Rural Development Regulation, a high proportion of these resources should be allocated to the organic farming sector, reflecting not just its current position but its long term potential to deliver policy goals. By focusing on the transfer of ‘new’ or ‘released’ resources, the potential to undermine other valuable but under-funded agri-environment and rural development schemes can be reduced.
Prepared by:
Dr Nic Lampkin
(Senior Lecture and Co-ordinator, Organic Farming Unit)
5th March 1999
Contact details:
Organic Farming Unit
Welsh Institute of Rural Studies
University of Wales, Aberystwyth
GB-Ceredigion SY23 3AL
Tel: +44 (0)1970 622248/624471
Fax: +44 (0)1970 611264/622238
E-mail: nhl@aber.ac.uk
http://www.aber.ac.uk/~wirwww/organic