MEMORANDUM SUBMITTED BY THE SOIL ASSOCIATION
(F62)
SECTION 1. SUMMARY
1. Organic food is now a mainstream purchasing
option for UK consumers, with more than a third of the public
regularly buying organic products. The organic market is projected
to grow from its current 2.5 per cent share to 20 per cent by
2005.
2. Organic farming meets all MAFF's major
policy objectives for UK agriculture. By contrast, conventional
agriculture fails to meet most of these objectives.
3. In view of this, we urge the Government
to make the expansion of organic farming a central priority. It
should develop a long-term strategy for the sector and adopt targets
to guide its policies. Because this has not happened, the expansion
of organic production is not keeping up with the market growth.
As a result there are substantial shortfalls of arable, vegetable,
fruit and livestock products, all of which could be produced in
the UK.
4. If the whole of the UK farmed area was
converted to organic production, we estimate that the resultant
direct and indirect annual cost savings to the Treasury would
be in the region of £2 billion. These savings would break
down as follows:
— at least £1.6 billion annually
in savings from "external" costs of agriculture;
— at least £330 million annually
from savings in direct payments.
5. If a target of 30 per cent of the UK
land area converted by 2010 was adopted, the annual direct costs
for funding this conversion and on-going support are estimated
at £285 million.
6. Additional funding for this programme
would be required in the following areas:
— increased conversion aid to meet
the strategic targets;
— higher conversion aid rates for arable
and horticultural crops;
— a new on-going support scheme for
organic farming (organic stewardship);
— increased investment in research;
— support for processing facilities
and market development.
7. Organic stewardship payments are needed
to provide on-going support after conversion is completed. They
would ensure that the UK organic sector is able to compete with
overseas producers and are justified because of the contribution
organic farming makes towards nature conservation and the protection
of biodiversity.
8. We support the role of the EU Regulation
and UKROFS in providing a regulatory framework for organic standards
but strongly urge the Government to enable private organisations
such as the Soil Association to maintain their standards development
function in order to safeguard consumer trust in the integrity
of organic food.
SECTION 2. EXPANDED
NOTES FROM
SUMMARY
These notes are intended to support the statements
made in the summary.
1. Growth in the market
The current market share for organic food is
about 2.5 per cent of the total UK food market. Since 1974, it
has grown by a steady 40 per cent a year, except during the last
two years when it has grown by 100 per cent. Based on a projected
50 per cent future annual growth rate, the market share will reach
20 per cent by 2005.
2. Market failure
UK farming is currently in deep economic crisis.
New expanding high value markets are urgently needed for hard
pressed farmers. The UK organic market meets these criteria. However,
the opportunity for UK producers to benefit from it has not been
fully realised. At present, only 30 per cent of the market is
supplied by British production with the remaining demand met by
imports. This organic "trade gap" is projected to widen
further, since although the market size is set to triple by 2003,
the Government has only allocated enough funds to triple the land
area under organic production by 2006.
3. Agricultural policy objectives
Organic farming delivers all major policy objectives
for UK agriculture:
— a market orientated farming system;
— greatly reduced use of pesticides
and veterinary medicines in food production;
— greatly reduced levels of pollution
of the physical environment;
— substantially higher levels of biodiversity;
— protection of the UK's soil and water
resources;
— improved food quality and safety;
— rural regeneration including increased
rural employment;
— reduced cost to the state of agricultural
support through market contribution.
By contrast, conventional agriculture is failing
to meet most of the above objectives.
4. The need for a target and strategy
There is a clear need to develop targets for
organic farming supported by a strategy. The orderly development
of organic farming will depend on a range of different support
measures including policy instruments, advice and training, funding
for market infrastructure and research being in place. Because
of this, without a clear and public target, it is hard for appropriate
policies to be adopted and for producers to make plans, secure
finance and develop their businesses at the optimum rate. It is
no coincidence that the four EU countries with the highest levels
of organic farming all adopted targets and a strategy to meet
them: Austria, Sweden, Denmark and Finland.
5. The need for on-going support: "organic
stewardship"
On-going support payments are needed to enable
the benefits of widespread organic farming to be realised in the
UK:
— On-going support payments are made
to organic farmers in most other EU countries. They are therefore
needed for domestic producers to compete and to supply a greater
proportion of the UK market.
— Organic stewardship payments for
continued organic farming would redress the funding imbalance
between organic farmers, who currently receive less financial
support than their conventional counterparts through the CAP,
as explained above. It is unacceptable and in contradiction to
Government policy that less financial support is given to sustainable
farming than to intensive farming.
— Current high market premiums cannot
be counted on continuing, a concern which is preventing many producers
from converting. The introduction of organic stewardship area
payments would facilitate substantial growth and ensure that organic
farming is more economically sustainable in the long term.
— While some of the benefits of organic
food are of direct benefit to the consumer (eg Food quality and
safety), other are "public" benefits (pollution reduction,
nature conservation, rural employment etc.). These should be met
from the public purse like other agri-environment schemes.
— A Government policy which depends
on high premiums continuing will hinder people on lower incomes
from having access to organic food: organic food should be available
at prices which make it affordable to all sections of the community,
not just a middle class minority.
— The current dependence on high market
premiums means that the demand for high priced organic food, which
is inevitably limited, acts to restrict the growth of the sector.
However, the benefits that widespread organic farming would bring
to society as a whole are such that a major expansion is desirable.
6. The external costs of agriculture
The hidden costs of conventional agriculture,
(the externalities, many of which are funded either by the taxpayer
through water treatment costs, or through other means) are internalised
in organic farming but are currently paid for entirely by the
organic consumer in the form of premiums on organic products.
The Soil Association believes that the market mechanism should
be used to contribute towards supporting widespread organic farming
in partnership with public purse, rather than being expected to
fund the internalisation of all the external costs.
The external costs of the UK's current agricultural
system have been calculated by Professor Jules Pretty et al
(JN Pretty et al "An assessment of the total external
costs of UK agriculture", published in Agricultural Systems
(65)2 (2000)). Those savings have been identified and are calculated
to total £2.3 billion annually. Examples include the cost
of removing pesticides from water, treating food poisoning, BSE
and restoring biodiversity. We have anticipated, for this calculation,
that organic farming would reduce this figure by 70 per cent.
This is an estimate and it is not yet backed up by a detailed
calculation. However, we consider that many of the external costs
of conventional agriculture have still not been identified and
that the true cost to the state is far greater (especially to
the NHS budget). Though there would still be costs related to
inspection, certification and monitoring, a switch to organic
farming would avoid the majority of these other major hidden "social"
costs.
7. CAP payments claimed by organic farmers
Using calculations of the payments claimed by
organic farmers based on three farm types, we have estimated that
organic farmers claim 15-30 per cent less CAP payments compared
with comparable conventional farmers. This is because organic
farmers grow more crops that are ineligible for arable area payments
and because their production systems have lower stocking densities
resulting in reduced claims for livestock headage payments. Direct
payments currently account for £2.2 billion of the total
£3 billion spent annually through the CAP in the UK.
8. A target of 30 per cent by 2010
The Committee is asked to support the target
of 30 per cent by 2010. This is contained in the draft Organic
Food and Farming Targets Bill. The related EDM has now been supported
by 36 per cent of MPs. Our estimate of the cost of converting
30 per cent of UK farmland (£285 million) includes: grants
to cover certification costs (£300 in the first year reducing
to £100 in the third), conversion costs (similar to those
of the existing scheme with increases for arable, fruit and intensive
horticultural enterprises) and annual payments after conversion
(of £8-£75/ha, depending on land type).
These levels of proposed support payments are
the minimum that would be required to maintain the expansion of
organic farming in parallel with market demand. If the full external
costs of conventional agriculture (which are internalised in organic
farming) were taken into account, considerably higher payments
would be justified.
9. Benefits of organic farming
As well as the economic savings to the Treasury,
further benefits of organic farming include:
9.1 The environment
The substantial benefits of organic farming
for biodiversity have recently been highlighted in a review of
independent research which found major differences in the levels
of biodiversity supported by organic farms compared to conventional
farms. This report, "The Biodiversity Benefits of Organic
Farming" is attached [not printed]. Given the current crisis
in the state of the UK's farmland wildlife, a widely applicable
and effective solution is urgently needed.
Because organic farming avoids the agricultural
practices that have been identified as the causes of the declines,
it has the potential to restore lost biodiversity on a large scale.
It should be noted that a reversal in the decline in farmland
birds is one of the Government's Public Service Agreement targets.
Through its avoidance of agro-chemicals and dependence on good
soil health and the maintenance of diverse habitats, organic farming
can also bring many benefits to the wider environment, including
reductions in soil, air and water pollution and a reduction in
the impact of agriculture on climate change.
9.2 Animal welfare
High animal welfare is a key attribute of the
organic farming systems. Routine veterinary medicine use is prohibited
and the maintenance of the health and vitality of livestock is
central to the system. This is delivered by good animal husbandry
and the avoidance of intensive management practices which are
the prime causes of welfare problems.
9.3 Human health
The Soil Association was established in 1946
in direct response to observations made by its founders of a link
between soil fertility and plant, animal and human health. We
take issue with recent remarks made by Sir John Krebs, Chairman
of the Food Standards Agency, who claimed that no links between
organic farming practice and enhanced food quality have been identified
in existing research studies and that consumers who purchase organic
food believing it to be nutritionally superior are therefore wasting
their money.
Although we accept that the number of research
studies conducted in this area is limited, we believe that on
the basis of existing work there is significant evidence of differences
in the levels of both primary and secondary nutrients between
organic and conventionally produced foods. Further research in
this area is urgently needed and we hope that both the FSA and
MAFF will devote more resources to this in the near future.
In the area of health disbenefits arising from
chemical intensive farming, once again the evidence is not conclusive.
Nevertheless, we consider that the proposition that increases
in cases of food intolerance, food poisoning, certain cancers,
diseases of the immune and nervous systems including allergies,
may be directly or indirectly related to residues and other undesirable
side effects of intensive farming on food quality and safety should
be taken seriously.
If it could be demonstrated that a proportion
of the expenditure on the NHS is being incurred as a direct consequence
of problems resulting from current agricultural practice and that
organic farming would avoid many if not most of these problems,
this would justify an entirely new approach towards funding for
organic farming. The Treasury would then regard support for sustainable
and public health promoting agriculture as an investment, in line
with Lady Eve Balfour's concept that agriculture should be regarded
as "the primary health service".
Scientific evidence linking intensive agriculture
with these health problems is still in short supply. However,
the absence of evidence should no longer be taken to indicate
that problems do not exist, especially in the farming/food/health
arena where time cycles are often very long before damaging practices
give rise to negative health effects. The committee is urged to
give serious consideration to the proposition that there is a
direct link between agricultural practice and the health of the
nation and that the long term consequences of intensive farming
may be to substantially undermine public health.
In conclusion, organic farming is very much
more than a high value and expanding agricultural market. Future
agricultural policies, funding and strategies should be designed
and to take into account the wider benefits of the farming system
to society as a whole.
SECTION 3. RESPONSES
TO THE
COMMITTEE'S
QUESTIONS
(NB Current statistics for numbers of organic
farmers and land area are provisional—the final figures
will be contained in the Organic Food and Farming Report, 2000,
to be published by the Soil Association in November 2000.)
1. Expansion of organic farming in all agricultural
sectors
Conversion of conventional farms to organic
production has nearly doubled over the last two years. In April
2000, there were around 416,000 hectares of organically managed
land in the UK (including in-conversion land), up from 240,000
hectares in April 1999. Organic farming now constitutes about
2.3 per cent of the total UK agricultural area (about 0.6 per
cent of which is fully converted). This increase is a result of
buoyant organic product prices, very depressed conventional prices
and outlook, and higher organic aid payments introduced in 1999.
About 10 per cent of farmers in England and Wales have now contacted
the OCIS conversion information service since it was set up in
June 1996.
The land type showing the greatest increase
is grassland. This accounted for 87 per cent of the fully certified
organic land area in April 2000 (up from 75 per cent in 1997).
Only 13 per cent was cropped (arable or horticulture) compared
to 24 per cent in 1997. This is due to disproportionate interest
among extensive livestock and dairy farmers, which reflects more
secure market opportunities in the dairy sector and the relatively
small changes in infrastructure and farming practices required
for these sectors to undergo conversion.
Organic arable production is taking place mainly
on farms which were already mixed. There has been very little
conversion in specialist arable areas. This is for several reasons:
the level of aid payments is not sufficient to off-set the loss
of income from arable area payments; the cost of introducing livestock
(the costs of fencing, livestock quota, and water supplies etc.);
a loss of livestock related skills; and the loss of income incurred
by growing the fertility-building crops necessary for organic
production which are not made up for by set-aside payments.
The figures for the changes in the level of
organic production from 1997-98 to 1998-99 were as follows:
— Production of beef, lamb, pork and
poultry (table birds) rose by 24 per cent, 13 per cent, 71 per
cent and 152 per cent respectively.
— Organic milk production increased
by 17 per cent and egg production by about 100 per cent.
— Organic arable production rose by
19 per cent.
— Horticulture, the smallest sector
and the sector where there are the most imports, had the smallest
rise: land used for organic vegetable production rose 8.5 per
cent from 2,400 hectares to 2,605 hectares; and land for organic
fruit production rose 5 per cent from 375 ha to 395 ha. A more
substantial increase in the horticultural area is predicted for
the current year.
In April 2000, there were 2,865 registered organic
producers, up from 1,568 one year before.
2. Market trends and customer demand
The market for organic food is growing very
rapidly. The total organic food retail market was worth around
£550 million annually in April 2000 and is predicted to increase
to £1 billion annually by early next year. In the year to
April 1999, the market value was £390 million, an increase
of 50 per cent on the previous year. In April 1993 it was £105
million. The largest sector is still fruit and vegetables but
other commodity areas such as dairy are catching up fast. It is
now being predicted that 100 per cent of the baby food being sold
in the UK will be organic by the end of 2001.
It should be noted, however, that because of
chronic domestic undersupply, these figures do not represent the
full potential market demand for organic food.
3. The setting of organic standards and tolerances
Organic standards were first developed in the
UK by the Soil Association over 30 years ago and were amongst
the first in the world. Through this early pioneering work and
subsequently through UKROFS, the UK has always been at the forefront
of organic standards development, both in the EU and internationally.
The Soil Association continues to play an active role in the International
Federation of Organic Agriculture Movements (IFOAM), which has
set its Basic Standards as international guidelines since the
early '80s.
The EU regulation 2092/91 now provides a legal
framework for enforcing organic standards. It has played a major
role in providing a sound foundation for the development of the
sector in Europe. The introduction in August 2000 of EU Regulation
1804/1999 to cover organic livestock production as well as crops
is welcome. There are still some areas of concern, particularly
in relation to animal welfare. Because of these and other shortcomings
we support higher UK standards to ensure UK consumers can continue
to have confidence in the products they buy.
There are currently no EU standards for organic
fish farming, but we support the decision by UKROFS to recognise
common UK organic fish farming standards, on the basis of the
IFOAM Basic Standards, and are working to finalise these with
the other UK sector bodies.
In our opinion the primary responsibility for
the development of standards should remain with the organic movement.
The maintenance of high standards for organic farming are crucial
in maintaining consumer confidence and in providing farmers with
a template and guiding framework for sustainable organic farming
practice. It is in everyone's interests that this essential foundation
of the organic sector is respected and not eroded. We view it
is as a highly retrograde step that the Irish Government has recently
taken the decision to prohibit the certification bodies to set
standards higher than the basic EU regulation.
It is the work of the independent organisations
promoting organic farming, in parallel with the regulatory role
of Government and developments in the marketplace, that has underpinned
the growth of consumer confidence in the sector.
There is an on-going debate about "where
to draw the line" in the development of standards. The aim
is to strike a balance between maintaining high standards that
reflect the organic principles and the more pragmatic approach
which takes into account "commercial" factors pertaining
to producing for a mass market. Examples of this are the organic
movement's ideals of whole, unprocessed food versus the demand
for organic convenience food or the inclusion of a non-organic
fraction in organic livestock diets.
It is important to recognise that the organic
standards are dynamic and will continue to evolve, as the organic
market develops, as advances in technology emerge and as our understanding
increases. It is for these reasons that the Soil Association maintains
its own standards development capacity with eight separate standards
setting committees. These standards are published in our Standards
for Organic Food and Farming document. We view this as a vital
function that is of central importance to our work—organic
standards represent the state of the art organic farming and are
the practical expression of the organic principles and philosophy.
We recognise the value of the task that UKROFS
has undertaken in setting minimum UK organic standards and in
regulating the organic market. However, we are concerned that
UKROFS has neither the resources nor the capacity to continue
with standards development work, which is becoming increasingly
complex and technical and, as the market grows apace, increasingly
urgent. We are currently developing an alternative standards setting
model in co-operation with the other sector bodies to extend our
existing standards development structure. UKROFS' role could then
be amended to endorsing such standards, rather than having to
take on the onerous responsibility of developing them.
4. The role of organic certification associations
Organic farming embodies the "whole system"
approach, which means that its control has to be very different
from that in a conventional assurance scheme or "end product"
certification. The organic certification associations, all of
whom have been involved with organic food and farming for several
years, understand this and indeed have championed it. It is very
important that this "whole system" approach is safeguarded,
which the dedicated organic certification associations are best
placed to do.
Prior to the introduction of the EU "organic"
Regulation 2092/91, control of organic farming was undertaken
on a voluntary basis by the private certifiers. They built up
a large body of expertise and, since 1993 when the Regulation
came into force, have continued to discharge their new role and
have taken on additional responsibilities in connection with the
reporting and other demands of the Regulation and with the requirements
of the Organic Farming Scheme. They provide a highly cost efficient
mechanism for control of this sector which would otherwise have
to be undertaken by MAFF or its designated agents at much greater
cost.
MAFF have recognised this and have provided
an annual grant as a contribution towards the costs of these legal
obligations. However, the scale of this grant has been variable
from year to year. This has made planning and budgeting an extremely
difficult task which has been exacerbated by the huge growth in
demand for certification, putting enormous pressure on the sector
bodies concerned.
Soil Association Certification Ltd grew by 92
per cent in the last financial year in response to the demand
for certification. This level of expansion is only possible with
good forecasting, careful planning and adequate investment. The
Government's activities last year militated directly against this,
with the stop/start of availability in conversion grants, leading
to large swings in applications from farmers. This, coupled with
the lower level of grant to the sector bodies (30 per cent less
than the grant paid in 1993-94) has placed the organic sector
bodies under considerable financial pressure.
We welcome MAFF's agreement that the grant allocation
should be reviewed, be paid on a quarterly basis and be the subject
of proper planning, with calculations made in a clear and consistent
way.
5. Genetically modified organisms
Organic Standards relating to GMOs are a relatively
recent addition to UKROFS standards and provide a good example
of standards developed by the organic associations and then submitted
to UKROFS for approval.
Our position with GMOs is clear: there should
be no tolerances for the inclusion of GM ingredients in organic
food. Organic consumers expect organic food to be GM free; a large
proportion buy it specifically because it is GM free. During the
last year the risks of GM contamination of non-GM crops and honey
have moved from being a theoretical possibility to having actually
occurred, through seed adulteration and through pollen transfer
by bees. Contrary to claims by the biotechnology industry that
the science is precise and controllable, there have been numerous
examples in the United States of America of unintended and undesirable
changes occurring in the characteristics of GM plants as an unpredicted
consequence of having a foreign gene inserted for a specific agronomic
purpose (eg. GM cotton was found to have deformed cotton bolls,
higher levels of lignin were found in GM soya which caused stunted
weak stems). These were in crops being grown commercially, after
the plants had been authorised for use.
There have been several incidents of cross contamination
with non GM plants (eg the recent Advanta seed incident). Because
of the long distance over which the wind and insects can transfer
pollen (eg bees have been found to have transferred GM pollen
4.5 kilometres in the UK), it is clear that cross contamination
with non GM crops and wild plants will occur and over a wide and
increasing area. Thus, it is now indisputable that unknown changes
will be introduced into the non GM plant populations if commercial
planting is allowed for any length of time without adequate measures
for isolation. Research by the National Pollen Research Unit has
recently shown that current SCIMAC buffer zone distances are completely
inadequate to achieve this.
There is also strong scientific concern and
increasing evidence about potential health risks from GMOs. A
current US court case has revealed that advice by scientists within
the US Food and Drugs Agency that there could be health risks
from GMOs and that the principle of "substantial equivalence"
should not have been used to avoid safety testing was ignored.
This issue should be treated very seriously by the UK Government.
We ask the Committee to support our demand that all authorisations
made and pending should be urgently reviewed in the light of these
factors.
In conclusion, it is our view that the legal
and practical safeguards for all production of GMOs should ensure
that the risks of adventitious contamination of organic products
are minimised and should where possible be zero. This approach
has been supported by several Government Ministers including The
Rt Hon Michael Meacher and The Rt Hon Nicholas Brown.
6. The role of farm assurance schemes
Farm assurance schemes are important in providing
consumer assurance that a baseline for conventional agricultural
practice is adhered to. Currently they are mainly used for the
contracts between farmers and multiple retailers. Premiums are
not demanded of consumers for the products of farm assurance schemes.
We consider this to be appropriate. Though most
farm assurance schemes encourage a generally high level of product
traceability, they do not address the issues that consumers are
most concerned about, namely pesticide residues, environmental
issues, animal welfare and GMOs. The schemes mainly require adherence
to codes of practice and do not tackle the underlying issues.
The benefits are therefore very limited. For example, in 1999
the DETR produced a report on the role of such schemes in delivering
environmental benefits. With the exception of farms in organic
certification schemes, they found very little evidence of environmental
benefits. They also concluded that there was little interest among
the operators in substantially altering the focus of the schemes
to include environmental conditions. In all schemes apart from
organic certification, intensive livestock management and pesticide
use is routine and relied on, and GMOs are not prohibited.
Considering the limited benefits and the main
concerns of consumers, there is no justification for charging
retail premiums for such products. Indeed, there is a case for
saying that the quality of the produce from these schemes is the
minimum that consumers expect from conventional food at the current
time. If the benefits of these schemes were seen to justify a
price premium, the market would become unnecessarily segmented
and the consumer confused by the range of options. This would
greatly reduce the opportunity to use the market mechanism to
support organic farming.
7. The availability of public and private
assistance for organic conversion
Apart from Government conversion schemes, there
are currently very few effective organic assistance schemes in
place with the notable exception of long-term agreements within
the organic dairy sector.
7.1 The role of the Government
The case for public purse support for agriculture
is currently the subject of national debate. Broadly there are
two schools of thought. The first is that farming should be left
to world market forces and that efficient and competitive producers
will survive in this climate whilst farmers in more marginal areas
should receive support payments for their role in protecting the
environment and preserving biodiversity. This approach, which
we refer to as "food factories and parks" is the current
Government policy, only mitigated by a reluctant recognition that
so long as other member states are subsidising their farming,
so must they.
The second school of thought sees agriculture
as having more in common with education and health than steel
or cars—in other words, that farmers and farming activity
have the potential to provide society with a range of "public
goods" which cannot be solely paid for through the market
mechanism. These "public goods" include the maintenance
of rural employment and of rural culture, the protection of landscapes
and the preservation of biodiversity, the avoidance of pollution,
respect for animal welfare and, potentially, a major contribution
towards the promotion of public health.
It is our contention that systems of farming
which deliver these "public goods" deserve on-going
support from the taxpayer and that organic farming is such a system.
Accordingly we consider that payments for conversion to and on-going
support for organic farming are amply justified in terms of their
beneficial public outcomes.
Organic conversion schemes exist in all areas
of the UK. At the current time, however, in contrast to Scotland,
Wales and Northern Ireland, there is no funding for the scheme
in England. It has not been available since November 1999 and
this situation is set to continue until April next year when the
Government's Rural Development Plan is implemented. This is a
major set back for the development of the organic sector. The
Committee is urged to support our call for extra funding to be
secured as soon as possible. We welcome the fact that in Wales
the scheme will now re-open in November with additional funds
(£2.2 million).
The Government has announced its intention to
provide about £20 million a year for the next seven years
for the English scheme. However, this is far lower than demand
from farmers and much below the level of support needed to enable
the sectors to catch up with the growing organic market and reduce
the high level of imports. In addition, the disproportionately
low rate of conversion in key sectors such as arable and horticulture
needs to be addressed. It is therefore clear that greatly increased
support for conversion should be made available—both of
the total budget and the payment rates for certain sectors.
In conclusion, the Government urgently needs
to adopt a long-term strategy for the development of the organic
sector. As well as increasing the scale and scope of direct support,
this should also fund training of advisers, distribution, marketing
infra-structure and research. Funding for research should be greatly
increased to match the targeted level of organic production, eg
30 per cent of the budget for agricultural research should be
for organic farming (up from about 2 per cent now). A long-term
plan and substantially increased funding is vital if the sector
is to grow in a manageable fashion and realise full potential.
We recommend that the 30 per cent target contained in the Organic
Targets Bill should be adopted.
7.2 Trade associations
Historically the farming, processing, retailing
and consumer sectors have each organised themselves into discreet
and separate associations, for example, National Farmers' Union,
Food and Drink Federation, British Retail Consortium, Consumers'
Association, etc. We believe that this fragmentation of interest-group
representation has often led to distrust between the different
sectors and has been a significant contributory factor behind
the loss of consumer trust in the food and farming industries.
The interest-group representation within the Soil Association
has followed a different course—the Association has actively
sought to involve all the links in the food chain within one organisational
structure. The benefit of this approach has been a dramatic improvement
in communications and trust between the various sectoral interest-groups.
7.3 Food processors
The Soil Association works closely with UK organic
food manufacturers and processors. We have established an elected
manufacturers and processors committee which meets regularly and
advises the Association on relevant issues.
One area of current debate is the degree to
which heavy processing of organic food is acceptable to the consumer.
The current Soil Association position on this issue is that until
and unless detailed criteria are agreed which enable consistent
discussions to be made in relation to processing, our policy is
to certify all processed foods, so long as the raw materials and
processing methods comply with our standards.
7.4 Supermarkets
In March 1998, the Soil Association established
the Multiple Retailers Organic Working Group with membership from
all the leading UK supermarkets including Sainsburys, Waitrose,
Tesco, ASDA, Marks and Spencer, and Iceland. The objectives for
this group include the agreement on standards, policy issues and
the provision of technical support for UK producers entering the
market.
Supermarkets can assist the development of the
organic market by providing long-term forward agreements on volume
and prices (eg Sainsbury's dairy initiative), by favouring products
of UK origin, and by financially supporting conversion where supplies
are short (eg ASDA's meat conversion scheme).
7.5 Private assistance in the organic dairy
and meat sectors
The dairy sector is the only organic sector
with an established sustainable marketing framework. Unlike the
conventional sector, where prices (at 16-18 pence per litre) are
now below the cost of production, fixed and fair prices are available
in the organic sector. This is because of the existence of a strong
producer owned co-operative (Organic Milk Suppliers Co-operative,
OMSCo). The OMSCo price for milk of 29.5 ppl is backed by Sainsbury
who have provided OMSCo with a fixed (five year) contract and
based on the concept of a fair price for the producer.
This price agreement has been accepted as a
"benchmark" price by the dairy industry, leading to
similar prices being offered by the majority of organic dairies.
As well as supporting the principle of a fair price to the producer
based on the true costs of production, the agreement has encouraged
the development of other support schemes. For example, some buyers
have provided funds to their milk buyers (eg Dairy Crest/Unigate,
Axis etc.) for loans for conversion. Advisory services are also
available during and after conversion from the dairy companies.
As a result, the organic dairy sector is the most secure for organic
farmers and developing the fastest. There is less concern about
downward price pressure in the immediate term, which is a major
inhibitor in the development of the other sectors.
The organic meat sector has been very under-supplied.
Similar pricing structures to those of the dairy sector have been
discussed but they have not been introduced on the same scale
and have therefore not had the same impact. In April this year,
ASDA announced a £3 million organic meat conversion scheme
to help UK farmers. Recently four major abattoir wholesalers (three
of which supply a specific multiple-retailer) have given loans
to the major organic marketing operation in the UK—the Organic
Livestock Marketing Co-operative (OLMC)—to improve and develop
consistent supplies. This is in response to demand from the supermarkets.
The smaller and more independent abattoirs are not in a position
to provide such additional support. However, they are vital for
the development of the sector, to enable local and direct distribution
systems which are very important for the organic sector as well
as for animal welfare. It is very important that planning and
hygiene regulations do not work against the closure of small abattoirs,
which is the case at present.
7.6 The Role of private certifiers
We support the approach, implicit in the current
structure of UKROFS, to establish a Government Competent Authority
which is responsible for overseeing the activities of private
certifiers rather than undertaking inspection and certification
work directly. However, we are concerned that the rapid increase
in organic production and processing activity is beginning to
attract new entrants into the organic certification arena.
We believe that the current strength of the
organic market is closely linked to the fact that there are a
relatively small number of certifiers and, in the case of the
Soil Association, that the inspection and certification work is
considered as a public service activity rather than a profit centre.
In the forthcoming review of UKROFS, we recommend that MAFF should
give consideration to restricting the overall number of certification
bodies. Although we accept that the principle of competition can
bring some benefits, there are real risks that too much competition
in organic inspection and certification could give rise to "corner
cutting" on cost grounds, dilution of standards and consumer
confusion.
8. Distribution systems for organic produce
and retail pricing
As organic food has moved into the mainstream,
this has affected the distribution systems and market outlets.
In April 2000, over 70 per cent of organic food was being sold
through the supermarkets, up from 63 per cent in April 1998. Local
marketing (eg farmers' markets, farm shops, box schemes etc.)
is growing (from £24 million worth in April 1998 to £76
million in 2000) but overall this category lost share of the total,
from 20 per cent in 1994 to 14 per cent in April 2000. Independent
retailers and health food shops account for less than 16 per cent
of supermarkets.
Local food marketing is highly important to
policy makers and fulfils organic principles. It benefits consumers,
producers and local communities. Farmers' markets and box schemes
are two well-known examples. There has been a phenomenal growth
in farmers' markets. From only one in March 1997, there were 30
in March 1999 and the latest information suggests there are now
over 250. Many have a policy to specifically prioritise access
to those registered as organic or in-conversion. Box schemes have
been growing at a very fast pace: from 137 in April 1998 to 340
across the UK at the present time.
In some areas, demand for local food is far
outstripping supply. For example, some box schemes are over-subscribed
or have reached capacity and demand for farmers' markets is greater
than the availability of local producers in many areas. The Soil
Association is one of the organisations that established the National
Association of Farmers' Markets in 1999. Its aims are to set guidelines,
promote new markets, support existing ones, raise public awareness
and promote their use at a national level.
Supermarket organic food sales are increasing
rapidly. Ten per cent of the produce sales of Waitrose in the
year to April 1999 were organic. Both Tesco and Sainsburys are
rapidly to develop their organic ranges. Marks and Spencer state
organic food has "become a major priority". In addition,
a major increase in the number of dedicated organic supermarkets
is foreseen in the near future. Planet Organic, an organic supermarket
in London, is planning to open another 40 stores throughout the
UK over the next four years. Iceland, which has 760 stores, has
recently announced plans to switch complete ranges to organic,
starting with all its frozen vegetables by October this year.
9. The level of imports and exports of organic
foods
Despite recent expansion of the UK organic production
base, the continuing growth is running ahead of home produced
foods and an estimated 70 per cent of organic produce sold in
the UK is still imported. (Figures quoted are from last year.)
Imports of dairy products rose from 10 per cent
in 1997-98 to an estimated 40 per cent in April 1999. Imports
of organic meat were negligible in 1997-98, but accounted for
over 4 per cent by April 1999 (predominantly pig and poultry meat).
The volume of imported organic meat has grown dramatically since
then. Organic fruit and vegetables remained the sector most dependent
on imports—more than 80 per cent were being imported in
1999. The import of cereals for human food remained at 50 per
cent of the total, but, in response to the rise in domestic organic
livestock production, the need for imported animal feed had increased
and is expected to increase further. Clearly, there is tremendous
potential for the expansion of domestic production of arable crops.
Exports were very low in 1998, mainly limited
to primary products, notably organic mushrooms and salmon. A newly-formed
organic meat co-operative on the Northern Irish/Irish Republic
border is, however, exporting a small amount of organic lamb to
Belgium. In addition, some multi-ingredient processed products
are being exported such as the Whole Earth product range.
10. International comparisons
The size of the UK organic farming sector is
still below the average of all EU member states. The latest estimate
of the EU organic land area is nearly 3 per cent of the total
EU agricultural land area (compared to 2.3 per cent in the UK).
In policy terms, however, the UK lags far behind
most other EU countries and so the UK is likely to remain behind
since the high growth rates required will not be achieved without
very substantial increases in funding and a more strategic approach.
The long-term annual growth rate in the EU is 25 per cent. Extrapolated
forward this would lead to 10 per cent by 2005 and 30 per cent
by 2010. The Welsh National Assembly has adopted a target of 10
per cent by 2005. In England, however, even with the additional
funds secured under the draft Rural Development Plan, (an average
of £20 million a year for the next seven years), the area
of organic land in England will be no more than 9 per cent by
2010.
In the UK, only 0\4 per cent of the total annual
expenditure on agriculture was allocated specifically for organic
farming in 1999 and 2000 (£11.35 million and £12 million).
Under the proposed Rural Development Plan, this will rise to about
0\7 per cent (£20 million annually). Some other European
countries already spend a much higher proportion on organic farming;
for instance, the total agri-environment budget is spent on organic
farming in Austria.
Considerably higher rates of conversion aid
are offered for horticultural products in some countries than
in the UK (where no special rates exist), particularly for perennial
plants. Furthermore, most (twelve) other EU countries pay "maintenance
payments" to support the continuance of organic farming after
conversion. In the absence of on-going support, UK producers are
at a competitive disadvantage with other member states. This is
a significant threat to the development of the UK organic sector.
A major shortcoming in the UK situation is the
lack of any long-term Government strategy, action plan or target
for organic production. These exist in many EU countries: the
Nordic countries, the Netherlands and France, for example. This
is very much needed in the UK.
The organic food market in the UK (projected
to reach £1 billion by early 2001) can be compared with France
and Italy where the population sizes are very similar (currently
£500 million and £600 million respectively). In Germany,
however, where the population size is a third larger than in the
UK (82 million people), retails sales are £1.6 billion. Denmark
and Austria which have small populations, 5\3 million and 8 million
respectively, also have large organic food markets (£240
million and £200 million respectively).
11. Future developments
With the majority of farmers currently considering
conversion being extensive livestock producers, the existing imbalance
between livestock and arable in the sector is likely to widen
further. The recently agreed shortened conversion period for livestock
will result in supplies of organic beef and lamb increasing particularly
rapidly over the next couple of years whereas arable, horticulture,
pig and poultry production will remain relatively less developed.
This means there will be further increases in imports of organic
cereals for animal feed to support the UK organic livestock sector.
Though significantly increased areas of organic fruit and vegetables
should be coming on stream in 2000 and 2001, the current high
reliance on high levels of imported fruit and vegetables will
continue. Retail capacity is expected to increase very rapidly,
with most supermarkets now having major plans for expansion in
organic sales. Meanwhile, in England, the results of the current
Government review of the Organic Farming Scheme may result in
some changes in the aid rates, with consequences for conversion
rates in the different sectors when the scheme reopens.
Overall, the rate of conversion will slow if
the Government's proposed funding plans go ahead unchanged. Organically
managed land increased by over 1 per cent of the total agricultural
land in 1999 when £22 million was spent in nine months in
1999 in England, but a proposed annual average of £20 million
a year will mean that total organic land in England will be only
triple by 2006. The market, however, is forecast to triple by
2003 alone.
In conclusion, without major changes in Government
policy, the UK organic market will continue to mainly support
foreign production and the extensive benefits of organic farming
will remain largely uncapitalised in the UK.
18 October 2000
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