22 March 2002

Organic production on large scale offers great potential

Our last report from Stuart Hailey coincides with the end

of his first year in full organic production and the start of

a major business re-organisation. John Burns reports

STUART Hailey reckons the first organic year at Sand Farm gave a result similar to that experienced from conventional dairy production.

Its difficult to judge, he admits, given the bad spring weather, foot-and-mouth restrictions and forage shortages in the past 12 months.

But he only received the organic premium on about half the milk sold and he was unable to use nitrogen fertiliser to overcome a forage shortage, which undermied output.

"Nevertheless, I believe the potential in the organic system is greater than that of our previous system and it will become more profitable," he says.

"If I was 20 years younger, my priority would be to move to another farm, possibly in partnership, that could be run organically more efficiently and on a bigger scale."

Like many others in the area, Mr Hailey finds the combination of steep, fragmented land, difficult access, narrow lanes and the ever-changing spring lines of the Green-sand lead to higher production costs, while returns tend to fall.

So, as he is approaching retirement age, Mr Hailey has taken the difficult decision to sell the dairy herd and followers by auction this autumn unless a buyer is found before then.

The land has two years of the five-year Organic Farming Scheme to run. It will probably be let on an organic farm business tenancy to meet scheme requirements. There are also several longer-term Countryside Stewardship agreements, but Mr Hailey believes the likely tenants will view those as assets rather than liabilities.

"The kind of land we farm is fast becoming more and more marginal. You could say the same about Mincombe Posts, though since converting to organic it has started to make modest profits and appears to have more potential."

The main lambing period is about to start at Mincombe Posts, following bad news with earlier-born lambs. Nine out of 60 were lost in the field before the local vermin control marksman shot a fox. Losses stopped, only to start again when the sheep were moved to another field. "I suspect there are even more foxes than usual, probably because F&M stopped the hunts for a year," says Mr Hailey.

Dspite widespread advertising, the 20 organic store cattle have not found a buyer at a worthwhile price. Mr Hailey reckons that by finishing them at around 18 months, he will bank a bigger cheque than store buyers have been prepared to offer – even allowing for the extra feed costs.

At Sand Farm, dairy heifers have held well to AI despite Mr Haileys concern over sub-standard silage. The recently bought Angus bull will catch stragglers.

The dairy herd was out to grass by day for about three weeks, but ground conditions recently proved too wet and the cattle are back indoors full-time. "Even using all the New Zealand methods, the cows were doing too much damage."

Cut prices

Mr Hailey has been examining organic milk margins beyond the farmgate. "There appears to be enough margin for processors and retailers to cut prices, so making it more attractive to shoppers."

Assuming a farmgate price of 19p/litre for conventional milk and 29.5p/litre for organic milk, Mr Hailey found that Waitrose made a margin of 22p on a two-pint container of conventional milk and 30p on the equivalent organic milk pack.

Tesco made 28p and 40p respectively, while Somerfield achieved 24p and 46p. The margin appeared similar across skimmed, semi-skimmed and whole milk, although it varied with container size.

But the margin was always considerably higher on organic milk. Smaller volumes may account for some of that, but Mr Hailey reckons the range suggests room for some action.

He notes that Tesco recently announced it was reducing the retail price of organic milk by cutting its own margin and changing to a more efficient processor.

&#8226 This is Mr Haileys last report. We thank him for the many hours he has put into Management Matters over the past two years. He has often said he hates to hear farmers moaning about their lot, yet felt he was often doing just that. But we feel he was telling it how it is. Being positive is fine, but being realistic is more important. &#42

FARMFACTS

&#8226 Sand Farm, Sidbury, Devon, is an 89ha (220 acre) organic dairy farm.

&#8226 A further 64ha (158 acres) at nearby Mincombe Posts is farmed under an FBT.

&#8226 100 dairy cows plus 60 followers.

&#8226 180 ewes – mainly Mules, some Suffolk crosses. Beef suckler herd being established.

&#8226 Steep, red clay/greensand slopes at Sand Farm, rising up to flinty clay on plateau. Easier soils and flatter fields at Mincombe Posts.

&#8226 Mainly down to grass/clover leys; oats/peas and lucerne/ grass mixes grown for silage, plus cereals for feed.

&#8226 Some areas in Countryside Stewardship Scheme.

&#8226 Three full-time staff.