Supply shortages will maintain value
Supply shortages will maintain value
THE bullish message that kicked off the Organic Cereals and Pulses conference at Cranfield Universitys Silsoe Campus last week was that burgeoning demand for organic grain means growers can look forward to healthy price premiums for the foreseeable future.
"Anyone thinking of converting has no fear of oversupply," says Gleadell Agricultures organic trader Brian Wilburn.
"We are well below the needs of the market and prices are still two and a half times those of conventional grain. Lack of supply is going to maintain that value," he predicts.
That is despite the area of organic cereals and pulses tripling by 2004 (see table). In the same period consumption is expected to double to 0.5mt, and even second year "in-conversion" wheat is worth £140/t at present.
"If the consumer keeps buying we have a long way to catch up."
A key factor in that is the greater rate of conversion in the livestock sector, driving demand for organic feed grain. Removal of the 10% non-organic feed derogation in 2005 will increase demand further, particularly for proteins.
Organic vegetable oils are also in demand but UK production is negligible, says Mr Wilburn. "We have crushers desperately wanting to buy 500t or 1000t organic lots now. We are importing but they would prefer to buy UK produce."
Meal by-products are valuable in themselves as high protein feeds and growers can expect a price for oilseed rape similar to the £250/t or so currently being paid for organic sunflowers, he says.
Abacus Associates Stephen Briggs echoes Mr Wilburns comments on the demand for organic arable produce. "Weve seen a 72% increase in the organic livestock sector – arable is falling behind."
But while organic vegetable oil is an untapped market he questions whether oilseed rape is the right crop to fill it.
Springdale Crop Synergies has had organic oilseed rape grown on contract with growers. The firms Clifford Spencer maintains it can be grown successfully.
"From spring crops, yields almost match conventional crops – close to 1t/acre." But volunteers will need watching, he warns.
"Really you want to follow your oilseed rape with a spring sowing. Use the post-harvest period to prepare false seed-beds." *
ORGANICARABLE
• Lagging livestock sector.
• Five years firm price prospects.
• £170-£200/t for cereals today.
• Oilseeds untapped market.
Organic arable area forecast (ha)
2001 2004
Wheat 11,228 32,279
Barley 2014 5915
Oats 3386 11,021
Others 1712 5055
Total arable 18,340 54,270
Source: Gleadell Agriculture.
Veg future uncertain
ADAS Terrington organic specialist Bill Cormack warns that while the future for organic grain looks good, the prospects for potato and vegetable producers look less certain. "We are nearing self-sufficiency in some sectors and buyers are becoming more choosey. The prices we are being quoted have come down considerably in the last two to three years." Organic potatoes are under £200/t compared to over £300/t a couple of years ago for similar quality, he says.