Financial help upholds case for conversion

7 December 2001

Financial help upholds case for conversion

Organic conversion is about more than just economics, says John Lee at our Management

Matters farm in France. Nevertheless, good prices for farms in conversion and generous

grants make it an interesting financial proposition, as Europe editor Philip Clarke discovers

WITH four months remaining in the milk year, output from Le Mont Hardys 72 milkers looks like falling well short of quota.

But profitability for the dairy enterprise is expected to at least match last years – thanks to the price premium paid in France for farms in organic conversion.

John Lee and his French partners Benoit and Gilles Delauney are half way through their two-year conversion period. The land will be registered as organic from next November.

During this time, local buyer GIE Laitier dAthis is paying a 15 centimes/litre (1.5p/litre) bonus, rising to 65c/litre (6.5p/litre) once full organic status is achieved. That is added to a basic price of 2.094 francs/litre (20.94p/litre) for standard 3.8% butterfat, 3.2% protein milk.

The black-and-whites at Le Mont Hardy do a lot better than that, producing 4.37% butterfat and 3.42% protein during what has been a very favourable autumn.

At 0.19c (0.019p) for each extra point of butterfat and 0.45c (0.045p) for each extra point of protein, plus another 8c/litre (0.8p) in hygiene bonuses, the total price for October milk came to 2.53 francs/litre (25.3p).

That compares with last years average return of 2.02 francs/litre (20.2p) for conventional milk. But the decision to switch to organic production was about more than just economics.

"Wed already started down the road of low input, low output sustainable farming," says Mr Lee. "We were concerned about the effects conventional farming and growing maize in particular were having on water quality. We decided to do something about it."

As is often the case in French agriculture, introducing change is made easier by the provision of generous government grants. The partners at Le Mont Hardy were able to commit to organic conversion under a Contrat Territorial dExploitation (land management contract) – part of Frances rural development programme, introduced under Agenda 2000 with joint Brussels funding.

These contracts pay farmers varying amounts of subsidy for delivering different environmental and social benefits.

The organic CTE that Mr Lee and the Delauneys signed on Nov 9 last year contains two basic conditions – the farm must conform strictly to lagriculture biologique (organic farming) standards and the business must employ at least four-and-a-half labour units/year.

In return, the French government is paying 798,500 francs (£79,850) over a five-year period.

This money is being front-loaded, with the partners receiving 258,900 francs (£25,900) in the first year. "This first instalment has been used to pay off the share capital of Gilless parents, who retired from the business earlier this year," says Mr Lee.

The conditions attaching to lagriculture biologique are broadly similar to those that apply in the UK, though some elements are a bit tougher. No synthetic fertilisers or pesticides are allowed on the land and any farmyard manure must come from animals that have never been fed any GM material.

The cows must also be allowed outside whenever the weather permits – usually at least nine months a year, given Normandys gentle maritime climate. A stocking rate limit of 2 livestock units/ha is applied, though the actual rate at Le Mont Hardy is more like 1.6 lu/ha.

When the cows are housed – and this is expected next week – they must have straw bedding and a minimum floor space of 6sq m/animal.

At least half the ration must be home-grown. Bought-in fodder must be organic where possible, though up to 10% non-organic material may be fed during the year. At certain times, the daily intake of non-organic feed can be as high as 25%.

"Given our extended grazing season and low stocking rates, we dont get anywhere near these limits," says Mr Lee.

There is also a restriction on the amount of silage that can be used in the ration at any one time – up to 50%. "The logic of this is that a highly acidic diet is unnatural and, in the long run, doesnt do their livers any good. We, therefore, feed more hay than silage."

Up to 33% maize is permitted, but it is no longer grown at Le Mont Hardy. "We may try growing some fodder beet next year," says Mr Lee. "But without the option of chemical weed control we are a bit concerned about the effect this may have on the cleanliness of our fields."

Non-organic seeds are tolerated under lagriculture biologique, where organic varieties are hard to come by. But GMOs are forbidden.

On the animal health side, the dairy cows are allowed just two antibiotic treatments a year plus one wormer. Any more than this and their milk must be withdrawn for six months. No boluses are permitted, while synthetic vitamins and amino acids are also banned.

Milk can be sold as organic six months after the land is fully converted. But cull cows only qualify for organic meat if they have spent over three-quarters of their lives on organic pasture.

Yields have taken quite a drop this year, though Mr Lee says this is more to do with the removal of maize from the diet than converting to organic. At current parlour performance, he anticipates the annual output will be about 40,000 litres short of the farms 395,000-litre quota.

Without the option to lease out any quota in France, this appears to be something of a wasted opportunity. But Mr Lee argues that because milk quota does not have the same capital value as in the UK, filling it is not such a priority.

Mr Lee sees this year as something of a transition period. As well as going organic, the farm is spreading out its traditional autumn calving pattern, in an effort to make better use of grazed grass and reduce the number of milkers during the winter months. "Also, we dont want to go out and buy in more cows just to fill quota, as this could jeopardise the health status of our herd."

Buying in more winter rations to push the cows is not really an option, either. "Feed costs are much higher this year because of the cold spring and dry summer. We have recently bought in 120t of fodder beet for about 250 francs/t (£25/t) and some lucerne. But we have had to pay more for it."

With calf prices and cull cow values on the floor due to BSE – good quality Friesian bull calves fetched 650-700 francs (£65-£70) apiece at auction last month, half their year-ago values – the partners are having to watch their costs. &#42

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