Organics not so rosy
LOWER stocking rates make the economics of converting to organic production much less enticing than many producers may expect.
Somerset vet Alastair Hayton told BCVAdelegates he was concerned that many producers currently considering converting to organic production were motivated by profit. "This may threaten organic philosophy and its credibility."
It is a luxury product and could be hit in a recession, he added. But with 70% of UK organic consumption being met by imported product, he said there is much room for expansion to fill UK demand.
Currently, an established organic farm could be making good margins, but this may not be the case for converting farms when you look at profit/ha. During conversion, he believes stocking rates would drop to 1.3-1.4 LU/ha (3.2-3.5 LU/acre) and there would be no premium payments.
On a 75ha (185-acre) dairy unit this would mean losing nearly £800/ha (£324/acre) or £60,000 over the whole farm in annual income. "This is a considerable amount of money for a farm business to be haemorrhaging each year during conversion," he added.
He warned those considering conversion to budget closely and allow for upsets, such as disease outbreaks, which may lead to additional costs. He was also concerned that selling off assets may be a short-term solution. "Stock and quota sales may release capital, but only serve to erode business assets."