Road to conversion never looked so good
Road to conversion never looked so good
Premiums for organic
produce look inviting when
conventional arable margins
are so low. In the following
pages we take a look at the
sector, starting with a
review of the aid available.
Simon Wragg reports
PRODUCERS may view conversion to organic production as a proposition not to be missed when they consider that UK sales rose 148% last year, according to consumer survey group Taylor Nelson Sofres.
The group reports the market was worth an estimated £400m in the same period – with 70% of sales being imports – and retailers expect demand to continue growing.
Producers interest in conversion schemes has risen sharply over the past few years and MAFF figures suggest there were three times more prospective applications than money to go around.
But government has pledged £140m to fund conversion over a seven-year period. The cash will come via the Organic Farming Scheme (OFS) in England, Wales and Northern Ireland while Scotland operates the Organic Aid Scheme (OAS) on the same principles.
At current rates producers receive up to £450/ha (£182/acre) over a five-year period (see table 1).
The amount of capital being ploughed into the scheme varies for different parts of the UK. In England, £13m will go to new applicants this year, although £4m has already been allocated. In 2002 that will rise to £20m with smaller annual increases thereafter.
In Wales, the annual fund was doubled this year to £4.23m, while the Scottish Executive is spending £4.5m. The figure for Northern Ireland will depend on the uptake of its OFS, say government officials.
However, the aid is only available on a first-come, first-served basis until the annual budget has been spent, so it pays to get applications in early.
First stop should be the Organic Conversion Information Service (OCIS) which is run in conjunction with MAFF. It provides a free information pack by post outlining the process of registration, financial aid and several illustrated on-farm scenarios showing the effect on margins (see contacts list).
OCIS also provides free on-farm visits by an adviser to talk through the options for British growers. Northern Ireland has its own agency offering a similar service.
Before an application for support can be made a programme for the two-year conversion will have to be agreed with one of the handful of organic certification bodies, the largest of which is the Soil Association.
That typically takes six to eight weeks, but the conversion process is back-dated to the original application. There are exceptions where the start date may be put back further still, but the opportunities are limited and often complicated.
After registration producers have six months in which to apply to the OFS or OAS.
Payments are highest in the first year of conversion at £225/ha (£91/acre). Aid will be reduced further if funding for an environmental scheme, such as Countryside Stewardship, is already being received on the area to be converted.
However, the impact of the cuts is geared to payments made after conversion has been completed. Typically, £35/ha (£14/acre) is removed in years three to five for AAPS-eligible land (see bottom of table right).
There are additional funds to cover registration and training costs. In year one of conversion £300/applicant is available, which decreases by £100/year over a three-year period.
One structural change introduced last year was the relaxation of maximum support payments received by applicants in Scotland. This has been increased from £75,750 last year to £157,900 over the five-year scheme. Despite the changes estimates suggest only 3% of the farmed area is currently in organic production.
Government cash is also being directed at providing telephone helplines (see panel), often backed up by training/open days and access to organic trials. In Wales alone £2m/year has been committed to research.
There may be more cash in future. Recent government announcements suggest a type of organic stewardship payment may be offered to producers who have completed conversion, although little indication of rates has been given.
Other sources of funding are worth seeking out. Asda has an organic support scheme in operation in the livestock sector and may consider extending it to arable projects, says a spokeswoman for the supermarket. Others have dedicated agronomists on hand to offer advice to suppliers.
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Fancy a dabble in organic veg or cereals? Theres plenty of advice available and aid money for conversion too. But plan carefully and seek all the information you can before before making the jump, say experts.
AIDATAGLANCE
• £450/ha over five years.
• Cash for advice and fees.
• Free on-farm advice/visits.
• Commercial support?
• Prospects favourable.
CONTACTS
• MAFF/Organic Conversion Information Service (OCIS) 0117-922 7707
• Soil Association 0117-914 2405
• Elm Farm Research Centre, Berks for advice 01488-658298
• Scottish Organic Producers Association, Perthshire 01786-458090
• Scottish Agricultural College Local office
• OCIS (Scotland) 01224-711072
• OCIS (Wales) 01970-622100
• Dept of Agriculture and Rural Development (NI only) 028-9442 6765
Organic prospects
A number of major retailers are expanding their organic ranges, in contrast to retail group Iceland which recently ditched the intention of only stocking organic food. The preference is for UK produce, but price will become the key issue of the future.
Geoff Burke, head of the Organic Arable Marketing Group (OAMG) based at the Elm Farm Research Centre, Berks, says the outlook is good for the next five years.
While some producers fear the rise in organics will cut premiums, it is unlikely to happen in arable circles, he believes. Most growth has been in livestock, creating demand for more organic feed.
Prices are currently about £230/t for malting barley, £220/t for top grade milling wheat, £193/t for oats destined for human food chain products, and £170-180 for feed barley and feed wheat.
If premiums do fall in the medium term and producers decide to return to conventional farming techniques after their OFS or OAS has run its course, MAFF officials suggest their is little likelihood of support payments being clawed back.