In recent years the markets for organic produce at the farm-gate have been very strong, commanding large premiums for the produce. The last year has seen the premiums for animal produce, such as milk, being severely eroded. In contrast the premiums received for organic grain have remained constant at two to three times the price of conventional grain. Why is this?
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Organic cereal supply
The area of organically farmed land (including ‘in conversion’ land) has increased significantly in the last 10 years, especially in the last few years e.g. in the six months to June 2001 total acreage increased by 18% (94,530 ha) on the previous whole year. Due to the principles and production methods of organic farming, livestock production has proven to be more adaptable than grain production. The result, as shown by table 1, is that although total arable area of fully organic land has increased from 9,650ha in 1998/99 to 17,970ha in 2000/2001 its actual share of all organic land has decreased from 16% to only 7.5% over the period.
Organic cereal demand
Demand is such that for 2000/2001, trade estimates suggest 80% of organic cereals consumed in the UK were imported (due partly to a poor season), up 5% from 1999/2000, and 10% on 1998/99. In comparison total imports of organic goods dropped from 75% in 1999/2000 to 70% in 2000/2001.
For the immediate future it looks as though this trend will continue as there is currently about 270,000 ha in ‘conversion’ to organic status, but the majority of this is permanent pasture.
| Year | Hectares | As % of total organic area |
| 98/99 | 9,650 | 16.0 |
| 99/00 | 10,800 | 10.0 |
| 00/01 | 17,970 | 7.5 |
Source: Soil Association
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By GlobalDataSo with the UK becoming more self-sufficient in organic livestock produce, the increased livestock numbers have and will continue to lead to large increases in demand for organic cereals as part of their diet.
Pressure on demand is also likely to carry on increasing in the future as in 2005 new legislation is to be implemented so that the diets of all organic livestock will consist of only organically produced feed (currently a minimum of 90% of dry matter intake is required). Note also that the retail market is also increasing and grew at a rate of 33% during 2000/2001, again increasing demand for organic cereals, through higher demand in all types of products.
Conclusion
The gap between supply and demand for organic cereals continues to widen, making procurement of UK produced cereals problematic, as can be seen by the increase in proportion of imported cereals in recent years. This gap looks set to remain as the area under organic arable production is increasing only slowly and is actually decreasing as a proportion of total organic farmland.
Key points
· Arable crops only represented 7.5% of organic land use in 2001
· 70 – 80% of organic cereal demand is met by imports
· Large increase in demand for organic grain in both the feed and milling sectors
· Further information available on the HGCA website: www.hgca.com
Further information:
Les Pickles
HGCA
020 7520 3997
les.pickles@hgca.com
