For many people the growth of organic farming and the consumer uptake of organic food has been depressingly slow. Some might say it’s an experiment that’s failing. But is it?
The introduction of many new ideas start with an excited introductory phase and then a long haul of slow growth as the “status quo” is overcome and overturned. I believe that this is the case with organic farming. But for any idea to have any chance of long term success in any field of endeavour there are two precursors:
- Does it actually represent a better way to do things (as opposed to just an alternative way to do things) and
- Does it make economic sense, by which I mean can the industry make realistic returns on a consistent basis into the future?
I’m hard pressed to think of any idea that has been a long-term success that does not meet these fundamental criteria. So what about organic food?
Is organic food a good idea?
There is no doubt that the world’s ability to feed itself is under threat.
In comparison to the past 50 years, the rate at which pressures are building up on natural resources – land, water, biodiversity – will be somewhat tempered during the coming 50 years due to the slowdown of demand growth for food and feed. However, an expanded use of agricultural feedstock for biofuels and ongoing environment degradation would work in the opposite direction.
Even if total demand for food and feed may indeed grow more slowly, just satisfying the expected food and feed demand will require a substantial increase of global food production of 70 percent by 2050, involving an additional quantity of nearly 1 billion tonnes of cereals and 200 million tons of meat.
Much of the natural resource base already in use worldwide shows worrying signs of degradation. According to the Millennium Ecosystem Assessment, 15 out of 24 ecosystem services examined are already being degraded or used unsustainably. These include capture fisheries and water supply. In addition, actions to intensify other ecosystem services, such as the ecosystem service ‘food production’, often cause the degradation of others. Soil nutrient depletion, erosion, desertification, depletion of freshwater reserves, loss of tropical forest and biodiversity are clear indicators. Unless investments in maintenance and rehabilitation are stepped up and land use practices made more sustainable, the productive potential of land, water and genetic resources may continue to decline at alarming rates.
We have always looked to technology to help improve our farming yields, yet the fact is that globally the rate of growth in yields of the major cereal crops has been steadily declining, it dropped from 3.2 percent per year in 1960 to 1.5 percent in 2000. Technology has increased yields over past decades, but at long term cost to the ability of land to produce at all. It’s funny how the laws of physics and the laws of nature seem to firmly agree on one thing: you can’t get something for nothing.
If technology is to save us then, it must do so in a way that does not contribute to the decline of the very land it is designed to support.
Alternatively, organic farming actively works to rehabilitate the land whilst decreasing the possibility that harmful chemicals enter the food chain. As a person with a science background myself, I don’t make these comments from a romantic viewpoint. I have no doubt that technology will need to be harnessed to improve food yields, but I think that this will be increasingly from working smarter with nature rather than with chemicals. I have no doubt also that in many farming situations currently, yields fall under organic practices. But that does not mean that they will always be less.
Fundamentally, then, it makes sense to work with nature in farming and the environment. Organic farming and food production is a better idea. Early adopters may have found it tough and many have retreated. That’s more a reflection of technique and know-how rather than on the idea itself.
So what is the situation in Australia at present? Let’s look at some basic information. In Australia there are already over 11 million ha of organic farming and grazing land available. This is a larger area than exists in any other country and it is continuing to grow.
ABS data shows that over 50% of farms are still small-scale, but that the average size of organic farms continues to grow, highlighting the trend toward professional farming.
So what of the second criteria?
Do organic farms make economic sense?
In Australia it takes three years of preparation for a farm to be certified organic. That’s the time deemed necessary for the chemicals previously used to disappear from the soil or pasture. The cost of chemicals and additives is taken out of the farm accounts. The cost of diesel for the machinery to apply them is removed, along with the time that takes. On the other side of the ledger we have reduced yields probably, particularly in the early years.
The other key factor, though, is what can farmers sell the crop for? Can they get a premium? Often the answer to that lies in what they are producing and where they are selling it. Perhaps it stands to reason that expensive foods are more likely to be able to stand some premium over the most simple basics, so that’s a consideration for the farmer. But is this born out by what we buy? The 2012 Australian Organic Market Report provides the following information. What organic product are consumers buying?
- 60% fresh fruit and vegetables
- 45% home-cooking ingredients
- 39% canned goods
It seems that simple basics that can carry an organic premium and are being purchased. 65% of consumers report that they buy organic food occasionally and the total value of the organic industry in Australia is now estimated at $1.276bn, $220m of which is exported.
However, there is no doubt that the marketplace is often “market-centric”, so selling to supermarkets can negate upside returns as the supermarket captures most the value of the effort. Despite this 75%, of all purchases of organic food in the country are through supermarkets, so presumably economically viable deals are being struck, if under pressure.
Export of organic food from Australia to Asia represents a good opportunity for growth. This is because, unlike Australia, Asia and particularly China has on-going concerns about basic food safety. For example, this month in Shanghai, a man was arrested with 10 tonnes of fox, mink and rat meat that he was selling for human consumption. Most of us have heard of the melamine-in-baby-milk scandal. Food safety in China continues to be a problem despite Chinese authorities working hard to eliminate these issues. Chinese consumers are prepared to pay a premium for clean, safe food and Australia’s reputation in this regard is second to none.
In the domestic market there are two issues. The first is price. Price apparently puts a lot of consumers off, but that’s the sort of explicit response that you can expect from market research in any category. Implicitly, consumers know that organic food is free from harmful chemicals. 89% of people say that’s why they buy it! The penetration of organic purchase continues to grow, as mentioned above it’s now over 65%, and so organic is now very much mainstream rather than a fad.
Production wise, 24% of all Australian beef production and 6% of all lamb production is organic. Demand for organic dairy products continues to rise. Interestingly, Australian companies can’t source enough organic milk or butter in Australia and the shortfall is made up almost exclusively from New Zealand, so opportunities exist here in markets that are already developed.
The other issue that can be addressed directly is that 48% of consumers say they’re not sure that they can trust that the food really is organic. If it’s a produce or packaged food that has been certified in Australia, it can be trusted. If it’s “organic” from China or other parts of Asia then that’s a problem. Despite this, Australian supermarkets insist on buying more and more product from Asia because it’s cheap, not because it’s good. That in turn impacts on the ability of Australian farmers to make the change to organic.
On balance then, organic seems to be a sound long-term idea that should get better as technology learns to support it. Interestingly these support techniques may well come from aid to developing countries where the infrastructure, machinery and cost of herbicides and pesticides probably make them unviable as a solution to yield increases in the first place.
Economically, it appears that organic farming practices can be viable in the long term but that short term there is some pain as markets establish.
The trend of buying organic fresh produce in Australia continues to rise, albeit slowly, but the increasing recognition of the role of epigenetics on long term health will slowly educate people to the real value of an untainted food chain. Then we will see human health and environmental health values begin to coalesce in people’s minds, as they always have in practice.