Farmers turn their backs on organic farming

[S.Annadana]

By Myra Butterworth, Personal Finance Correspondent
Last Updated: 4:01pm BST 04/08/2008



The number of dairy farmers who are adopting organic farming methods has declined as the slowing economy curbs demand for expensive organic produce.

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Figures show diary farmers are seeing rises of up to 80 per cent in the price of organic feed for diary herds, meaning that many are now operating at a loss.

advertisementThe increase in costs has resulted in diary farmers turning their back on organic farming in favour of more conventional methods.

Richard Hampton, the sales and marketing director of Omsco, Britain's largest organic milk co-operative, said: "Everyone is suffering on costs and in many cases, organic farmers have the option to operate at a higher profit elsewhere."

Organic farmers tend to have higher rates of labour and so labour inflation can also hit organic farmers disproportionately.

However, the rapid increase of fertiliser used in other types of farming will not hit organic farms - although this saving is outweighed by the other costs faced by organic farms, experts said.

Demand among shoppers for organic food has soared in recent years, but signs are emerging that this trend is waning as households reign in their spending.

Patrick Holden, director of The Soil Association, which certifies much of Britain's organic food production, said: "Perhaps it is inevitable that we might see some decline in demand among less deeply committed organic consumers."

But he added: "This is more likely to be a plateau than a reverse."

Organic Monitor, a London-based consultancy, said demand for fresh organic food would remain, while sales in newly established organic produce - including frozen foods and ready meals - would "fall off a cliff" as the economic slows.

The "veg-box" delivery schemes are among the casualties as cash-strapped families turn to buying their vegetables from the supermarket or growing their own instead.

The organic delivery companies argue that their fruit and vegetables are cheaper than the organic produce in supermarkets. However, organic vegetables tend to be more expensive than standard groceries.

For example, a small punnet of organic cherry tomatoes costs £2.50, compared with a standard punnet costing 62p.

Farmaround, one of the largest players, estimates that it has lost 10 per cent of its customer base since the start of the year, and is budgeting for 20 per cent of its customers cancelling their deliveries by the end of the summer.

Isobel Davies, its founder, said: "Families are extremely worried about their finances and do not know what is coming. Most of the customers that do cancel do so for financial reasons, which never used to be the case."