6607: Economics of organic farming (extension to OF0190)

{PROJECT} Economics of organic farming (extension to OF0190). Runs 01 December 2002 - 30 September 2006. Project leader(s): Lampkin, Dr Nicolas, University of Wales, Aberystwyth.

Summary

Description
The Report of the Policy Commission on the future of farming and food identified the need for better knowledge of the structure, performance and economic interdependence of all businesses in the rural economy. Also identified was the need for a stronger drive on benchmarking to gain a deeper understanding of costs and efficiencies for agricultural production. These needs are particularly strong in the organic sector, where conversion to organic production has been encouraged, but economic viability is uncertain, and there is a lack of information on numbers and types of farms converting and amounts of produce coming on line.
Recent pressures on prices of organic products have highlighted the lack of information on costs of production. Previously funded work on the financial performance of organic farms focused on whole farm incomes and selected gross margin figures, but the latest data are from 1998/99.
This proposal aims to provide information on the financial performance of organic farms of seven farm types, compared with carefully selected conventional farms, and to build up data on costs of production and comparable enterprise performance to enable benchmarking within the organic sector.
The results will inform DEFRA policy making with respect to organic farming, arable and livestock commodity support programmes and agri-environment policy, and provide a basis for assessments by farmers and advisers of the farm-level implications of conversion to and continued organic farming. Information derived would assist in assessment of the forthcoming English Action Plan. The provision of robust benchmark data will enable farmers and advisers to critically examine their costs of production, and inform initiatives aiming to determine costs for price setting.
The specific aims are to gather organic farm data annually from English and Welsh farms for the years 2001/02 to 2003/04 and to contrast them with matched conventional farm performance data (from the Farm Business Survey (FBS)), and to produce annual reports, for a single year’s data for 2001/02, and for two-year identical samples for 2002/03 and 2003/04. Gross margins for major enterprises and net margins for pig and poultry enterprises will also be collected and reported. Any farm incomes data available from DEFRA funded projects for the years 1999/2000 to 2000/01 will be collated and incorporated into an initial report. Organic farms collected (by chance) within the DEFRA FBS will be included in the appropriate annual reports.
The specific objectives include:
- the collection or collation of income and gross margin data from 72 farms; upland cattle and sheep(12), lowland cattle and sheep (12), arable (12), mixed (12), horticulture (12) and dairy farms (12) to provide continuous samples of at least 10 farms of each farm type,
- this will include collation of whole farm data from 6 holdings on the DEFRA-funded HDRA fruit project (OF0305) (all years), 6 holdings from the DEFRA-funded horticulture conversion project (OF0191) (2001/2002 and 2002/2003) only and from 6 dairy farms from the DEFRA-funded Dairy project (OF0146) for 2001/2002 only.
- the collection of enterprise costings for up to 6 pig and poultry enterprises
- the collation and reporting of data provided by the Farm Business Survey of organic farms included in their sample
- continued liaison with the Economics (Farm Business) division of DEFRA on the development of FBS systems to enable organic farm sampling and data collection in future DEFRA FBS contracts,
- to collate organic farm data available from current FBS DEFRA contracts (OF0145 and OF0147),
- to prepare annual reports, including matched conventional farm data derived from the Farm Business Survey
- to produce benchmark figures for costs of production for farmer and adviser use
- to disseminate the results widely to farmers, advisers and policy makers.
Results will be published on the web and used to inform presentations to advisers, farmers and interested groups. Gross margin results and enterprise costings will assist in the production of the Organic Farm Management Handbook. Enterprise costings and benchmark data will be available in the reports and on the web for use by advisers and farmer groups, and used for modelling organic systems for policy analysis purposes.
Data will be available for analysis of more specific issues, e.g. analysis of labour use on organic farms.
Objective
Objective 1
Recruitment of up to 72 suitable farms (12 of each of lowland and upland cattle and sheep, 12 mixed, 12 arable, 12 dairy and 6 horticulture farms) plus up to 6 farms with pig and/or poultry enterprises willing to provide physical and incomes data.
Objective 2
Collect farm and enterprise data from up to 72 farms, including those with pig and poultry enterprises
(6 horticulture holdings to be subcontracted) for the years 2001/02, 2002/03, 2003/04.
Objective 3
Collate fruit and horticulture farm and enterprise data from HDRA DEFRA-funded project (6 horticulture holdings, 2001/2002 and 2002/2003 only) and from HDRA as a subcontractor (6 horticultal holdings 2001/02 and 2002/2003 and 12 farms 2003/04) and DEFRA funded dairy project (OF0146) for 6 farms for 2001/2002 only.
Collate organic farm data from conventional farm survey supplied by FBS centres.
Objective 4
[An initial report collating pre-existing organic farm data (without comparisons) for 1999/2000 and 2000/01 from other DEFRA-funded studies and Farm Business Survey studies.]
Produce annual organic farm incomes reports incorporating collected and collated organic farm data including conventional comparisons, with interpretation. This would contain one year’s data in the 2001/2002 report, thereafter containing two years data from identical samples.

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