Organic farm profitability probed by research unit

Organic horticulture farms are more profitable than their conventional counterparts per hectare, though their generally smaller size means they make less money overall, according to a new study by the Rural Business Research unit at the University of Newcastle.

The authors calculated that Farm Business Income (Defra's standard measure of profitability in the sector) for organic horticultural producers was just £20,290 per farm for the 2014-15 financial year, compared with £32,826 for non-organic farms. But this amounted to £1,705/ha for organic, compared with £1,197 for non-organic. Moreover, this average figure per organic farm was 78 per higher than the figure for 2013-14 of just £11,400.

Horticulture is the farming sector in which organic producers lag furthest behind their non-organic counterparts in the gross value of output per hectare, at £6,588/ha compared with £13,754/ha for non-organic, the report found. But this was outstripped by organic farms' much lower input costs (£4,880/ha versus £12,579/ha).

At farm level "non-organic horticulture farms operated a much more intensive operation - output was £378,046 for non-organics versus £78,385 for organic farms and total costs for non-organics were £345,760 but just £58,059 for organic farms", the report notes. But it cautions: "Extreme care must be taken when making conclusions about the horticulture sample due to the diverse nature of enterprises."

It set this apparently positive picture of organic horticulture against the continuing decline of UK organic farming overall. In England 303,739ha were classified as organic in 2015, down from a peak of 391,761ha in 2010 - a trend mirrored in Wales and Northern Ireland. Scotland's organic area has been in decline for a longer time and at 126,267ha is only 29 per cent of the 2002 area.

The UK now lags behind France and even further behind Germany and Italy in area farmed organically. The number of organic producers also fell for the fifth year in a row, to 2,336.

Yet sales of organic products in the UK increased by nearly five per cent in 2015, the fourth consecutive year of increase, the report points out. While vegetable sales took a slight dip of 0.3 per cent, organic fruit sales rose by 10.6 per cent, bringing both to a similar market share of 7.9 and eight per cent respectively.

"Alternative channels of consumption are realising higher growth rates in the organic sector," said the report authors, with catering's demand for organic produce rising by 15.2 per cent and box schemes by 9.1 per cent, compared with a rise of just 3.2 per cent in supermarkets.

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