Sue Kedgley

Organics industry growth in jeopardy

by Sue Kedgley

In the 2005 cooperation agreement between the Green Party and the previous Labour-led government, we negotiated funding for an Organics Advisory Service (OAS). It included mentoring support for conversion to organics and peer support for organic farmers.

Unfortunately, after three years of successful service to the organics sector, the modest $2.15 million funding has now run out, and the National government has not provided any further funding for the OAS. Was it money well spent, and what does the future hold for the sector?

In 2005, the area of NZ land under organic production was 45,000ha. By 2007, this had increased to 65,000ha – that’s over 20% growth a year. The 2008 figures have yet to be compiled, but Biogro alone certifies 65,000ha, and to that we can add organic land certified by the other 3 certifiers AsureQualityOrganicFarmNZ and Demeter. As a proportion of total agricultural land, NZ still lags well behind European countries, but the sector in NZ is certainly a fast growing one.

A 2007 study into the value of the organics sector to the NZ economy found that it generated $120million domestically, and $210million in exports, per year. And that doesn’t include the ecosystem services that an organic farm provides – more soil carbon retained, cleaner water and more biodiversity.

In the pipfruit sector, 10% of production by volume is organic. But this equates to 15% of the pipfruit sector by value because of the price premium (33%) commanded by organic pipfruit.

Organic sheep and beef meat also gets a strong premium, helping organic farmers through a time of low prices and droughts. Apparently, 20% of organic lamb on sale in the UK is from NZ, and our major meat exporter Silver Fern Farms has been advertising for organic lamb suppliers. An SFF statement last year noted that their organic premiums were holding despite the recession.

Looking at the dairy industry, we find that Fonterra is unable to find enough organic milk suppliers to satisfy its demand. Fonterra says it wants to grow its number of suppliers from 80 now to 350-400 farmers by 2013.

So, the organic sector is a valuable market for NZ producers, one that commands a good premium for a high quality product, improves environmental health, and is growing rather rapidly. Indeed, the global $60 billion organics market is growing at between 10 – 20 percent annually according to Organics Aotearoa NZ.

Like all sectors, organics needs specialist advisory support to continue growing. Because it spans across most types of farming and growing, and is a production style that requires specialist experience and knowledge, it isn’t well served by the existing support bodies, although organic farmers pay the same producer levies as other farmers. Farm service and product suppliers (like fertiliser and agrichemical salespeople), who commonly offer support to conventional farmers, don’t have the experience and knowledge of organics production to do the same for organic farmers. So organic producers fall through the gaps. Hence the need for the OAS.

Without good support for farmers through an OAS, the ability for the sector to continue to expand – to provide more jobs, economic activity and a healthier environment – to meet export market demands is in jeopardy.

Published in Environment & Resource Management by Sue Kedgley on Tue, June 30th, 2009   

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