Organics may gain from oil pain

Spiralling food inflation could bring good news for one set of producers. Mark Holdstock checks the organic view.

The cost of putting meals on the table is rising much faster here in the UK than in most of the countries of Europe. Our food inflation figure at 6.3 per cent is three times greater than some of our neighbours.

For many shoppers, organic food has always been regarded as an expensive luxury.

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It is dearer because the way the crops are grown produces lower yields than those where chemicals are used. But producing those chemicals requires oil, which is now rocketing in price.

So could this be the time when less oil-dependent organic produce starts to match the price of the conventional type?

“We have done some research with Andersons, the farm business consultants and they have shown that the impact of rising oil prices will have much less of an impact on organic farming systems,” says Emma Hockridge, head of policy for the Soil Association, one of the bodies which certifies organic farmers.

“Nitrogen fertiliser is extremely energy-intensive and of course that is produced with natural gas which almost exactly follows the price of oil.”

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That sounds like good news for those farmers that don’t have to use artificial fertilisers such as Peter Richardson, a partner in the Riverford venture at Home Farm at Newby Wiske near Northallerton.

“We get the fertility from the grass clover lays, that takes the nitrogen from the atmosphere,” he explains.

“In every five year cycle the land has two years of clover lay.

“We won’t be as affected as our conventional brothers who rely on the nitrogen which is oil-based. But a lot of our operation is mechanical and the tractors are diesel powered.

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“People have the perception that organic food is very expensive. I would agree to differ with that.

“Without doubt conventional food has been far too cheap for far too many years and conventional food prices have dipped to an unsustainable level.

“Now the conventional food is coming up in price, the premium we get is being condensed a bit and is making it a lot more affordable.

“I think the conventional food is finding its correct level.”

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Tim Sellers farms 480 acres of arable land near Driffield. He produces grain, which his wife Caroline makes into bread and breakfast cereals as well as selling grain into the open market.

Tim points out that although organic farmers won’t be hit by fast-rising input costs for fertiliser and pesticides, they probably spend more money on diesel in their tractors than their conventional counterparts. Particularly when it comes to ploughing and weed control.

He points out that when the prices are low, one way for conventional farmers to reduce their costs is by not ploughing and just to “tickle” the soil and put a crop in. “Obviously we can’t do that,” he says.

Emma Hockridge from the Soil Association adds, “In theory it’s perfectly possible that organic food prices wouldn’t carry on rising with the increase.

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“But food prices aren’t just about the input costs. There are other huge issues in terms of speculation on markets, and people being able to afford food.”

The association reports a drop in demand for organic food last year, with some areas hit harder than others.

They say things have now stabilised and some areas have even started to report a modest growth in business.

Helen Browning, who will take over as the Soil Association’s director shortly, is reported as saying the future looks much more positive than for the last year or two.

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The decline in Britain contrasted with many other European countries where demand for organic products has held up well during the economic downturn.

She says that in many other European countries organic is a normal part of the scene. Here it still seems to be quite an exceptional activity.

Kevin Littleboy who farms conventionally more than 600 hectares at Howe near Thirsk says it is what happens elsewhere in the world which determines the price of the food – flooding, drought, failed harvests and the stock of wheat in the world.

He reckons market speculation and volatility will continue to rule supreme, making any predictions about farm margins unreliable.

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Andrew Gloag, another arable conventional grower, who farms 4,000 acres near Stokesley, says he bought this year’s supply of fertiliser in advance at last year’s prices.

“The movement in fuel prices at the moment could potentially put ten pounds a tonne (of cereals grown) onto the cost of fertiliser,” he says.

“And put three pounds a tonne onto the cost of the fuels required to grow that crop in the course of a year.”

It all adds up to the uncomfortable conclusion that in these difficult times, producers and consumers alike have so many more things on their plates to worry about.

Where their food comes from. and how it was grown, becomes less of a priority for a majority of people as the cost of putting it on the table continues to soar and with no end in sight.

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