Organic agriculture: opportunities galore?

Organic farming is a strategic choice

Cows placidly grazing in the meadow, a sow and her piglets wallowing in the cool mud on a hot day, tomatoes and cucumbers growing in an open field. No longer strictly the domain of idealists, today’s organic farms combine well-run commercial operations with a concern for the environment and animal welfare. With consumer demand for organic products on the rise, organic conversion seems more appealing than ever to a growing number of Dutch farmers.

The switch from conventional agricultural practices to organic farming is a major transition, one that requires guts, determination, investment and time in addition to specialised expertise. Rabobank currently has more than 500 agricultural customers who are engaged in organic farming, while a growing number of other farmers are considering making the switch.

Rabobank’s Jan van Beekhuizen, a sector manager specialising in cattle farming: ‘Farmers looking to convert to organic farming should do so at a time when their business is doing well. The changeover should be a careful and strategic decision rather than a perceived solution to, say, low milk prices or declining meat prices.’

Key conditions

As Van Beekhuizen explains, ‘Farmers who decide to convert to organic farming need to really change their mindset along with it. It needs to be right for you, as you have to be prepared to radically change your farming practices. That means you have to stop using chemical fertilisers, pesticides and antibiotics. You are essentially expected to rely on your own wits and resources, including your expertise and business acumen. Will you be able to identify and treat a sick animal or crop at an early stage without access to any of the resources of conventional farming, or can you afford to hire the services of external experts if needed? And do you have a solid financial plan in place? These are all key conditions for success in organic farming.’

Increase in organic food consumption

The “organic revolution” has not had the same impact in the Netherlands as in its neighbouring countries. By way of comparison: in Denmark, Germany, Austria, Switzerland and Sweden organic farmland currently accounts for 10 percent of all agricultural soil, versus only 3 percent in the Netherlands.

So there would appear to be ample room for growth. Van Beekhuizen: ‘Consumption of organic produce is increasing by around 10 percent a year. The Netherlands currently imports organic products because its own output is too small to meet consumer demand. So there is not a lack of demand, but the market would not be able to sustain unrestrained growth over a short period of time. Around 50 Dutch dairy farmers are expected to convert to organic farming in 2016. That may not seem like too many, but it does mean we will be seeing a 20-percent increase in the production of organic milk, which puts pressure on the market.’

Organic carrots for baby food

The market for organic crop farming is seeing similar developments as the dairy farming industry. Land prices in Flevoland province are soaring, for example, as many farmers in this part of the country have decided to convert to organic practices, enticed by the high yields. The fertile land in this region is particularly suited to the production of organic carrots, along with other crops. Organic carrots and other organic vegetables are used as basic ingredients in the production of organic baby foods, for which there is a growing demand. Our responsibility is to ensure that the sector and the market remain in balance. Van Beekhuizen: ‘If large numbers of farmers decide to convert, this could change the positive market outlook and the attractive opportunities that draw farmers to organic conversion will evaporate.’

Personalised approach

It takes two years for conventional farmers to convert to organic practices, a period during which their expenses exceed their earnings. Rabobank supports farmers in bridging this period, including by allowing them to suspend repayments on current loans for a specific period of time. ‘Converting to organic farming often also means investing in barns and buildings,’ Van Beekhuizen explains. ‘Since these investments benefit the environment, these farmers are usually eligible for a green loan. If they are frontrunners in sustainability, they can apply for one of Rabobank’s low-interest impact loans. But there are plenty of other options out there. Every organic conversion calls for a personalised approach. Farms and farmers are all different and they need to find a way to switch to organic farming that best suits them.’

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