Organic conversion label could enable price premiums
Farmers need to go through a two-year conversion process in order to market their produce as organic – rising to three years for permanent crops. During this period they tend to incur additional costs for investment and labour and see lower yields and lower livestock density. Generally speaking, these costs are not yet off-set by the premiums obtained for organic goods.
While government supports exist to help farmers through this tricky period and encourage conversion, financial considerations do tend to be a barrier to making the move. The EU is a net importer of organic produce, but increasing demand indicates the need for more EU-grown organic produce.
The new study, published in the journal Food Policy, surveyed organic farmers and those in the middle of the conversion process in the UK, Denmark, Italy, Portugal and Ireland. They also surveyed a total of 1527 consumers across the five EU states, asking them about their consumption habits and willingness to pay for conversion-grade carrots and chickens.
Consumers did not see the same intrinsic value in conversion produce as in certified organic produce, but 50 per cent indicated that they would be willing to pay a premium for conversion grade in order to support farmers going through the process.
Unwillingness to buy conversion grade produce was largely explained by issues of trust and unfamiliarity, and a preference for certified organic produce since they did not consider the benefits of conversion grade to be equivalent.
Farmers, meanwhile, reported selling conversion produce as animal feed, since at the time of the study (2002) use of conversion feed was allowed for organic livestock in Europe. Fruit, vegetable and meat products for food tended to be sold via direct and local means, however.
“What is apparent is that successful marketing of conversion-grade products needs and appropriate ‘official’ label,” wrote the study authors in their conclusions, adding that only through this would farmers supplying longer food chains be able to capture a premium.
They see such a label as being “somewhat less” than the full organic label, and would be marketing mainly on the notion of persuading more farmers to convert.
The researchers noted that educational efforts would have to be made to increase awareness of organic products and surrounding issues – and indeed the role of conversion grade.
There could be some resistance to formal marketing of conversion grade produce on the grounds that it could dilute understanding of organics and confuse the consumer.
Without government support the cost of establishing marketing routes would fall to food chain businesses; moreover, the authors raise the possibility of consumer resistance to paying a premium when, as tax payers, they are already funding state supports.
Food Policy 34 (2009) 287 - 294
Consumers’ willingness-to-pay for organic conversion-grade food: Evidence from five EU countries
Authors: Tranter, R; Bennet, R; Costa, L; Cowan, C; Holt, G; Jones, J; Miele, M; Sottomeyer, M; Vestergaard, J.