This year, the Department of Agriculture and Food announced increased support levels for the organic sector. This was done primarily to increase the proportion of Irish land farmed organically towards the EU average.

The big question is – will the increased supports attract new entrants? And if so, will increased production affect the markets, and more importantly, the price of output?

In the mid 1990s, just 6,400ha was farmed organically on 300 holdings. By 2005, there were approximately 1,090 registered organic operators in Ireland farming 35,266ha. By 2007, this had increased to 1,334 farmers on 41,122ha.

Organic support payments, increasing price premiums and developing niche organic markets helped to drive numbers into the sector over the years.

By late 2007, approximately 1% of the total area farmed in Ireland had organic status, some 3.3% lower than the European average at the time. In 2008, a target was set to achieve 5% of the area farmed in Ireland by 2012.

Teagasc provided two full-time dedicated organic advisers in order to support the sector and encourage conversions. The Department also continued additional aid packages such as dedicated investment schemes for the organic sector.

Although uptake increased, the targets were not met, and in 2012 an organic focus group was established which resulted in an action plan being created. The group highlighted key areas of improvement, including the need for increased support.

Organic scheme

The Organic Farming Scheme, which ran from 2007 to 2013, saw farmers receive a conversion payment of €212/ha for the first 55ha, and €30/ha for the organic area farmed over 55ha.

This conversion payment was only paid for the first two years after going organic. Thereafter, the payment was reduced to half, or €106/ha for the first 55ha and €15/ha over 55ha.

For livestock farmers to avail of the full payment on a per-hectare basis, they needed to have a minimum stocking rate of 0.5LU/ha. Farms stocked below that level received a pro-rata payment based on the stocking rate on the forage area.

The plans announced earlier this year were to increase support payments to approximately €220/ha in the conversion period and €170/ha after conversion for farmers with up to 60ha from 2015 onwards.

In addition, the Department has vowed to continue the on-farm investment scheme of 40%.

There is no doubt that the increased organic scheme payments for farmers after conversion will attract new blood to the sector, particularly suckler farmers who will feel the pinch due to convergence under the Basic Payment Scheme (BPS) and reduction of environmental payments.

Despite support payments, the sector has grown over the years at a steady rate and the beef market has increased in line.

One of the fears of increased numbers going into organics is the effect on beef price. The Department has said that there will be targeted selection criteria for allowing farmers to enter the scheme over the coming term.

Some of the selection criteria will be market-led in order to avoid over-production in certain sectors and to encourage production for growing markets.

Lower cost structure

Analysis and cost comparisons carried out by Teagasc between organic drystock farms and conventional drystock farms have shown that direct costs on organic farms are much lower. In fact, they are approximately 53% lower.

Pasture costs have been shown to be 76% lower, attributed to savings on fertilizer costs. Despite organic concentrates being much more expensive, concentrate spending on organic farms was found to be 55% lower and spending on winter forage was 52% lower than conventional farms. Much of the forage savings are due to the use of legumes and reduced fertilizer use, while lower reliance on concentrates and increased use of grass and forage has reduced supplementation costs.

A growing beef sector

Over the years, the demand for organic beef has increased steadily. The Irish market itself is estimated to be worth approximately €8m annually. Exports are mainly to the UK and German markets.

Approximately 8,000 to 9,000 organic cattle are slaughtered annually. The past year has seen a further increase in the demand for Irish organic beef with the securing of another high-value German market outlet for beef. In terms of a premium, over recent years, farmers supplying quality assured organic cattle for slaughter attracted a price premium of between 15% and 20% over the conventional trade.

The processing sector in Ireland is made up of three main players – Good Herdsmen, ABP and Slaney Meats. The marketing of Irish organic beef by Bord Bia and the beef export companies has helped to develop the market over recent years.

In 2014, it is estimated that over 10,000 organic cattle will have been slaughtered in Ireland. It is thought that the domestic market demands approximately 3,000 to 3,500 of these, with the remainder going for export, mainly to higher-priced European markets.

Organic cattle numbers are continuing to increase in line with demand. From 2008 to 2012, there was an increase of approximately 38% in cattle numbers, while the number of cattle farms increased by just 19% in the same period.

The average cattle farm had 42 cattle, while the average suckler farm had 17 cows. Approximately 50% of organic farms with cattle slaughtered cattle, with 85% of total producers slaughtering less than 20 cattle per year.

However, there are some very large-scale finishers in the system also. Traditionally, some of the organic weanlings produced in the country would have been purchased by the conventional sector, but in recent years this has become less common.

Increased market demand earlier this year resulted in specialised demand for weanlings for a new veal market. This resulted in some weanling producers getting premium prices for light weanlings, giving an added incentive to producers.

However, Teagasc organic advisers have said that the interest in the sector has increased phenomenally in recent months.

One of the knock-on effects of increased uptake of the organic scheme will be greater pressure on market returns. Despite organic beef prices resting about 20% higher than conventional beef prices, there continue to be difficulties at certain times of the year in getting organic cattle slaughtered.

An increase in the uptake of the organic scheme will undoubtedly test the markets. Some farmers continue to raise issues over the impact that higher uptake will have on the price premium for organic beef.

Eugene Kirrane, Co Mayo

Eugene is a farmer who has just gone organic in the last few years. He farms 120 acres near Claremorris, Co Mayo, and previously finished approximately 70 to 90 cattle per year.

There were several reasons for him going organic. Firstly, the cost of finishing and particularly meal was too high and there was little or no margin out of the finishing system.

He was looking at alternative systems that could result in a greater margin and reduce the overall workload. Three years ago, he took the plunge and went organic, and after the two years of conversion, last year he sold the first organic cattle.

The farming system changed also. He now runs 24 suckler cows and buys in weanlings to finish approximately 34 to 35 cattle per year.

He runs a paddock system and is now firmly focused on producing beef while keeping costs low. Red clover silage is the primary winter feed and no meal is fed to finishing cattle.

Eugene said that the big change was that although he is selling less cattle each year, there is no fertilizer bill and no meal bill. The biggest expense he has is straw for bedding. He also invested in a dry bedded shed for straw storage and to fulfil the 50% dry bedded area which is a requirement under the scheme.

Eugene said that completing the organic farming course prior to going organic was very beneficial.

“It sorted the men from the boys and means that only serious people convert to organics. I have a renewed interest in farming again. I am in a system that is now profitable again, and not just because of payments. I am now turning a margin on cattle.

“At the end of the day, the purpose of farming for me is to make money.”

Although there were a lot of positives, he did outline some fears.

“Although there is strong demand for organic cattle and prices are good, last year I did not know that cattle had to be pre-booked and I had a fair bit of difficulty getting them killed.”

He said that although there is a strong market out there for beef, he is slightly worried what impact an influx of people into the organic system will have.

In order to retain his organic status, he has to follow a certification process with one of the approved bodies. Eugene said that to do this there is a lot of paperwork and red tape, which sometimes can be difficult.

He said the cost of certification was slightly higher than he would have originally anticipated, but at the same time he acknowledges the work involved in certification.

One of the clear messages from Eugene was the importance of land quality when going organic. The inability to use chemical sprays will continue to have the most impact on his wetter ground where rushes are more difficult to deal with. The drier ground continues to respond well to the system. Managing grass can be quite difficult in an organic system, but Eugene feels that a good paddock system and a clear focus on removing surplus grass as baled silage has allowed him to adapt to the organic system.

He said that rushes are his only problem. Some of the land he farms is wetter in nature and tends to grow rushes.

Draining, reseeding and topping are the only avenues open to him to allow him to address the issue.

However, regardless of any issues, he still feels that going organic has had a particularly positive impact on him and his farming enterprise.