The impacts of the EU Farm to Fork policy is starting to be seen.  This policy which seeks to have 25% of EU farmland certified organic by 2030 that drove a wave of conversion and supply that outstripped the pace of increases in consumption.  Some of the more enthusiastic organic states in Europe, the French and Swedish, saw significant conversion as policies to encourage organic production succeeded.  However, with high inflation and lower discretionary spend consumers couldn't keep up with this additional supply and organic farmers were selling product onto the conventional market.  This led to significant decertification.

Sweden lost 9% of its organic land area in 2 years.  Anecdotally Denmark was similar to Sweden.  Both Sweden and Denmark are now seeing growth in organic consumption and Sweden is reporting deficits in both milk and cereals.  Whilst Germany didn't see its organic market decline, growth slowed.  The rate of land entering organic conversion fell sharply from 5.9% to 1.8% between 2021 and 2023.  Germany's organic food sales have grown by over 7% in each of the last 2 years having seen slow growth in supply this increase in demand cannot easily be met.

The need for a conversion period creates a lag between demand an supply.  A new organic consumer does not have to wait 2 years to buy organic food but a new organic farmer cannot immediately sell their produce as organic.  With a loss of organic area (or slow growth) over the last few years as demand now grows strongly there is a deficit.

Here in the UK, Defra published the Organic farming statistics 2024: United Kingdom in May.  This shows arable area is pretty static.  The fully organic area remains at 47,000 Ha with inconversion arable area at 4500 Ha  Producer number continue to decline which suggests farm size is increasing.  Other than poultry, livestock numbers continue to fall.

The Soil Association Organic Market Report heralded organic food sales in major retailers growing by 8% with independent retailers and home delivery sales also increasing.  

What does all this mean?  Falling livestock numbers has led to an increase in milk and beef prices.  Dairy is of greatest interest as the dairy sector is the largest consumer of organic grains with 47,900 dairy cows and followers consuming approximately 100,000 t of feed., this is a key market.  Milk prices are rising as there is insufficient milk available which will encourage dairy farmers to feed more.  As one dairy farmers put it, "Milk price to feed price ratio is as high as it has been for many years", meaning they can afford higher values than in recent years.

The overall trend seems to be that both in Europe and the UK there demand for organic is growing faster than the supply leading to a deficit and higher values, with imprecise and patchy data this is a broad trend rather then accurate picture but suggests arable prices be firmer than they have been.  Importers are indicating new crop wheat values at around £300 per tonne which is a higher value at this time than has been the case for the past two years.  One importer recently approached us to supply them with grain which suggests they aren't getting the offers they might anticipate from their usual sources.