Organic products generally yield more to farmers than ‘regular’ products. But farmers do not en masse switch to organic farming, because the switching costs are high, there is less demand and the yield per hectare is usually lower.
This is the conclusion of the Netherlands Authority for Consumers and Markets (ACM) after research by Wageningen Economic Research (WR) into the price development of organic products in 2017 and 2018, on behalf of the Ministry of Agriculture. The researchers looked at milk, onions, tomatoes, white cabbage / sauerkraut, pears and pork.
Producing five of these six organic products is profitable for farmers and horticulturalists. Only organic dairy farmers suffer an average loss, although this also applies to regular dairy farmers.
The profit margin for organic food is usually higher than for regularly produced products. However, the average price difference between these products has narrowed since 2016, says the Central Bureau of Statistics.
There are major differences between the products. For example, organic milk is on average 15 percent more expensive than the non-organic variant, and pork from the organic farmer is 72 percent more expensive than regular meat.
Higher start-up costs
According to ACM, the fact that not all farmers are switching from regular to organic farming is therefore due to various uncertainties. For example, the yield from organic production per hectare is usually lower and there is relatively little demand for the products at home and abroad.
There is also a lot of uncertainty among farmers about the ever-changing costs and production requirements. ACM cites as an example that it takes a few years before a switched farmer is allowed to sell his products as organic, even though he already had higher costs.
The ministry also wants to keep up with developments in the agricultural sector in the coming years. The report will therefore be published annually.