Organic Agriculture Across the Pond
Nellie Robertson, OFGA Coordinator
“You know, it is a bit like dental floss,” said a friend of mine last week here in Hungary when I asked about organic fruit. My confused look prompted him to explain. “Dental floss, or dental silk, as it is called here, has been around for many decades. But people associate “silk” with rich people, so dental floss is thought to be the privilege of the wealthy — just like organic food.”
From my conversations with new and old friends in the last couple of months of living here, it seems the average person doesn’t think more about asking how produce was grown than I explore the inner workings of my car engine, and purchasing anything organic doesn’t cross their minds more often than I think about purchasing my private jet.
It turns out that people don’t think a whole lot about organic food not simply because it is so expensive, but mainly because there isn’t a whole lot available. As we are establishing temporary residence here, I have tried to look for organic produce and products at the stores — the equivalents of Hy-Vee or Aldi. The produce is often labeled “Grown in Hungary,” but there is no information regarding the growing practices used. Other than snack items, such as granola bars, the only organic food product I was able to find was tomato sauce, but the labeling is in German (not a language spoken in the country).
These experiences prompted me to look into the current state of organic food production in Europe, and more specifically, in Hungary. I wanted to know where we stand, what the future holds, and what it will take to get there. While the US seems significantly “ahead of the game” if we compare it to Hungary, the comparison provides some insight that can be useful for growers everywhere.
Economic Competitiveness
From an ecological or social point of view, the current situation is less than ideal around the world, but the good news is that organic agriculture is a dynamically developing segment in the economies of both the US and Europe. In Hungary, the organic farming movement started in the 1980s, and it seems to be gaining momentum again after a decade and a half of stagnation in the early 2000s.
The Hungarian Bioculture Association is the umbrella organization overseeing certification, ensuring that EU legislations are complied with, and representing the interests of growers when Hungarian legislations regarding agriculture, food production, and marketing are discussed. They issued a report* last year about the current state of organic agriculture in Hungary, focusing on the economical competitiveness of the industry.
When preparing the report, they identified three important requirements for organic products to be competitive in the market.
Demand by consumers in a financially sound market
The growers’ ability to get the product to the market
Effective and economical operations
In the following sections, I will look at each of these in turn, as they apply to the current situation in the two countries I was curious about.
1, Demand for Organic Produce and Products
In the US, organic now comprises more than 5% of total food sales, so one out of every twenty food dollars is spent on organic food. In comparison, Hungarians spend over $330 on non-organic food for every organic dollar (the organic sales are under 0.3%). As the graph in our gallery shows (below), the situation is much different in other European countries, some of which show an even higher share of organic food than the US.
In both the US and in Europe, the overwhelming majority of food is sold on the mass market where competition is mainly based on price. In the niche market of organic products, other qualities (unique, healthy, sustainable) are more important, and consumers, for now, are willing to pay relatively high prices.
The demand for healthier alternatives is expected to continue growing; the market seems to be far from saturated — per capita consumption of organic produce in Europe has doubled in the last 15 years. In the US, sales growth of organic food (in 2019, at 5.9%) significantly outpaced that of conventionally produced food items (at 2.3%). This is due, in part, to a growing consumer base that is more health-conscious.
“Millennials are the fastest-growing demographic of consumers who want what’s best not only for themselves but their families, too,” said Emmanuel Laroche, global marketing leader and vice president of marketing and consumer insights for Symrise. “So, when it comes to foods and beverages, organics are on the top of their grocery lists.”
(Source: https://www.foodbusinessnews.net, downloaded on 9/25/2020).
The second graph in our gallery shows how consumption of organic food has grown in the decade between 2005 and 2015 in Europe. As we can see, lack of demand is not an issue for now. In this situation, as long as growers are able to manage their operations effectively and get their produce to the right customers, growing high-quality organic produce makes good business sense.
2, Getting Organic Products to the Market
The average family income in Hungary is only 1/6 to 1/4 of that in European countries with significant consumption of organic food (Denmark, Switzerland, Austria). For this reason, an apple grower in Hungary faces the challenge of finding local customers who can afford organic produce or value-added products. While the Western and Northern European market would be ready for much more organic than what is currently available, getting the produce to these markets is difficult due to almost complete lack of industry organization within Hungary.
Local cooperations are in the embryonic stages, and these are limited to integration by retailers focusing on sales within their region. Considering the fact that high demand will increase market competition and eventually bring prices down, more organization is needed in the following areas:
Joint use of resources
Collaborative organization of production
Expert mentoring, courses, hotlines
Branding
Logistics
Grower Challenge
Do you collaborate with other growers when it comes to purchasing or using resources? (E.g. equipment, bulk orders, etc.) Look for a way to expand these opportunities!
Have you considered hiring a business coach? Do you have a website, a logo, a tagline? Why or why not?
If you are an experienced grower, have you connected with others who could use your expertise? Are you attending any in-person or virtual events to learn more? If you are just now starting, have you reached out to others for advice?
In countries with a more affluent consumer base, such as Western Europe or the US, the organic market is becoming more competitive, and for this reason, products delivered to the consumers already, or will soon, have to meet the requirements that normally apply more to mass market sales:
Homogenous quality
Continuous supply
Quick response
Reliability
High-quality technology for
post-harvest handling of produceWell-organized logistics
Developed processing industry
According to the Biokontroll report, mid-term (5-8 years) changes in Hungary are not very likely when it comes to income levels and an affluent enough customer base, but it is never too early to start thinking about these issues, so at least some of the organic food could be produced and processed within the country, instead of having to be imported.
Grower Challenge
Are you able to supply high-quality produce or products year round?
How quickly do you respond when someone approaches you?
Are you too busy to not “drop the ball” during certain times of the year?
How does your produce get from farm to table? Do you process the food you grow?
Pick one area from the above and see if you can introduce improvements right now!
3, Effective and Economical Operations
Even with high demand on the organic market and good logistics, business will only bring sustainable profit with effective operations management. The following table compares Hungary and the US in regards to some important aspects of successful operations, focusing on the production of organic fruit.
Expertise, research support
Organic management of fruit farms demands highly specialized knowledge.
Hungary
A significant percentage of growers do not have the expertise necessary for competitive production due to lack of financial and infrastructural support for research institutions that could provide up-to-date information specific to Hungary, in Hungarian.
US
The Extension System is widely available and accessible to growers.
Conferences, hotlines are available for continuing education in the field.
E.g. https://mosesorganic.org/ask/
The internet has resources readily available in English.
Capital
Organic food production, especially in the case of organic tree fruit, requires significant initial investment that often does not bring a return for several years.
Hungary
Since organic production is mainly practiced on small farms, it would be important for family businesses and individuals to access the capital necessary for the initial investment. Unfortunately, the system is highly bureaucratic, slow, and characterized by high interest rates.
When it comes to grants or government support, there is very little incentive for growers to switch from conventional to organic farming.
US
While loans always have an inherent risk, small business loans are easier to obtain in the US.
Grants are available for growers to supplement their income, which is helpful for those entering the farming industry, especially if they are coming from a situation with little debt and access to land. It is much more difficult for a farmer already in huge debt to switch from conventional to organic (see details in the articles below).
Human Resources
Organic fruit farms specializing in hand-harvested produce need reliable, skilled workers.
Hungary
Since the beginnings of the organic movement, Hungary has lost an active work force of approximately 400-500 thousand people (5% of the total population), due to an aging society, the focus in education shifting from vocational and trade schools to university-level education for many more students than before, and at the same time, both skilled workers and university graduates are relocating to Western Europe for higher income and more opportunities.
US
Check out the following review about young farmers in the US:
And here’s a TIME article about the crisis of American farmers - and the thriving organic sector:
https://time.com/5736789/small-american-farmers-debt-crisis-extinction/
“One category of small farmers is thriving in the current marketplace: organic farms who can charge a premium for their crops and who can sell them locally. There were more than 14,000 certified organic farmers in 2016, up 58 percent from 2011.”
As seen above, there are differences between the state of organic agriculture in the two countries I call home, but there are certain challenges that farmers face in both, especially when it comes to financing the initial investment and later the improvements, and also the availability of staff to help (the seasonal nature of many operations does not help matters).
Finally, the Biokontroll study summarizes nicely why I am having a difficult time finding organic produce and fruit products on the shelves of supermarkets in Hungary, with little hope for change in the near future.
“Organic fruit production demands significant capital and human resources, so the possibility of development in the current Hungarian economical situation is limited. This applies especially to fresh-market produce harvested by hand, but also to fruits harvested by machine for the processing industry, albeit to a smaller degree.
In our estimate, 30-50% of growing sites were introduced to organic farming not with the purposes of producing organic food, but these are sites that were simply under-managed (‘since we don’t apply anything to the area, it produces organic fruit’). The main motivation here is receiving additional grant support — those who applied for money in the rural development program, but did not receive the “Agricultural-Environmental Management” grant, often applied for organic management support. This attitude does not help market-based improvement of organic production.Organic fruit in Hungary is essentially produced exclusively for processing; there are no organic products on the fresh food market. One reason for this is that the processed-food market is less sensitive to blemished products due to pathogens or pests. Within the processing industry, production of juices, concentrates (apple, sour cherry), and purees (peaches, apricots) dominates, a sector that is practically neutral when it comes to issues of plant protection (maggots, moth larvae, fungal diseases). With a closer look at the processing industry, we don’t see products more sensitive to quality (preserves, canned fruit), and very few sites are capable of producing anything for the fresh-food market due to pest damage, even though this sales direction would bring more added value and opportunities for increased profits. […]
Significant development is expected only in case of apples and sour cherry; organic production of other fruits is likely to remain a very small segment in the mid-term. One reason for this is that grant support for agricultural-environmental management is somewhat higher than the support available for organic production, so from the growers’ point of view, there is little motivation to switch to organic.” **
** Section translated from main source referenced at the end of the article.
A final note of hope: just this weekend, I was able to connect with some local growers who are quietly, without certification, are practicing organic and sustainable farming. One sells honey from his house not too far from us, and we talked about the dewy meadow that the district was named after, and that used to be where the new subdivision is now covering all soil life with concrete. Another farmer has built an enterprise that includes a vinery, a large vegetable garden, a bed and breakfast, and a restaurant that serves meals made from local, organic ingredients. His dream to one day own and operate an organic food business started when he was a small child and his little sister showed an allergic reaction to strawberries — but only the store-bought ones, not the ones that grew in their back yard. In the next several months of living here, I am excited to learn more and find more hope for healthy fruits in this world where the official story is not very encouraging.
* Main source of Hungarian information: “A hazai ökológiai (bio) gazdálkodás helyzete és középtávú verseny-képessége” (Organic Agriculture in Hungary — Current Situation and Mid-term Competitiveness), published 07/26/2019, available online at biokontroll.hu, downloaded on 9/25/2020. Information extracted and summarized in English.
