Demand for organic produce is growing. Our guide will help you start up and run your own organic farm business.
- Research your target market
- Conversion to an organic farm
- Organic versus conventional
- Price your produce
- Estimate your sales
- Market your produce
- Buy an existing business
Research your target market
The type of market research you do is likely to vary depending on how you decide to sell your produce. Organic control bodies like the Soil Association publish annual market reports, which are a good source of information about how the overall market for organic produce is performing. The Soil Association also produces more regular, monthly summaries of the main organic farming market sectors as well as guidance on different routes to market.
If you are planning to sell direct to consumers in your local area, for example through your own farm shop, farmers' markets or box schemes, it's important that you try to establish whether there's enough local demand. Organic produce is typically more expensive and as a result is most commonly bought by more affluent households in the higher social grades. Visiting existing farmers' markets and farm shops should give you some idea of the level of demand in your area and it may highlight any gaps in the market that your produce could fill. You might decide to set up a website to take local orders for boxes.
Despite independent retailers and box schemes having grown in significance in recent years, the majority of organic sales are still made by the major supermarket chains. Organic control bodies like the Soil Association strongly encourage individual farmers and growers that want to sell to the supermarkets (or to the large processors that supply the supermarkets) to join producer groups. As well as ensuring you get a better price for your produce, there are other benefits of producer groups like access to regular market information and technical support.
You might also decide to sell to fruit and vegetable wholesalers. While most general fruit and vegetable wholesalers handle a small amount of organic produce, there are also some specialist wholesalers who sell exclusively organic produce. Contact individual wholesalers for an idea of the price you would expect to receive along with any other relevant contract details.
Local retailers and catering businesses
If you are intending to supply to local retailers and catering establishments direct, get in touch with them to find out if they would be willing to take your produce and also what supplying these businesses will actually involve. For example, if you are intending to supply livestock products, you may have to pay to have your animals slaughtered and dressed by an abattoir before selling the meat or carcases to local businesses.
If you are planning to sell a large proportion of your produce through local retailers that already sell organic produce, it may be worthwhile to talk to a few of them in advance to find out which products sell the best. For example, you may establish that mixed boxes of vegetables are very popular, or that some cuts of meat are more commonly purchased and that added value items, such as joints ready for cooking prepared with herbs or a marinade sell very well. This can help you to plan how to add value to your own produce.
Research current trends, plus legal and tax issues
Conversion to an organic farm
Converting an existing farm - or an existing piece of farmland - to a certified organic farm is not straightforward.
All organic farms must be registered with one of the approved control bodies. These are:
- Organic Farmers and Growers Ltd
- Global Trust Certification Ltd
- OF&G (Scotland) Ltd
- Organic Food Federation
- Soil Association Certification Ltd
- Biodynamic Association
- Irish Organic Association
- Organic Trust Ltd
- Quality Welsh Food Certification Ltd
The stages of conversion
- you make an initial application to the certifying body. The application must include a cropping history for each field, a livestock management plan and a conversion plan for the whole farm. You will be charged an application fee
- you will be visited by an inspector and either approved or turned down for organic conversion
- once approved, you have to keep detailed records of inputs and sales and submit an annual report
- you will be inspected at least once a year and your licence will be renewed on an annual basis
Organic farming grants
Organic farming in the UK is supported by the Countryside Stewardship scheme in England. Similar but separate schemes operate in Scotland, Wales and Northern Ireland.
The schemes offer payments to existing organic farmers as well as payments for conversion of conventionally farmed land to organic production. Further details of the schemes are available on the Gov.uk website and you can get additional guidance from the relevant agriculture department.
Organic versus conventional
If you have not already converted, think carefully whether your farm is appropriate for conversion to organic. According to the Scottish Agricultural College (SAC), mixed and grassland farms are most suited to conversion as they already have a large amount of the infrastructure in place. Arable farms are the worst suited as they require the introduction of a whole new cropping system.
Many consumers are concerned with environmental issues and the 'traceability' of the food that they eat and how far it has travelled. (The horsemeat scandal in early 2013 brought a national focus to the issue of traceability and the organic sector benefited as a result, as consumers increasingly turned to food items whose provenance they could trust.) Organic farms can boast vegetables grown on healthy soil and livestock reared to strict welfare guidelines. Also, the very limited use of fertilisers and pesticides means there is less risk of harmful materials ending up in water courses.
Organic farming is definitely not the easy option. The extensive rules and regulations laid down by the control bodies mean that few shortcuts can be taken. The restriction on the use of soil enrichers means that soil must be improved through the use of organic manures and careful crop rotation; the prohibition of weed killers means that weeds have to be controlled by other means, in some cases by hand weeding; livestock must be kept with as minimum stress as possible; and so on. As with conventional farming, you will aim to make sure that livestock (if kept) performs as well as it can. This means ensuring that weight gain is maximised while keeping input costs as low as possible and trying to minimise mortality levels.
It is almost inevitable for many individual organically produced commodities that it will not be possible to achieve the same yields as conventional farming. However, studies have shown that in both cropping and livestock organic farming, overall yields can be comparable to and in some cases greater than those achieved by conventional farming methods. It's a good idea to keep records of the yields achieved to keep track of any fluctuations and try to establish reasons for them.
As well as environmental concerns, the prospect of price premiums influences many farmers' decision to convert to organic food production. In the early days of organic production, pretty much every sector of the market commanded a significant price premium. However, economic downturns can have a major impact on the organic sector and put producer prices under a great deal of pressure. As a result, profitability achieved by most types of organic farm in the early 2010s was lower than that recorded by conventional equivalents.
Organic versus conventional
If you mostly sell to the wholesale trade, you will not have a great deal of influence over the price you receive for your products - you will generally have to accept what the market offers.
However, if you sell to local retailers and catering establishments, you should have more control over setting your prices. The retailer or caterer will add their own mark-up, so perhaps aim to offer your produce at around 60% of normal retail prices. (Remember to look at organic retail prices rather than those of traditionally produced items if you are not sure how much your type of produce normally sells for in a shop.)
If you are intending to sell direct to the customer, there are certain things to bear in mind when setting your prices:
- organic produce generally attracts higher prices, particularly when sold in outlets like farm shops or farmers' markets - where shoppers tend to be a lot less price-sensitive
- your customers may be prepared to pay extra as they will know exactly where their food has come from. So it makes sense to do everything you can to promote the provenance of your produce
- adding value to cuts of meat by, for example, adding herbs and spices can be an inexpensive (to you) way of increasing the retail price
- if you're selling direct through your own website, it can be easier for customers to check how competitive your prices are by quickly searching online for similar suppliers. You may need to work hard to justify your prices if they're much higher than your online competitors
Estimate your sales
When you are making an estimate of your sales income, take into account:
- the price you will receive for all of the produce you will sell. Bear in mind that if you sell some of your produce to wholesalers and some direct to the public, you are likely to receive considerably different prices. When you make estimates of income for a whole year, if possible try to use monthly or weekly prices from previous years rather than just the annual average. This will give you an idea of the level of seasonal price fluctuation that you may expect and will give you a good idea about the best times of the year to market your produce. (When it comes to estimating your income, monthly and weekly prices will be most relevant where your farm is producing a commodity on a regular basis, for example eggs or milk. With other commodities, such as cereal crops, the production cycle is several months long and runs along established seasonal patterns. Although there may be opportunities to store crops until prices improve, you'll often find yourself at the mercy of the market. Similarly with livestock finishing, this will often take up to two years and may be very difficult to predict in advance what price you'll receive.) Agriculture departments such as Defra and organic control bodies like the Soil Association should be able to give you detailed historical producer price data for various commodities
- the quantities that you will be selling - how many animals each year, how many tonnes of vegetables, cereals and so on
- any other income from sources other than the sale of organic produce - for example farm tourism
Also consider such things as:
- your own experience (or lack of it)
- unexpected levels of mortality amongst your animals
- lower than anticipated crop yields
Market your produce
Think about how you are going to market your produce to give yourself the best chance of achieving the highest possible prices for it. The control body that you register with is likely to produce information on how best to market your produce. For example, The Soil Association, which is the largest control body in the UK, produces fact sheets that are available to its members. You can find out more on the Soil Association website.
There are different channels that you could market your produce through and you could choose to use one of these exclusively or opt to use a mixture. They include:
- using the wholesale trade
- joining a producer group or co-operative to give you greater power when selling to supermarkets and large processors
- selling through local retailers
- selling at farmers' markets or through your own farm shop
- selling to local restaurants and other catering establishments
- selling direct to the customer through your own website or by mail order
- setting up regular deliveries to customers through an organic box scheme
You may also decide to process your produce in some way so as to add value to it. While this may not be viable for you (lack of time or space, for example) the potential profits that can be made from doing this are very attractive. Some ways of adding value include:
- butchering livestock. You could do this yourself if you have the necessary qualifications, or pay the abattoir to do it. Packaged individual joints and poultry (maybe with the addition of herbs, stuffings or sauces) are likely to prove popular with customers and attract a significant price premium
- making meat products such as sausages and pies
- making vegetables and fruit ready for the table (by washing and trimming them)
- making cheese, ice-cream, yoghurt and other dairy products
However, the cost of installing the necessary equipment, obtaining qualifications and taking on extra staff to carry out food processing can be high. So do market research to ensure that there is a market for your products.
Buy an existing business
You might decide to buy an organic farm rather than start your own venture from scratch. Buying a going concern can mean that the farm buildings, machinery, equipment, customers, regular sales, and any staff are already in place:
- the conversion to organic has already been done, or is in the process of being completed
- livestock and/or crops (either in the ground or in store) are included in the sale
- the organic subsidy has already been applied for
But buying a business can be a hazardous, expensive process unless you have the right skills and experience on your team, including legal and financial know-how. Establish the genuine trading and financial position, so that the price you pay for the business is not too high.
You may be confident that your proposed method of farming will be successful regardless of the previous financial results achieved by the vendor. However, it's a good idea to make sure that there are no underlying reasons that would prevent you from being successful, such as:
- particularly poor quality soil
- the state of the farm buildings, equipment and so on
- the health and condition of any livestock and planted or stored crops