3.5 Similarities & differences between sectors
3.5.1 Technical challenges
There were a number of consistent messages across all sectors and some very specific sector issues.
Technical challenges fell into five areas:
- Soil nutrient management was an issue across all sectors, and includes nitrogen, phosphorus and potassium availability. Lack of access to nitrogen fertiliser reduces not only production opportunities in all sectors, but also the use of nitrogen as a risk management tool. The lack of an alternative potassium source is an issue for the dairy sector, for arable farmers producing forage silage for dairy farms, and in sheep and beef systems where the same paddocks are repeatedly cropped for supplements due to the limited availability of flat land. The limitations of RPR and elemental sulphur in high pH soils, low rainfall environments, and in situations where there is a high short-term demand for phosphorus and sulphur, reduces the producers’ ability to provide a high-quality balance for forage and crops.
- For the sheep and beef sector and, in particular, the arable sector, management of the physical properties of the soil represents a major challenge that has the potential to impact significantly on production. Although not listed as an issue, all workshops talked about the importance of having the soil resource in an optimal state for biological activity and the ability to supply nutrients to the plant in the correct ratios.
- Animal health generally, and specifically endo-parasites in sheep and cattle in the livestock component of the arable sector, lungworm in deer, and mastitis in dairying were seen as highly significant issues. Each represented a major threat to the production base of their respective sector by reducing the amount of product that could be sold at a premium. They also had the effect of restricting the range of livestock operations and the ability to mate yearling stock. Lack of information on the opportunity for genetic selection for disease control, and its potential benefits, was a constraint that could be put alongside animal health.
- Weeds were seen as a major constraint across all sectors. In comparison to animal health issues and, to a lesser degree, nutrient and physical management of the soil, weeds are a medium- to long-term threat to the three livestock sectors. Under cropping their effect can be immediate and devastating as weeds affect plant growth and contaminate the crop. Surprisingly, woody weeds were an issue with all livestock sectors, regardless of landscape.
- Skills, knowledge and access to information were major issues in all sectors except for deer. The deer sector appears to be more closely aligned with research and development. The lack of skills and knowledge requires more time to seek out help and resource, and incomplete knowledge reduces options and adds considerable risk to the business. What did not emerge as a high priority, although often mentioned, was the need for support/confidence building through networking with other organic producers.
The relative importance of each technical issue for the four sectors is shown in Figure 2.
Figure 2 Relative importance of each technical issue for the four farming systems. The further the shaded area reaches towards the end of the arm, the greater the importance of the issue
3.5.2 Infrastructure and industry
There were few similarities between the sectors in terms of infrastructure and industry constraints.
- Premiums and market stability were seen as important issues for all sectors except the deer industry. As the deer industry as a whole is already perceived by the public as operating in and producing a quite "natural" product in venison, organic branding was seen as offering the opportunity to reinforce that perception. For two of the sectors, sheep and beef and arable, a large, stable premium was identified as critical to the growth and viability of an organic industry. Premiums and market stability are common problems facing new markets, yet the demand for organic food has been growing at 10-20 percent p.a. for more than a decade.
- The perceived lack of commitment by the dairy industry to developing the processing and marketing capability necessary for a sizeable organic industry was identified as the single biggest factor limiting this sector.
- The sheep and beef workshop highlighted the lack of good independent advice for farmers planning to convert to organics. However, the slowness of the industry to respond to this need may reflect more the fact that sheep and beef farmers have only recently had the financial resources to invest in business development, rather than a lack of confidence in the organic sheep and beef industry.
- The lack of leadership in all sectors was a factor raised in all workshops as a reason for the slow growth of the organic industry.
- The way the organic industry was perceived by the general public was an important issue for arable and especially deer farmers. If the deer industry as a whole is already receiving a "premium" for being perceived as natural, then surely there is a need for the other sectors to address the perceptions held of their industries.
- The notion that an organic system is viewed as "better" polarises views. A much healthier perspective would be to see organic growers as just other producers tackling the same issues from a different perspective. Potentially, organic farmers are themselves a very valuable source of information.
- The perception that organic producers are less caring of animals and their systems are more vulnerable to pest outbreaks and extreme climatic events are factors that delay the acceptance of organic systems as a legitimate means of production.
- Organic farming standards were generally not an issue except in the arable sector where it was considered that there was a need to have standards that are readily recognised by the market and that were practical to implement. This would mean that the principles could be maintained but the risks reduced.
The relative importance of infrastructure and industry issues for the four sectors is shown in Figure 3.
Figure 3 Relative importance of each infrastructure and industry issue for the four farming systems. The further the shaded area reaches towards the end of the arm, the greater the importance of the issue
Financial implications of constraints
The implications of accommodating the constraints, identified by the Focus Groups on the financial performance of organic systems, varied between sectors.
Of the constraints facing the organic sheep and beef sector, the loss of premium would have the most immediate and devastating effect on the financial viability of the operation. The radical changes to the stock policy, with a shift to more and older cattle, was the single most important factor reducing the profitability of the organic system examined in this study. The change in cattle policy was necessary to better manage the parasite challenge in sheep. Funding the reduction in farm income during the conversion period therefore becomes a major constraint for those sheep and beef producers faced with making substantial changes to their existing livestock policy.
The MAF base model (Hawkes Bay summer moist) used in this study for examining the financial implications of accommodating constraints to organic sheep and beef production can be characterised as being intermediate between the more extensive sheep and beef operations found in the drier or hill country regions of New Zealand and the more intensive sheep and cattle finishing systems found in Southland and Waikato/Bay of Plenty. For the less intensive systems, fewer changes (livestock species and age cohorts) would need to be made to the existing livestock policy to accommodate the constraints to organic production. This means that the impact on the financial performance of the operation would be reduced accordingly. In contrast, with a more intensive finishing operation, the changes to stock policy would be likely to result in greater loss of income.
A similar picture emerges when the organic arable operation is examined. The profitability of both the cropping and livestock operations depends on a substantial premium (40-50 percent) to be profitable due to the changes required to the cropping and livestock operation to be sustainable, and from the reduced performance of the crops in a low-nitrogen environment.
A major breakdown in parasite management would threaten the ability to finish all lambs to an organic specification. However, given that most lambs are finished before the start of autumn, its effect on the financial performance of the business can be managed. With cattle sold as rising 2- and 3-year-olds, the need to treat weaner cattle following a parasite outbreak does not jeopardise their organic status as 2- and 3-year-old animals. Similarly, with ewe lamb replacements, a pest outbreak in their first autumn and winter can be managed without affecting their certification as breeding ewes.
Physical damage to soil and pasture by the older cattle during the winter and early spring has the potential to reduce pasture growth and cause environmental damage. Removal of fertiliser nitrogen as a risk management option requires that a more conservative approach be taken for feed budgeting. In dry environments and high pH soils, the inability to maintain soil fertility and legume growth is compromised because there are no suitable fertilisers available.
In the long-term the greatest risk to the sheep and beef sector, and all sectors, is weed infestation as it affects all aspects of land use. For arable producers the threat of weeds can be immediate and devastating on crop yield, quality and value. The need to use mechanical control as the major technique for managing weeds in an organic arable system creates a series of other threats to the system by impacting on the soil resource.
Repeated cultivation will reduce soil structure, encourage mineralisation of organic matter, and reduce the biological activity of a soil. This reduces the resilience of the soil to extreme events, reduces the window of opportunity when soils can be cultivated, increases the intensity of cultivation, and necessitates, in time, returning increasing amounts of organic matter to preserve current production levels. In preventing weed invasion, there is a real risk of soil damage. A pest outbreak would appear to be less of a threat to the organic arable sector than weed infestation.
Like the sheep and beef sector, the financial viability of the organic arable sector depends on a significant premium for both the cropping and livestock enterprises. Again, like the sheep and beef sector, this is partly a product of the changes that have to be made to the enterprises to accommodate constraints identified by the Focus Groups in the construction of a viable organic arable system.
In contrast to the sheep and beef and arable sectors, dairying did not depend on a premium to be viable. Aside from the lack of processing capability, which limits the growth of the sector, the major threat to the organic dairy unit would be animal health, primarily mastitis as it reduces the number of cows in milk. The ability to maintain soil fertility, and particularly potassium, is a medium- to long-term threat, along with weeds. The increased amount of conserved feed in the organic dairy model provides increased insurance against climatic extremes.
In comparison, with little change required to the dairy operation modelled and hence little impact on production levels, there is no need for a premium once the conversion period is over. Interestingly, the deer workshop concluded that extensive, low-stocking-rate deer operations come very close to complying with certification for organic supply and, as such, require little change and support during conversion. Consequently, only a small premium would be required to compensate for any production losses. In more intensive deer operations, a significant drop in stocking rate will be required and hence funding conversion becomes a major financial constraint.
Contact for Enquiries
Kay Brown
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0695
Fax: +64 4 4 894 0746
Contact this person
