The Scottish Government

« Previous | Contents | Next »

Listen

2 Background

2.1 As part of the drive to develop a sustainable agricultural industry in Scotland, there is a strong policy commitment to develop systems of primary production that can deliver clear environmental benefits in addition to meeting market demand. Organic methods of farming and growing offer the potential to meet this policy objective.

2.2 Organic methods of primary production aim to produce food using land management practices which avoid the use of agrochemicals. They aim to limit pollution and to embrace high animal welfare standards. They aim to limit damage to wildlife and the wider environment.

2.3 The market demand for organic products has grown in recent years to the point where it now represents c.2% of all UK food sales.

2.4 The Scottish Executive already funds a substantial amount of research into organic food and drink. It invests c. £0.5m per annum, equivalent to c.25% of UK government research funding on the organic sector. Recent research funded by SEERAD has included scientific and technical work on sustainable ley-arable systems and on conversion from ley to arable; weed population dynamics; and genetic resistance to disease in pesticide-free environments. It has also included research on the competitive position of the Scottish organic fresh food market and on public perceptions and consumers' priorities for food purchasing ¹.

Organic farming in Scotland - overview

2.5 Data on land areas under organic farming are collected by different methods and over different timescales by the certification bodies and by both central and devolved governments. This makes precise comparisons difficult, a situation acknowledged in Defra's Organic Action Plan for England. Steps are being taken to obtain more consistent data from across the UK in future. The figures in Table 2.1 show that over half of the UK organic land area is in Scotland. At 8% of total agricultural land, this is one of the highest figures in Europe and close to the 2001 figures for Italy and Austria, countries with the highest figures in mainland Europe ².

2.6 The rate of growth in land area in organic production has slowed since the rapid increases of the late 1990's. The apparent decrease in some areas between 2002 and 2003 is probably due to a mismatch in the two data sets used to compile the table. However, the current industry view is that across the UK there is likely to be an actual loss of existing organic farms as final Organic Aid Scheme payments are made. Some producers will pull out of organic production due to marketing difficulties.

2.7 Organic land in Scotland is dominated by unimproved grassland. Only 5% of land within the Organic Aid Scheme in 2002 was in arable production (Table 2.2). This is the sector that must be expanded if unfulfilled demand for crops and horticultural products is to be met.

2.8 The dominance of unimproved grassland is reflected in the greater average farm size in Scotland than in the other UK countries (Table 2.3).

Organic Action Plan

2.9 The Scottish Executive established the Scottish Organic Stakeholder Group ( SOSG) in 2002. This Group provided the Executive with advice in the preparation of the Organic Action Plan³. The Group also provided valuable advice to the Study Team in the course of the present research.

2.10 The Organic Action Plan provides the key framework within which the current research and its findings will be placed. The prime aspirations and commitments within the Action Plan are summarised below:

• market share: Scottish organic products to increase their domestic market share from 35% to 70% by value of organic products that can be sourced in Scotland, as well as succeeding in UK and international markets
• land in organic production: to increase the area of arable land and improved grassland in organic conversion or production from 15% to 30% by 2007
• supporting organic farming: consultations on additional support for organic farming through new payment rates to incentivise organic conversion; new payments for conversion of vegetable and fruit production; more advisory help for organic converters; assistance with the capital costs of conversion; options for support to producers beyond the initial conversion period
• marketing: support for effective marketing of organic produce
• research funding: support for research to assist the Scottish organic sector
• standards: development of organic standards appropriate to Scottish circumstances.

2.11 The Organic Action Plan and SOSG also give priority to addressing the place of organic food in healthy eating and to the opportunities offered by public sector procurement of food.

2.12 Discussions in the SOSG during preparation of the Organic Action Plan identified a number of topics for further research to assist in the delivery of the plan. The proposed research is concerned with the following:

• environment: ensuring a sound knowledge base on how organic farming methods best deliver biodiversity and environmental benefits
• systems: development of organic systems appropriate to Scottish circumstances
  • to support expansion of arable and mixed farming and expansion of fruit and horticulture production
• information: provision of information to help producers, processors and retailers to identify, influence and respond to market trends
• validating claims: for the Food Standards Agency ( FSA) to quantify claims of health and nutritional benefits.

2.1 In the minutes of their second meeting (12 Dec 2002), SOSG recommended three priority areas of a scientific and technical nature:

• plant breeding for varieties needing minimum nitrogen inputs.
• nitrogen-fixing legumes in remote areas.
• stockless organic arable farms.

2.2 SOSG members have also expressed concern that relevant research results were not being applied.

Scottish Food and Drink

2.3 In addition to the support provided by SEERAD to the marketing of organic produce from Scotland (see SAC, 2002 ⁴), the food and drink sector in Scotland also receives support from Scottish Enterprise and Highlands & Islands Enterprise, much of the support delivered under the banner of Scottish Food and Drink⁵, including through the dedicated organic zone on its web site.

2.4 The Scottish food and drink industry as a whole employs c. 52,000 people and accounts for c. 17% of manufacturing jobs in Scotland. It accounts for c. 15% of all manufactured exports from Scotland. The industry is considered to be very fragmented, with 75% of food processors for example employing no more than 50 people and only c.5% employing more than 250.

2.5 It is argued that Scottish food and drink businesses are disadvantaged in their markets by these scale factors in three key important ways:

• the businesses fail to capture benefits in areas such as R&D and marketing
• they suffer from the consequences of pricing volatility and of inequalities of bargaining power relative to the large UK multiple retailers, and
• the potential for added-value remains largely untapped.

2.6 On the Scottish Food and Drink web-site (op. cit.) a number of market trends are identified of importance to the whole sector in Scotland, including trends that bring opportunities as well as constraints to the organic sector:

• more "international" eating habits
• increased convenience in preparation
• healthier eating, with concerns over food safety, additives and genetic modification
  • and the emergence in the market of functional or health-enhancing foods
• new channels to market, including food service, home shopping/delivery and e-commerce
• increasing product customisation and one-to-one marketing
• the importance of brand identity and strength
• creation of niche opportunities.

2.16 The Organic Zone on the Scottish Food & Drink web site provide information on the organic market, products, customers and consumer trends. Its organic marketplace provides an online searchable directory to assist organic producers buy and sell livestock, forage and grazing. Co-funded by the Scottish Food & Drink initiative and the Soil Association the organic marketplace aims to deliver a web-based service that has the following objectives:

• to support the development of the organic livestock sector and, in particular, organic store and breeding units
• to develop links between upland and lowland organic farms
• to increase the number and capacity of organic finishing units
• to encourage sourcing of organic replacement and breeding stock, as required under EU organic livestock regulations.

2.17 Scottish Food and Drink has also recently explored the linkages between food and tourism, and the opportunities these may offer for the marketing of both these sectors of importance to the Scottish economy.

« Previous | Contents | Next »