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Analysis of socio-economic aspects of local and national organic farming markets - OF0377

Description
After rapid growth, the area of organically farmed land has remained relatively constant in recent years, accounting for 3.4% of the total agricultural area in England and Wales at the beginning of 2006 (Ref 1). On the other hand, retail sales continue to grow, increasing by 30% in 2005 and leading to an estimated annual market value of £1.6 billion (Ref 1). Whilst research suggests that organic farming can provide a wide range of benefits, including positive employment impacts, improved environmental benefits and support for local and regional economies (Ref 2, 3, 4), constraints in the supply chain, in particular limited growth in the area farmed, mean that the sourcing of organic produce is increasingly met by imported food, although this does vary considerably depending on the sector studied. For example, most organic dairy produce sold in the UK in 2004 was internally sourced, whereas for some horticultural produce over 60% was imported (Ref 2). Clearly, there are a range factors that affect the ability of organic producers in different sectors to meet consumer demand. In turn, consumers have their own expectations of organic food such as seasonality of produce, local food supply, and the variety of products. It is against this background that this research will explore the opportunities and barriers to increasing organic production from farms in England and Wales and consider the implications for rural development. The research will also appraise the extent to which organic farm businesses and associated food chains meet public expectations of organic food. The research will examine these issues through an integrated approach designed to combine a state of the art review of existing knowledge with new empirical investigations of producer and consumer behaviour, all supported by a specially convened panel of expert stakeholders.

In order to achieve these aims the research will:
1. Review existing knowledge on organic supply, organic food chains and barriers to the expansion of organic production through an analysis of relevant literature and evidence provided by key stakeholders (as used successfully in our other recent projects for Defra).
2. Characterise the organic market according to gross output values, net output values, physical flows of commodities including use of environmental resources, flows of services/consultants, employment, destination of sales, and imports and exports. These data will be used to describe simple value chain models and to create a national benchmark for organic businesses.
3. Examine the impact of organic farming on rural development in terms of local employment and income multipliers (including analysis of supply to public sector bodies such as schools and hospitals).
4. Develop whole chain models to examine upstream and downstream linkages of organic businesses to develop a detailed analysis of their relationships with different retail outlets, which sell organic produce, and those that supply the production process.
5. Identify and explore opportunities and barriers to the expansion of organic production through both increasing output from existing producers and the conversion of non-organic producers.
6. Consider the extent to which the current supply of organic food meets consumer expectations regarding food quality, safety, seasonality, etc.
7. Develop implications for rural policy at regional and national scales in consultation with Defra and other stakeholders.

Given these ambitious aims and objectives, it is essential that new empirical investigations are carried out enabling the research to provide reliable guidance to policy makers. Moreover, many of the interrelated issues raised in the project brief cannot be addressed simply by using current literature and data. Specifically, the research will adapt and develop techniques for socio-economic analysis such multiplier analysis and whole chain methods developed by the Universities of Exeter and Gloucestershire in previous research. Data will be collected from organic businesses to enable the integration of these techniques, providing a strong combination of analytical tools. The particularly close alignment of data required for multiplier models and whole chain methods means that the collection of data can be kept to a minimum, yet the data gathered will allow for a powerful analysis of the socio-economic impact of organic farming at a variety of spatial scales. In addition, information will be gathered on recognized indicators of 'simple value chains' such as gross output values, net output values, physical flows of commodities, flow of services/consultants, employment, destination of sales and imports and exports.

Ref 1: Defra (2006) Organic Statistics United Kingdom, Defra
Ref 2: Soil Association (2006) Organic Market Report 2006, Soil Association
Ref 3: Pretty, J.N. , A.S. Ball, T. Lang, and J.I.L. Morison (2005) Farm costs and food miles: An assessment of the full cost of the UK weekly food basket, Food Policy.
Ref 4: Lobley et al. (2005) The impact of Organic Farming on the Rural Economy of England, Centre for Rural Research, University of Exeter (RE0117).
Objective
Despite a growing body of research on different aspects of organic farming, the socio-economic dimensions of organic food and farming remain less well understood. The proposed research, therefore, will make a unique contribution to policy relevant knowledge on the socio-economic aspects of organic food marketing by addressing the needs identified in the project specification. Whereas previous research has often been ‘singled sided’ i.e. focusing on either production or consumption issues, this research proposal innovatively integrates both elements. It does this by developing a research design and methodology that allows analysis of the three parts of the project specification as an integrated whole rather than as three separate projects.

As stated in the project specification, the overall aim of the research is to provide a fully integrated analysis of:
A) The socio-economic impacts of the organic farm supply chain on rural development;
B) How well the organic food chain delivers public expectations;
C) Barriers affecting conversion to organic farming and expansion of existing organic farms.

In order to achieve these broad aims, the approach adopted will draw on an innovative and integrated range of socio-economic research to measure, benchmark and map the potential longer term development of the organic farming sector as a whole (and its main component parts - arable, horticulture and livestock, including dairy), as well as exploring the extent to which organic food delivers consumer expectations. Given the ambitious aims stated above and objectives detailed below, it is essential that new empirical investigations are carried out if the research is to provide informed and independent guidance to policy makers. Moreover, many of the interrelated issues raised in the project brief cannot be addressed simply by using current literature and secondary data.

Project Objectives
1. Review existing knowledge on organic supply, organic food chains and barriers to the expansion of organic production through an analysis of relevant literature and evidence provided by key stakeholders (as used successfully in our other recent projects for Defra).
2. Characterise the organic market according to gross output values, net output values, physical flows of commodities including use of environmental resources, flows of services/consultants, employment, destination of sales, and imports and exports. These data will be used to describe simple value chain models and to create a national benchmark for organic businesses.
3. Examine the impact of organic farming on rural development in terms of local employment and income multipliers (including analysis of supply to public sector bodies such as schools and hospitals).
4. Develop whole chain models to examine upstream and downstream linkages of organic businesses to develop a detailed analysis of their relationships with different retail outlets, which sell organic produce, and those that supply the production process.
5. Identify and explore opportunities and barriers to the expansion of organic production through both increasing output from existing producers and the conversion of non-organic producers.
6. Consider the extent to which the current supply of organic food meets consumer expectations regarding food quality, safety, seasonality, etc.
7. Develop implications for rural policy at regional and national scales in consultation with Defra and other stakeholders.
Project Documents
• Final Report : Analysis of Socio-Economic Aspects of Local and National Farming Markets   (611k)
• Technical Report : Analysis of Socio-Economic Aspects of Local and National Farming Markets   (5047k)
Time-Scale and Cost
From: 2007

To: 2009

Cost: £182,500
Contractor / Funded Organisations
University - Exeter
Keywords
Consumer Survey              
Crops              
Economic Research              
Farming              
Horticulture              
Livestock              
Organic Farming              
Social Research              
Fields of Study
Organic Farming