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ARTICLES >> Livestock Articles

Organics Gives Business Flexibility...but also Frustration

Posted by Bestprac on Feb 06 2012

by Liz Guerin
Close to ten years ago, Steve Cresswell and family changed from merinos to white dorpers in order to take advantage of lower production costs and ease of management.


Steve and son Jack Obtaining full organic accreditation in 2005, Steve says he is pleased with his enterprise shift and the degree of flexibility organics have given his business. However he is frustrated by the lack of an adequate premium for organic products.

Obtaining full organic accreditation in 2005, Steve says he is pleased with his enterprise shift and the degree of flexibility organics have given his business. However he is frustrated by the lack of an adequate premium for organic products.

Running two properties, Annalara (24,000 hectares) located between Wilcannia and Tilpa, and Dungary (2,000 hectares) southwest of Dubbo, Steve said that a poor wool market, ongoing drought and low lambing percentages in his merino flock were key drivers of the change.

“We needed a sheep that was hardy, easy to manage and without coloured fibres, as our neighbours were still wool producers” said Steve. “The more we got into dorpers, the more we could see benefit through lower costs of production whilst still suiting traditional markets.”

The Cresswell’s achieved fully certified organic status with NASAA (National Association for Sustainable Agriculture Australia) in 2005 and whilst not being an onerous, expensive or time consuming process, Steve says that there are still some significant barriers within the organic industry which need to be overcome.

Consumer demand for organic lamb may be rapidly increasing, however supply is not. One reason for this is the lack of a producer premium for organic lamb.

“We need a consistent, weekly supply and in the last 12 months stock numbers have been low due to drought and now floods” he said. “All indications show that consumers are willing to pay a premium for our organic product, but it is not really getting back down the line to us as producers.”

Compounding the problem are additional killing fees under the organic system and freight costs to organically certified abattoirs.

“We sell to two organic abattoirs – both of which are approximately 700 kilometres away. So freight is a large issue and growing, and definitely affecting our pocket” he said.

Steve estimates that costs associated with freighting his lambs to the nearest organic abattoir costs his business between $8-12/head - greater for smaller lots.

“These issues are meaning that many organic lambs are being sold conventionally because of the price variation” he said. “Being an organic producer isn’t that hard, but it is a cost and therefore we need a premium at least 50 cents per kilogram above traditional markets.”

In the past, the Cresswell’s have achieved net premiums for their organic lamb of up to 150c/kg, however with recent record rises in sheep prices certified organic lamb sold via traditional markets are achieving prices level, or better than the organic rate.

“It is so frustrating because we put so much into achieving and maintaining our organic status that we should achieve a premium and it is just not happening” he said. “Most recently we sold some organic lamb though traditional market that was 40 cents/kilo above organic price.”

Steve says that from a producer perspective there seems few opportunities available to change this current situation.

“As part of the Wilcannia Bestprac Group we did look at setting up our own supply links, but it’s really not feasible” he said. “It is a bit of a vicious circle – we need to achieve a premium in order to be able to increase supply and without the supply, we’re not achieving a premium.”

Members of the Wilcannia Bestprac Group recently returned from a study tour of South Africa looking at organic industries and opportunities for their own businesses. Whilst Steve was unable to participate in this trip he says he looks forward to the opportunity to sit down with his fellow group members and discuss the ideas and issues they picked up overseas.

For his own business, Steve says that in the next 12 to 18 months they will continue to build their ewe numbers up and therefore increase lambing.
“If organic lambs aren’t at a premium well above traditional local domestic prices, then our lambs will go the traditional way” he said. “We will still maintain our organic certification by paying our yearly fee, undergoing our audits and so forth, as we don’t want to lose it.”

By maintaining their organic certification, the Cresswell’s can keep their options open.

“In the past 10 years, we have seen premiums and benefits through organics – not big amounts, but it has been enough to pay for itself” he said. “I think we have reached a new level in the sheep market at the moment which might not back off any time soon. And considering our costs, it really can’t.”
 

Last changed: Feb 07 2012

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