Organic farming development in the Czech Republic Institute

Organic farming development in the Czech Republic Institute of Agricultural Economics and Information (ÚZEI) Andrea Hrabalová Summer Academy 2009, MZLU / 28. 5. 2009

My Background to this talk n Since 2002 scientific studies on European organic farming policy, mostly funded by the European Commission (EUCEEOFP 2002 – 2005, ORGAP 2006 - 2008) n Involvement as advisor and expert in designing and guiding Czech organic farming policy (Action plan, OF Scheme within AEMs) n Responsible for providing statistics about OF development in CZ (for Mo. A - Eurostat) n Responsible for providing marketing data about OF (for Mo. A)

Content n n n n OF development in CZ (1997 -2008) Inspection and certification system State support for OF including other policy instruments supporting OF Action Plan for OF development SWOT Analysis Results and next steps Data sources

Milestones of OF development 1990 1993 1998 2001 2003 2004 2006 2007 Subsidies for OF, based on investments approach, were provided by the Mo. A, available until 1992 “Methodological Instruction of the Mo. A for OF No. 655/93 -340” became effective as a first national directive, inspection and certification system was established and state label “BIO – Organic Farming Product” was introduced Renewal of state support for OF within support for non-productive functions of agriculture Act No. 242/2000 on Organic Farming came into force and the Mo. A entrusted KEZ o. p. s. with inspection and certification Action plan for OF was approved by the Mo. A and by the Government in 2004 State support for OF was implemented as a part of AEMs in RDP Two new control bodies started to operate in CZ: ABCert and Biokont CZ “Organic Farming and Organic Food Program” (followed on AP) was approved by the Government and launched in 2008

OF development in CZ (1997 -2008)

Main characteristics of OF in CZ n n n applied mostly in mountainous and sub-mountainous regions on permanent grassland dominate grazing livestock farms (mostly cow-calf system) focused on landscape preservation 65% of organic area is farmed by organic farms larger than 500 ha (average farm size decreased to 176 ha in 2008) Arable crops Grassland Perman. crops Others Total 2001 2004 2008/07 19 164 8, 8% 19 694 7, 5% 35 178 10, 3% 195 633 89, 7% 235 379 89, 4% 281 596 82, 4% 9% 963 0, 4% 1 170 0, 4% 3 105 0, 9% 66% 2 354 1, 1% 7 056 2, 7% 21 753 6, 4% -8% 218 114 100, 0% 263 299 100, 0% 341 632 100, 0% 9%

OF development in CZ (1997 -2008) 1997 1998 2000 2003 2005 2006 2007 2008 20 239 71 621 165 699 254 995 254 982 281 535 312 890 341 632 Total no. of organic farms 211 348 563 810 829 963 1 318 1 946 Share in total UAA (%) 0, 47 1, 67 3, 86 5, 97 5, 98 6, 61 7, 35 8, 04 Share in total farms (%) 0, 58 0, 96 1, 54 2, 27 2, 57 2, 87 4, 23 6, 01 Share of area in conversion (%) nd nd 40 23 11 15 24 26 Average size of organic farm (ha) 96 206 294 315 308 292 237 176 Average size of conventional farm (ha) 118 117 120 139 127 136 131 Total organic area (ha)

Size structure of enterprises in organic farming, 2006 -2007 Size groups of organic farms (ha) No. of organic farms 2006 2007 0 – 5 54 130 5 – 10 38 10 – 50 % Area (ha) % 2006 2007 9, 9 106 247 0, 1 78 6, 0 281 579 0, 2 214 345 26, 4 6 018 9 368 3, 0 50 – 100 164 219 16, 7 12 005 16 201 5, 2 100 – 500 290 335 25, 6 70 113 80 889 26, 0 500 – 1 000 115 130 9, 9 84 772 95 647 30, 7 1 000 – 2 000 53 61 4, 7 73 598 84 386 27, 1 2 000 and over 12 11 0, 8 28 243 24 014 7, 7

inspection and certification system can be described as a mixture of state and private system (Mo. A represents a state side to private inspection bodies); the first inspection and certification system was started in 1993; since 1999, KEZ o. p. s. (Inspection of Organic Farming, publicly beneficial company), has been authorised to carry out OF inspection in CZ; in 2003, KEZ o. p. s. was granted IFOAM accreditation; Inspection and certification system n n n § in 2006, two adittional organisations started to operate in CZ: q ABCERT Gmb. H q Biokont CZ, Ltd.

State support for OF- history n n the first support for OF was provided from 1990 till 1992, the renewal of government payments to OF was in 1998 and they were part of a government regulation concerning support of nonproductive functions of agriculture: q in 1998 -2000: the aid was provided in the form of direct payments based on a system of points and the value of one point depended on total budget and number of hectares applying for support; q since 2001: Regulation 505/2000 was valid with a fixed amount of money per hectare of organic area; q in 2002 and 2003: amended Regulation 500/2001 came in force but the payments remained the same. in period 2004 -2006, OF was supported within AEMs in the Horizontal Rural Development Plan (HRDP) through the Decree No. 242/2004 and its amendments, since 2007, OF scheme is included in AEMs within the framework of new Rural Development Plan designed according EU Regulation 1698/2005 (EAFRD) for the period 2007 -2013.

Area payment scheme for OF (€/ha) 1998 19992000 20012003 20042006 20072013 I II IV V IV / III V / IV* Arable crops 60 60 63 110 155 75% 41% 21% Grassland 60 30 31 34 71 10% 109% 78% Permanent crops 60 90 110 381 849 246% 123% 91% Vegetables 60 60 110 344 564 213% 64% 40% Herbs / spices 60 60 63 344 564 446% 64% 40% Average payment 55 25 34 47 71 38% 51% 46% * The growth calculated in CZK Growth (%)

Organic farming policy before 2004 n the main and only policy instrument supporting OF was area payment scheme for OF q n negative consequences of such trend: q q q n despite of the lowest payment level (45% of arable land) – grasslands cover nearly 90% of the total organic area oversupply of organic beef (underdeveloped market) preference of interests of grazing livestock farms within organic movement (powerful lobbing of LFA) public perception of OF as a sector nonviable without state support the reason is supposed to be found in: q q low risk and costs of converting grassland in marginal regions lack of other policy instruments supporting OF development

Organic farming policy after 2004 n To overcome the main weaknesses of organic sector (identified by Action Plan) more diversified policy instruments started to be implemented: n to improve specialized consultancy the advisory service in OF started to be supported by the state up to 80% n to increase support for research the OF is incorporated into the project themes of the National Agency for Agricultural Research and into the research programme for the agrarian sector for the period 2007– 2012 n to increase awareness about OF the information campaign promoting organic farming and its products, approved by EU, has been launched since 2008 (CZK 29 million for period 2008– 2010) n to stimulate processing a preference for organic farmers is made in RDP measures (2007 -2013): Modernizing agricultural holdings, Adding value to agricultural products, Support of young farmers, Diversification into nonagricultural activities and Support of tourism (CZK 669 million in 2007)

Action Plan of the Czech Republic for the development of Organic Farming by 2010 n to achieve by 2010 an approx. 10% share of organic farming in the total agricultural land; n main priorities are divided into 6 topics: q q q 1. Relation between OF, environment and animal welfare 2. Strengthening customer confidence – promotion 3. Processing and marketing 4. Ability to do business and financial viability 5. Research, education, consulting 6. Policy tools and solutions

Action Plan for OF development n although the AP is considered as the main national strategic document for OF development, its implementation is not systematically supported by the state and was poorly implemented n to ensure the AP implementation, the “Organic Farming and Organic Food Program” was designed as a concrete measure which details the tasks of the AP. (The program was approved by the Government and launched in 2008 with annual support around CZK 10 million). § The Program’s main goals are: Ø Improving consumer confidence in OF by promotional activities, Ø Promoting consumer awareness by their use in the public food service, Ø Support for the production of organic foods, Ø Support for the marketing of organic foods, Ø Research, education and advisory services for OF.

SWOT Analysis 1/2 Strengths: Weaknesses: § existence of appropriate legal § low amount of organic production § § § framework corresponding to EU considering the high share of OF in legislation, accepted standards; UAA; political will to support OF (OF § underdeveloped processing of scheme within AEMs); organic products and complicated legislation regulating organic well established inspection and processing; certification system; powerful organic farmers’ association § lack of support for market development and low level of market PRO-BIO; organisation; recognized logo “BIO” for organic § non-existence of OF promotion products; (public is not familiar with benefits of OF, logo etc. ) (partly improved); § insufficient support of research, education and consultation focused agreed AP on OF (improved).

SWOT Analysis 2/2 Opportunities: Threats: § advantageous allowances for organic § growing share of imported organic § § farmers and processors under the new RDP; increasing consumer demand for organic products and great potential of growth in organic food consumption; launched Organic Farming and Organic Food Program (followed on AP); increased organic assortments by conventional retailers and massive campaigns promoting their own brands of organic food; increased demand for some organic raw materials from producers of organic foodstuffs. § § food; refusal of conventional farmers to organic farming; stagnation in the development of processing and a decrease in the number of on-farm processors; too high costs for organic food due to low level of distribution infrastructure / cooperation among vertical market actors; low consumers awareness and knowledge of OF and its products (partly improved).

Results of more diversified policy § growing share of arable land, vineyards and orchards § increased participation of smaller farms with mixed production in OF § growing trend of the number of organic food producers Producers of organic food 2001 2004 2005 2006 2007 2008/07 75 116 125 152 253 422 67% § improved consumer awareness of OF and its products § knowledge of BIO logo increased from 32% in 2006 to 54% in 2008 § share of people buying organic product increased to 39% in 2008

Next steps to be done To stimulate further development of organic sectors in CZ there is a need: § to implement other policy tools strengthening OF development (e. g. Participation of farmers in food quality schemes) § to improve an integration of the OF policy with other policies such as rural development, environment, health and food policy, etc. § to develop strategies to build trust in organic food and increase consumer awareness mainly of domestic / regional organic products to strengthen purchase of local products § to develop ways of co-operation among organic farmers, processors and traders as mediators between producers and consumers

Data sources n YEARBOOK 2006, 2007, 2008 on Organic Farming in the Czech Republic, Bioinstitut, o. p. s. , www. bioinstitut. cz n Statistics evidence on organic farms in the Czech Republic provided for Eurostat since 2006 (ÚZEI) n Horizontal Rural Development Plan (2004 -2006) n Rural Development Programme of the Czech Republic (2007 -2013) n Action Plan of the Czech Republic for the development of Organic Farming by 2010 n EU Project EUCEEOFP - “Further Development of Organic Farming Policy in Europe with particular emphasis on EU Enlargement”

Contact: Ing. Andrea Hrabalová Institute of Agricultural Economics and Information Agri-environmental policy, Czech Republic Tel: +420 541 211 487 Fax: +420 541 211 321 Mail: hrabalova. andrea@uzei. cz