Organic farming development in the Czech Republic Research

Organic farming development in the Czech Republic Research Institute of Agricultural Economics (VUZE) Andrea Hrabalová Pavla Wollmuthová Summer Academy, 16 June 2008

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

Content n n n n OF development in CZ (1997 -2007) Inspection and certification system Action Plan for OF development Area payment scheme for OF (€/ha) Other policy instruments supporting OF SWOT Analysis Data sources

OF development in CZ (1997 -2007) Total organic area (ha) 1997 1998 2000 2003 2004 2005 2006 2007 20 239 71 621 165 699 254 995 263 299 254 982 281 535 315 581 Total no. of organic farms 211 348 563 810 836 829 963 1 318 Share of total organic area in total UAA (%) 0, 47 1, 67 3, 86 5, 97 6, 16 5, 98 6, 61 7, 35 Share of organic farms (%) 0, 58 0, 96 1, 54 2, 27 2, 36 2, 57 2, 87 3, 93 Share of area in conversion (%) nd nd 40 23 20 11 14 16 Average size of organic farm (ha) 96 206 294 315 308 292 239 Average size of conventional farm (ha) 118 117 120 121 132 127 128

OF development in CZ (1997 -2007)

Size structure of enterprises in organic farming, 2006 Size groups of organic farms Number of organic according to area (ha) farms Total % Area (ha) Total % 0 až 5 54 5, 7 105, 5 0, 04 5 až 10 38 4, 0 281 0, 10 10 až 50 214 22, 8 6 018, 3 2, 19 50 až 100 164 17, 4 12 005, 1 4, 36 100 až 500 290 30, 9 70 113, 1 25, 48 500 až 1000 115 12, 2 84 772, 3 30, 81 1000 až 2000 53 5, 6 73 597, 5 26, 75 2000 a více 12 1, 3 28 243, 4 10, 27

Milestones of OF development 1990 1993 1998 2001 2003 2004 2005 2007 Subsidies for OF, based on investments approach, were provided by the Mo. A, available until 1992 “Methodological Instruction of the Mo. A for Organic Farming 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 nonproductive 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 within new HRDP Act No. 553/2005 (amended Act 242/2000) came into force to omit all provisions which are duplicated in EU regulations “Organic Farming and Organic Food Program” was approved by the Government and launched in 2008

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.

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.

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% total support for OF (1000 €) 1 316 2 502 7 266 10 733 17 967 48% 67% x average payment (€/ha) 55 25 34 47 66 38% 40% x uptake (%) 34 60 84 81 87 -3% 7% x * The growth calculated in CZK Growth (%)

Land use structure in OF and CF OF Arable crops Grassland Permanent crops Others Total 2001 2002 2003 2004 2005 2006 2007 19 164 19 536 19 637 19 694 20 766 23 478 30 580 195 633 211 924 231 683 235 379 209 956 232 190 258 079 963 898 928 1 170 820 1 196 1 591 2 354 2 778 2 747 7 056 23 440 24 671 25 331 218 114 235 136 254 995 263 299 254 982 281 535 315 581

Area payment scheme for OF n n n the main policy instrument supporting OF (since 1998) despite of the lowest payment level (45% of arable land) – grassland cover more than 80% of the organic area and differ from the structure of the overall farming, where the share of grassland is only about 23% the reason is supposed to be found in: § § low risk and costs of converting grassland in marginal regions no clear political decision on OF purpose – Is an increase in production of organic products OR maintenance of countryside the main goal?

Policy instruments – focused on processing of organic products n n no special economic measures focused on OF (absence of loans and subsidies and viable concept); some preference for organic farmers was used within the Farming Operational Programme in period 2004 -2006; keeping the advantageous allowances for organic farmers and organic food producers in some measures within the new RDP (2007 -2013): Axis I q q q n modernizing agricultural holdings (27 / 15 points) increasing the added value of basic agricultural and forestry production (20 + 15/7 points) support of young farmers (27 / 15 points) Axis III q q diversification in non-agricultural activities (15 / 10 points) support of tourism (15 / 10 points)

Policy instruments – focused on organic farming promotion and marketing n n n n the advertising campaign project titled “The Promotion of Organic Farming and its Products – Natural Riches” approved by EU (for period 2008 – 2010); the international conference “Bioacademy – European summer conference in OF in Lednice (since 2001); various traditional events: the Barták Cup, the “Czech Organic Product Food of the Year”, the “Favorite Czech Organic Product of the Year” and newly the “September – Organic Food Month (since 2002 / latter 2005); participation in fairs: at the trade fair Bio. Fach and national the Earth Provider in České Budějovice, the Salima and G+H trade fair in Brno, the fair Wine and Spirits and newly Biostyl in Prague (mainly since 2005); the educational promotional campaign “Organic Living – Get to Know Organic Farming and Organic Foods” (in 2007); the marketing survey about awareness of organic farming and organic foodstuffs provided by Gf. K Prague (in 2006); group of seminars „distribution and marketing in OF“, welfare in OF, processing and marketing in OF, etc. (in 2005 and 2006)

Policy instruments –focused on research, education and consultation n n introduction of support title for advisory service in the area of OF conversion as one of three preference themes supported by the state up to 80% (since 2004); incorporation of OF into the research themes in the framework of the NAZV (National Agency for Agricultural Research) and into the research programme for the agrarian sector for the period 20072012 (since 2005); offer of numerous trainings, courses, and excursions, creation of a network of model organic farms, realization of “Organic goes to school” project etc. within the network of Agri-Environmental Information and Advisory Centres supported by the Operational Programme – Human Resources Development (2006 -02/2008); contribution for publications (textbooks for OF, practical handbooks, methodological papers (significantly since 2004); realization of research databank in OF (since 2005)

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 price premium 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).

Data sources n YEARBOOK 2006 - ORGANIC FARMING IN THE CZECH REPUBLIC, Bioinstitut, o. p. s. , www. bioinstitut. cz n YEARBOOK 2007 - ORGANIC FARMING IN THE CZECH REPUBLIC, Bioinstitut, o. p. s. , www. bioinstitut. cz n Horizonatl 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”