Are the factors used and the results of the impact analysis reasonable?
Most of respondents consider the role of retail chains as very important. Arguments are:
o Share of retail chains in sales of organic foodstuffs in the Czech Republic is around 80 %;
o Retail chains have started marketing organic products in the Czech Republic;
o Supply of organic products in retail chains is independent from policy measures. It is based on marketing strategies and furthermore is also less dependent on consumer demand (“retail chains do it rather for its “green” image than due to consumer demand”).
However some participants argue that in the Czech Republic there is no driver for organic market development as:
o Retail chains do not actively develop organic markets. The main motive is to keep a “green” image.
o Promotional activities are very poor an unprofessional.
o Sales from organic products are provided as a part of very basic advertisement without public education.
o Until 2007, conventional retail chains had no interest in organic products. Since 2007, there has been an organic boom and also assortment in organic food increased, private brands were launched. But now due to the economic crisis, retail chains drastically reduced the provision of organic food.
“Consumers’ concern towards food safety, environmental issues, animal welfare, GMO risks...”: in the Czech Republic, people interest in such issues is very low. People still do not have money for this: the main topic is prices not quality. Since organic foods are connected with heath food / life style, it is more difficult to be successful and people still laugh at them. A way could be to present organic foodstuffs as “luxury goods” and not to stress too much “organic farming”.
Is it correct, that so far there was no real driver of organic market development in Czech Republic?
The answer is not easy – both views are valid:
The Czech Republic lacks a real key actor who could be the motor for further organic market development. There is a lack of specialized organic retail chains and conventional retail chains do not promote the organic market directly / wilfully.
On the other hand, the role of retail chains is very important for organic market development as organic food is now more visible and people learn to buy it. Retail chains supply only a narrow and basic organic assortment.
The most important factors which might influence the future development of the organic market are: Promotion and public education, conventional retail chains, domestic consumers demand for organic products and EU agricultural policy and public support for agriculture in general.
The effectiveness and efficiency of the current policy support measures for organic farming could be improved through following strategies:
Implement an expert group only for organic farming to discuss proposals how to adjust conditions of measures in the rural development program;
Try to improve the current support system (better than to change it totally since continuation is very valuable and nothing innovative will be probably proposed) – essential is right targeting and setting of good conditions / requirements;
To implement functional control mechanisms at ministry level.
There are some proposals for organic farming area payment support improvement:
Whole farm approach: organic farming payment should be available only for fully converted farms or for farms converting partly at a significantly lower level;
Argument against whole farm approach: conversion of larger farm with arable land is not easy / possible and much more suitable will be to put commitment to convert farm into organic farming system within a certain period of time.
Gradually increase livestock density but in lower speed for organic farming (to maximum 0,3 LU/ha grassland instead of 0,5 LU/ha grassland proposed for AEMs);
Stricter requirements for permanent crops (orchards / vineyards);
Payment calculations should be updated and made transparent to farmers.
Better targeting organic farming support within the rural development program. Focus should be led more on market support.
2.3
Quantitative impact indicators
The average income level of organic and comparable conventional farms in the Czech Republic was very similar during 2000‐2005. In the subsequent years, incomes in organic farms were lower by 15‐ 29 %. The share of organic farming in total UAA increased over the entire period, and thus no obvious link can be established to the development of relative profitability.
Area support for organic farms was not sufficient to maintain relative competiveness in the more recent years, which however did not prevent the share of organic area in total UAA to increase. Measured in EUR/ha, the effective specific area support to organic farming increased by 80 % from 2004 to 2008 (from 35 to 63 EUR/ha), which seems to have contributed to the increase in the share of organic area in total UAA in the more recent years.
Figure 2.1 Income (FNVA/AWU) in organic and comparable conventional farms in the Czech Republic, 2004‐2008 0 5000 10000 15000 20000 25000 30000 2004 2005 2006 2007 2008 €/ AWU 0 1 2 3 4 5 6 7 8 9 10 % of UAA Organic farms
Comparable conventional farms
Organic farms without specific subsidies Organic area share in total UAA (%)
EUR/AWU
Source: Own calculation based on EU FADN, DG‐AGRI.
Figure 2.2 Effective specific area support to organic farms in the Czech Republic, 2004‐2008,
EUR/ha 0 20 40 60 80 100 120 140 160 2004 2005 2006 2007 2008 EUR / ha 0 1 2 3 4 5 6 7 8 9 10 % of UAA
Effective specific subsidies (EUR / ha) Total agri-environmental payments (EUR / ha) Organic area share in total UAA (%)
Source: Own calculation based on EU FADN, DG‐AGRI.
2.4
Representation of organic farming in the RDP
The Rural Development Programme of the Czech Republic aims to develop rural areas according to the principles of sustainable development, environmental protection and reduction of the negative impact of intensive agriculture (MoA & VÚZE, 2007). The programme also intends to increase the competitiveness of the Czech Republic in basic food commodities and support and expand the diversification of economic activities in the countryside, with the goal of developing entrepreneurship, creating new jobs, reducing unemployment in rural areas and strengthening the cohesion of the rural population.
These objectives are reflected in the budget where the most important areas of support are (according to the budget) Axis 2 (53 % of the RDP budget) followed by Axis 1 (23 %) and Axis 3 (18 %) (MoA & VÚZE, 2007). Within Axis 2 the highest amount of funding is allocated to disadvantaged areas and agri‐environmental payments.
Due to the low level of organic food production in CZ, the Ministry of Agriculture has provided a built in advantage for organic food producers and organic farmers through a point‐evaluation of submitted projects in five measures in addition to the main Measure 214 for area support for organic farming. These measures are: Setting‐up of young farmers (112); Modernisation of agricultural holdings (121); Increasing the added value of agricultural and forestry production (123); Diversification into non‐agricultural activities (311); and Encouragement of tourism activities (313). Overall, organic farming is considered in Axes 1, 2 and 3. In addition, Measure 114 mentions provision of advisory services for environmentally friendly systems of farming is relevant to organic farming but there are no special provisions made for organic farmers/processors within the mentioned measures.