Soaring oil prices look set to make organic ingredients more profitable for farmers to produce than non-organic ingredients, according to a report released today. The impact of rising oil prices on organic and non-organic farm profitability, a study for The Soil Association by farm business consultant Andersons, found that if the price of oil increases to the predicted price of $200 per barrel in five to ten years’ time the production of organic combinable crops like wheat, barley and oil seed rape could become more profitable than non-organic production.
With oil at $200 per barrel the margins of non-organic combinable crop systems range from £296 to £348. This is largely due to the high cost of artificial fertilisers, a fossil fuel heavy industry, which could rise to $550 per tonne. In contrast, organic margins range from £371 to £411. Rotations that include potatoes are the only exception and even here the profit gap between the two systems is narrow.
With oil at $135 per barrel – the price of fuel at the time the analysis was carried out – the margins for organic and non-organic production of a combinable crops system show similar rates of return.
“Organic systems are not perfect, but they do lose less energy, generally emit fewer greenhouse gases, can sequester carbon in the soil, provide more jobs and support more wildlife,” said The Soil Association policy director Peter Melchett. “This report suggests they could also offer a more long-term financial future for the UK’s farmers.”
Organic farming builds soil fertility through crop rotation and the use of clover, which can fix 200kg of nitrogen per hectare per year.