With the reopening of the Organic Farming Scheme (OFS), announced last week, many conventional beef farmers across the country will now be considering applying to the scheme.
With this in mind, Teagasc organics advisor Enda O’Hart has assembled a table comparing the profitability of organic and conventional beef farming systems based on 2022 figures.
The data used in the table was taken from the 2022 National Farm Survey and the Teagasc 2022 E-Profit Monitor Programme.
The table below compares the profitability of conventional beef systems with the profitability of organic beef farming systems.
Cost Cattle rearing Cattle other Organic farmers Land (ha) 31.3 37.2 42.9 Stocking rate Lu/ha 1.11 1.32 0.81 Gross output / ha € 985 1570 642 Total costs / ha € 1135 1546 624 Net margin excluding direct payments / ha € -150 24 18 Net margin including direct payments / ha € 300 506 741
The Teagasc advisor said: “Based on 2022 figures comparing organics and conventional beef farms, we find that organic farming is more profitable and these farmers are less intensely stocked, have lower costs and have a greatly reduced whole farm carbon footprint.”
He also added that the sample size used for the organic farm profitability is small with only 20 farms used to source the average figure.
He explained that organic beef farms tend to be less intensively stocked than conventional beef farms and output from the organic farms is lower as a result of this.
While stocking rates tend to be lower in organic systems, the total costs on organic farms are much reduced when compared to conventional beef farms, as the table above indicates.
“This results in a net margin excluding direct payments of €18/ha on organic farms and -€150/ha and €24/ha on the conventional farms.
When direct payments are factored into the net margin / ha figure, then organics comes out best at €741/ha vs €300/ha and €506/ha for the conventional farms.
“This difference is mainly down to the OFS payment, which farmers in organics avail of. The expectation is that this difference will widen as OFS payments increased in 2023 by about 50%,” O’Hart said.
The Teagasc advisor continued: “When all these figures are assessed, we can say that organic beef farmers are financially better off than their conventional colleagues and that this profitability gap will widen due to increased OFS payments from 2023.
“Total costs are lower on organic farms, which results in less cash flow pressures and a lower-risk business model.”
Organic payments
Drystock farmers entering into a contract could qualify for yearly payments of up to €300/ha during the conversion period, and up to €250/ha when they have achieved full organic status.
Higher payment rates are available for horticultural and tillage farmers in organics.
In addition, an annual participation payment of €2,000 in the first year of conversion and €1,400/yr thereafter, has been introduced to support farmers in organics.