Farmers Losing Out in German Organic Boom

With organic products increasing in popularity across the board despite being more expensive, one might think that organic farmers are raking in the profits.

But just as "bio-food" takes off in Germany's many discount food chains, farmers are taking a financial hit from the no-frills segment, which is cutting the price of organic produce in line with the rest of the cheap items on offer.

For German organic farmers, seeing their eco-friendly products, laboriously grown with care and conscience, on the shelves of discount supermarkets is a bitter pill to swallow. While they're happy that more and more organic products are reaching the consumer, they must face up to the realities of dealing with the discounters whose bottom line is: "Sell the produce for less or we'll get it from abroad."

Competing farmers in Poland, Italy, and the Czech Republic are at an advantage over their German competitors as they receive twice as much in government subsidies. But in a bid to remain competitive and to keep German stores stocked with organic produce grown in Germany, the farmers are facing another dilemma.

Problems converting to meet demand

The regulations in the organic farming sector concerning growth agents and agricultural techniques are so strict, and the time and costs involved in cultivating bio-produce so demanding, that German farmers find themselves unable to meet the rising demand. And for conventional farmers looking to convert to organic farming in a bid to profit from that demand, there are also problems.

The switch to organic is a costly one for conventional farmers. A farm beginning to produce organically grown food can expect to earn 60 percent less in revenue at the start of its new business.

"The change from conventional to organic farming does not happen overnight," said Achim Spiller, professor for agrarian marketing at the university of Göttingen. "It takes at least three years of conforming to organic guidelines until a farmer can sell produce under the 'bio' label."

Foreign competition adding pressure

With the discounters slashing the prices of organic products and foreign growers increasing competition, the consumers are looking like the winners of Germany's "bio-boom" while German farmers are almost certainly on the losing side.

"In Eastern Europe and Latin America, there is a focus on producing organic food and the industry is strongly promoted by governments," Spiller said. "Many third world countries also use organic cultivation as they have had little access to fertilizer and pesticides in the past."

Hermann Heldberg, a health food wholesaler for over 30 years, is just one of a growing number of people in the organic food industry who are calling for the German government to help farmers.

"We are behind the likes of the Netherlands in producing organic vegetables," he said. "It is heavily promoted there and if a Dutch firm wants to expand and export its goods to Germany, then there is a big market here for them. But we also can produce cucumbers and peppers."