1. Organic farming development in the Czech Republic Institute of Agricultural Economics and Information (ÚZEI) Andrea Hrabalová Summer Academy 2009, MZLU / 28. 5. 2009

2. My Background to this talk Since 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 MoA - Eurostat) Responsible for providing marketing data about OF (for MoA)

3. Content OF development in CZ (1997-2008) Inspection and certification system State support for OF including other policy instruments supporting OF Action Plan for OF development SWOT Analysis Results and next steps Data sources

4. Milestones of OF development 1990Subsidies for OF, based on investments approach, were provided by the MoA, available until 1992 1993“Methodological Instruction of the MoA for OF 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 1998Renewal of state support for OF within support for non-productive functions of agriculture 2001Act No. 242/2000 on Organic Farming came into force and the MoA entrusted KEZ o.p.s. with inspection and certification 2003Action plan for OF was approved by the MoA and by the Government in 2004 2004State support for OF was implemented as a part of AEMs in RDP 2006 Two new control bodies started to operate in CZ: ABCertand Biokont CZ 2007 “Organic Farming and Organic Food Program” (followed on AP) was approved by the Government and launched in 2008

5. OF development in CZ (1997-2008)

6. Main characteristics of OF in CZ applied mostly in mountainous and sub-mountainous regions on permanent grassland dominate grazing livestock farms (mostly cow-calf system) focused on landscape preservation 65% of organic area is farmed by organic farms larger than 500 ha (average farm size decreased to 176 ha in 2008) 2001 2004 2008 2008/07 Arable crops 19 1648,8% 19 694 7,5% 35 17810,3% 19% Grassland 195 63389,7% 235 379 89,4% 281 59682,4% 9% Perman. crops 9630,4% 1 170 0,4% 3 1050,9% 66% Others 2 3541,1% 7 056 2,7% 21 7536,4% -8% Total218 114100,0%263 299100,0%341 632100,0%9%

7. OF development in CZ (1997-2008) 19971998200020032005200620072008 Total organic area (ha)20 23971 621165 699254 995254 982281 535312 890341 632 Total no. of organic farms2113485638108299631 3181 946 Share in total UAA (%)0,471,673,865,975,986,617,358,04 Share in total farms (%)0,580,961,542,272,572,874,236,01 Share of area in conversion (%)nd 40231115152426 Average size of organic farm (ha)96206294315308292237176 Average size of conventional farm (ha)118 117120139127136131

8. Size structure of enterprises in organic farming, 2006-2007 Size groups of organic farms (ha) No. of organic farms % Area (ha) % 2006200720062007 0 – 5541309,91062470,1 5 – 1038786,02815790,2 10 – 5021434526,46 0189 3683,0 50 – 10016421916,712 00516 2015,2 100 – 50029033525,670 11380 88926,0 500 – 1 0001151309,984 77295 64730,7 1 000 – 2 00053614,773 59884 38627,1 2 000 and over12110,828 24324 0147,7

9. Inspection and certification system inspection and certification system can be described as a mixture of state and private system ( MoA 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;  in 2006, two adittional organisations started to operate in CZ:  ABCERT GmbH  Biokont CZ, Ltd.

10. State support for OF- history 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 non- productive functions of agriculture:  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;  since 2001: Regulation 505/2000 was valid with a fixed amount of money per hectare of organic area;  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.

11. Area payment scheme for OF (€/ha) * The growth calculated in CZK 1998 1999- 2000 2001- 2003 2004- 2006 2007- 2013 Growth (%) IIIIIIIVVIV / IIIV / IVV / IV* Arable crops60 6311015575%41%21% Grassland 603031347110%109%78% Permanent crops6090110381849246%123%91% Vegetables 60 110344564213%64%40% Herbs / spices60 63344564446%64%40% Average payment 552534477138%51%46%

12. Organic farming policy before 2004 the main and only policy instrument supporting OF was area payment scheme for OF  despite of the lowest payment level (45% of arable land) – grasslands cover nearly 90% of the total organic area negative consequences of such trend:  oversupply of organic beef (underdeveloped market)  preference of interests of grazing livestock farms within organic movement (powerful lobbing of LFA)  public perception of OF as a sector nonviable without state support the reason is supposed to be found in:  low risk and costs of converting grassland in marginal regions  lack of other policy instruments supporting OF development

13. Organic farming policy after 2004 To overcome the main weaknesses of organic sector (identified by Action Plan) more diversified policy instruments started to be implemented: to improve specialized consultancy the advisory service in OF started to be supported by the state up to 80% to increase support for research the OF is incorporated into the project themes of the National Agency for Agricultural Research and into the research programme for the agrarian sector for the period 2007–2012 to increase awareness about OF the information campaign promoting organic farming and its products, approved by EU, has been launched since 2008 (CZK 29 million for period 2008–2010) to stimulate processing a preference for organic farmers is made in RDP measures (2007-2013): Modernizing agricultural holdings, Adding value to agricultural products, Support of young farmers, Diversification into non- agricultural activities and Support of tourism (CZK 669 million in 2007)

14. Action Plan of the Czech Republic for the development of Organic Farming by 2010 to achieve by 2010 an approx. 10% share of organic farming in the total agricultural land; main priorities are divided into 6 topics:  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

15. Action Plan for OF development 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 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:  Improving consumer confidence in OF by promotional activities,  Promoting consumer awareness by their use in the public food service,  Support for the production of organic foods,  Support for the marketing of organic foods,  Research, education and advisory services for OF.

16. SWOT Analysis 1/2 Strengths:Weaknesses:  existence of appropriate legal framework corresponding to EU legislation, accepted standards;  political will to support OF (OF scheme within AEMs);  well established inspection and certification system;  powerful organic farmers’ association PRO-BIO;  recognized logo “BIO” for organic products;  agreed AP  low amount of organic production considering the high share of OF in UAA;  underdeveloped processing of organic products and complicated legislation regulating organic processing;  lack of support for market development and low level of market organisation;  non-existence of OF promotion (public is not familiar with benefits of OF, logo etc.) (partly improved);  insufficient support of research, education and consultation focused on OF (improved).

17. SWOT Analysis 2/2 Opportunities:Threats:  advantageous allowances for 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.  growing share of imported organic 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 costs 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).

18.  growing share of arable land, vineyards and orchards  increased participation of smaller farms with mixed production in OF  growing trend of the number of organic food producers  improved consumer awareness of OF and its products 2001200420052006200720082008/07 Producers of organic food 7511612515225342267%  knowledge of BIO logo increased from 32% in 2006 to 54% in 2008  share of people buying organic product increased to 39% in 2008 Results of more diversified policy

19. To stimulate further development of organic sectors in CZ there is a need:  to implement other policy tools strengthening OF development (e.g. Participation of farmers in food quality schemes)  to improve an integration of the OF policy with other policies such as rural development, environment, health and food policy, etc.  to develop strategies to build trust in organic food and increase consumer awareness mainly of domestic / regional organic products to strengthen purchase of local products  to develop ways of co-operation among organic farmers, processors and traders as mediators between producers and consumers Next steps to be done

20. Data sources YEARBOOK 2006, 2007, 2008 on Organic Farming in the Czech Republic, Bioinstitut, o.p.s., www.bioinstitut.cz Statistics evidence on organic farms in the Czech Republic provided for Eurostat since 2006 (ÚZEI) Horizontal Rural Development Plan (2004-2006) Rural Development Programme of the Czech Republic (2007-2013) Action Plan of the Czech Republic for the development of Organic Farming by 2010 EU Project EUCEEOFP - “Further Development of Organic Farming Policy in Europe with particular emphasis on EU Enlargement”

21. Contact: Ing. Andrea Hrabalová Institute of Agricultural Economics and Information Agri-environmental policy, Czech Republic Tel: +420 541 211 487 Fax: +420 541 211 321 Mail: hrabalova.andrea@uzei.cz hrabalova.andrea@uzei.cz