More farmers become food manufacturers

By Nicholas Robinson

- Last updated on GMT

Farmers should promote their produce’s organic status, says Crichton
Farmers should promote their produce’s organic status, says Crichton

Related tags Food manufacturing Organic food

Organic farmers are increasingly moving into food manufacturing in search of higher margins and greater financial security, it has emerged.

By seeking to add value, organic farmers presented a more attractive proposition to prospective lenders when they sought investment to set up their own processing facilities, said Simon Crichton, organic agriculture relationship manager with Triodos Bank.

The manufacture of products such as organic pies and ready-meals could help to provide higher margins than by focusing solely on raw products like organic pork, beef and lamb, for which demand fluctuated, he said.

Make more money

“Farmers are looking to find their own way in the food manufacturing arena,”​ he said. They no longer wanted to sell just their organic beef, lamb or vegetables on to local processors or shops. By cutting out the middle man they could make more money for their business, Crichton added.

Moving into processing also gave farmers more financial stability, said Anna Rosier, md of children’s organic food brand Organix. “Farmers want to diversify and not rely on a single source of income as they may have done historically,”​ she said.

Their knowledge of the raw material also gave them an advantage in how to use the product in food, “so it seems the obvious next step for them”​, Rosier added.

A 2.8% rise in sales of organic food from £1.74bn in 2012 to £1.79bn in 2013, following a five-year decline, was announced by the Soil Association last month.

Driven by innovation

Recovery was driven by innovation from the likes of farmers entering food manufacturing and selling into independent stores, where sales rose by 6.9%, said Rob Sexton, chief executive of certification at the Soil Association. Independents were able to offer consumers more choice than the multiples, md of organic retailer The Better Food Company Phil Haughton added. However, there was still consumer demand for basic organic raw ingredients and projects like box schemes, which had seen sales increase by 11% to £193M in 2013, said Haughton.

Meanwhile, Sexton called on food manufacturers to accelerate the sector’s growth by developing new products, working closely with farmers to establish stronger supply chains and promote their produce’s organic status on pack.

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