Oats seems to be a prime example of the organic commodity market with its ups and downs. Finland is the biggest organic oats producer in Europe and also the country with the biggest oversupply. This year however the product just isn’t there. Why? The strong growth of the organic acreage in the 90’s in Finland was largely driven by subsidies. 40% of that acreage is cereals and the most imortant cereal is oats, which is very well adapted to Finnish soil types and the Finnish climate. So Finland had a big surplus of organic oats and became a big exporter. As a consequence farm gate prices were very low until 2005/06. Those prices were not profitable for the farmers so many pulled out: the acreage of organic oats in Finland decreased by 3000 ha. Partly permanently with farmers going back to conventional – partly as a shift within organics. On top of the decreased acreage came last summers extremily warm and dry weather. Yields were 15-20% less than normal, but even more importantly some farms harvested almost no milling quality oats and the proportion of shrinked grain is very high. Flake yield in milling is very low. These factors together result in only c 50% yield of milling quality organic oats compared to normal situation. The situation is of course catastrphic to those companies who are committed to exporting organic oat products. Every stone is turned to find the remaining oats. F.ex. Helsinki Mills has offered animal-farms to change their organic oats into conventional fodder (many organic farms do not market their animal products as organic).
What will happen next? Prices are increasing to extremily high levels and contract prices for the 2007 crop in Finland will be at a substantially higher level than 2006. This should bring some of the lost acreage back but those farmers who have gone back to conventional are probably lost permanently. Certainly their will be an increase in organic oats acreage in Finland, Sweden, Germany and other countries. But also other organic grain prices – even conventional due to biofuel – are increasing so it is not so clear what will happen. In any case the market demand is strong and I believe the farm-gate prices will be ‘permanently’ (what ever that means) higher and farmers are safe to increase their acreages even if it means they need to convert from conventional.
But when the prices start to decrease eventually we should be careful to avoid this happening again. Farm-gate prices must be kept at a sustainable level – otherwise the same cycle will follow again.
BioFach is over and a few days have passed. It was the fourth time we had a joint Finnish stand at BioFach and definately the busiest so far. Until now Saturday at BioFach has been relatively calm giving some possibility to get off the stand and make a tour in other halls. Now that kind of breaks didn’t come before Sunday.
This time we were 5 companies from the Organic Food Finland export group: Finnamyl, Helsinki Mills, Kankaisten Öljykasvit, Kiantama and Maustaja. As a typical feature of 2006/07 two important products: potato starch and oat flakes were already out of stock. Wild berry products from Kiantama and ketchup and Napapiiri jams from Maustaja seemed to be drawing the most attention. We received a few orders and a lot of follow-up work to be done by myself and Lhassan (right in the picture).
There is definately nothing that can be compared to BioFach. Still also local shows are necessary – see you at Natural Products Europe in London in April.
The first time I visited BioFach was back in 1995. I was travelling with a friend of mine who has been one of the key officers responsible for organic farming issues in the Finnish Ministry of Agriculture and Forestry (well, if he ever reads this and wants to comment, he can put his name in). I remember we were quite interested in the degustation of organic wines and I did get long lasting friends at Perlage – their Cabernet is still available in the Finnish ‘Alko’ monopoly retailer as a result, and I think stil one of the organic best-sellers there.
In 1996 I was involved in a marketing project for organic-biodynamic food and had arranged a small booth for organic products from Finland. That is where the story of the world’s first organic liquorice started although the manufacturer Makulaku wasn’t aware of it before I introduced the idea to them half a year later. In 1997 the Nordic countries were the region of the year at BioFach and saw the biggest ever number of companies from Finland exhibiting at BioFach. After that I arranged the Makulaku stands until we started with joint Finland stand in 2004.
So this is the 12th time at BioFach and 11th time we have a stand at Biofach in one form or another. This year six companies participate at the Finland joint stand – five of them also members of Organic Food Finland Export Group. Helsinki Mills and Finnamyl have participated at the joint stand since 2004. For Kiantama, Maustaja and Virgino this is the first time. Also this is the time when we are introducing the NAPAPIIRI Organics range: six sugar-free preserves based on Nordic berries and 2 flavored hot cereal products. So far the response to the jams has been quite positive – we sent samples to some of our contacts as invitations to our stand – so we’ll see what BioFach brings along and if we can report some real business.
It seems that for me personally I see less and less of BioFach and am busier and busier at the stand. Even now my calendar is pretty full with meetings every hour or half-an-hour. We’ll see how that works with everyone rushing around more or less late. And then there are all the people who I should meet who don’t have an appointment. Lhassan, who is working at Organic Food Finland as Key Account Manager since last April will be busy on the stand.
Anyway I’ll see you there!