Why things are currently not going well in the organic industry

Organic is a success story in Austria: almost 24 percent of agricultural businesses were organic in 2023. 27.7 percent of the areas are farmed organically (Upper Austria: 20.3 and 18.7 percent). For comparison: In the EU in 2020 (more current figures are not available) it was 9.1 percent of the area. Now the organic industry is struggling with problems that are also reflected in the numbers: In Austria, the number of companies fell by 3.7 percent to 24,150. There was a decrease of 1.5 percentage points in area.

One reason for this is the cautious demand for products in the premium segment, as the President of the Upper Austrian Chamber of Agriculture, Franz Waldenberger, explained at a press conference: The share of organic food in food retail amounted to 11.5 percent in the first half of 2023, a stable value compared to the previous year, “but according to observations, the numbers declined in the second half of the year”. Accordingly, the prices that farmers can currently achieve on the markets have fallen.

In addition, the premium rates according to the Öpul agri-environmental program were set before the outbreak of the inflation crisis and do not currently cover the additional costs in organic farming.

Export markets are collapsing

In addition, consumption lags behind production in many areas, meaning Austria is dependent on exports. For a long time, the most important export market was Germany. There, however, hesitant demand is met with a shift in production: more and more farmers are switching to organic farming. This is also the case in the rest of the EU. “Austria is therefore dependent on increasing domestic consumption,” said Waldenberger.

According to Johannes Liebl, chairman of the Bio Austria Upper Austria association, one lever is communal catering: “2.2 million meals are consumed outside the home every day.” The action plan for sustainable public procurement stipulates that at least 55 percent of organic food will be consumed in meals by 2030 public canteens of schools, homes, prisons and the armed forces. Currently it is estimated that it is only four percent. However, there are pioneers in this field, such as the old people’s and nursing home in Gaspoltshofen: the proportion of organic goods there is 40 percent.

Johannes Liebl, chairman of Bio Austria in Upper Austria (l.), Franz Waldenberger, president of the Upper Austrian Chamber of Agriculture
Picture: LK ÖÖ