The French Ministry of Agriculture and Food Security is stepping up to assist organic farmers with a financial aid package totaling €60m. This move aims to alleviate the losses these farmers are facing as a result of the ongoing economic crisis, which is itself a fallout of the Russo-Ukrainian war. The government has collaborated with industry associations to define the parameters of this aid, which has also been registered with the European Commission as state assistance.
Eligible for this aid are all agricultural businesses that are either already certified organic or in the process of transitioning to organic farming. However, they must meet two specific criteria: a minimum 20% loss in their gross operating surplus (calculated as value created minus personnel costs but including depreciation) and a minimum 20% reduction in liquidity. Both criteria should be met in the period between June 2022 and May 2023, compared to the average for the years 2018 and 2019. This aid can cover up to 50% of the gross operating surplus and will be no less than €1,000 per enterprise. Applications for the aid must be submitted through the FranceAgriMer website by September 20, 2023.
Declining demand for organic products
According to the German trade magazine WEINWIRTSCHAFT, the revenues and profits of organic farmers have been hit especially hard in this era of inflation and reduced purchasing power. The impact varies across different products. For instance, while the inflation rate has remained relatively similar for both conventional and organic milk, the price of conventionally produced oil stood at an average of €3 per liter in 2022, compared to nearly €8 per liter for organic oil.
The consumer preference for organic products is also waning, increasingly replaced by a focus on local products, regardless of whether they are organic or conventionally produced. A consumer survey conducted in 2017 revealed that 30% of French respondents wanted more organic options; however, by 2021, this figure had declined to just 18% according to the same survey.
FranceAgriMer has not specified how many of the businesses applying for this aid are expected to be from the wine industry.