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Austria is one of the main success stories of European organic farming in terms of the size of the organic farming sector and in terms of positive policy support, first on a national basis and – after Austria’s membership of the EU – under EU regulations. Hence, Austria provides a good case to study the factors that promoted this rapid expansion of the organic sector. However, as shown in Figure 2-1, the development has slowed down recently and Austria therefore also provides a case for studying such a period of slow or stagnating development.

Austria has a fairly long tradition in organic and biodynamic farming. Individual farms date back to the 1920s. In the late 1970s a steady but relatively slow growth in the number of organic farms started and continued throughout the 1980s. The first half of the 1990s was characterised by the beginning of a rapid growth period that led organic farmers to cover 8 per cent by of all farmers in 1996. In recent years the development has been considerably slower again, but still the organic sector is one of the largest in Europe.

According to several different interview sources four decisive steps in the Austrian development can be detected. The first step includes the definition and protection of the term organic in the Austrian food law in 1983 (Codex Austraicus) that was implemented by the Ministry of Health and Consumer Protection. The second step includes public support to organic associations and the introduction of a law on organic production in 1989, which was expanded from crops to livestock in 1991. Thirdly, general subsidies for organic farmers were introduced nationwide in 1991 and continued under the framework of the agri-environment programme after Austria joined the EU in 1995. And, finally, in 1994, the biggest Austrian retailer Billa-Merkur started an organic product line.

It is also generally acknowledged among interviewees that the farming conditions in Austria supported conversion to organic farming because many farmers in Austria are, in any case, following extensive production practices. In addition, the more rapid development of organic farming in Austria coincided with the negotiation period for Austria’s EU accession and these are likely to have contributed indirectly to the development of organic farming through a substantial re-orientation in Austrian

agricultural policy.

2 _{Prepared by Susanne Padel and Johannes Michelsen on the basis of interviews done and summarised by}

The halt in organic farming growth after 1995 has no clear explanation. However, after Austria’s EU accession, the objectives of the Austrian agri- environment programme were broadened and other less restrictive support programmes were offered (a direct effect is mentioned in note a to Figure 1-1.) It is, furthermore, worth mentioning that the structure of organic farms seems to change towards smaller farms as the total certified area is decreasing while the total number of farms is increasing. This indicates a process where quite a few organic farmers (re)convert to non-organic farming – a process mentioned in a leading Austrian magazine in March 1999 and explained by difficulties in marketing the products (Weber 2000).

Figure 2-1: Development of organic land area (total and policy supported) and number of farms in Austria from 1985 a _to

1998

Source: Foster and Lampkin (2000)

a _{area for 1985-1993 estimated from number of farms (ca. 14 ha/farm)}

Note: In 1995 there were initially 22 875 holdings registered at start of the year, but many transferred to other EU Reg. 2078/92 schemes during the year. Official data now exclude these farms.

Organic farming in Austria is rather unevenly distributed both geographi- cally and with regard to product. Organic production is concentrated in the Alpine regions (65 per cent), with 30 per cent in medium altitude regions and less than 5 per cent of organic farms in the lowland regions (Eder 1998a). Of the provinces, Tirol has the largest share, followed by Steiermark, Salzburg, Niederösterreich, Oberösterreich, Kärnten, Voralberg and Burgenland. Conversion was mainly concentrated in the western areas with a large proportion of permanent pasture (Tirol, Salzburg) and is not so strong in those regions, where, traditionally, cropping dominates (e.g. Burgenland). Approximately 80 per cent of the organic area is permanent

- 50 100 150 200 250 300 350 400 85 86 87 88 89 90 91 92 93 94 95 96 97 98

Land area ('000 ha)

0 5000 10000 15000 20000 25000 No of farms

pasture and 20 per cent is cropping land (Foster and Lampkin 2000). Approximately 86 per cent of all organic producers are in the

disadvantaged mountainous areas, with only 14 per cent in the lower (for agriculture) more favourable regions (Groier 1998). The uptake of organic farming among specialist producers, such as wine and fruit growers and specialist horticultural producers is limited.

The average farm size is 19.8 ha (compared to 13.2 ha in Austrian

agriculture). In some regions the organic farms are larger than average (e.g. Burgenland, Niederösterreich) while in others, smaller (Tirol, Voralberg). About 97 per cent of all organic farms have livestock and 87 per cent of all organic farms are in the mountain regions of Austria. A large proportion (58 per cent) of the livestock producers’ activities can be classified as low intensity grassland production (Eder 1998b). The proportion of full-time farmers is higher among organic farmers (51.4 per cent) as compared to conventional agriculture (31.3 per cent) (Groier 1998).

Approximately 65 per cent of all organic farms are members of an organic producer organisation and private certification body (Ernte being the biggest), but 37 per cent of the organic farms follow the Codex-standards and are inspected by the general Agriculture Chambers. The majority of those farms are in the regions Tirol (in 1997, 4395 out of 4995) and Salzburg (2004 out of 3340), whereas Ernte is particularly strong in the southern and southeastern regions.

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Main questiMain questiMain questiMain questions for the in-depth studyons for the in-depth studyons for the in-depth studyons for the in-depth study

Apart from an improved understanding of the development of a large organic sector the following issues were, in advance, specified as of special interest in the Austrian in-depth study.

The first and most general issue is about the role of organic farming in the Austrian agriculture network. It appeared that strong growth in organic farming took place in spite of a relatively weak representation of organic farming in the very tight and strongly interrelated agricultural network in Austria. This network includes the Agriculture Chambers and the co- operatives which both have close connections with agricultural policy institutions. Of specific interest was the position of organic farmers and their organisations in this network. An ongoing competition among two organic umbrella organisations lead to the question of whether this internal conflict had impeded joint representation of the interests of organic farmers. A special aspect of representation included questions regarding the high proportion of codex farms in some regions and how their interests are represented.

The second main issue of investigation is the basis for the political commitment in supporting organic farming and any change in this in recent years. This issue includes an interest in clarifying the perceptions of the economic implications of Austria’s EU membership for conventional

agriculture that, during the negotiation phase, seemed quite negative and a possible explanation for the very rapid growth of the organic sector. The third issue is the development of the market and the relative importance of multiple retailers and direct or regional marketing. Against this background it was important to obtain interviews with representatives of all the most important organisations concerned with Austrian agriculture policy: the Ministry of Agriculture, the Agriculture Chambers, and Agrar Marketing (AMA). To these were added Ernte as the largest organic producer organisation, the Raiffeisen Verband as the company including the main firms supplying farmers with raw materials and processing their products, and Billa as the main Austrian multiple retailer who developed its own organic label (“Ja natürlich”). Finally, interviews were conducted with persons involved in marketing outside multiple stores and with significant individuals of the field such as researchers, organisers of farmers, or leading individuals.3