Banks impeding growth in Danish organic meat sector
This lack of expansion, despite record demand and consumption, is causing a serious shortage of organic meat on the domestic and export supply side.
Danish organic meat processing specialists, including Danish Crown’s Friland A/S, are finding it increasingly difficult to meet domestic and international orders because of acute supply shortages from Danish organic pig and beef farms with shrinking herds.
"The demand for organic meat is growing fast and we are unable to keep up with demand in the marketplace. If we had access to more organic meat, we would certainly be able to sell a lot more," Henrik Biilmann, managing director at Friland A/S told GlobalMeatNews.
Friland is Europe’s biggest supplier of organic meat. The company specialises in supplying pork and beef to processing firms, including fresh, frozen, retail-packed, as well as a selected range of processed pork products. The company accounts for 95% of all organic meat sold in Denmark and 15% in Germany.
"Based on current trends, we would expect sales of organic meat to grow by between 15% and 20% a year. Naturally, this level of growth depends on scaled-up production by organic farms, which is difficult under present farm supply circumstances," said Biilmann.
Friland currently slaughters 2,000 organic pigs per week at its factories in Denmark. The company would need organic livestock supplies to increase to 3,000 pigs a week in order to achieve the 15% to 20% projected growth rate, Biilmann noted.
A key reason for this problem is that banks are refusing to lend to any significant degree and amounts to organic farmers, stressed Rikke Lundsgaard, a senior policy adviser to Danmarks Naturfredningsforening, Denmark’s nature conservation organisation and a supporter of organic farm production.
"The government has set a target that 120,000 extra hectares of land will be used for organic farming by 2020 in Denmark. This will be a challenge, as banks still do not recognise organic farming as an attractive alternative to conventional agriculture when they examine applications for working capital or investment loans," Lundsgaard told GlobalMeatNews.
He claimed banks increasingly wanted to see evidence of greater and more sustainable productivity and profitability from organic meat farms before lending: "Organic farmers are often encouraged by banks to return to conventional meat farming as a trade-off to secure the working loans they need," said Lundsgaard.
