Scenarios represent mainly limitations
- and, to a lesser extent, possibilities

There are three levels of feed imports

	no import, complete self-sufficiency in feed
	15% imported for ruminants and 25% for non-ruminants
	unlimited import of feed and maintenance of the present level of livestock production (1996).

On the basis of the current rules, 15-25% of the import is assumed to be conventional feed and the remainder organic feed.

- and two yield levels

The scenarios use two different yield levels in the main crops, i.e. cereals and grass: the "present yield level" based on current organic practice, and an "improved yield level", in which it is assumed that cereal production could be increased by 15% and clover grass production by 10%. This is based on a more goal-oriented effort to increase cereal production and better use of pastureland as a result of the lower yield of the individual dairy cow compared with present organic practice. The three levels of feed import and two yield levels are expressed in six different organic scenarios:

- six scenarios in all

No export of plant products

Plant products are produced for domestic consumption in all the scenarios, but no plant products are exported, in contrast to today's situation, in which the net export of grain accounts for almost one fifth of the harvest and in which there are significant exports of seeds, sugar and potato starch.

The production of milk and beef could be sustained at an almost unchanged level through adjustment to feed that contains more coarse feed. Pork and poultry production would vary in step with imports of feed and productivity in plant production. In the case of 0-import, production would drop to about 30-44% of present production and, for 15-25% import, production would drop to 71-93% of present production. In arable farming, feed is produced for the above-mentioned livestock production, and plants are produced for current human consumption. It is assumed that cereal and seed grain of sufficiently good quality can be produced since the early generations are assumed to be dressed with pesticides until new organic production methods for seed grain are developed and implemented.

Necessary to import potassium

The scenarios indicate a number of constraints on a total switch to organic farming. The main constraint is probably that, in all the scenarios, it is estimated that it would be necessary to import potassium in the order of magnitude of 60 to 100 mill. kg K per year (most in the 0-import scenarios) in order to maintain yields in clover grass at the level of the empirical basis for the scenarios. In coarse sandy soil, potassium leaches easily and has to be added. There are unexploited possibilities for recirculation from urban communities in the organic scenarios, but the quantities would be relatively small compared with the need for potassium. Besides potassium, it would be necessary to import feed phosphates for the animals, also in the 0-import scenarios, to meet the animals’ needs. That means, on the other hand, that there would be no problems with the nutrient balance for phosphorus. Under the current organic rules it is permissible to purchase feed minerals and sparingly soluble mineral fertiliser.

Import of feed is important to nutrient balance

To summarise, the loss of phosphorus and potassium through sales products must be made up for by a supply to farmland in the form of mineral fertilisers, recirculation or feed. Nutrient import via feed thus plays a significant role in the organic scenarios. As mentioned, the current rules allow use of 15% conventional feed for ruminants and 25% for pigs and poultry. However, a discussion now going on in the EU indicates that permission to use conventional feed will be withdrawn over a period of years. In such case, the need for imported feed will have to be met with organically cultivated feed. If feed were supplied to 100% organic farms in Denmark, there would be a corresponding loss from farms elsewhere in the world, which would shift the nutrient problem but not solve it. It has not been clarified how the exporters of organic feed in other countries would be able to achieve nutrient balance so that a larger organic export of feed to Denmark could be maintained in the longer term. It is therefore uncertain whether it would be possible to maintain the present quantity of exported pork from a 100% organic agricultural sector in Denmark.

Particular problems in fruit, vegetables and special crops

Organic production of fruit, certain special crops and individual vegetable species is particularly problematical. In conventional operation, larger quantities of pesticides are used in these crops than in ordinary farm crops, and the financial value of using pesticides is high. There could also be difficulties with storage and shelf life and, thus, the length of the season. For vegetables, the increased yield variation would be a problem in itself, due to the high establishment costs and the accompanying economic risk.

- and in ornamental greenery

It is difficult to use and transfer the rules for organic production of agricultural and horticultural products to the forestry sector because the time horizon and the production period within forestry are very long, with continuous value growth throughout the production period. However, problems can be expected with national monuments in old forest areas, where there is little possibility of mechanical weed control, and it can be concluded that production of organic ornamental greenery and Christmas trees on a large scale would be difficult and would require extensive development work.

The nitrogen cycle is significantly reduced in the organic scenarios, to a level corresponding to Danish agriculture in the 1950s, because nitrogen would not be imported in the form of artificial fertiliser. It would instead be obtained by symbiotic nitrogen fixation in clover grass fields and through importation of feed, but cereal production would be limited by nitrogen in all the scenarios. The calculations show a 50-70% reduction of the net contribution of nitrogen to the soil in the organic scenarios compared with Danish agriculture in 1996. One would therefore have to expect a significant reduction of nitrogen leaching in the long term, retaining the same cultivation practices. It should be noted, however, that the calculations are encumbered with great uncertainty.

Energy and greenhouse gases

The consumption of fossil energy and emission of greenhouse gases would fall in step with the scale of livestock production. The fall in Danish pork exports would presumably be balanced by an increase in production in other countries. Restructuring Danish agriculture for organic production would therefore not necessarily reduce global energy consumption even if Denmark’s CO₂ account were improved. Energy consumption per unit of plant and livestock production would fall, mainly because of the changed composition of crops at a 100% organic farm and because industrially manufactured nitrogen fertilisers would not be used. On the other hand, if some of the crops were used for energy purposes, there would be a bigger net energy production in conventional arable farming because of the higher yield.

Increased natural content

A complete switch to organic farming would result in larger quantities of flora and fauna in crop rotation fields. Species diversity would gradually increase, although mainly in species that are already rather common. The biggest qualitative effects would be found in semi-natural ecosystems and in small biotopes because there would no longer be any spreading and drift of pesticides or unintentional delivery of top-dressed artificial fertiliser to edge biotopes.

A considerable increase in the quantity of organisms in the soil can be expected with a switch to organic farming, mainly because of changed crop rotations, and that would affect the structure of the soil, the release of nutrients and the food basis for large parts of animal life in and over the earth.

The consequences for public health of a total switch to organic farming would depend on changes in the intake of physiologically important substances. Some changes could be expected in the content of physiologically important substances, but they would be generally small in relation to the effect of changes in the composition of the diet.

Use of antibiotics is falling

Use of antibiotic growth promoters would end altogether with a total switch to organic farming. It should be mentioned, however, that the use of growth promoters in conventional farming is going to be phased out in 1999. Overall, it is estimated that the consumption of therapeutic pharmaceuticals would fall by around 30% with unchanged livestock production and further still with falling livestock production. Discontinuation of use of growth promoters is presumed to reduce the risk of transference of resistant genes to bacteria pathogenic to humans.

An established market

Today, there is an established market for organic food products. Approx. 3% of all Danish food consumption is organic and the share of the market ranges from 0-22% for different products. It is characteristic that the biggest market shares are gained for relatively cheap food products, such as milk, potatoes and vegetables. For processed products, such as meat, cheese and butter, the market shares are small.

- with price premiums

The price premium for organic products also varies greatly – from 5 to 90% for the farmer in relation to corresponding, conventional products. In the longer term, it is estimated that a price premium for the consumer of maximum 10-25% would enable continued growth in the market share of organic food products. However, for a growing market for organic food to materialise, the consumers would have to compose their consumption not only with a view to satisfying their material needs but also with consideration for their own values, including an interest in the production process in food production.

Socioeconomic consequences difficult to predict

It is extremely difficult to predict the socioeconomic consequences because the change is a very big one, with both primary production and a number of associated sectors affected to a greater or lesser extent.

A number of analyses have been carried out with a socioeconomic model that primarily throws light on the costs that would arise from the fall in primary production. The analyses are based on a "compulsory" switch to organic farming because that would be the only sure way of achieving 100% conversion. Any preferences the Danish consumers may have for organic farming have thus not been valued. On the other hand, a sensitivity analysis has been carried out in which it is assumed that foreign consumers’ preferences change to the benefit of Danish organic products.

Impairs the national economy

The socioeconomic analyses show that 100% organic farming in Denmark with unchanged consumer preferences would impair the national economy. Gross National Product (GNP) would be reduced by 1-3%, corresponding to a reduction of DKK 11-26 billion per year. Private consumption would be reduced by 2-5%, corresponding to DKK 1,900-4,700 per capita per year.

The effect would depend on feed imports and productivity in primary production. 0-import and present yield level would result in the biggest reduction, while 15-25% import and improved yield level would result in the smallest reduction.

The different agricultural sectors would be affected very differently. For example, dairy farming would remain largely unchanged, whereas pig farming and arable farming would be very badly affected. These changes would affect farm economy in dairy farming, pig farming and arable farming.

- depends on consumer preferences

A sensitivity analysis has also been carried out in which changed consumer preferences in the export markets are assumed, corresponding to a price premium of 10% on milk and 20% on pork. This analysis has only been carried out for 15-25% feed import and improved practice. The analysis shows that this would reduce private consumption by about DKK 500 per capita per year and that the GNP would be reduced by DKK 8.5 billion per year.

- and valuation

A valuation has been carried out of the quantifiable environmental benefits of omitting pesticides, reducing nitrogen leaching and reducing emissions of greenhouse gases. There are big differences in the different groups’ willingness to pay for environmental benefits, and the valuation here is based only on alternative costs in the form of society’s savings in connection with the conversion. The analysis shows that the alternative costs of the environmental benefits can be put at DKK 1-1.5 billion per year, but it should be noted that the valuation is very uncertain.

The socioeconomic analyses show that the costs of compulsory 100% conversion are high. If one instead allowed demand and the price mechanism to govern the rate of conversion, there would be no guarantee as to how much would be converted, but it can be assumed that the conversion that did take place would improve society’s welfare. That is because, according to current economic theory, a market-driven change is synonymous both with a more effective resource allocation in society and with the consumers, through their change of preference, individually assigning the "right" value to organic food products, corresponding to their willingness to pay. Since a switch to organic farming is associated with beneficial environmental effects, it need not be based on market forces alone in order to improve the welfare of society, but can be based on government regulation.

The Sub-committee on Legislation has considered some legal questions concerning possible restructuring of Danish agriculture for organic production (chapter 8). It is concluded that, with the current EU rules, it would hardly be possible to implement compulsory conversion. It is not possible to prohibit the importation of conventional or organic feed or food products. As long as the current EU rules remain in force, the most realistic scenario would be voluntary conversion to organic production. The sub-committee also indicates some legal initiatives that the Danish government could take in an EU context to promote conversion to organic production.

In this report, the organic scenarios are based on a number of assumptions that can be discussed in connection with the perspectives for organic agriculture in Denmark. The main assumptions can be divided into two groups, as follows:

1. The organic form of production, which in turn depends on the interpretation of organic farming’s basic concept, including legislation and rules on imports and self-sufficiency in fertiliser and feed.
2. Society’s interest in and the consumers’ preference for the organic form of production.

- are related to the precautionary principle

The trend in organic production has hitherto been based extensively on changes in consumer preferences to the benefit of organic products. This change in consumer preferences may be connected with a conscious or unconscious use of a preventive or precautionary principle based on the consumers’ experiences with the use of new technology in farming.

- sustainability

Involvement of the precautionary principle is bound up with a perception of nature as more or less fragile and acceptance of man as an integral part of nature. In the form of the concept "sustainability", this insight has gained a big foothold in the national debate.

- and perception of nature

Organic farming is based on a different perception of nature than the one that has dominated in conventional farming. This difference in the perception of nature leads to a different approach to food production and prevention of environmental problems. Seen in this way, organic farming would do more to prevent environmental problems than conventional farming, but, the level of production and productivity would be lower. Organic food production would therefore involve more production costs. However, it is estimated that it would be possible to improve the efficiency of organic farming in the long run, although this would depend on organic farmers wanting a development in which the rules are generally up for debate but naturally with proper respect for organic farming’s values.

The cost of compulsory total restructuring would be high. If one instead allowed demand and the price mechanism to govern the rate of conversion, there would be no guarantee as to how much would be converted, but it can be assumed that the conversion that did take place would improve society’s welfare. Since the change would be linked to beneficial environmental effects, it would not need to be based on market forces alone to improve society's welfare.

Government regulation and changed subsidy schemes increase conversion

It follows from the above that the impact on the common environment from agriculture constitutes grounds for government regulation and that increasing the rate of conversion may be warranted. In continuation of that, the trends in international agricultural and trade policy will be of importance. For example, the current trends point in the direction of unlinking subsidy and production quantity and towards higher prioritisation of environmental objectives. These perspectives may imply incentives for a continued expansion of organic food production.

As far as the market perspectives are concerned, continued high prioritisation of the environment and livestock welfare is presumed to lead to continued growth in the demand for organic food products. The reason why this prioritisation is assumed to be primarily addressed to organic food products is that only organic farming is based on a clear and internationally recognised concept.

if the players agree

All in all, it follows that the development perspectives will depend on market conditions and political decisions. However, in addition to that, it must again be stressed that the development perspectives also depend on whether relevant players agree on and are motivated for a conversion of the extensive network of companies and institutions of which agriculture is a part.

- and reduce the use of pesticides

With respect to society’s current possibility of reducing the use of pesticides, organic farming is an obvious option. If the development continues as hitherto, about 20% can be expected to have been converted by the year 2008, which will result in a 14-18% reduction in the average treatment frequency compared with present practice. As long as there is a market prepared to pay a premium for organic products, that will be the socioeconomically cheapest solution.

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