Organic Yoghurt in Germany
- 143 Downloads
In Germany in 2016, the market share of organic milk products was 4.3% of the whole milk products market, slightly lower than the average of all organic products (5%). A total of 47,300 tons of organic yoghurt was produced in Germany in 2016. The market share of organic natural (unflavored) yoghurt is 7.3% of the whole German natural yoghurt market. Whereas in the conventional value chain, exports are very important (nearly half of the production volume), imports are necessary in the organic sector. One of the major reasons why German organic milk production has continuously grown in recent years is that German producers of organic cow milk can rely on high and stable prices compared to fluctuating and often low prices of the conventional produce. Organic yoghurt is supplied to consumers through all kinds of distribution channels. In terms of volume, around 74% of the organic yoghurt is distributed by conventional retailers, followed by organic specialized retail stores. Another distribution channel is direct selling from on-farm dairies to consumers, but reliable data on the size of this channel is lacking. In terms of sustainability performance, organic yoghurt performs better than its reference for all the economic and social indicators we could assess. It also consumes less water. Regarding the carbon footprint of organic yoghurt production, the picture is today unclear. These environmental assessments are more favourable to organic yoghurt when indicators are expressed on a per hectare (rather than per ton) basis.
Market Development of Organic Cow Milk Yoghurt in Germany1
However, the market share of organic food products in Germany in 2016 was still low, accounting for only 5% of the total private spending for food. With a market share of 4.3%, the market for organic milk products at consumer level is more important than that of other similar animal products.
In Germany 2016, approximately 175,500 organic certified dairy cows were reared on around 4000 organic farms (Destatis 2017). The number of dairy cows has risen by almost 16% compared to the previous year (AMI 2018a).
In 2016, total German production volume of organic milk was 794,700 tons, whereas 31,972,700 tons of conventional milk was produced (AMI 2018a; BLE 2018). In recent years, the organic milk market as a whole has experienced significant growth. In 2016, the milk market grew by 8.5% compared to the previous year (AMI 2017a, b). Compared to 2008, organic milk production in Germany in 2016 had increased by over 70% (AMI 2017a, b).
A total of 47,300 tons of organic yoghurt was produced in Germany in 2016 (AMI 2017a, b), and at consumer level, a total of 54,000 tons of organic yoghurt were sold on the German market. The discrepancy is accounted for by imports. About two thirds (63.6%) of the total quantity of yoghurt was sold as natural yoghurt, 38.7% as fruit yoghurt and the remaining quantity as tzatziki (AMI 2018a). This is the opposite of conventional yoghurt, where only 34% is sold as natural yoghurt. The average per capita consumption of yoghurt in Germany was 16.7 kg per head in 2015, of which 5.6 kg was natural yoghurt (MIV 2017a, b).
The recent growth in German organic milk production is mainly due to the conversion of conventional farms. In addition, existing organic farms have expanded milk production (AMI 2018a). This growth can be mainly explained by stable and high producer prices for organic milk. In recent years, the conventional milk sector has been subject to strong price fluctuations. The average producer price for organic cow milk with 4.0% fat and 3.4% protein was 48.19€ cent per kg (farm gate) in 2016, which compares to 26.70€ cent per kg for conventional milk (Bioland 2017). At the end of 2017 however, the gap between conventional and organic milk producer prices had narrowed to around 20% (AMI 2018a).
Quality Attributes of Organic Milk
In general, health, environmental protection and the abandonment of chemicals and pesticides are the main reasons for buying organic food (Hemmerling et al. 2015). The most important purchasing motives for organic products among German consumers are animal welfare, regional origin/support for regional farms, less use of additives and processing aids and lower pollution (BMEL 2017).
Research on comparison between organic and conventional milk products shows differences in quality with measurable factors such as higher Omega-3-content (Alfödi & Nowack 2015) Conjugated Linoleic Acid (CLA) (Bloksma et al. 2008; MRI 2018) ruminant fatty acids, and iron content as well as a higher level of vitamin E (alpha tocopherol), beta-carotene (vitamin A precursor) and other antioxidants like lutein and zeaxanthin (Bloksma et al. 2008; European Parliament 2016). Moreover, organic milk was considered to be creamier and tastier than conventional milk and had a higher lymphocyte stimulation index (Bloksma, et al. 2008).
Rearing conditions, processing standards and quality attributes of organic yoghurt production in Germany
Requirements in organic production/quality attributes
It is compulsory to have 100% organic certified feed for dairy animals. Moreover, at least 60% of the dry matter in daily rations of herbivores consists of roughage, fresh or dried fodder, or silage (§20 of EU regulation 889/2008). Private standards also require that feed be produced in Germany. The quality of the milk produced, in terms of fatty acid composition, depends on the feeding regime of dairy cows. A high proportion of roughage, especially grass in the feed, results in a comparatively high content of omega-3 fatty acids in the milk (Steinberger 2018). In order to improve nitrogen fixation, organic farms usually have clover in their grassland cultivations. Grass and clover both have a high omega-3 fatty acids content. Another group of fatty acids – ruminant fatty acids – are found in higher concentrations in organic compared to conventional milk (European Parliament 2016).
Health and treatments/keeping
Since the preventive use of antibiotics is forbidden and the curative use is heavily restricted (with double the waiting period than in conventional production), there is a lower risk of having antibiotics in the final product or of development of antibiotic resistance (European Parliament 2016; Smith-Spangler, et al. 2012). Animals reared under organic conditions are not confined and can thus express their natural behaviors. They have access to exercise in the barn as well as to outdoor activities such as grazing, and might therefore have lower risks of illnesses (Sautereau and Benoit 2016).
Taste and ingredients
According to Smith-Spangler (2012), organic dairy products have a higher nutritive value in terms of omega 3 (56%) and a higher vitamin E and iron content as well as a lower level of iodine and selenium (Sautereau and Benoit 2016).
On average, replacing conventional with organic dairy products while keeping the diet constant will increase the intake of omega-3 Poly unsaturated Fatty Acids (PUFA) by approximately 4% (European Parliament 2016). It has also been found that organic milk might contain a higher content of vaccenic acid or conjugated linoleic acid, reducing risk of eczema (KOALA study conducted in the Netherlands).
Environmental and resource protection
The main benefits of organic milk production from an environmental point of view are higher part of grassland/pasture in feed (Thünen 2017; Steinberger 2018), which improves carbon sequestrations (Sautereau and Benoit 2016). In a Dutch study, it has also been found that the energy use per unit milk in organic dairy is approximately 25% lower than in conventional dairy, while GHG emissions are 5–10% lower. (F.F.P. Bos, et al. 2014).
EU regulation on organic production does not limit transports in a special way. But most of the private certification organizations limit the transports to the slaughterhouse to four hours or 200 kilometers, in order to limit animal stress. Tranquilizers are not permitted for organic animals. Straw is required during the transport and in some areas of the slaughterhouse. Some certifiers define the maximum animal number in the vehicle or the space over the heads of the animals. Moreover, by growing most of the feed on the dairy farms themselves, organic production seeks to minimise the environmental impact of feed transport over long distances (Feeding + Dairy Co 2012).
Organic milks contain a higher content of Conjugated Linoleic Acid (CLA), which is a polyunsaturated fatty acid, and a higher content of antioxidants than conventional milk. Even after processing, these advantages are preserved (Butler et al. 2011).
Although processing methods are the same in organic and conventional milk, the use of processing aids, additives and other substances is very limited in organic processing. In organic processing, only 54 additives are permitted, whereas in conventional processing more than 320 additives are permitted (BMEL 2018). For example, in organic yoghurt processing, processing aids reducing breeding time of yoghurt are not allowed, nor are artificial flavors or preservatives. Some organic processors also avoid using milk powder, which prevents the whey-water separation, though it is permitted in organic processing.
Description of the Value Chain
Agrarian technology, stable equipment, animal health and reproduction products (veterinary). Reproduction methods are similar to the ones employed in the conventional chain, i.e., mostly artificial insemination, but transfer of embryos is not permitted in organic production.
skimmed milk (powder and liquid), lactic acid bacteria (lactobacilli) for yoghurt processing; Sugar, which can be added in rare cases.
Milk Producer and Milk Producer Associations (U3 and U4)
A major difference between conventional and organic milk production is the origin and the composition of feedstuff. In general, organic farms produce their own feed or produce it in cooperation with neighboring organic farms. Organic feed is procured to a lower extent than in conventional farming. Moreover, organic dairy cows are mainly fed with roughage from pasture, at least in summer. Producers of crop inputs (U1) thus play a minor role in the organic dairy supply chain. Organic dairy cows are fed less with concentrate (<14% of the total daily ration), than conventional ones (24% average) (Warnecke et al. 2014).
The dairy cow feeding system is mainly based on roughage (grazing, hay, and others) from the same farm. The proportion of roughage varies according to season (summer/winter) and region (north/south Germany), but it is never below 60% of the daily ration. There are two main feeding systems in organic cow rearing depending on the season: in summer, 70–90% grazing, and in winter mostly grass- or maize-silage and grains (Blanc 2017, Hörtenhuber 2013). According to the experts interviewed (Ofenbeck 2018; Steinberger 2018), pasture periods are becoming longer as vegetation periods lengthen because of climate change. This trend to a “pasture based rearing system” leads to a significant higher performance in carbon sequestration as well as biodiversity preservation (Hörtenhuber 2013).
In Germany, the average organic dairy farm rears 40 cows (57 in conventional) and uses 57.2 ha of utilized agricultural area (59 ha in conventional), but these values vary depending on the region (Thünen 2017). These figures clearly indicate the lower animal density in organic farming (1 organic dairy cow every 1.43 ha on average) compared to conventional farming (1.03 ha/cow).
The dairy cow breeds used in organic farming are similar to those in conventional farming and can be classified into three main groups: Simmental (Fleckvieh), Brown Swiss (Braunvieh) and Holstein Frisian (Schwarz/Rotbunte) (LKV 2016; KTBL 2017). In Southern Germany (especially in Bavaria), nearly 75% of the dairy cattle is Fleckvieh (LKV 2016), whereas in the northern parts, Schwarzbunte (Holstein) are dominant. The proportion of Braunvieh is slightly higher in organic farming than in conventional dairy farms (LKV 2016). The share of crossbreeds (meat/milk) is more or less the same in both value chains (Schumacher 2018).
Looking at breeding objectives, there is concern in the organic farming value chain that conventional breeders (and some organic breeders as well) are trying to obtain hornless breeds, mainly for safety reasons. Organic farmers (Demeter) fear that horned dairy cattle will die out in a couple of years if the ongoing genetic selection is not halted.
Organic cows produce approximately 10–20% less milk than conventional cows. Results from 2017 show that organic reared cows give on average 6348 litres/year, whereas the average of conventionally reared cows is 7037 liters (Thünen 2017). All organic cull cows are generally sold in the organic value chain with high added value, whereas male calves generally end up in the conventional sector for fattening. The average lifespan of organic milk cows (5.7 years) is not much higher than that of conventional cows (5.5 years; LKV 2014, 2016). In both production systems, young calves are separated from their mothers at an early stage.
A key difference between conventional and organic rearing conditions lies in the reproduction methods: transfer of embryos is forbidden in organic farming.
Each organic milk producer is part of a producer association, which is not always the case in the conventional value chain. These associations, called “MEG” (Milch-Erzeuger-Gemeinschaften) are cooperatives or other forms of organization. Each dairy belongs to its own producer organization, which is responsible, inter alia, for price negotiations, general policies and quality patterns. Compared to the conventional sector, the price of organic milk is higher and less volatile (See price development below). This is for three reasons. First, the organic market is less export oriented and therefore less dependent on global price fluctuations. Second, price setting is completely disconnected from price setting in the conventional supply chain and separate negotiations are carried out, mainly by specialized associations. Thirdly, production aims at delivering smaller quantities of intermediate or bulk-products (like powder) but more of final consumer products, for which the contract periods in general are longer (AMI 2017c, expert interviews).
This number is high, since according to MIV (2017a) the total number of all milk processing companies was 124 in 2016. It appears that the organic value chain is not so affected by the concentration process of mergers ongoing in the conventional dairy sector (MIV 2017b). Approximately 2/3 of the total milk production is collected by cooperatives, and only 1/3 by privately run dairies or companies (MIV 2017b, page 11). In the organic value chain, half of the organic certified dairies are cooperatives and the other half is composed of private companies (Blanc 2017, Brügmann 2018a, b).
Nevertheless, the organic value chain also faces problems in collecting milk on a regional level, since the dairies need to expand their collecting area in order to achieve economies of scale at the facility level (Runge 2015). Experts state that the spot market has no relevance for organic yoghurt production (Szezinski 2018; Scheitz 2018; Brügmann 2018b). Almost all organic yoghurt processing dairies use their own collected milk for production.
Organic processing methods are mostly the same as the conventional ones. Standardized milk and milk powder can be used, although use of processing aids and other inputs is very limited in organic processing. At processing level, if storage as organic milk powder is not viable, organic milk can be exceptionally downgraded into the conventional value chain, but very small amounts are concerned.
There is no reliable data on the importance of on-farm (or farm-based) dairies in organic production. This is partly because the term “Hofmolkerei” or “Hofkäserei” (farm dairy) is not legally protected in Germany. The national “association for crafted milk processing” (Verband für handwerkliche Milchverarbeitung – VHM) has its own definition of what farm dairies are (at least 51% of the processed milk is produced on farm) and delivers a product with its own brand. But no statistics are available on yoghurt processing volumes of these farm dairies (Albrecht-Seidel 2018; Mack 2018).
Storage Facilities, Wholesale and Retail (D1, D2)
The degree of self-sufficiency for organic milk products in Germany in 2016 was around 67%, expressed in milk-equivalent and at the consumption level (AMI 2017b). Austria as well as Denmark, and to a lower extent the Netherlands, Switzerland and France are the main countries supplying organic milk products (AMI 2017a, b). According to market experts, there is no consolidated data available on volumes dealt on the spot market, but the volumes are very small, and there are also other countries involved, like the Czech Republic (Mack 2018).
Concerning organic yoghurt, in 2015/2016, around 6700 tons of organic yoghurt (flavored and natural) were imported, mainly from Austria, which corresponds to 13% of the total organic yoghurt consumption (AMI 2017a, b). The import rate for organic natural yoghurt is only 9%. The main exporting countries are Austria (covering nearly all imports) and, to a very small extent, Poland and the Czech Republic (AMI 2017b).
In addition, a few German organic milk products are exported to other European countries and China (AMI 2017a). This export mainly concerns milk products such as whole milk powder, skimmed milk powder, cheese and whey powder. There is no official information on export of organic yoghurt. But according to market experts, export of organic natural yoghurt is undertaken by very few market players, is lower than 4% of the total production volume (Rampold 2018; Brügmann 2018a, b) and is exclusively to European countries, France being one of the destinations.
Conventional retailers like supermarkets (e.g., Rewe and Edeka) and discounters (e.g., Aldi and Lidl)
Organic specialized retailers: organic supermarkets and other organic stores
Direct sale from organic dairy farms to consumers
Other channels: mainly restaurants, canteens and the catering sector
In 2016, nearly 75% of organic natural yoghurt was sold in conventional supermarkets (38.3%) and discounters (34.9%). Only 21% of the organic natural cow yoghurt was sold in organic specialized retail stores via organic specialized wholesalers like Weiling, Dennree, Bodan, Terra, Willmann, Naturkost West, Naturkost Nord, Epos or Ökoring.
The number of brands of organic milk products in Germany is continuously rising. Some examples are: Andechser Natur, Söbbeke Pauls Biomolkerei, Schrozberger Milchbauern, Lobetaler Bio, TüBio, Alpenzwerg (Berchtesgadener Land) etc. Beside these brands of organic processors, the main German conventional retailers like Edeka, Rewe, tegut, Real, Feneberg, Lidl and Aldi also offer organic yoghurt through their own organic (retail) brands. Specialized organic wholesalers and retailers also sell their own brands of yoghurt. Examples are “alnatura”, “bioladen∗” (Weiling) or “dennree”. At retail level, the share of 1 kg packages and 500gr cups (both available in glass and plastic) is lower than for conventional yoghurt. More than 90% of the natural yoghurt sold in Germany is packed in cups with contents of 475gr or higher, whereas this kind of packaging has a market share of only 66% in the case of organic yoghurt (AMI 2018b).
Despite the slight price fluctuations for organic milk at producer level and the growing supply, the price of organic yoghurt at consumer level remains relatively constant, even in the discount channel. Organic natural yoghurt with 3.5% fat content is sold on average for €0.36 per 150 g pack in German retail stores. The prices for organic yoghurt were lowest at discounters for all types of yoghurt in Germany in 2016 (AMI 2018a).
Governance of the FQS
The description of governance is based on Porter’s Five Forces model. In general, the value chain of organic yoghurt is not marked by industry rivalry, although there is competition between the two main distribution channels, “conventional retail” (supermarkets and discounters) and “organic specialized retail” (organic food stores and organic supermarkets).
Another type of rivalry occurs within the organic value chain: the competition between organic retail brands and dairy brands. There are in fact a few dairies specialized in processing on behalf of organic retail brands like “alnatura”, “dennree” or “bioladen∗” (Meier 2016), as well as on behalf of conventional retailers like Rewe, Lidl or Aldi. This runs the risk of losing transparency, which is increasingly demanded by German consumers, since names of dairies are often not shown on the packaging of retail brands.
Nowadays, all German organic dairy farmers can sell their milk as organic, since all production regions are covered by the collecting systems of organic certified dairies. There is no decertification mechanism. Contracts are generally negotiated by producer associations (MEG and dairy associations) and agreed on a long-term basis, for more than two years. Farmers’ bargaining power can therefore be considered high. The threat of new entrants exists in the form of actors from other countries, especially given that German self-sufficiency in organic milk was only around 70% in 2016.
The threat of substitute products is serious, since other labelling schemes exist and are gaining market share. Concerning Germany and Austria, experts say that the most important competition for organic milk is “hay milk” (Heumilch). In 2017, approximately 1000 farmers were producing this product in Germany, mainly in the south, under the TSG2 European certification scheme. In terms of volume, this kind of quality milk accounts for less than 1% of the total German milk production volume (TopAgrar 2018). Unlike in Austria, German Heumilch farmers and dairies tend to obtain the organic certification in order to compete on the market. German consumer expectations of Heumilch seem to differ from Austrian ones.
Other competing products are labels like “GVO-frei” (GMO-free) “Weidemilch” (pasture milk), “Alpenmilch” (milk from the Alps) and “Berg(bauern-)milch” (“mountain farmers’ milk”), but these concern mainly the fluid milk sector and not so much yoghurt, so are less relevant for this study. There is also competition from alternative non-dairy vegan products (e.g., soybeans, oat, almond, rice, hemp, lupine, pea and coconut). Consumption of organic soy yoghurt and soybean cream products is increasing in Germany and reached a 7% market share of the entire organic milk market in 2015 (BÖLW 2016). Not all of these types of milk are made into yoghurt, but the variety of products is increasing.
Private Certification Standards – A German Specificity
In Germany, two organic markets exist in parallel: the market for organic products, certified under EU organic regulation and the market for Verbandsware, which covers products certified according to one of the private organic standards3. For cow milk, private certification covers 90% of the whole organic milk market.
In principle, these markets can be considered as separate, since products certified according to private standards do not allow organic raw materials, certified according to EU standards. Furthermore, they generally operate with different prices, at least for raw materials, but not always for intermediate or final products, and with special labelling. Sometimes, there are even different distribution channels because certain organic retailers only allow privately certified products.
But in reality, these markets are no longer completely separate: there is no significant price difference between them. A Demeter farmer may get the same price for Demeter milk as another farmer producing according to EU standards elsewhere. At dairy level, EU-certified milk is never mixed with milk certified to higher private standards; but the opposite may sometimes occur.
Organic dairy farmers in Germany choose among the private certifiers for market access reasons. It is a peculiarity that on the German organic retail market, organic milk products have rarely been sold at low prices even in the discount channel in recent years (Brügmann 2018a).
Sanders et al. (2016) state that organic supply chains create a higher value compared to the conventional supply chains. Indeed, the highest proportion of added value of organic drinking milk is generated at farm level, and a comparatively low share at processor level. This can be explained by the operation of powerful producer groups of organic milk farmers in Germany. These producer groups pool milk production and carry out negotiations with the dairies, which results in a stronger market position of each individual producer (Sanders et al. 2016).
This situation may also foster the development of organic dairy products through private certification organizations4 (e.g. Bioland and Demeter) (Sanders et al. 2016). This has actually been the case in Germany: there are several farmer associations especially for organic milk, the “Bio-MEG’s” – Bio-Milcherzeugergemeinschaften. These were set up with support from farmer associations like Bioland and operate independently from conventional producer associations. The MEG Milch Board was established in 20075.
In order to control the growing production volumes of organic milk in the coming years, organic dairies have developed different systems. Dairies often provide information about the state of market demand in regular newsletters, and new organic farmers can register on a waiting list and become members only if market demand increases. Farmers already contracted must apply for permission to expand production (AMI 2017a, b). There are regular meetings within the sector to discuss market developments.
To sum up, cooperatives and retailers appear to be the most powerful market actors in the organic milk sector. It is important to note that there no longer seems to be any difference between organic and conventional retailers when it comes to price negotiations and contracting. According to the experts interviewed, price negotiations can sometimes even be easier and more favorable for organic dairies with conventional retailers than with organic wholesalers.
Furthermore, there are many associations and institutions in Germany that support and develop the production and marketing of organic food products in general, but not specifically organic yoghurt. The most important ones are BÖLW (“Bund Ökologische Lebensmittelwirtschaft e.V.”) – the umbrella organization of producers, manufacturers and traders, founded in 2002. There is also AÖL (organic processors organization) and BNN (association of organic wholesalers and retailers). There are, moreover, lobbying and umbrella organizations at the level of federal states, for example skills centers like the KÖN in Niedersachsen, and regional associations for organic farming.
In the case of yoghurt, it was not possible to calculate indicators of gender equality, generational change, educational attainment or the local multiplier. The main reason for this was the absence or non-accessibility of statistical data. In some cases, we were able to generate empirical data from our own surveys, but not for all levels of the value chain, since this case study concerns approximately 4000 organic farms and 130 dairies over the whole of Germany. Empirical data on generational change and educational attainment was not available and expert interviewees did not feel confident to provide an estimate.
Price premium is positive and substantial all along the value chain. The farm level has the highest price premium, with 81%, followed by retail level (21%) and processing level (8%). The price premium appears to be lower downstream, especially at the processing level, but the quantitative flow of product needs to be taken into account. Processing and retail are more concentrated in the FQS and accumulate a significate premium.
Profitability is also higher for organic at farm level. Intermediate consumption and wages are very high in both organic and conventional sectors, but it is important to note that conventional production is not economically viable by itself, i.e. without subsidies. Moreover, organic farms are both more profitable in terms of cost/benefits relations and because they receive a higher level of subsidies. It should also be considered that organic farms are less productive and more labor-intensive, while conventional milk farms follow a strategy of higher volumes at lower prices. There is no data available at processing level on costs, but we can make the hypothesis that costs are similar, at least for similar production scales. Yields at processing level are also the same. The cost of collection can be higher for organic, as production units are smaller and more frequently located in mountain areas. Moreover, organic farms are less densely concentrated than conventional ones.
Finally, while 21% of conventional milk is sold in Europe at a higher price than on the national market, the share of exported organic milk is low, and the valorisation seems to be the same in domestic and export market. This could be explained by a higher ratio demand/supply for organic milk compared with conventional milk. Sales prices on export markets are not automatically higher than those for domestic markets; we assume that they are the same for natural yoghurt, which is a “basic product” in comparison with other high value-added milk products exported. Furthermore, export is sometimes simply a way of disposing of surplus volume without getting significantly higher prices.
Regarding the carbon footprint of organic yoghurt at farm level, the method used does not make firm conclusions possible. On the one hand, a higher output of greenhouse gases can be observed, as the milk-to-feed-conversion is lower in organic. But on the other hand, there is higher carbon sequestration in organic fields. The extant literature provides wide ranges of values of the estimated carbon footprint. Methods are not sound enough to draw conclusions on the carbon footprint of organic yoghurt production at farm level.
Over the entire supply chain, from farms to distribution (U3-D2), organic yoghurt travels 12% shorter distances (4500 vs 4400 t.km) and releases 30% less emissions (125 vs 175 kg CO2 eq) than conventional yoghurt. The shorter distance embedded in organic yoghurt is mainly due to a lower share of exports compared to conventional yoghurt (3.8% vs 21.5%), and to a more Europe-oriented export market. Moreover, the reference product is exported outside Europe, which drives the distance up, and by air freight, which drives emissions up since air transport is a far more carbon intensive mode than the road transport used for exports to Europe. The distribution level (P1-D1) concentrates most of the kilometers embedded in the product and most of the emissions generated along the value chain (i.e., more than 75%).
The green water footprint (rainwater use) has the greatest share of the water footprint indicator. But because there is generally no shortage of rainwater in Germany, this is not very important. Given that all feed is irrigated, differences in blue water footprint (surface and ground water use) are small, and higher for conventional yoghurt due to the manufacturing of nutrients and pesticides. Breeding, stable cleaning, animal beverage and processing also require some groundwater use, and this amount is a little higher for organic farms. Milk processing to make yoghurt however uses same amount of water in the two production schemes. However, the share of these uses in the overall water footprint is negligible.
The grey water footprint (water pollution by nitrates) is slightly higher for conventional yoghurt production. Crops used for conventional yoghurt in fact consume more nitrogen. But due to the substantial use of organic nitrogen in the organic value chain and the lower feed-to-milk conversion efficiency, the difference is not very high when grey water footprint is expressed on a per ton basis.
The labour use ratio indicator, calculated on the basis of output, reflects labour requirements for a unit of physical output (Just and Pope 2001). The allocation of labour to production is higher for organic yoghurt than for the reference product (German dairy farms). At farm level, it takes 17 hours of work to produce a ton of milk whereas the reference product requires nine hours. The difference (84%) indicates that the organic product generates more jobs than the reference system. The turnover-to-labour ratio indicator provides an insight into labour productivity. The average turnover per employee is higher in organic farm than in reference ones, with a relative difference of 6%. These differences are mostly due to higher sales prices at U3 level as well as higher financial support (subsidies to organic farms). We further assume, that staff costs (payment/remuneration) is similar in both value chains.
Both Putnam (2000) and Halpern (1999) identified education as key to the creation of social capital and greater educational achievement as an important outcome. The education attainment indicator, which refers to the highest level of education that an individual has completed, makes it possible measuring certain components of social capital indirectly. This indicator is close to 0 if the majority of workers have a primary education level and approaches 1 as the level of education increases. The lack of specific data for the organic sector means no specific observations can be made. On German dairy farms (conventional and organic), the very large majority of employees have above secondary level educational attainment, with one-third holding a three-year first cycle degree.
strong consumer demand, which makes processors compete for raw matterials
vertical long-lasting contracts between farmers and processors
better relations between farmers and processors and shared values along the supply chain.
This advantage is partially offset by the fact that the contribution of farmers, producing organic milk, is key for the differentiation of the end product. In other words, the downstream level of processing enjoys a bargaining power advantage related to a more favorable competition landscape, i.e. fewer competitors, but this advantage is partially offset by the key contribution of farmers to the unique characteristics of the end product. This is because their milk is organic and producing organic milk requires specific agricultural practices and a specific organization of the farm.
Finally, bargaining power positions in the organic chain can be considered as average, as evidenced by the average bargaining power scores obtained at each level, the weakest level being that of milk production. This means that the whole supply chain can be considered as moderately vulnerable against any major changes, for example, entry of new competitors, or a change in market structure.
Our results show that bargaining power is well distributed along the conventional chain, although processors have a slight advantage (P1), at the expense of farmers (U3), which is probably because they are fewer in number. However, both U3 and P1 levels achieve very low bargaining power scores (0.19 and 0.33 respectively). These low scores also suggest that the supply chain would be vulnerable to significant change: entry of new competitors, changes in the market structure.
All in all, our results suggest that the organic supply chain enjoys a strong sustainability advantage over the reference product, as our calculations show that bargaining power is far more evenly distributed along the supply chain for the FQS than for the reference (index ratio is of 0.03). This finding is also supported by several characteristics of the supply chain which are not captured by our variables. The organic yoghourt supply chain is characterized by more stable relations between farmers and processors and by the fact that milk prices are more stable and higher.
Regarding sustainability parameters, the main differences between the organic and conventional cow milk value chain mainly concern production, and to a smaller extent processing and distribution. First of all, rearing conditions are not the same, and concern mainly aspects such as feed composition and feed origin, use of veterinary products as well as animal welfare aspects (i.e., density of animals, access to pasture). One major issue is the use of pasture and grassland, where opposing tendencies have been observed in recent years. Unlike conventional milk production, feeding systems in organic dairy farms are becoming increasingly “pasture based”, whereas conventional rearing systems are moving towards “intensive” stable based productions systems with a large share of external feed inputs coming from arable farming. This leads to significant performance differences in biodiversity and carbon sequestration, although it is not possible to say today whether this carbon sequestration leads to a better carbon footprint for organic yoghurt production as a whole.
Differences in governance are found in the value chain. Farmers’ bargaining power is higher in the organic value chain than in the conventional one. First of all, nearly all organic farmers are part of an organic milk producer association, which is not the case in the conventional sector. Secondly, private organic certification organizations (e.g., Bioland, Naturland) play an important role in the organic milk value chain. These organic farmer associations are certifiers, with higher production and processing standards. On top of this, they are also lobbying organizations for organic production as well as market players, and they also buy and sell organic products and participate in price negotiations. This also leads to the unique situation that more than 90% of German organic milk is certified according to higher production rules than those laid down in EU Organic Regulation 834/2007. Note that private certifiers are not so important in other organic value chains like meat or plant production.
Thanks to steadily growing demand, the bargaining power of organic producer associations and the planning of dairy output volumes, German producers of organic milk can rely on stable prices at a high level, compared to the fluctuating and often low prices seen for conventional milk. For this reason, German organic milk production has grown in recent years. Most of the experts interviewed for this study find no signs that this situation will change in the future, and that especially organic natural yoghurt can rely on steady growth rates. This rising demand may partly be related to the health benefits of organic milk products, which have been widely identified in scientific studies disseminated to consumers. Another reason for the steadiness of the organic milk market is the lower dependency on international markets. Compared to the conventional value chain, there are very few imports or exports in the organic value chain and the spot market has very little importance.
But the organic value chain is also threatened by changes in general market patterns. First of all, there is rising demand for organic “retail/distributor brands” in conventional as well as in organic distribution channels, which may lead to less transparency and disrupted links to the origin of the products. A second threat the organic value chain will potentially face is the ongoing concentration of dairies. This is taking place through mergers, but also through takeovers by bigger companies. There have been cases of organic dairies lacking financial resources for the necessary investments which have joined groups from other sectors. In a way, however, this risk is offset by a growing number of new processors, since ever more conventional dairies enter the organic market and obtain the organic certification. This may help to keep pace with consumer demand for “regional milk products”. Only medium scale dairies operating on regional levels can meet this kind of consumer preference in the future.
This chapter refers to available market data on organic natural yoghurt (non flavored) from cow’s milk in Germany. In cases where the market data for organic natural yoghurt was not available, we used market data for both, flavored and unflavored yoghurt or even for the organic dairy market as a whole. Unless otherwise stated, the market data refers to Germany and the reference year 2016.
“REGULATION (EU) 2016/304 of 2 March 2016 entering a name in the register of traditional specialties guaranteed (Heumilch/Haymilk/Latte fieno/Lait de foin/Leche de heno (TSG))”
A private certification organization is a union of organic farmers and manufacturers set up for the joint marketing and control of products. The first organization, founded in 1924, was Demeter. Demeter requirements are higher than those laid down in the EU regulation on organic farming. The most important organic certification organizations in Germany for milk are Bioland (which certifies 50% of the organic milk produced in Germany), Demeter, Naturland, Biokreis, Biopark and Gäa. These certifiers have their own standards (“EU+”) which are checked by the yearly mandatory controls by German control bodies. Most of the 50 organic certified dairies in Germany are certified “EU+”.
In Germany, organic farmers associations like Bioland or Naturland are at the same time (a) (private) certification bodies, mandating inspections bodies to carry out controls on farms (b) lobbying organizations (communication via own labels) and (c) market actors through (outsourced) entities buying and reselling crops, animals, etc.
- Albrecht-Seidel, M. (2018). Expert interview with Marc Albrecht-Seidel on 13.6.2018, Verband für handwerkliche Milchverarbeitung im ökologischen Landbau e.V. (VHM).Google Scholar
- Alföldi, T., & Nowack, K. (2015). Biowissen – Fakten und Hintergründe zur biologischen Landwirtschaft und Verarbeitung. Frick: Forschungsinstitut für biologischen Landbau (FIBL).Google Scholar
- AMI. (2017a). AMI Marktbilanz Öko-Landbau 2017 – Daten, Fakten, Entwicklungen. Deutschland, EU: Welt“, e-book.Google Scholar
- AMI. (2017b). AMI Marktcharts Importangebot von Bio-Produkten in Deutschland – Biomilch- und Molkereiprodukte – Stand 8.3.2017. Bonn: Agrarmarkt Informations-Gesellschaft mbH.Google Scholar
- AMI. (2017c). Marktspiegel Milcherzeugung, edition of 4/2017, 28.4.2017.Google Scholar
- AMI. (2018a). AMI Marktbilanz Öko-Landbau 2018 – Daten, Fakten, Entwicklungen. Deutschland, EU: Welt“, e-book.Google Scholar
- AMI. (2018b). Database DE Client AMI CP+ 30.000 FMCG, Excel files concerning packaging sizes of natural yoghurt, June/July 2018.Google Scholar
- Bellassen, V., Giraud, G., Hilal, M., Arfini, F., Barczak, A., Bodini, A., Brennan, M., Drut, M., Duboys de Labarre, M., Gorton, M., Hartmann, M., Majewski, E., Muller, P., Monier-Dilhan, S., Poméon, T., Tocco, B., Tregear, A., Veneziani, M., Vergote, M.-H., Vitterso, G., Wavresky, P., & Wilkinson, A. (2016). Strength2Food project, deliverable 3.2: Methods and indicators for measuring the social, environmental and economic impacts of food quality schemes. Dijon: INRA.Google Scholar
- Bioland. (2017). Durchschnittliche Milchpreise Deutschland, 26 June 2017, based on www.biomilchpreise.de
- Blanc, M. (2017). Analyse des filières laitières biologiques en Europe – Fiche pays Allemagne, Résilait, ITAB, Institut de l’Elevage, Mathilde Blanc, Jérôme Pavie; no year indicated, received in 2017.Google Scholar
- BLE. (2018). Kuhmilchlieferung der Erzeuger an deutsche milchwirtschaftliche Unternehmen, Excel data-file of 08. January 2018. Available on www.ble.de/DE/BZL/Daten-Berichte/Milch-Milcherzeugnisse/
- BLE. (2018b). Versorgung mit Sauermilch-, Kefir- und Joghurterzeugnissen, Milchmischerzeugnissen sowie -getränken in Deutschland nach Kalenderjahren, Bundesanstalt für Landwirtschaft und Ernährung (BLE), Excel data-file of 14.5.2018. Available on www.ble.de/DE/BZL/Daten-Berichte/Milch-Milcherzeugnisse/
- BMEL. (2017). Ökobarometer 2017, Bundesministerium für Ernährung und Landwirtschaft (BMEL).Google Scholar
- BMEL. (2018). Ökologischer Landbau in Deutschland. Bonn: Bundesministerium für Ernährung und Landwirtschaft (BMEL).Google Scholar
- BÖLW. (2016). Zahlen, Daten, Fakten zur Bio-Branche 2016. Berlin: Bund für Ökologische Lebensmittelwirtschaft (BÖLW).Google Scholar
- Brügmann, R. (2018a). Stabilität dank Engagement – Wie es den Biomilchbauern gelingt, sich zunehmend vom konventionellen Markt abzusetzen und die Milchpreise stabil zu halten“, article in. Kritischer-Agrarbericht 2018”, p. 129 ff.Google Scholar
- Brügmann, R. (2018b). Expert interview with Rüdiger Brügmann, Bioland e.V. – Koordinationsstelle Bio-Milch, 8.6.2018.Google Scholar
- Destatis. (2017). Land und Forstwirtschaft, Fischerei – Viehhaltung der Betriebe Agrarstrukturerhebung 2016, Fachserie 3 Reihe 2.1.3.Google Scholar
- EU Parliament. (2016). Human health implications of organic food and organic agriculture; EPRS (European Parliament Research Service) – Scientific Foresight Unit (STOA), PE 581.922.Google Scholar
- Feeding + Dairy Co. (2012). Managing organic feeding, section 8, June 2012.Google Scholar
- Halpern, D. (1999). Social capital: The new golden goose. Faculty of Social and Political Sciences, Cambridge University. Unpublished review.Google Scholar
- Hemmerling, S., et al. (2015). Consumption behaviour regarding organic food, March 2015.Google Scholar
- Hörtenhuber, S., et al. (2013). Integrative Bewertung von Merkmalen der ökologischen, ökonomischen und sozial-ethischen Nachhaltigkeit landwirtschaftlicher Produktionssysteme am Beispiel von Milchproduktionssystemen (Nachhaltige Milch), FIBL, BOKU, AWI; final report October 2013; research project number Nr. 100783.Google Scholar
- Just, R. E., & Pope, R. D. (2001). The agricultural producer: Theory and statistical measurement. In B. L. in Gardner & G. C. Rausser (Eds.), Handbook of agricultural economics, Volume 1, Part A (pp. 629–741). Amsterdam: North-Holland.Google Scholar
- KTBL. (2017). Ökologischer Landbau – Daten für die Betriebsplanung im ökologischen Landbau (2nd ed.). Darmstadt: Datensammlung Kuratorium für Technik und Bauwesen in der Landwirtschaft (KTBL).Google Scholar
- LKV. (2014). Leistungs –und Qualitätsprüfung in der Rinderzucht in Bayern 2014; LKV (Landeskuratorium der Erzeugerringe für tierische Veredelung in Bayern e. V.).Google Scholar
- LKV. (2016). LKV Milchleistungsprüfung Bayern 2016, Uwe Gottwald, et al, Drake Media GmbH Oeyenhausen.Google Scholar
- Mack, C. (2018). Expert interview with Christine Mack (18.5.2018). Munich: Bayerische Landesanstalt für Landwirtschaft (LfL-Institut für Ernährung und Märkte).Google Scholar
- Meier, M. (2016). Mit wunderschönem Gruss aus der Region, article in Biowelt, ed, p. 14–17.Google Scholar
- MIV. (2017a). Beilage zum Geschäftsbericht 2016/2017 – Zahlen, Daten, Fakten. Berlin: Milchindustrie-Verband (MIV) e.V.Google Scholar
- MIV. (2017b). Fakten Milch – Milch und mehr – Die deutsche Milchwirtschaft. Berlin: Milchindustrie-Verband (MIV) e.V.Google Scholar
- MRI. (2018). Authentifizierung von Bio-Milch. https://www.mri.bund.de/de/nrz/forschung/authentifizierung-von-bio-milch/download. 9 July 2018.
- Ofenbeck. (2018). Expert interview with Christian Ofenbeck on 11.6.2018, LfL (Bayerische Landesanstalt für Landwirtschaft Lehr-. Kringell: Versuchs- und Fachzentrum & Akademie für ökologischen Landbau und Tierhaltung).Google Scholar
- Putnam, R. (2000). Bowling alone – the collapse and revival of American community. New York: Simon & Schuster.Google Scholar
- Rampold, C. (2018). Expert interviews with Christine Rampold, organic milk specialist at AMI – Agrarmarkt Informations-Gesellschaft mbH, Bonn.Google Scholar
- Reinhard, G. (2018). Email-exchange with Dr. Guido Reinhardt in May 2018, scientific Director at IFEU – Institute for Energy and Environmental Research, Heidelberg.Google Scholar
- Runge, K. (2015). Wem gehört die Biobranche? Gesellschafterstrukturen im Wandel in Der kritische Agrarbericht 2015, article of Karsten Runge.Google Scholar
- Sanders, J., et al. (2016). In: J. Sanders, D. Gambelli, J. Lernoud, S. Orsini, S. Padel, M. Stolze, H. Willer, & R. Zanoli (Eds.), Distribution of the added value of the organic food chain – Final Report. Braunschweig: Thünen Institute of Farm Economics.Google Scholar
- Sautereau, N., & Benoit, M., (2016). Quantifier et chiffrer économiquement les extenalités de l’agriculture biologique, Nov 2015.Google Scholar
- Schumacher (2018). Expert interview with Ulrich Schumacher, Bioland e.V. / Gut Wilhelmsdorf, 14.6.2018Google Scholar
- Scheitz, B. (2018). Expert interview with Barbara Scheitz, CEO of Andechser Molkerei.Google Scholar
- Statista. (2017). Umsatz mit Bio-Lebensmitteln in Deutschland in den Jahren 2000 bis 2016, Statistikportal, https://www.statistikportal.de/de/node/150
- Steinberger. (2018). Expert interview with Siegfried Steinberger; LfL (Bayerische Landesanstalt für Landwirtschaft). Grub: Institut für Tierernährung und Futterwirtschaft.Google Scholar
- Szezinski, B. (2018). Expert interview with Brigitte Szezinski, sales manager at Molkerei Hohenlohe/Schrozberger Milchbauern.Google Scholar
- Thünen. (2017). OekoBuchführung, table 131- Betriebe des ökologischen Landbaus nach Betriebsformen im Vergleich zu konventionell wirtschaftenden Betrieben, Excel-file with results from Testbetriebsnetz, Thünen/BMEL; downloaded on 26.4.2018: https://www.bmel-statistik.de/landwirtschaft/testbetriebsnetz/testbetriebsnetz-landwirtschaft-buchfuehrungsergebnisse/
- TopAgrar. (2018). Damit die Heumilch fliesst, article in Topagrar südplus, nb.4-April 2018, p. 13.Google Scholar
- Warnecke, S., Schulz, F., Paulsen, H. M., Rahmann, G. (2014). Differences in feeding practices on organic and conventional dairy farms – data from a farm network. In G. Rahmann & Aksoy U (Eds.), Proceedings of the 4th ISOFAR Scientific Conference. Building Organic Bridges, at the Organic World Congress 2014, 13–15 Oct., Istanbul, Turkey (eprint ID 23349).Google Scholar