Where (and why) organic is booming

Germany is a hotbed for consumer-niche food, and some farmers are cashing in.

Growing up on a conventional row crop and livestock farm in western Germany, Christoph Leiders never dreamed he’d one day own and operate a direct-to-consumer organic farm, retail and restaurant business. He took over from his grandfather in 1987 as just a 20-year-old, but 10 years later began to re-organize the business to focus on organic and other specialty foods.

“To stay conventional farming we would have had to grow acres and we didn’t want to do that,” says Leiders. “We started looking for a better way and decided organic was the way.”

Turns out Leiders latched on to a trend that has helped his farm business, Stautenhof, grow at a 10% annual clip, churning out $3.3 million in annual sales.

The developed world – where most consumers can afford it - has gone gaga for organic food, and nowhere is it more obvious than in Germany, the world’s second biggest organic market after the United States, according to USDA. Sales of organic food in Germany more than tripled since 2000 and in 2014 sales reached over $8.8 billion -- nearly a third of total organic EU food sales and about 4% of total German food sales. Almost 10% of all farm holdings, and 6% of total land area in Germany, is in organic.

Model farm
Today the Leiders’ 150-acre business is considered a model for others to follow – so much so, the German government has designated it a showcase operation for others to learn from. Consumers flock from miles around to load up their cars with organic, free-range or naturally-raised veggies, eggs, cheeses and eggs, or dine in the quaint restaurant not far from the farm itself.

Starting out with any new venture can be hard, and in his first few years Leiders faced tough times finding buyers for his organically-raised pigs. “We had to drive long distances to get them sold,” he says, because it was so difficult to find butchers. That’s when we started to direct market our own products.”

Then, in a twist of fate, luck fell upon him when Europe’s BSE crisis hit in 2001. His business took off.

“Up until 2001, my customers were hippies,” he says. “When the BSE crisis came along consumers started to be encouraged to eat organic meat. We went from 200 customers a week to 2,000 customers a week.” It doesn’t hurt that the farm is well-located near Dusseldorf and Cologne.

The Leiders grow organic potatoes, cereals, corn, clover grass and field beans. They also work with other farmers to manage supplies when theirs run low. Potatoes are sold in the farm shop, along with bakery goods, pasture-eggs, chicken and other meat and sausage products – slaughtered right there on the farm with low-stress practices. Bread is baked in their own bakery using mostly the farm’s organic rye and wheat. They also have their own mill.

Pastureland is part of a five-year rotation, with clover, laying hens, broilers, grains and potatoes. Manure fertilizes the next crop or is applied to other fields. He also uses three ‘mobile stables,’ complete with solar panels for electricity, and each houses 800 chickens. Eggs from these happy chickens sell for about 50 cents per egg, more than double the conventional price in Germany.

Government incentives
The German government and the EU provide various incentives for Leiders to promote and grow organic production. He can get up to $2,200 a year for hosting visitors on the farm. Because the public wants ‘animal-friendly stables,’ this business gets some government funding. Some 30% of the cost of the new ‘animal-friendly’ beef barn he’s building is paid by government, as well as 35% for the mobile chicken coops.

Even in organic-happy Germany, the Leiders’ business is unique because of the vast variety of products sold. Even so, there’s little chance of saturating this market; Germans import organic food from other EU countries and export conventionally-grown food.

Because his customers buy based on values and farm practices, not price, Leiders’ can charge two to three times more for his products compared to a typical discount retail food store. In some cases it’s even more: organically-fed, free-range chicken fetches five times the price of conventional chicken.

“I’m very happy with our decision to go organic,” says Leiders with a smile.

People challenges
That’s not to say it’s all without challenges. The farm now employees 50 people. “We must find them, keep them and train them,” he says. “Skilled labor is our biggest issue.”

In his region minimum wage is $11.20 per hour; more for specialty work. Nearby industrial jobs pay higher wages, so Leiders must also focus on job satisfaction. He has exercise bikes for workers who want to focus on their health and does surveys to see what makes his workers happy.

Leiders gives department heads autonomy to make work plans. They use an internet-based time management system to track activity.

As the farm’s leader Christoph’s job now is to jump from spot to spot, filling in and solving problems when needed. “We are not specialists in every area, but we have broad knowledge of all aspects of the business,” he says. “There’s a lot of value in that.”

Unique business model
To succeed in this business model you need a specific set of skills that have less to do with cost control, and more to do with consumer connections and people management. That includes not only jumping through all sorts of government regulatory hoops, but also doing things that consumers feel make products worth more – sometimes much more.

For example, the Leiders have their own slaughterhouse, processing upwards of 8,000 broilers, 1,000 turkeys and 1,000 pigs each year. It requires three master butchers and one trainee.

“Consumers have a negative feeling about traditional slaughtering,” says Leiders. “Doing it here is more expensive, but meat quality is better because there is less stress.”

Once a month they hold an open house for the public to try various farm activities, like driving tractors or learning how to make sausage with the butcher. To inform the public all media are used, such as customer newsletters, internal news or their website. Press releases, social media, TV and radio reports also provide information on the farm’s activities, all with the goal of getting customers to understand the farm’s sustainability values.
In effect, the company’s ongoing goal is to establish trust and empathy with its customers. It wants them to know what they do to conserve resources, improve soil, help the community and its people.

“Public relations is a broad part of my job,” concludes Leiders.

The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.

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