THE EXPANDING MARKET FOR ORGANIC PRODUCE

The organic sector is meeting a growing consumer demand and production is finding it hard to keep up. Organic display sections are now well established in UK supermarkets. Tesco, the UK's largest supermarket has announced recently that it plans to sell annually organic produce worth £1 billion by 2005. IFOAM estimates that the value of the European market for organic products for 2003 is just under $9 billion and that the collective organic market in23 European countries, USA, Canada, Japan and Oceania will reach $23-5 billion in 2003. In certain key markets rates of growth are falling, or perhaps stabilising from exceptionally high growth rates, but nevertheless factors such as the increasing presence of organic products in mainstream outlets and new demand in middle income countries indicate that growth in the market is likely to persist.

The Soil Association's Organic Food and Farming Report 2002 indicated that demand in the UK for organic food increased by a 55% between 1999 and 2000 and a third between 2000 and 2001. The UK market is currently worth over £920m. In 2002 65 per cent of sales of organic products were imported, particularly organic products sold by supermarkets. This is because overseas supplies were cheaper and because of problems with getting a reliable supply from UK producers. However, experience suggests that supply chain problems for domestic producers are likely to be resolved over time. Nevertheless, there remain many opportunities for smallholder producers from developing countries.

Smallholder producers can have a comparative advantage over large-scale commercial farmers, since organic production is usually labour-intensive and requires limited amounts of purchased inputs. However, some consideration of how the market might develop is recommended. Large commodity suppliers, who have been slow to embrace organic production, are likely to develop their own organic lines in the long term. Certainly, retailers will not want to deal with or develop relationships with a vast number of new suppliers. As the market matures, some suppliers brought in to meet the unsatisfied short-term demand will fall by the wayside. The long-term survivors will be those who have got their businesses in the right shape, with long-term strategies for organic production.

The system of growing horticultural crops 'organically' is significant because of the environmental benefits offered, the increasing market demand for this type of produce and the premium it commands over conventional produce. Organic crops are grown without the use of artificial fertilizers or artificial pesticides.

A National Organic Certification organization in each producer country issues rules to explain which inputs and crop protection methods are allowed in the production of an organic crop.To export produce with an organic label it is necessary to have an internationally recognised organic certificate. There are government regulations on organic agriculture in many countries, e.g. USDA's Organic Food Production Act in 1990 and the European Council regulation 2092/91. The implementation of the EU regulation is supervised in each member state by a competent authority (in the UK this is UKROFS) which approves certifying agencies (such as the Soil Association).

In addition to government regulation there is a network of organic certifiers whose requirements in many cases exceed government standards. In this context, the custodian of the international private sector organic standard is IFOAM (International Federation of Organic Agricultural Movements). As its name suggests, IFOAM is a decentralised organisation of member organisations including certifiers, retailers, processors, farmer organisations and consumer interests. Organic certifiers are accredited by the International Organic Accreditation Service (IOAS), established in 1997 by IFOAM. The IFOAM Basic Standard lists 17 principle aims of Organic Production and Processing. These cover social, environmental and farming issues.

Accessing organic markets can be a problem for Southern producers: there are so many standards for different markets, standards written in the north may need interpretation for tropical conditions and certification may be a costly process. Nevertheless organic farming presents opportunities for small producers and developing countries, especially where organic certification is made affordable to smallholders through group certification.

One of the best examples of a project to promote organic agriculture by small producers is the EPOPA programme. To date the programme has focused on coffee, but it is planning to move into fresh produce.

More information:

Websites

• The Soil Association
• International Federation of Organic Agriculture Movements
  Reports
  FAO (2001) World Markets for Organic Fruit and Vegetables - Opportunities for Developing Countries in the Production and Export of Organic Horticultural Products, details available at www.fao.org/DOCREP/004/Y1669E/Y1669E00.htm
  
  Minou Yussefi and Helga Willer (eds) The World of Organic Agriculture 2003. Statistics and Future Prospects. IFOAM. Available at www.ifoam.org and http://www.soel.de/inhalte/publikationen/s/s_74.pdf