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ORGANIC UPDATES
World trend shows organic products moving into supermarkets
According to the International Trade Centre, UNCTAD/WTO, retail sales of organic products for 1997 are estimated at over $10 billion worldwide, with three markets accounting for the majority: EU–$4.5 billion; U.S.–$4.2 billion, and Japan–$1 billion. More than 100 countries now produce certified organic commodities and products. World demand is expected to grow because of increasing health and environmental concerns, new product development, aggressive promotion by retailers, and supportive government policies.
A seminar presented at International Federation of Organic Agriculture Movement (IFOAM) conference in Mar del Plata, Argentina, last November highlighted the growing availability of organic products in supermarkets, particularly in Europe which leads the world in bringing organic products to mainstream consumers. Supermarket executives from Denmark, Sweden, UK, Belgium, France, Italy, Japan, and Argentina presented their views and described their companies’ commitment to organics. Several common themes emerged:
* Most supermarkets started by carrying a limited range of organic fruits and vegetables but many now offer hundreds of organic items. Some use their own brand name to foster consumer recognition and loyalty. European consumers of organic products want convenience, reasonable prices and variety. Supermarkets excel in this for conventional products, and are applying their skills and expertise to do the same for organic foods and products.
* Adequate supply is crucial. Supermarkets prefer to carry organic items year-round. They are reluctant to invest resources in a product they cannot source continuously because it takes time and resources to reintroduce products to consumers and to reeducate their personnel about proper handling of organic products. Inadequate supply has been and continues to be one of the most important limiting factors to expansion of organics in the retail setting.
* To ensure adequate supplies grown to their specifications, supermarkets are increasingly contracting directly with producers. This has a secondary effect of advancing government policies (in the EU) encouraging producers to convert to organic production methods and adapt them to large-scale agriculture.
* Supermarkets function in an extremely competitive environment. If consumers lose confidence in a retailer’s ability to deliver reliable organic products, supermarkets will lose customers. To ensure the integrity of organic products from field to consumer, supermarkets are developing ‘sustainable relationships’ along the entire supply chain. Forging such links helps lower costs, increase efficiency, and enhance communication, but there are risks such as reduced flexibility due to greater dependency on business relationships rather than market forces.
* The ability of supermarkets to respond to consumer demand and deliver reliable products is essential to their continued success. European supermarkets must be especially responsive to consumer concerns about such issues as ecological packaging, the ‘fair trade’ movement, GMOs, and the preference for locally/regionally produced foods over imports.
Organic support for British farmers set to increase
British Agriculture Minister Nick Brown announced in early January that assistance for farmers converting to organic production will double this spring. This measure is part of a package which includes increasing to £2 million ($1.2 million) annually, the amount spent on research and additional resources for advising farmers on the practicalities of conversion. The increase is designed to persuade more conventional farmers to "go organic." Although more than 20,000 hectares (49,400 acres) were converted in 1998, it was far from enough to meet the burgeoning demand for organic food in the UK reflected in sales that increased by 250 percent from 1992 to 1997. Approximately 60 to 70 percent of the organic food available in the UK now is imported, mostly from other EU countries.
For more news on organics, see HTP’s monthly newsletter "Organic Perspectives," available at the HTP home page:
The newsletter contains reports on organics from around the world gleaned from attache reports, trips made by HTP’s organics staff, and other sources. The newsletter also covers items of interest about the U.S. national organic program and the domestic organic industry. A list of upcoming conferences, trade shows and other events is included in every issue.
(For further information, contact Janise Zygmont (analysis) at 202-720-1176 or Kelly Strzelecki (marketing) at 202-690-1341.)
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