Organic Trade Association Sees Opportunities in Exports
By Janise Zygmont
Organic foods have been a particularly bright spot on the agricultural horizon in recent years. According to industry estimates, retail sales in the United States grew from $1 billion in 1990, to $5.5 billion in 1998.
Although part of a high-value, niche market, organic products are no longer found exclusively at farmers markets or health food stores. Instead, mainstream shoppers are finding increasing numbers of organic products on supermarket shelves around the country. At the same time, demand for organic products overseas is at an all-time high, and growing.
The U.S. Department of Agricultures Market Access Program (MAP) is designed to help U.S. agricultural exporters promote their products in overseas markets. Last year, the Organic Trade Association (OTA) became a MAP fund recipient for the first time.
AgExporter talked with Katherine DiMatteo, OTAs Executive Director, about trends, challenges and the goals of U.S. organic product suppliers in the global market.
What is the Organic Trade Association (OTA)
and what is its mission?
DiMatteo: Founded in 1985, OTA is a business association representing all sectors of the North American organic industry. Our 1,000-plus membership includes producers, processors, certifiers, importers, exporters, retailers, researchers and others engaged in producing and marketing organic products. Our mission is to encourage global sustainability through promoting the growth of diverse organic trade, and protecting the integrity of organic standards.
AgExporter: So what does the term "organic" mean?
DiMatteo: "Organic" refers to the way agricultural products are grown and processed. It stands for the commitment to a system of agriculture that strives for balance with nature using methods and materials that have a low impact on the environment.
Organic production systems replenish and maintain soil fertility and build biologically diverse agriculture. The routine use of synthetic pesticides and fertilizers is prohibited. Organic foods do not contain artificial ingredients or preservatives, and irradiation is prohibited.
The term "certified organic" refers to a product that meets organic standards set and verified by a third-party public or private entity.
Although organic standards may vary somewhat from certifier to certifier, they generally require that land on which organic food and fiber are grown must be free of prohibited substances for a minimum of three years prior to certification.
They also require farmers and processors to prepare a comprehensive organic plan detailing their management practices, maintain thorough records to document their adherence to the organic plan and undergo an annual inspection of their operations by the certifier.
Certification ensures the organic integrity of a product and thus is a key requirement for organic products traded in the international market.
What types of
certified organic products does the
United States produce?
DiMatteo: There is an organic counterpart to nearly every conventional agricultural product grown in the United States. This includes not only basic commodities such as grain (including wheat and rice), soybeans, fruits and vegetables, meat, eggs, dairy products and even fibers like cotton and wool, but a host of organic processed products, starting with pasta, prepared sauces, juices, frozen meals, ice cream, cereals, baked goods and soup. It also includes chocolate, cookies, wine, beer, cooking oil and snack foods. And lets not forget fiber products such as clothing and personal care products.
AgExporter: Whew, thats quite a list! Are there any product categories that are especially in demand? How important are exports to the U.S. organic sector now? And what about the future?
DiMatteo: The booming domestic market is now the only focus for most U.S. organic producers, many of whom have small operations and grow for local markets.
However, exports are very important to a small but growing segment of the organic industry that sees a role for exports in its overall marketing strategy.
Some producers are in the information-gathering stage, assessing potential overseas markets by doing research, visiting other countries and attending domestic and international trade shows. Others have been exporting for over 10 years and have well-established ties overseas.
The United States exports a wide range of organic products. Major markets are Japan and Western Europe. Although the strongest current sales are in grains, beans, and ingredients such as flour, fruit juice and food strarch, there is growing demand for fresh and dried fruits, frozen vegetables, nuts, wine, juice, snacks and prepared foods.
AgExporter: What are the major challenges for U.S. suppliers of organic commodities and products?
DiMatteo: The current international regulatory environment poses a significant challenge to our exporters. Countries such as Argentina, Australia and Israel, which produce many of the same organic commodities we do, have third-country status with the European Union, which eases the flow of products into that lucrative and growing market. It is hard to compete in such an environment.
And we know that competition will continue to heat up. The U.S. organic industry is keenly aware that production is increasing all over the world. For example, China tops the list of countries the industry is eager to learn more about because of its huge productive capacity and proximity to key Asian markets.
At the same time, foreign production is a vital source of ingredients for the U.S. processed food sector, and has a place in assuring a stable, year-round supply of organic products in the United States.
Although export market channels for some commodity and ingredient categories exist, we are just beginning to introduce our full range of products to international consumers. There is a real need to increase awareness about the high quality and variety of organic commodities and products available from the United States, and to build value by emphasizing the organic integrity of our products.
Because the brand names of processed, consumer-ready organic products are not well-known, breaking into the market may be difficult in a very competitive climate. However, commodities such as almonds, walnuts and raisins are doing very well right now.
Another challenge is the lack of basic trade data. The current tracking system for imports and exports does not differentiate between conventional and organic commodities and products. We can say confidently that business is up just by listening to our members, but we cant quantify it.
AgExporter: What are OTAs plans for FAS/MAP funds?
DiMatteo: Our first accomplishment was to publish an export directory listing export-ready U.S. organic companies. We were especially pleased at the response we had to this project. In fact, we are still getting inquiries about it, which shows the growing interest of our domestic organic sector in exporting.
You may reach the Organic Trade Association at P.O. Box 547,
Greenfield, MA 10302. Tel.: (413) 774-7511; Fax: (413) 774-6432;
In February, we introduced the directory to a global audience at Bio Fach in Germany, the worlds largest organic trade show. The directory was translated into Japanese, German and French, and has been distributed to FAS overseas offices. We intend to make it available at all international trade shows we attend.
We are also working on consumer and wholesale market research in Europe and Asia. In the future, OTA will expand upon its efforts to introduce U.S. organic products to a wider audience overseas and continue to work on identifying new opportunities.
The author is an agricultural economist with the FAS Horticultural and Tropical Products Division in Washington, D.C. Tel.: (202) 720-1176; Fax: (202) 720-3799; E-Mail: firstname.lastname@example.org