Organic Sales Bucking the Trend09 March 2012
ANALYSIS - Despite the tough economic times, the organic market around the world is growing and going against the trend of generally falling sales, cuts and reduced expenditure, writes Chris Harris.
The latest figures issued by the Soil Association in the UK and Organic Monitor show that in 2010 sales of organic products rose by eight per cent and by 228 per cent since 2000.
Worldwide sales were valued at $59 billion or around €44.5 billion in 2010 and were showing strong growth in all the major European markets as well as the US.
The total amount of land around the world devoted to organic farming is 37 million hectares.
In Europe, organics hold about two per cent market share with Germany and France leading the way. However, despite the value of $28 billion, around €22 billion, the growth rates are slowing, whereas the US that has an organic market worth $29 billion and about three per cent market share is seeing healthy growth and rising prices.
The Soil Association says the market for this current year for both Europe and the US is positive.
Away from the main markets, China has seen its organic sector quadruple in size over the last five years and Organics Brasil is showing a 40 per cent growth rate in the Brazilian market.
The Soil Association says that organic sales in Asia are expected to grow by 20 per cent over the next three years.
With Europe and the US making up more than 90 per cent of the organic market around the world, the recent equivalency agreement between the two blocs is expected to boots sales on both sides of the Atlantic.
The trade arrangement recognises the integrity of organic systems in both regions. It allows organic products meeting USDA NOP standards to be marketed and labelled as organic in EU countries, while EU certified organic products are also recognised as organic in the US. The USDA Organic seal and EU Organic logo can be placed on these products, although labelling requirements in the destination country must be met.
By opening up the two largest markets for organic products to each other, the arrangement will facilitate trade of organic foods between the US and EU.
As trade between Europe and the US represents less than five per cent of the global organic food sales.
Although the largest consumers, Europe and North America are also not the main producers of organic crops. The two regions have just 30 per cent share of international organic farmland. Organic farming is practiced in 160 countries, with most production in Asia, Latin America and Africa and sent to the US and Europe.
The Soil Association Organic Market Report for 2012 shows that the UK market for organic produce is going against the global rising trend as the market fell by 3.7 per cent last year, largely because of the economic situation that has seen a five per cent drop in retail sales.
Because of the drop in sales retailers are also giving up less shelf space to organic products and there has been a lack of investment in own-label organic ranges.
The main cause of the market's overall decline was a five per cent drop in multiple retail sales, which account for 71.4 per cent of organic food sales.
Despite the tough environment, sales of organic lamb rose by 16 per cent and organic poultry by 5.8 per cent.
Dairy products and fresh fruit and vegetables continue to be the most popular organic categories accounting for 29 per cent and 23 per cent of sales respectively.
However, the amount of land being devoted to organic production fell by 2.8 per cent representing 4.2 per cent of the farmland in the UK.