According to analysis by The Poultry Site website, the organic market around the world is growing despite the economic downturn. Worldwide sales were valued at US$59 billion in 2010, ‘showing strong growth in all the major European markets as well as the US’. According to the Soil Association in the UK, sales grew by 8% in 2010, taking the overall increase in sales since 2000 to 228%. Nevertheless organic products still account for only 2% of the market in Europe and 3% in the US.
While Europe and the US account for around 90% of the global market for organically certified products, organic sales have been growing strongly elsewhere. The organic market in China has increased fourfold in 5 years, with growth of 20% expected elsewhere in Asia in the next 3 years. Strong growth is also apparent in Brazil. The Poultry Site article notes that ‘Overall organic farming is practiced in 160 countries’, but adds that most production in Asia, Latin America and Africa is destined for the European and US markets.
One aspect of the Soil Association review that will be of concern to African producers supplying UK organic markets is the contrary trend in the UK, with a 3.7% decline in sales occurring in 2011. The main cause of this decline was a 5% fall in organic sales via supermarkets, which in 2011 accounted for almost three-quarters of organic product sales. Supermarkets were giving less shelf space to organics and reducing investment in their own-label organic range of products. Food sector analysts suggest that demand for organic products in the UK is ‘unlikely to increase noticeably in the short term’, although consumers are likely to favour ‘fair-trade or locally sourced’ products.
In contrast to the UK, the Fresh Plaza website reports that ‘The sale of organic products in Germany increased by nine percent in 2011’. As a consequence, the gap between demand and local production continues to grow, with imports taking a growing share of the German market.
Within this overall trend some products performed well, with a 16% increase in sales of organic lamb and a 5.8% increase in sales of organic poultry. ‘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.’
Following the organic equivalency agreement between the EU and the US, the USDA has produced a summary analysis of its implications. This includes a breakdown of organic production and demand in the EU, market opportunities and the principal competing third-country suppliers. It highlights how 11 countries are now on the list of countries ‘with full recognition of that country’s organic production system’ by the EU. These are: Argentina, Australia, Canada, Costa Rica, India, Israel, Japan, New Zealand, Switzerland, Tunisia and the United States.
While there is considerable unmet and expanding demand for organic products in the EU, the ACP countries have no exports in the most important organic market, that for dairy products. In the second most important component, fruit and vegetables, ACP suppliers are important players for some products. However with new preferential trade agreements entering into force or pending, competition in the organic sector, where ACP countries are already underrepresented, is likely to increase. This is particularly the case from countries whose organic certification regimes are recognised by the EU, such as Costa Rica and India. Currently the Indian government is putting in place programmes to assist producers in exploiting new market opportunities in the EU. In addition, countries such as Peru, Colombia, Guatemala, Honduras, Nicaragua and Mexico are already established suppliers to the US market, potentially simplifying the process of attaining equivalency agreements with the EU.
This gives added importance to the establishment of government policies and institutional arrangements in ACP countries which are supportive of organic sector development. This is also particularly important in view of the growth in demand for organic products in developing countries themselves (including in Africa and the Caribbean tourism market).
Real opportunities exist on the EU market in certain market components, if existing SPS restrictions can be addressed. For example, exports of Namibian organic lamb could capitalise on this rapidly expanding market component if the EU would extend its ‘regionalisation’ provisions. This would entail granting foot-and-mouth disease-free status to the area south of the veterinary control fence, which has been free of the disease for over 50 years. This would extend to Namibia the existing practice applied to Brazil of differentiating between regions for export purposes.