Will organic find salvation in the local ethos asks Fiona McLelland
Commoditisation and price pressure on suppliers from the multiples are threatening organics, claims Patrick Holden, director of the Soil Association.
On the face of it the market would appear to be in rude health. The association’s Organic Food and Farming Report 2004, published last week, suggests the UK now has the third-largest organics market in the world, behind the US and Germany, having passed the £1bn barrier last year.
However, warns Holden, the reasons that consumers buy organic - namely because they associate the produce with environmental protection, health benefits and better taste - could disappear if continued price pressure drives the small and medium-sized producers out.
“Industrialising the market is a threat to its survival - if the story of localness and sustainable farming methods fails to meet expectations, then the industry fails,” he says.
Holden says there is too much emphasis on price when consumers at all levels of society thirst for more information about the origin of food.
Declining returns from supermarkets and the fact that up to 50% of crops can be rejected on aesthetic grounds make it increasingly difficult for small to medium-sized suppliers to thrive in the multiples, he warns, though for some, there are viable alternatives. Over the past two years, many farmers have turned to selling directly to consumers via farmers’ markets and box schemes. Indeed, in 2003/04 direct sales increased by 16% while organic sales in supermarkets rose by 10%.
The belief and commitment to developing a local market is paying off, says Holden. The number of farmers’ markets has increased from 14 in 1997 to more than 500 today - a figure that backs up the Soil Association’s claim that localness is increasingly important to consumers.
However, the multiples still drive 80% of sales with Tesco and Asda setting the low price agenda, and inevitably other chains follow suit. Even Sainsbury, which has won the Soil Association’s organic supermarket chain of the year award three years in a row, does not escape criticism. “It’s not as bad as some, but it’s not exempt,” says Holden.
Sainsbury is reluctant to go into detail about the terms it strikes with its organic suppliers, but insists that it works closely with them. Head of integrity Alison Austin adds that it is important to show ongoing commitment to UK producers because of the growing interest in local produce from customers. The organic consumer’s profile has changed from “traditional foodies and die-hards to frequent dabblers”, says Sainsbury, and in the last 10 years the organic market has grown into one of its core brands, worth £265m. In fact, £1 of every £30 spent in its stores is on an organic product and 65% are from British producers, claims Sainsbury, which says it is market leader when it comes to British sourcing.
But the Soil Association says while some progress towards reducing imports has been made by all leading retailers, foreign products still account for 56% of sales.
That said, practically all organic chicken is produced on UK farms and this market has enjoyed a 30% year-on-year rise in sales. The Soil Association expects the rise to continue.
From next year, organic farmers in England and Wales are to receive ongoing environmental stewardship payments, which should bring organic products into reach of more shoppers, says Holden. And he claims that more farmers are considering organic.
As for the multiples, Holden hopes that growing demand from consumers for locally produced food will influence their pricing strategy. “There are more and more people for whom a stronger story of localness means a great deal,” he says.
“If retailers can get that story across, they will get more consumer loyalty.”
Organics: direct sales up 16%
>>Soil Association Report 2004
The UK organics market is worth £1.12bn, the third-largest in the world
Organic sales grew 10% last year, twice the rate of the total food market
Direct sales have grown by 16% to reach £100m. There are now over 500 farmers’ markets in the UK
Organic imports account for 56% of the market
One million extra organic chickens were sold last year, increasing sales by 30%
Commoditisation and price pressure on suppliers from the multiples are threatening organics, claims Patrick Holden, director of the Soil Association.
On the face of it the market would appear to be in rude health. The association’s Organic Food and Farming Report 2004, published last week, suggests the UK now has the third-largest organics market in the world, behind the US and Germany, having passed the £1bn barrier last year.
However, warns Holden, the reasons that consumers buy organic - namely because they associate the produce with environmental protection, health benefits and better taste - could disappear if continued price pressure drives the small and medium-sized producers out.
“Industrialising the market is a threat to its survival - if the story of localness and sustainable farming methods fails to meet expectations, then the industry fails,” he says.
Holden says there is too much emphasis on price when consumers at all levels of society thirst for more information about the origin of food.
Declining returns from supermarkets and the fact that up to 50% of crops can be rejected on aesthetic grounds make it increasingly difficult for small to medium-sized suppliers to thrive in the multiples, he warns, though for some, there are viable alternatives. Over the past two years, many farmers have turned to selling directly to consumers via farmers’ markets and box schemes. Indeed, in 2003/04 direct sales increased by 16% while organic sales in supermarkets rose by 10%.
The belief and commitment to developing a local market is paying off, says Holden. The number of farmers’ markets has increased from 14 in 1997 to more than 500 today - a figure that backs up the Soil Association’s claim that localness is increasingly important to consumers.
However, the multiples still drive 80% of sales with Tesco and Asda setting the low price agenda, and inevitably other chains follow suit. Even Sainsbury, which has won the Soil Association’s organic supermarket chain of the year award three years in a row, does not escape criticism. “It’s not as bad as some, but it’s not exempt,” says Holden.
Sainsbury is reluctant to go into detail about the terms it strikes with its organic suppliers, but insists that it works closely with them. Head of integrity Alison Austin adds that it is important to show ongoing commitment to UK producers because of the growing interest in local produce from customers. The organic consumer’s profile has changed from “traditional foodies and die-hards to frequent dabblers”, says Sainsbury, and in the last 10 years the organic market has grown into one of its core brands, worth £265m. In fact, £1 of every £30 spent in its stores is on an organic product and 65% are from British producers, claims Sainsbury, which says it is market leader when it comes to British sourcing.
But the Soil Association says while some progress towards reducing imports has been made by all leading retailers, foreign products still account for 56% of sales.
That said, practically all organic chicken is produced on UK farms and this market has enjoyed a 30% year-on-year rise in sales. The Soil Association expects the rise to continue.
From next year, organic farmers in England and Wales are to receive ongoing environmental stewardship payments, which should bring organic products into reach of more shoppers, says Holden. And he claims that more farmers are considering organic.
As for the multiples, Holden hopes that growing demand from consumers for locally produced food will influence their pricing strategy. “There are more and more people for whom a stronger story of localness means a great deal,” he says.
“If retailers can get that story across, they will get more consumer loyalty.”
Organics: direct sales up 16%
>>Soil Association Report 2004
The UK organics market is worth £1.12bn, the third-largest in the world
Organic sales grew 10% last year, twice the rate of the total food market
Direct sales have grown by 16% to reach £100m. There are now over 500 farmers’ markets in the UK
Organic imports account for 56% of the market
One million extra organic chickens were sold last year, increasing sales by 30%
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