The £1 billion organic industry

- Last updated on GMT

Within the next few years sales of organic food in the UK are
expected to top £1 billion.

Within the next few years sales of organic food in the UK are expected to top £1 billion. The organic industry is expanding rapidly to meet consumer demand, which is continuing to grow at 40 per cent a year. Once limited to a few health shops and a small shelf space in supermarkets, the demand for good quality organic food has led to a rapid growth in specialist outlets, the development of farmers markets and box schemes, and the massive expansion of the product range sold by the supermarkets. Much of the interest in organic food and farming has resulted from the various food scares of the last decade, together with the unknown impact of Genetically Modified Organisms (GMO's) and a concern for the link between food production and the environment. Iceland's announcement that it intends to buy 40 per cent of the world's organic vegetables and its encouragement to farmers to go organic recently made headline news. Standards and definitions​ 'Organic' is a term defined by law and all organic food production and processing is governed by a strict set of guidelines. Organic agriculture is a safe, sustainable farming system, producing healthy crops and livestock without damage to the environment. It avoids the use of artificial chemical fertilisers and pesticides on the land, relying instead on developing a healthy, fertile soil and growing a mixture of crops. In this way, the farm remains biologically balanced, with a wide variety of beneficial insects and other wildlife to act as natural predators for crop pests and a soil full of micro-organisms and earthworms to maintain its vitality. The organic industry is governed by a tough set of guidelines known as standards. Producers, manufacturers and processors each pay an annual fee to be registered and are required to keep detailed records ensuring a full trail of traceability from farm, or production plant, to table. Any major infringement of this results in suspension of license and withdrawal of products from the market. All organic farmers, food manufacturers and processors are annually inspected, as well as being subject to random inspections. The UK Register of Organic Food Standards (UKROFS), which meet the European Community directive on organic production, governs basic standards in the UK. There are seven certification bodies in the UK, all of which have to conform to UKROFS guidelines. Many, such as the UK's leading certifier, the Soil Association have much higher standards that the minimum required. The Soil Association Certification Ltd is the UK's leading organic food and farming certification body, and farmers and growers wishing to convert must go through a two-year conversion period before they can label their products 'organic'. This conversion period is closely monitored by regular inspections to make sure the standards are met. Processor applications generally take about 3 months. The Soil Association, founded in 1946, is a charity dedicated to promoting organic food and farming. The state of the market​ Iceland's announcement of their intention of buying up 40 per cent of world's organic vegetables for its frozen range highlighted one particularly crucial issue. More than 70 per cent of organic food in the UK is imported (all imported organic food has to conform to the same standards as domestically produced organic food). This demonstrates the need for more support for farmers wishing to convert. Only 3 per cent of UK farmland is organically managed. The Organic Farming Scheme, which supports farmers and growers converting to organic production has been seriously underfunded by the Ministry of Agriculture, Fisheries and Food. Two-year's funding was allocated in just 6 months last year, running out in October 1999 and no new money is available until April 2001. The Organic Food and Farming Targets Bill, a private members Bill sponsored by Paul Tyler, MP, is supported by 236 MPs . The Bill aims to ensure that by 2010 at least 30 per cent of UK farmland is organic. This would help redress the dependence on imports of organic food. Organic points of sale​ As sales of organic food continue to rise, the projected total sales figure for the year 1999/2000 was £546 million, and this figure is expected to reach more than £1billion by 2001. Supermarkets continue to be the main locations for the purchasing of organic food, with 70 per cent of all organic sales. Most of the multiple retailers are increasing their range in organic food and there is fierce competition between them to capture the organic consumer. However, local and direct marketing initiatives are thriving. Many towns and cities hold regular farmers markets where producers sell directly to consumers. With over 200 in regular operation they are estimated to be worth more than £60 million to the rural economy. Vegetable box schemes, providing seasonal fresh produce, are also expanding rapidly with more than 200 certified schemes and an estimated customer base of 30,000. Organic supermarkets such as Fresh and Wild and Planet Organic have been hugely successful and are looking to expand the number of outlets they have in London and other locations. Trading on the Internet, with UK-wide firms such as Organics Direct, is also proving hugely popular. Food safety concern​ The reasons more consumers are switching to organic food are closely related. Concern over the link between the food we eat and the countryside has mushroomed following BSE and the threatened introduction of GMOs. A MORI opinion poll commissioned by the Soil Association in June 1999 found that one third of the public regularly buy organic food and the prime reasons are: 53 per cent said its is healthy/better for you; 43 per cent said it tastes better; 30 per cent because it is GM free; and 25 per cent because it is good for the environment and animal welfare. The Industry​ There are currently 2,000 registered organic producers in the UK and 1,800 food processors. This number has been continually growing since the early 1990s. Approximately 3 per cent of UK agricultural land is either organic or in-conversion, double the figure of 1999, but compares less favourably with other European Union countries. For example, 6 per cent of agricultural land in Denmark is organic or in-conversion, while the figure for Sweden is 12 per cent. Each European Union (EU) country has its own national organic certification authority which conforms to EU standards, much like UKROFS, and within each there are various certification bodies.

The EU standards are subject to those laid down by the International Federation of Organic Agricultural Movements (IFOAM). Beyond the EU, produce must conform to recognised equivalent standards and inspection procedures or if there are no national standards importers may apply on behalf of organic producers. They are then inspected annually by an EU recognised certification body and storage facilities for imported produce must be open to inspection at all times. In 1998 the Soil Association established the UK Multiple Retailers Organic Working Group, which meets on a quarterly basis to discuss support for UK producers, raising customer awareness and ensuring that the Government is aware of consumer demand. Most of the major UK supermarkets are members. Both Tesco's and Sainsbury's sell £1.5m and £2m of organic produce a week respectively. For Waitrose, who won Organic Retailer of the year in 1998 and 1999, organic produce accounts for 10 per cent of total sales and a staggering 52 per cent of all baby food sales. A great success story has been the relationship which has developed between the Organic Milk Suppliers Cooperative (OMSCo) and Sainsbury's. OMSCo was founded in 1994 by a group of organic dairy farmers. There are now 100 fully organic farmers involved in the scheme and 200 in-conversion members. During the 2-year conversion period the co-operative provide advice and price support to committed members. OSMCo supply 85 per cent of all organic milk in the UK and is the only dedicated marketing agency trading solely in organic milk. In 1999 the supermarket Sainsbury's, signed a five-year price and volume agreement with food processors supplied by OSMCo. This agreement guarantees minimum prices, currently 29.5 pence a litre, and minimum volumes with OSMCo members for five-years, giving them financial security and the ability to plan for future conversions. Later in the same year Sainsbury's agreed to increase the volume of milk bought through OSMCo processors by 20 per cent. This kind of partnership between producer, processor and retailer has given the organic dairy sector great stability and gives a base from which to develop local markets with confidence. Conclusions​ Organic food is becoming accessible and affordable to larger numbers of people. More farmers are interested in converting to organic farming and if additional funding was secured this sector could rapidly increase in size. Food manufacturers are developing more product lines. Consumers are turning to organic food and the industry is responding to the challenge to meet demand. There are many opportunities for the organic industry, as it taps into people's concerns over the impact of intensive farming during the last fifty years, the threat from GMO's and the desire to eat fresh local produce. Still only representing a small segment of the total food sector, the organic food industry can look to the future with confidence. The trust, which has been built between producers, processors, retailers and consumers, will allow the industry to expand further to meet the huge demand. The Soil Association is a membership charity which has been researching and promoting organic farming as the key to sustainable agriculture since 1946. It is the UK's leading campaigning organisation and certification body for organic food and farming.

This article is reproduced with the kind permission of Croner.CCH Group Ltd.

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