The UK faces future organic supply shortages unless something is done to stem the number of producers quitting the sector, a report has revealed.
The Soil Association's 2013 Organic Market Report says producer and processor numbers fell by 5% last year to 6,929, leading to an 8.7% drop in the area farmed organically, which now stands at 656,000ha.
A narrowing gap between conventional and organic farmgate prices, uncertainties over CAP reform and varying retailer commitment to organic on the back of falling sales were all factors for the poor producer confidence.
But the report said producers and retailers should be more optimistic as a number of markets were growing. Online sales were up 10% among the top three home-delivery specialists - Ocado, Abel & Cole and Riverford - while sales through independent suppliers and catering also increased slightly. There was also steady growth of markets in Europe, Asia and Africa.
However, supermarkets still account for the majority (71%) of the UK organic market and sales were down 3.8% last year, with own-label ranges recording an 11.2% fall, the report showed.
"Some supermarkets have turned their predictions of falling demand into a self-fulfilling prophecy by dramatically cutting organic ranges and shelf space, reducing availability for shoppers who want to carry on buying," said Soil Association chief executive Rob Sexton.
"This has triggered disproportionate cuts in production of some commodities, such as eggs, causing supply shortages. It is important for all retailers to work more closely than ever with their organic suppliers to ensure the higher farmgate prices, better planning and decent forward contracts that are needed to restore producer confidence and safeguard future supply."
|Growth in online sales
||Total organic sales down 1.5% to £1.64bn in 2012|
|Box scheme, home delivery and mail order sales up 4.4%
||Supermarket sales down 3.8%|
|Signs of growth for dairy towards end of 2012
||Dairy remains main product category with 30% market share, but sales fell 4.8%|
|Horsemeat scandal knock on meat sales up by 8.4% in Feb
||Fruit and veg sales down 7.7%|
Organic shoppers remain committed - 33% of shoppers account for 85% of spending. The most committed buyers are aged 28-44
|Fresh poultry and game sales down 30%|
|Sales strongest in London and southest England
||Reduced supermarket availability has longer-term impact on confidence|
| Growth in catering and food service sector
|| Sales through farmers' markets and farm shops down 14%|
Download the report at www.soilassociation.org/marketreport
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Organic sales drop but reasons for optimism