29 January 1999

Organic market is not exploited

By Philip Clarke Europe editor

UK farmers are missing out on big opportunities in the organic market, with imports accounting for up to 60% of total supplies.

That is considerably more than in any other EU member state, according to a new report The European Market for Organic Foods, produced by Corporate Intelligence on Retailing.

The study covers eight key member states, where organic sales amount to k4.3bn (£3bn), or 2% of the total food market.

"A high proportion of organic products sold in all European countries is imported, so there is evident scope for European farmers to increase their sales," says the report. "But imported products take a considerably higher share in the UK than elsewhere, which suggests there is substantial potential for UK farmers."

The report notes the organic sector is one of the fastest expanding areas of food retailing, with growth rates of between 20% and 40% a year in the countries studied. This could be higher still if production increases and prices fall.

"Consumers are worried about the safety of food, insecticide and pesticide residues, heavy use of chemical fertilisers and genetic modification," the report says. "This has intensified the interest in organic foods everywhere."

Good profit opportunities exist for those who are prepared to convert, with consumers generally ready to pay 20% to 30% price premiums, claims the report. "Many items sell at much higher premiums. But when the price of the organic product is 50% or more above the conventional one, the number of potential customers falls off substantially."

Big retailers are now seriously committed to organic production throughout Europe, due to surging consumer interest. "Small farmers should do well; mass-production farmers may suffer," says the report. "Large retail chains will have to buy on a more local scale, leading to some reorganisation of their buying operations." &#42