While media speculation about the state of the organic market in the UK has reached unprecedented levels in recent weeks, the organic community remains fairly upbeat about its prospects and can certainly see the light at the end of a very long recessionary tunnel.
Roger Hitchings, head of advisory services at the Organic Research Centre (ORC), Elm Farm, tells FPJ: “Organics is not and will not grow at the rate of the last 10-12 years in the current climate, although horticultural crops are not being hit in the same way as other sectors - for example, poultry.
“It is true that vegetable box schemes are suffering a bit as people scrutinise their spending.”
But Hitchings is confident the market will resume. “We came through the recession in the early 1990s when growth in organics plateaued, and after the recession it took off and moved into double-digit growth and has continued until now in response to consumer demand. I expect it will come through again.”
The organics sector remains hopeful that sales can rebound once the difficult economic conditions have passed, and as a result is encouraging growers to still seriously consider conversion to organic production.
The original Organic Conversion Information Service (OCIS), operated by the Soil Association and Elm Farm Research Centre on behalf of DEFRA, ran from 1999 to 2006. Permission from the European Commission to launch the new replacement service, under the State Aid exempted rules procedure, was given on January 10 this year. OCIS is managed for DEFRA by Natural England, which has appointed the ORC, headed up by Hitchings, to deliver the new service after inviting tenders in the usual way.
With the period of conversion to organic taking two years, Hitchings believes that a little bit of thinking ahead would not be remiss for growers considering making the switch.
“In general terms, most people who convert find the technical challenges can be overcome,” he says. “When people are asked before they start what they think the challenges will be, they say controlling weeds, pests and disease - but in reality, those who convert cope with this.
“Usually it is the market and its demands that prove most difficult. The key is not to plant until you know there is demand, but getting commitments and finding customers is not so easy when you are looking two years ahead. However, if you can find the opportunities, they are there.”
Points that OCIS outlines to consider are:
• Farms in Higher Level Stewardship may find that many of their agreement terms resonate with the requirements of organic standards
• Conventional input prices have reached record levels in recent months and are very unlikely to drop back to historical levels
• According to the latest Organic Farm Management Handbook (to be published in the very near future), there are still healthy gross margins on horticultural crops
• Conversion periods for most farms are two years or more, so now is a good time to consider conversion in order to be ready for renewed growth in the market
• There is a wealth of information available to assist producers in planning and implementing organic conversion.
“It is crucially important to remember that organic conversion needs detailed planning and that producers should embrace both the letter and the spirit of the organic standards,” says Hitchings. “While it is possible to negotiate the conversion process on a DIY basis, there are many issues to consider. It must make sense to take advantage of help, especially when it is free.”
Persuading growers to convert as consumers tighten their purse strings will be tough, says Hitchings, but the people he talks to on OCIS visits are looking at more specialised areas as an opportunity. “We need to hold out the carrot that better days are coming,” he says. “A company that is ready for that will be in a better position than a company that sits by and waits for the market to pick up again.”
A lot of the land for conversion does not come through OCIS, as the body only deals with new entrants to the organic scheme, not firms that already grow organic produce that are expanding their land.
Conventional input costs are rising due to the use of oil-based fertilisers, offering another advantage to organic conversion. “Costs need to be looked at across the whole rotation, and it all needs to be balanced out,” says Hitchings.
New regulations recently introduced at European level on organic agriculture will not make too much of a difference on the ground, says Hitchings. “The guidelines do have some changes, but for the certifying bodies it will be business as usual,” he says. “The certification firms will still require licences to come and ask for change and growers will not see any difference at a business level.”
DEFRA is still working on guidance for the certifying bodies. “There will be minor changes in managing operations and keeping records, but the commission’s idea is that it would carry on as usual, but with regulations that are more organised and integrated than before. Once the system beds in there may be more fundamental changes, but they should not affect the growers.
“OCIS provides growers with the most up-to-date info we have, and we have a line into DEFRA on this subject,” adds Hitchings.
But he is concerned there are still no specific regulations on protected cropping. “We are trying to get standards on this on the table in Brussels - we would like a pan-European approach to be adopted,” adds Hitchings.
TOSC BRANCHES OUT THIS WINTER
We are expanding our product portfolio to include vegetables, legumes and exotics, says Matthew Godfroy, managing director of The Organic Salad Company (TOSC). TOSC will continue to remain specialists in mainstream organic salad crops such as tomatoes, cucumbers and peppers. However, we view the financial uncertainty consumers are experiencing as an opportunity to diversify our range, to support our customers with a solely focused organic team who understands delivering customer solutions.
We started the launch of the new product range into Musgrave on Monday; this will provide a platform of support to our business, especially during the winter period, where salad sales traditionally fall. We are aware that diversification is one of the keys to moving the business forward.
Recent developments at TOSC have helped us expand the range with ease, as only industry specialists work here. The team’s skills are being drawn upon to maximise the overall goal of growing the business, not only with the retailers but with the foodservice and wholesale sectors too.
The current economic climate has seen maintaining sales as challenging, but not unachievable. Having transparent relationships with our customers allows each of us to support one another in these uncertain times. There is no getting away from the fact that retailers are the vehicles to driving volumes of organic produce - nevertheless, you should not dismiss the great job that box schemes, wholesale specialists and farm shops represent.
It is pleasing on the one hand to see the UK consumer has woken up to the fact they wasted far too much produce in the past; portion control is on their radar and high on the agenda. The truth is that consumers still want to purchase organic produce but can’t make the weekly shopping budget stretch to the pack sizes and retails they once bought.
A key message to communicate is that produce should not be perfectly straight and blemish-free - it’s about working with your customers to widen specifications to allow perfectly good food on the shelves that historically was not given the opportunity. UK consumers affiliate to retailers who demonstrate their support for growers, not just locally but globally. We have to remember that large pack sizes are not in demand any more; more is not better value, it is more waste. Consumers want to know retailers are looking after their interests and pennies. Affordable organic produce is available, but this requires the industry to collaboratively broaden its specifications and offer smaller pack sizes and the produce that was once deemed out of specification.
Ethical shopping remains high on the agenda for most consumers. You see organics as the likely target to suffer, and that is why we need to react to the vibrations of this trend. I can’t think of any business that can afford to take its eye off the ball. Although it is vital that the organic sector remains price-competitive and quality-focused, it should not lose sight of new product development and investment in order to keep up with the conventional sector.
TOSC works closely with its partners to develop new packaging, varieties and innovations such as the wild cucumber, which came second in the Fruit Logistica Innovation Award this year. One of the projects that TOSC has been working on is climate-neutral produce. TOSC’s sister company, Eosta BV, was instrumental in signing a climate agreement in the presence of Al Gore. The agreement is to achieve completely climate-neutral management together with a variety of other companies, including PricewaterhouseCoopers, Triodos Bank and other world-leading companies.
Earlier this year, TOSC continued with this intention as the first to bring climate-neutral tomatoes to the UK. The 2009 summer season will see the entire range of salad products available as climate-neutral; it’s the right step forward, allowing consumers the choice of environment-friendly food alongside that which may be produced more locally, but is not so environment-friendly. You need partners who see the bigger picture to support the larger, long-term wins, and not the quick wins of locality.
