Last April, the Journal’s organic supplement reported that sales of organic fresh produce in the UK had reached a plateau. Those who wanted to buy organic had made the switch as soon as the products became available, and since then, organic producers and retailers have been searching for ways to make their produce more appealing to the occasional buyer. This week, promotional efforts across the UK reach their annual peak with supermarket price cuts and in-store merchandising to promote National Organic Week 2004.
With the shelves full of all things organic, there are many in the industry who feel the market is progressing well. But price cuts on organic lines, as on their conventional counterparts, have hit farmers and producers where it hurts: in the pocket. Premiums are falling, so profits.
Low, and last month, Organic Farmers and Growers Ltd carried out a survey of more than 1,000 organic producers. Citing poor financial returns, only around 50 per cent of organic producers said they intended to still be farming organically in five years’ time. This has to be a worry for the retailers who place such stock in their organic portfolios.
More than 60 per cent of farmers rated their profitability as low or borderline, while 12 per cent said their business is unviable at current prices. Despite this, Richard Jacobs, business manager for OFG remains optimistic, suggesting co-operation between farmers and recently introduced government funding of £60 a hectare will certainly improve things in this respect.
According to Jacobs, the UK market is still expanding, as consumers and retailers realise the value of producing locally: “Supermarkets have done a good deal of work increasing the amount of UK organic produce that they source. Fruit and vegetables are fairly safe at the moment because they are undersupplied. Because we are starting from such a low point, organic fruit and veg volumes continue to increase. What we don’t want to see is a repeat of the situation with milk producers who were promised a high price for their organic milk and didn’t get it,” he says.
But have organics moved into the mainstream, everyday consciousness of shoppers? To what degree have they permeated the market?
For the large multiples, organics are now an established, and often expanding range.
Tesco alone saw sales of organic strawberries and raspberries rise by more than 100 per cent this summer, while this week, Waitrose has reduced prices of all organic fresh produce by 25 per cent as an Organic Week promotion. However, according to Defra’s recently updated Action Plan to develop Organic Food and Farming in England, organics are still not a first choice for a majority of people. Although three quarters of consumers will buy some organic produce, 84 per cent of organics are bought by just 23 per cent of customers.
Statistics like this suggest that most organic consumers are fairly dedicated to the cause, and that to attract the part-time buyers, the organic sector will need to make its presence felt in more convenient arenas.
This is a sentiment that Ian Burgess, group quality assurance manager at The Co-operative group is well aware of: He says: “Realistically, organics sales haven’t moved much year on year. I suppose one of the reasons is the store front that we operate. We are more of a convenience store. People come for a top-up. We’re not a destination store and people aren’t that bothered about organics. When organics were very much in vogue, three or four years ago, there was a lot of growth. Then you had all those people who wanted to buy them anyway and now it’s a matter of converting those who are not necessarily organic shoppers.”
Unsurprisingly, for one of the smaller retail chains, there are bigger concerns than organics for the Co-op: “I wouldn’t say that organics are a priority. It’s one of a basket of things we consider. I think there is a market there so you wouldn’t put yourself at a disadvantage by stopping selling them,” says Burgess.
Buyer attitudes, of course, differ depending on who you speak to. Caroline Walker, spokeswoman for the organic store As Nature Intended believes the popularity of organics with consumers is justified: “There are more books and more articles and more newspaper stories about organics and health now,” she says. “I think people are becoming more health conscious generally. People will even come to us for advice when they’ve been diagnosed with diseases like cancer and decided to go for an organic lifestyle.”
Meanwhile, on the other side of the Atlantic, scientific opinion is daring to suggest that health claims about organics are tenuous at best. Food scientist Professor Joseph D Rosen, from Rutgers University in the US, spoke at a meeting of the world’s largest science organisation, the American Chemical Society (ACS), in Philadelphia last month and accused comsumers of “spending unnecessary dollars on wishful thinking”, noting that scientific research does not necessarily prove organic food to be healthier than regular counterparts. “First of all, the organics people claim that their food is healthier because they don’t fill it with pesticides. But it is well accepted that the more fruit and vegetables you eat the less susceptible you are to cancer. So if what the organics people claim is right, then the reverse would be true,” he said.
Last Friday, The Independent ran a supplement for Organic Week which treads the same fine line of critical promotion, coming down heavily on the pro side of the debate. Relying heavily on the perception that organics are healthier, the most certain statistic in the supplement (aside from slightly higher levels of certain nutrients) is that a recent Mori poll found that 42 per cent of customers buy organic simply because they believe it is healthier.
The Food Standards Agency’s current assessment of organic produce is that it is not significantly different from conventionally produced food in safety and nutrition terms. A recent Defra investigation into fruit-based baby food found no pesticide residues in the product, and yet a July Guardian article revealed scientists claimed to have used government figures to calculate that if children ate an apple a day, they could potentially receive toxic levels of pesticide residues.
So, with the public, the scientific community, producers and retailers confused over the health and wealth benefits of organics, the potential for growth sits uneasily alongside the potential for a public and scientific backlash and a steep decrease in popularity.
SEACTORSEARCHES FOR FRESH BLOOD
A worrying sign for the organics sector is the lack of fresh blood coming in. Gerry Lane, course convenor for the Royal Agricultural College’s BSc Agriculture (Organic Farming Specialism) told the Journal: “We started the course four years ago and it isn’t a massive success I have to say. We had anticipated a much larger demand. It’s possible that people who want to do a course in organic agriculture don’t have time to take the course. Applications are plodding along at three or four per year. It’s marginal whether we will continue the course. I wouldn’t say we were going to stop it but it’s a possibility.
“I think organic is a good system of farming. There are definite environmental benefits, which is why Defra are so keen on it. I sometimes eat organic myself if I can afford it and it looks nice. I don’t think there’s anything wrong with normal foods though, and neither does the Food Standards Agency. It would be totally wrong to say that there was anything wrong with the way food is produced currently.
“I think it’s wonderful to find a section of the community who are prepared to pay the premium for what organic produce is really worth but price reductions are the worst thing that can possibly happen to organics in my opinion.
One of the things associated with organics is growing locally and if we lose that it’s ridiculous. I think the producers in this country should be trying to cultivate the local markets. Organic interests must be maintaining continuity of supply. Otherwise ian organic lettuce is just another lettuce, isn’t it?”
TESCO EXPECTS GROWTH TO CONTINUE
Christy Van Maanenberg, Tesco business planning manager, says: “At the moment we’ve got very high growth in organics. We’ve improved the look of things on the shelf and that’s improving sales. It’s all in shelf-ready packaging which has reduced wastage which has also improved sales. There are continual developments in packaging and we continue to work with suppliers.
“Organics are relevant to certain customers. There’s a natural cycle of development and it goes with changing lives. Now mums buy organics quite a lot for their kids. We’ve got a marketing project which means we reviewed customers who buy organics. We’ve done research in terms of what customers perceive about organics and generally customers think it tastes better and feel it’s a premium product. We tried to find out how organic they were, and whether they accepted bendy beans and things like that but they see organics as a premium offer and they want it as such.
“I do think there’s a limit on the market but we haven’t reached that yet. There’s only so much shelf space we can devote to organic produce.
“Personally, I have a little girl and so I tend to buy fresh produce and milk for her. I’m not a devoted organics buyer really, but I do try.”
BURGESS POINTS OUT RB’S PLUSES
Andrew Burgess is a director of RB organics, an organic vegetable producer which supplies UK retailers and was founded in June 2000. He says: “In our first year’s trading we had a target of £1m turnover, but our anticipated turnover for 2004-5 is £11m.
“As products become commoditised, margins at all levels are being squeezed. There is a definite cost to running a sustainable organic operation, which has to be supported. To this end we have invested in areas of the business which will help to maintain returns to the grower, such as the prepared sector. This, coupled with support from customers is helping to maintain a balance, but it is fragile.
“There is increasing interest in the convenience sector. Along with our busy life-styles, as a nation we are more demanding. With the rapid development of the prepared conventional market, we expect to see considerable growth in organic convenience products too.
“As conventional produce becomes more and more affordable it gives a false sense that organics are expensive. This puts retailers in a difficult position, as despite their desire to maintain a sustainable base for all parties, competition continues to erode margins.
“Organics still have great potential. Many parents have changed their shopping habits and purchase organic produce for their children. As those children reach maturity and make their own lifestyle choices we believe that organics will feature heavily. There is also a sense of change in attitudes towards our environment, and a growing willingness for consumers to take greater care of our heritage to pass down to our children. It is not uncommon to see parks, canals, woodlands and wetlands being restored and this is all wrapped up in the organic ethos.”
MBM AIMS ORGANICS AT CATERERS
According to the IGD’s recent report Organic Food: Niche or Mainstream?, the size of the organic food market will continue to grow in excess of £1bn in the next two years. With organic produce now available for almost all produce lines and year round availability on many, organic foodservice is now becoming a reality. Many restaurants, pubs, cafes and takeaways have become accredited to prepare and serve organic meals to offer their customers greater choice.
With this in mind Cambridgeshire-based MBM Organic Produce has developed the ‘Organic Cuisine’ brand of quality assured fresh organic produce to meet the needs of caterers, the hospitality industry and hoteliers. A wide selection of organic fruit, vegetables and salads is available under the ‘Organic Cuisine’ brand with certification by the Soil Association.
Julia Gilbert, customer insight and marketing manager, MBM Organic Produce, says: “We started supplying to the catering and foodservice industry in June of this year. We have our own organic packhouse and we’re working very closely with the Soil Association to promote organics in the food service market. We’d like to see them with a greater share of organics.
“Obviously the foodservice industry is a growing market and we are trying to promote organics within it. It’s a bit early to say definitely how we are doing, but so far we have been very pleased with the results.
“Organic integrity is fundamental to MBM Organic Produce. The organic packhouse is dedicated to supplying only organic produce, ensuring that customers have confidence in their products. In addition to having the appropriate certification under EEC 2092/91 all MBM’s growers, both in the UK and overseas, are audited by MBM’s technical team and all their organic facilities are annually certified by an approved certification body. To avoid cross contamination and ensure that its organic integrity remains intact, product packed under the ‘Organic Cuisine’ brand is supplied in a sealed carton.
“So, for those chefs who are considering adding organic options to their menu or who would simply like a greater choice of organic produce, the ‘Organic Cuisine’ brand is the answer.”
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