Some may be predicting organic food will be left on the shelves as shoppers penny pinch, but the reality, according to those involved in the industry, is that shelves are more likely to be bare than full.
Sourcing domestic organic products remains a problem for manufacturers and retailers. The Soil Association's market report shows an average of 66% of organic primary produce sold by the multiple retailers was sourced in the UK in 2006, no better than the 2005 figure.
An average of 79% of organic meat sold in the multiple retailers was UK-sourced - 9% down on 2005. The percentage of pork, bacon and ham sourced in the UK was even more worrying, falling from 80% to 53% for pork and from 70% to 42% for bacon and ham.
"The cost of conversion for pigs is quite expensive, and farmers would want guarantees before making the change," says Richard Cullen at the Agricultural and Horticultural Development Board. "The premium on organic pigs is about £1.30/kg for the farmer, but they don't get that for the whole carcase. It tends to only be for loin and leg."
Changes to the regulatory framework for organic certification have also prompted concern. Most livestock now needs to be fed entirely on organic feed, the cost of which is soaring. Some companies are thus offering livestock reared to organic welfare standards, but fed on conventional grain.
Duchy Originals is one such company. It has 'free range' pigs fed on conventional feed to cater for customers who cannot afford their organic products.
Duchy is confident about both the ranges.
"It's important that branded companies help farmers to convert by showing them the potential and the promise of a market for their products. We are trying to reconnect with farms within the Duchy of Cornwall tenancy," says chief executive Andrew Baker. "It's incumbent on people like us, and the supermarkets, to show farmers why it's worth doing. Unfortunately we're not terribly joined up as an industry and it tends to be driven by supermarkets."
Some of the multiples have nevertheless successfully secured a home-grown meat supply chain. The decision by Sainsbury's three years ago to forge longer-term supply deals has paid off, and the group is now able to trumpet that 100% of its fresh organic meat is UK-sourced. Waitrose and Marks & Spencer have also long had strong buy-British policies, but others are looking further afield. Asda, Tesco and one or two others are having to import organic meat from Denmark and the Netherlands, and organic beef from Argentina. "The multiples that compete a lot more on price are the most likely to import," says Amarjit Sahota, director of Organic Monitor.
Some have also had to import organic milk following a surge in demand. Farmers who converted two years ago are starting to bring their supplies into the system. Their 90 million litres of new organic milk "will absorb the current shortage", believes Richard Hampton, sales and marketing director at OMSCo, the largest organic dairy farming co-operative in the UK. But the situation is not sustainable in the long-term because farmers are less keen on converting, he warns.
In 2006, 95 million litres of milk went into the conversion process, but in 2007 that fell to 40 million litres, and this year only 300,000 litres. "What's more serious is those farmers coming to the end of conversion are on the verge of abandoning."
" The key challenge this year is to restore the premium to the farm. If it's not paid then we go short of organic milk. "
The Soil Association report also revealed that the UK's self-sufficiency in organic cereals for human consumption fell below 50% during 2006, increasing our reliance on imported grain. Organic wheat prices have increased to £300-£350/tonne, maintaining a premium of about £100/tonne on conventional, says Alex Waugh, director of the National Association of British and Irish Millers. But because conventional wheat prices have also increased, the gap has narrowed in percentage terms.
"Prices have gone up a lot over the past year but they have stopped rising now," he says. "For conventional wheat there is an expectation that prices will drift back a bit, but there's less of an expectation for that to be the case in organic. Supply issues are not likely to improve any time soon."
The UK organic fruit and vegetable market is also under-supplied. It seems more retailers may need to go down the fixed-contract route if they want to increase - or even in some cases maintain - their stock of British organic products.
Doing so would certainly allay the concerns of the green lobby, where air-freighted organic produce has been a recent source of contention.
The Soil Association says 96% of organic air freight comprises out-of-season fresh fruit and vegetables flown in to the UK. The second round of consultation on the likely changes to its standard on air freighting of organic produce concluded on 30 May, and some licensees are understandably fearful of the further increase in red tape that is likely to be required.
It looks like the recommendation to permit air freighting when combined with the Association's own ethical trade standard or the Fairtrade standard will go ahead, but it won't go live until 2009. n
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