Study of the market for organic vegetables

Summary

This project was led and conducted by HDRA, in collaboration with the Soil Association, Elm Farm Research Centre and The Institute of Rural Studies, Aberystwyth. Data was collected from UK packers and wholesalers of organic vegetables on the amounts, value and source of organic vegetables traded during the 2001/02 season. This was supplemented with crop area data from the organic certification bodies on the area of organic vegetable crops grown in the season. All data was cross-referenced with other published sources of information for the same season.
Results and conclusions
For a range of twenty-five organic vegetables, which can be grown commercially in the UK, levels of self-sufficiency, or market share, have risen from previous reported levels of 30-40% to an average of 57% for all vegetables. When considered on a crop by crop basis, however, there are large variations of UK market share, ranging from 96% for swedes to 33% for onions. For staple crops such as potatoes, carrots and cabbage the UK share is 65%. Within the main marketing season, for most staple crops, it is estimated that the UK is self sufficient for two-thirds of organic produce with the remainder being imported. Levels of imports rise during the time when UK produce is not in season. Packers and wholesalers estimate that on average there is potential to increase UK market share by 10-15%, although again there are variations on a crop by crop basis. If this were achieved this would put organic production at similar UK market share levels to that achieved in conventional production, namely 70%, which is the target set by the English government’s organic action plan. In order to increase supplies UK growers will have to compete with imports on quality, continuity of supply and in some cases on price. Much of the challenge for UK growers is to increase production at the beginning and end of the season, a time when there is greatest risk from pest, diseases, poor nutrient supply and variable economic returns. The need for organic growers to use organic seed, for which supplies are not always available, could in the short-term act as a constraint to UK growers expanding their production levels.
In the EU, the largest markets for organic vegetables are in Germany, France and the UK, these three are major importers of organic vegetables. On the other hand Spain, Italy and the Netherlands are major exporters of organic vegetables. The UK has the lowest level of self-sufficiency in both vegetables and potatoes compared to other EU countries. Many EU countries have increased their levels of production to meet the growing UK market, and for some crops there is oversupply at the EU level.
In the future the UK market is predicted to grow at a slower rate, 10-15% per annum. Future growth will be related to a wide range of factors such as the growth of the economy, and education of the consumer to the benefits of organic food. According to retail analysts 8% of the ‘committed’ organic shoppers buy 60% of the organic food. It is a challenge, firstly to encourage the committed consumers to buy more organic food and secondly to entice the other 71% of so called ‘dabblers’, who only currently buy organic food occasionally, to buy more regularly. Commitment to buying organic grows as consumers become more aware of the benefits of organic farming.
Recommendations
Farmers, policy-makers and other market actors must react swiftly to the changing conditions of the new environment that will evolve in coming years. But in order to do this, government must continue to give clear policy support to the sector. Growers and marketers need a clear picture of the market and knowledge about the supply levels of crops at different times of the year and precisely where there are opportunities for innovation, processing and expanding production. Hence there is an imperative for market information to be collected annually, so future projections could be more easily and accurately mapped. However conversion period time lags will inevitably act to slow the response of farmers to changes in market conditions or consumer behaviour. Growers should also be encouraged to innovate and differentiate their produce, to invest in suitable facilities for storage and processing of crops, such as washing carrots, and to increase their marketing awareness and marketing skills.
Co-operation and communication must be fostered within the supply chain. Ideally the food chain should be short, fast, transparent, seamless and collaborative, with all partners in the chain taking equal responsibilities and sharing risks, too often the food chain is complex, price driven, confrontational, disjointed and opaque. An increased UK supply can only be successful if organic market actors join forces to realise the potential of the advantages arising from the economies of scale associated with growing supply. The easiest way to secure long-term growth in UK production is through long-term contracts between partners in the supply chain.