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AustralianOrganic Market Report 2010

Australian Organic Market Report 2010 3

Researched by the Organic Research Group, School of Environmental and Rural Science University of New England (UNE), Armidale, NSW, Australiaand Mobium Group, Melbourne, Australia

Commissioned by Biological Farmers of Australia Ltd (BFA)A Co-contribution Project funded by Horticulture Australia Ltd (HAL)

August 2010BFA Publication No. 10/01

Publisher Contact DetailsBiological Farmers of Australia LtdPO Box 530 (766 Gympie Rd)Chermside Brisbane QLD 4032Phone: (07) 3350 5716Fax: (07) 3350 5996Email: [email protected]: www.bfa.com.au

© 2010 Biological Farmers of Australia Ltd. All rights reserved.

AustralianOrganic Market Report 2010

4 Australian Organic Market Report 2010

About the report

“ Data presented here

is not intended to be

a precise description

of the current level of

organic production

and extrapolated data

presented in this report

are estimates. “

• ISSN 1836-0149 Australian Organic Market Report 2010 Publication No. 10/01 Citation: Mitchell, A., Kristiansen, P., Bez, N. & Monk, A. 2010. Australian Organic Market Report 2010 . Biological Farmers of Australia Ltd, Chermside.

DisclaimerThe information contained in this publication is intended for general use to assist in public knowledge and discussion and to help improve the development of organic and sustainable farming industries and related sectors. You must not rely on any information contained in this publication without taking specialist advice relevant to your particular circumstances.

While reasonable care has been taken in preparing this document to ensure that information is true and correct, the University of New England (UNE), Mobium Group (Mobium) and Biological Farmers of Australia Ltd (BFA) give no assurance as to the accuracy of any information in this publication.

The BFA and the authors or contributors expressly disclaim, to the maximum extent permitted by law, all responsibility and liability to any person, arising directly or indirectly from any act or omission, or for any consequences of any such act or omission, made in reliance on the contents of this publication, whether or not caused by any negligence on the part of the BFA, UNE, the authors or contributors.

Data presented here is not intended to be a precise description of the current level of organic production and extrapolated data presented in this report are estimates. The BFA does not necessarily endorse the views in this publication.

This publication is copyright. Apart from any use as permitted under the Copyright Act 1968, all other rights are

reserved. However, wide dissemination is encouraged. Requests and inquiries concerning reproduction and rights should be addressed to the BFA Media Department on phone 07 3350 5716.

UNE Researcher Contact Details Dr. Paul KristiansenUniversity of New England, Armidale NSW 2351 Phone: (02) 6773 2962Fax: (02) 6773 3238 Email: [email protected]

UNE PhD Researcher Contact DetailsMs Alexandra MitchellUniversity of New England, Armidale NSW 2351Phone: (03) 6233 2404Fax: (03) 6228 5123Email: [email protected]

Consumer Study Researcher Contact DetailsMr Nicholas Bez Mobium GroupSuite 6, 24 Eastern RoadSouth Melbourne VIC 3205Phone: (03) 9645 5516Email: [email protected]

In submitting this report, the researchers have agreed to BFA publishing this material in its current form.

Editor: Cecile Storrie, Anhinga Communication and Editorial ServicesPhone: 08 8274 1156Email: [email protected]

Design: trioGraphic [email protected]

Printed by Cornerstone Press Northgate Qld. Phone: (07) 3256 7655 Email: [email protected]

© 2010 Biological Farmers of Australia Ltd. All rights reserved.

Publication details


Author profile

About the authorsDr Paul Kristiansen Dr Paul Kristiansen is a researcher and lecturer at the University of New England in Armidale. He has been involved with organic agriculture for about 15 years. Paul’s research activities include studies of organic

and low-input farming systems in Australia, Burma, Slovakia and Thailand. This work has spanned a wide range of issues including production constraints such as weed and soil fertility management, economics, marketing and supply chain development.

Paul is an editor of the Journal of Organic Systems, a journal devoted to highlighting organic research and education in the Asia Pacific region. He was lead editor of Organic Agriculture - a Global Perspective, an international book on organic agriculture (www.publish.csiro.au/nid/21/pid/5325.htm) that brought together a world-wide group of experienced researchers, farmers, writers and thinkers across a broad range of disciplines to produce a 24 chapter review of organic agriculture around the world.

Alexandra MitchellAlexandra Mitchell is a PhD candidate at the University of New England investigating policy development and data collections in emerging industries focusing on organics as a case study. Since 2007 Alex has worked with

the Tasmania Department of Primary Industries, Parks, Water and Environment as the Organic Industry Development Officer addressing both state and national issues.

Alex also has extensive experience in new industry development through her work in the Commonwealth Department of Agriculture, Fisheries and Forestry. Alex holds a Bachelor of Science degree with Honours from the Australian National University and before joining the public service industry worked in research and development in various science disciplines, mainly focusing on population genetics in Australian forest species.

Nick BezNicholas Bez is Research Director with Mobium Group (www.mobium.com.au), a market research and strategy consultancy with a specific focus and expertise in understanding what motivates Australians to make healthier,

more sustainable lifestyle choices. The firm assists organisations to make informed

decisions about market opportunities related to sustainability, health and wellbeing.

Nick is a market research expert, with more than fifteen years experience studying consumers in the USA and Australia.

Nick has a specific interest in ‘trend spotting’ with a strong focus on ‘health and wellness’ issues and its links to consumer behaviour and has won national awards for his work on brand strategy.

Nick has academic qualifications in Marketing (Boston) (Hons), and a Master of Business Administration (Melbourne) and is professionally accredited (QPMR status) with the Australian Market and Social Research Society.

Dr Andrew MonkDr Andrew Monk has two decades of experience in organic industry auditing, certification and standards, and commercial interests across the organic supply chain including in horticulture and value-adding as well as

currently in the organic waste sector. Andrew has a PhD with a focus on organic production systems and sustainability in Australia.

Andrew consults to both public and private entities across the supply chain on environmental (including organic) issues and management systems, whilst being managing director of an environmental sector services company, Mulching Technologies Pty Ltd. Andrew is a prior CEO and current director of Biological Farmers of Australia Ltd (BFA) and an adjunct associate professor at the University of New England, Armidale, NSW, School of Business, Economics and Public Policy.


Table of contents• Definition of organic ................................................................................................................8• About the authors .....................................................................................................................7• Foreword ......................................................................................................................................9• List of Figures ............................................................................................................................12• List of Tables ..............................................................................................................................13• Acknowledgements ...............................................................................................................15• Funding and sponsorship support ...................................................................................15• Abbreviations ...........................................................................................................................15• Australian Organic Industry Overview: Growing pains for a maturing industry ......16• Executive Summary ................................................................................................................19• Value of this research .............................................................................................................19• Using the research ..................................................................................................................19• Summary of findings .............................................................................................................19• Key figures ................................................................................................................................ 20

Chapter 1• Introduction ............................................................................................................................. 23

Chapter 2• Overview of Australian Organic Farmers and Farmland ...........................................24• Number of certified organic operations .........................................................................24


Contents

• Comparison of survey, AQIS and other market data ..................................................27• Number of organic enterprises ......................................................................................... 28• Certified organic land area ................................................................................................. 29• Effect of drought .....................................................................................................................31• World trends in organic land use .......................................................................................31• Years spent farming organically versus general farming ..........................................31• Organic farm employment and education ....................................................................32

Chapter 3• Organic Production Figures ................................................................................................33• Value of total farm-gate sales .............................................................................................33• Beef ............................................................................................................................................. 36• Lamb ........................................................................................................................................... 40• Wool .............................................................................................................................................43• Poultry (meat) .......................................................................................................................... 46• Eggs ..............................................................................................................................................47• Milk and dairy products ........................................................................................................52• Pigs .............................................................................................................................................. 54• Other livestock products: alpacas and aquaculture .................................................. 56• Honey ......................................................................................................................................... 56• Vegetable, herb and nursery production ...................................................................... 58• Fruit (including coffee, olives, wine) ................................................................................ 64• Nuts ............................................................................................................................................. 68• Essential oils ............................................................................................................................. 69• Grains, pulses, fibres and & oil crops ................................................................................ 72

Chapter 4• Organic Supply Chain ........................................................................................................... 77• Retailers and wholesalers .................................................................................................... 77• Processors, manufacturers and importers .................................................................... 80• Abattoirs .................................................................................................................................... 82• Exports ....................................................................................................................................... 82

Chapter 5• Lifestyles of Health and Sustainabililty (LOHAS): engine room of the organic market ................................................................................ 84• The Australian Organic Consumer ................................................................................... 86• Consumer understanding of organic ............................................................................. 86• Purchasing behaviour: How often? .................................................................................. 88• Purchasing behaviour: What types? ................................................................................ 89• Purchasing behaviour: Barriers to buying more organic food ............................... 90• Purchasing behaviour: How much do consumers spend? ...................................... 90• Purchasing behaviour: Where do consumers buy it? .................................................92• References ................................................................................................................................ 96

Appendix 1• Methodology ........................................................................................................................... 98• Other data sets ........................................................................................................................ 99

Appendix 2• Recommendations for future national organic surveys ........................................100


Figure 1. Number of certified organic clients categorised by supply chain sector

Figure 2. Number of certified organic clients categorised by state (AQIS 2010 and public research)

Figure 3. Area of certified organic land (AQIS 2010 and public research)

Figure 4. Percentage of survey respondents categorised by supply chain sector (AQIS 2010, BFA 2010, TOP 2010 and public research). See back of report for further details and methodology

Figure 5. Number of organic enterprises responding to the survey categorised by state

Figure 6. Land area reported in the survey, categorised by organic status

Figure 7. Certified organic, in-conversion and pre-certification land area reported in the survey, categorised by state

Figure 8. Percentage of survey respondents categorised by total farm area

Figure 9. Percentage of survey respondents categorised by organic farm area

Figure 10. Effect of drought on enterprise typeFigure 11. Percentage of survey respondents

categorised by years of experience with farming generally and organic farming

Figure 12. Percentage of survey respondents categorised by years of experience with organic trading

Figure 13. Age of employees (including owner-operators) working in organic enterprises reported in the survey

Figure 14. Education levels of employees (including owner-operators) in organic enterprises reported in this survey

Figure 15. Number of organic beef producers (n = 39) categorised by state

Figure 16. Respondents’ expectation for production levels in 2009-10

Figure 17. The percentage breakdown of dairy product

share by volume: whole fresh milk, light milk, cream, yoghurt, cheese, other

Figure 18. Area (hectares) of organic vegetable production of respondents categorised by state

Figure 19. Annual volume (tonne) of organic vegetable, herb and nursery production by state reported by respondents

Figure 20. Percentage of marketing outlets used in selling organic vegetable, herb and nursery products

Figure 21. Number of organic fruit producer respondents (n = 99) categorised by state

Figure 22. Area (hectares) of organic fruit production reported by respondents, categorised by state

Figure 23. Annual volume (tonne) of organic fruit production of respondents by state

Figure 24: Percentage distribution of essential oil types reported

Figure 25: Grain type by % volumeFigure 26. Expected change in certified organic grain

production in the following yearFigure 27. Number of certified manufacturers/

processors from 2002 to 2009 (BFA 2008 amended with AQIS 2010 and industry data)

Figure 28. Number of certified operators in 2010 categorised by supply chain sector (AQIS 2010 and industry data)

Figure 29. Expected change in sales of organic products over the following year reported by organic processors, manufacturers and importers

Figure 30. Total quantity of organic produce exported by certified organic clients (AQIS 2008, AQIS and industry data)

Figure 31. Quantity of organic produce exported in 2007 and 2009 by commodity (AQIS 2010, industry data)

Figure 32. LOHAS TypesFigure 33. Number of responses received over time

from date of survey mail-out

Figures

List of Figures


Tables

List of tablesTable 1. Changes in the number of certified organic

clients reportedTable 2. Organic producers responding to the

survey categorised by commodityTable 3. Land area reported in the survey,

categorised by commodity producedTable 4. Recorded financial returns and estimate of

national farm-gate salesTable 5. Number and status of organic beef cattle

breeding stock production and sales reported by respondents

Table 6. Number and status of organic beef stores cattle production and sales reported by respondents

Table 7. Proportion of certified organic beef cattle sold to different market outlets

Table 8. Expected change in certified organic beef cattle production in the following year

Table 9. Total number and status of lambs produced on organic farms as reported by respondents (n=27)

Table 10. Number and value of respondents’ certified organic lamb production for the stores market, with market location indicated

Table 11. Number and value of respondents’ certified organic lamb production for the finished market, with market location indicated

Table 12. Size and value of wool clip produced as reported by survey responses (n=12)

Table 13. Volume (kg) and status of wool produced collated from respondents and industry

interviews 2008-9 and comparison from 2006-7

Table 14. Prices received ($/kg) and status of wool produced reported by respondents

Table 15. Number of poultry meat birds managed on organic farms reported by respondents (including In-conversion*)

Table 16. Number of laying hens, eggs produced and pullets bought-in on organic farms

Table 17. Status of eggs sold from organic farmsTable 18. Market outlets for certified organic eggs as

noted by respondentsTable 19: Comparison of pricing of raw milk at farm-

gate reported by respondentsTable 20. Number of pigs managed on organic farms

reported by respondentsTable 21. Number and value indicated by

respondents of certified weaners and finished pigs sold to various outlets, with market location indicated

Table 22. Quantity and value of organic honey produced, with market location as indicated by respondents

Table 23. Number of organic vegetable producers responding to the survey, area under organic vegetable production (not all reported in this table) and volume of organic vegetables reported, categorised by crop

Table 24. Number of organic vegetable producer respondents (n = 73) categorised by state


List of tables

Tables

Table 25. Annual production volume, average price received and returns for organic vegetable, herb and nursery products, categorised by crop as reported by respondents

Table 26. Expected change in certified organic vegetable, herb and nursery production in the following year

Table 27. Comparison across years for total area under organic fruit production and volume of organic fruit reported by surveys (n=99), categorised by crop

Table 28. Market outlets for organic fruit productionTable 29. Number of trees in production (6 years or

older) or coming on-line (under 6 years) as recorded by surveys, categorised by crop

Table 30. Annual production volume, average price received and returns for organic fruit products, categorised by crop, reported by respondents

Table 31. Marketing outlets for certified organic fruit products

Table32. Production and sales (domestic and export) by variety

Table 33. Production area and numbers of trees in or coming into production by variety

Table 34. Average price reported for organic nut products, categorised by crop

Table 35. Summary of organic essential oil producers responding to the survey, area under organic production, volume of organic essential oil reported and % market breakdown

Table 36. Number of organic grain producers responding to the survey, area under organic grain production, volume of organic grain reported, average price as categorised by crop type

Table 37. Number of state responses and area of grain production comparison for 2008-9 and 2006-7

Table 38. Value of financial returns reported by organic grain, legume and oilseed crop producers

Table 39. Average prices reported as sold by organic grain, legume and oilseed crop producers and bought domestic by wholesalers ($/tonne)

Table 40. Sales of organic products reported by retailers and wholesalers

Table 41. Retail value ($A Mill) (Euromonitor, 2010)Table 42. Percentage distribution of organic products

(Euromonitor, 2010)Table 43. Value of world organic markets

(Euromonitor, 2010)Table 44. Number of respondents using overseas

organic certification schemesTable 45. Snap shot of findingsTable 46. Organics: Perceived benefitsTable 47. Organics: Overall household participationTable 48. Organics: Category purchase penetrationTable 49. Organics: Category purchase frequency Table 50. Organics: Barriers to further purchase Table 51. Organics: Overall household food spend #1Table 52. Organics: Overall household food spend #2Table 53. Purchasing behaviour: Organic fruit and

vegetablesTable 54: Purchasing behaviour: Organic home-

cooking ingredientsTable 55. Purchasing behaviour: Organic red meatTable 56. Purchasing behaviour: Organic dairy


Acknowledgements

Biological Farmers Australia Ltd (BFA), Horticulture Australia Ltd (HAL)

Gold: Australian Certified Organic; Inglewood Farms; Parmalat

Silver: Australian Organic Honey Company; Citrox; Cleavers The Organic Meat Company; Country Heritage Feeds; Ladybird Organics; Melba Fresh; MiEssence; OBE Beef; Seasol; Steel River Brewery; Sunny Queen Eggs; Temple Bruer Wines; Wray Organic

State Governments of: New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia

Researchers would like to thank:ACO (Akiko Nicholls); BFA (Doug Haas, Andrew Monk, Holly Vyner); NCO (Stephanie Goldfinch and David Nott) OFC (Marg Will); OGA (Doug Haas, Holly Vyner); SFQ (Brian Witherspoon); AusQual (Ian King); TOP (Rex Williams), Regional Development Victoria (Rowena Cann), Organics Tasmania (Jim Rossiter and committee).

Thanks goes to the certification agencies: Australian Certified Organic (ACO); NASAA Certified Organic (NCO); Organic Growers of Australia (OGA)

and Safe Food Queensland (SFQ) for approval for use of AQIS data and for additional assistance in survey distribution and related industry information and data cross checking. The assistance also from numerous other supply chain businesses from farm to retail in cross checking available data sets with actual market values and volumes is gratefully acknowledged.

Input, research support and feedback:Alasdair Smithson, Organic Knowledge Els Wynen, Eco Land-use SystemsJulie Crockett, Australian Quarantine and Inspection Service (AQIS)

People who provided feedback on the questionnaire and research methodology:Rowena Cann (Regional Development Victoria), Hugh Griffiths (DPIPWE), Ross Corkrey (Tasmanian Institute of Agricultural Research), Andre Leu (Organic Federation of Australia), Steve McCoy (Department of Agriculture and Food WA), Tim Marshall (TM Organics), Andrew Monk (BFA), Jim Rossiter (Toehold Farm),

The researchers would especially like to thank Doug Haas (BFA Chairman) and the BFA Board, for fully supporting this project.

Funding and sponsorship support

AbbreviationsABARE Australian Bureau of Agricultural

and Resource EconomicsABS Australian Bureau of StatisticsACO Australian Certified OrganicACT Australian Capital TerritoryAQIS Australian Quarantine

and Inspection ServiceBDRI Bio-Dynamic Research InstituteBFA Biological Farmers of AustraliaDA Dairy AustraliaDAFF Department of Agriculture Fisheries

and Forestry, Australian GovernmentFiBL Research Institute of Organic

Agriculture

FY08-9 Financial year, 1 July 2008 – 30th June 2009

GRDC Grains Research and Development Corporation

HAL Horticulture Australia LimitedIFOAM International Federation of Organic

Agriculture MovementsJAS Japanese Agriculture StandardLOHAS Lifestyles of Health and Sustainability MLA Meat and Livestock AustraliaNCO NASAA Certified OrganicNOP National Organic Program (USA)NSW New South WalesNT Northern TerritoryOBE Organic Beef Export

OFC Organic Food ChainOGA Organic Growers of AustraliaOMRI Organic Materials Research InstituteQLD QueenslandRIRDC Rural Industries Research and

Development CorporationSA South AustraliaSFQ Safe Food QueenslandTAS TasmaniaTOP Tasmanian Organic-Dynamic ProducersVIC VictoriaWA Western Australia

Value of this researchThis is the second report the Biological Farmers of Australia has commissioned to help industry bench mark the growth and health of its sectors. This report - another significant milestone in the two decade plus history of the rapidly developing Australian certified organic sector - builds the information base for industry to benchmark production and market value against past and current claims and estimates and will enable monitoring of future growth of the certified organic market in Australia and its farming and production base. In an industry characterised by operational diversity, this report allows for performance assessment by sector. The next publication in this series is planned in 2012 (biennial since the inaugural report in 2008) as a means of providing the wider industry with invaluable and realistic market information.

Using the research This report may assist the commercial sector by contributing to business decisions and business

planning in farming, value adding or marketing operations. Researchers, governments, industry associations and those with an interest will be able to understand more effectively the nature of the organic industry and its multi-sector foot print within Australia, while also comprehending the broader trends of the industry. Please note the caveats and disclaimers in relation to this research.

Summary of findingsIndustry growthThe organic sector is showing strong patterns of sustained growth through what has been an extremely challenging Global Financial Crisis (GFC) period. Total retail value in Australia has reached approximately $947 million, an unprecedented mark, while with growth projections it is tipped to breach the A$1B mark before the end of 2010. This is in the context of a global slowing of some international organic markets. Despite the fact that the Australian organic industry at this point commands a relatively small percentage of total market value, (average circa 1%) it represents

Summary


Key figures

Chapter 2: Overview of organic farmers and farmland

As at the end of 2008-9 the total number of certified organic operators was 2986, of which three quarters were in farming operations, being 1.6% of all farming operations in Australia

4% is the average annual increase in certified organic operators over the last 2 years, in line with a long term trend of the past 7 years.

With 12,001,724 hectares, Australia exhibits the largest amount of certified organic farmland in the world, the vast majority of which is used for extensive grazing. 35 million hectares of agricultural land are managed organically by almost 1.4 million producers worldwide.Non rangeland and pastoral certified organic lands have continued to increase by 5% over the past two years.

The average age of an organic farmer in Australia is lower than a non-organic Australian farmer and 25,000 are employed by this industry.

Chapter 3: Australian organic production (farm gate value) figures 2009

2009 farm gate values were estimated to be in excess of $223,224,000 using very conservative new estimation methods. However, using previous multiplication factors, they could well now be higher than $300M.

Despite widespread drought, recorded farm gate sales have risen by over 48% since last reported in 2008.

Market (farm gate) value figures

The organic vegetable, herb and nursery production market was valued at$77,500,000The organic fruit & wine market was valued at $39,700,000 with winecontributing $2,341,720 of thisThe organic beef market was valued at $34,456,100The organic milk & dairy product market was valued at $17,914,000The organic poultry (meat) market was valued at $15,349,000The organic lamb market was valued at $11,307,000The organic honey market was valued at $9,789,000The organic grains, pulses, fibres & oil crops market was valued at $9,456,000The organic poultry and eggs market was valued at $3,200,000The organic nut market was valued at $2,234,824The organic essential oils production market was valued at $1,243,056The organic wool market was valued at $826,993The organic pig market was valued at $255,030

Executive Summary


Summary

significant opportunity as an expanding market for operators committed to consistent delivery of high quality product.

Strong growth is increasingly evidenced by the growing presence of organic products in mainstream food marketing. In 2009 92% of organic sales were through store based retailing. Supermarkets now make over 60% of all organic sales. With the now permanent positioning and offering by major supermarkets including Coles, Woolworths, Aldi and IGA, into the organic market, demand for organic products has reached a new level of acceleration. There are over 500 organic lines ranged in some larger retail stores. As was noted in the 2008 report, the ability of developing domestic production to meet this demand continues to be a key challenge for the future of the Australian organic industry.

In addition to GFC concerns, drought has been a driving factor, suppressing growth and development for some sectors. This remains particularly marked for grains, while livestock products (red meats in particular and specifically lamb and high quality beef ) remain undersupplied in a sector that has grown some 25% in 2009 alone.

Independent retailing has been through a tumultuous time with the buy-out of the Macro Wholefoods chain of independent organic stores. Others are taking their place, however, this sector has challenges, needing a boost in professional independent retailing to deliver longer term growth in this long established sector.

Locally, consumer interest in organic product has been facilitated by the growth in farmers’ markets, home delivery and related direct marketing and “box” schemes, bringing the consumer closer to the organic farm world than ever before.

Industry sectorsThe organic industry in Australia is characterised by diversity in the sectors of production represented; market outlets and distribution; and types and sizes of business operations. The industry has benefited from growing professionalism and maturation in production (farming and processing), supply chain and marketing operations, from both small and larger organic businesses alike.

The recorded organic farm gate value has grown over 48% in two years, with some sectors contracting or remaining contracted (mostly drought driven) while others have developed considerably. A lower than expected growth rate is attributed primarily to the impact of the drought on the viability of some farming operations and regions, in particular in the organic grains and meat sectors, while the GFC has possibly also impacted in some higher value adding sectors. A stagnant period of low to no rainfall had halted production in many traditional organic grain production areas through to 2009, and the volume and value of organic grain production has lowered over the last decade, with some knock-on effects indicated from feed-mills and livestock producers. This is expected to pick up in some areas for 2010/11 as

Key figures

Chapter 4: Organic supply chain

The total retail value of the Australian organic market consolidated from both primary industry figures and industry intelligence information for fresh and processed lines is estimated at $947 million, with an expectation that in 2010 this will breach the A$1B level.

Major retailers carry in excess of 500 different organic lines in fresh and grocery categories.

Supply of consistent, quality product remains a major challenge for sustained industry sector growth.

There is also a need for further promotion at consumer level for horticultural product.

Chapter 5: The Organic Consumer

60% of consumers (up from 40% in 2008) buy organic food on occasion with “leaders”, as identified in the Lifestyles of Health and Sustainability (LOHAS) report, the core of this purchasing activity by volume and regularity.

Organic fruits & vegetables remain the most common entry points for consumers.

As in overseas trends, the majority of traded organic products are now moving through the major supermarket chains. They have been the single largest driver of growth over the 2008 – 10 period and are expected to remain the largest single channel for future growth for the organic industry.

The industry otherwise remains diverse in its market outlets, with farmers markets and innovative direct marketing remaining a strong core component of the organic marketplace, though not showing the strength seen in markets such as the UK.

Summary


rains and floods have arrived in flood plain production systems.

In contrast to the last report in 2008, while the farm gate value of horticulture has increased, it appears that as at mid 2010 demand growth in the conventional market settings (both independents and chains) is somewhat suppressed. Operators are reporting either stagnant sales or slightly higher volumes but with pressure on margins, delivering the same returns over the past year. The estimate of growth for the horticulture sector, again while varying across sub-sectors, is three fold in some vegetable sectors and 10-20% in fruit sectors.

The organic industry is continuing to consolidate on 2008 report trends and the average size of organic farms has increased, highlighting a trend towards professional farming on a larger scale (albeit still well under non-organic farm enterprise levels for most sectors). This also highlights the expansion of some long term organic farming families who have purchased additional land and/or farm units in other states to cater for increased demand as the multiple retailers move more decisively into the organic market.

At the same time, the organic industry remains solidly diverse in terms of operator types and sizes, with the ongoing flourishing success of smaller farmers’ markets and direct marketed products. This is reflective of ongoing reports from the certification sector of a rise in applications for both small and medium to larger farmers alike.

Challenges continue to be observed in co-ordinating organic production and supply chains. Production of beef cattle has been a significant success story for the organic sector, continuing to represent around one sixth of total industry farm gate value. Despite this, one third of organic beef was delivered into the non-organic conventional markets and has not been included in the current value of organic market estimates. At the same time, processors continue to claim lack of access to consistent quality product, including beef and lamb.

The industry has witnessed an increase in strategic market alliances and marketing groups as a means of facilitating optimum logistics in supply and distribution of product to market. Some groups have achieved substantial success in co-ordinating supply chains to access larger domestic markets and

international markets. Access to these larger markets has often been obstructed by fragmented or lower volume supply lines. This report profiles a number of those success stories as an example for many organic sectors.

Poultry meat and egg operators have experienced very solid growth and almost all products are sold as certified organic, however production has been highly sensitive to rising feed costs with the organic monogastric sector ever reliant on certified organic feeds. Organic monogastric industries, including pork, have taken a varied approach to adapting to changed conditions, with some producers following a business model of vertical integration and some expanding the farm land they own to feed their growth. Distance from certified organic abattoirs remains a challenge for some and an acute challenge for pork producers.

Horticulture remains a major stay of the industry. Some two thirds of organic farmers form part of this sector which represents over one third and possibly up to half of the total organic farm gate value in Australia. Fresh produce remains the first entry point for the majority of first time organic consumers and is a major component of the organic shopping basket.

Organic dairy products have been a stand out champion between 2008 and 2010, reaping the rewards of many years of background work on co-operative marketing and promotion. A number of dairy brands are now present in the organic marketplace in Australia across a number of states.

Other new and emerging market segments include organic honey and its related medical applications, profiled in this report, along with a soon to be booming organic cosmetics segment, set to be one of the potential stand-out growth sectors of the coming years as consumers take up more of the “organic lifestyle” options now on offer.

The cosmetic sector continues to enjoy great interest from export markets, with large high-end Asian hotel chains looking for signature products. Honey producers have doubled their exports in the last two years, with US and Germany the major destinations for these products.

Imported products are appearing on shelves more often, but the biggest section of imports is ingredients for manufacturers. It is estimated that over $200million worth of products are imported, from grains to essential oils to dairy powders.


Summary

Certified land area and demographic trends Australia continues to report the largest surface area of certified organic land in the world with some 12 million hectares certified for organic operations. This is primarily accounted for by vast areas of rangeland for organic cattle production in the Channel Country regions of Queensland and the semi arid rangelands of Queensland, NSW and SA.

Over 11million of those hectares are rangelands producing beef, lamb and wool. Of the remainder grains, fruit and dairy have the next highest percentages of land use.

Across some 90% of Australia’s total certified land, Queensland has the most area of all Australian states. NSW accounts for the highest number of organic operations in terms of number of individual certified organic businesses. Nationally, 2986 certified organic operators were recorded. Of these operations, some three quarters were primary producers and representative of some 1.6% of Australian farming operations.

The organic industry continues to add to its farmer numbers at a time of ongoing departure from the land by non-organic farmers. The organic industry reports an average of just over 5% net operator growth per annum over the past seven years, closely reflected also in the past two.

There is an ongoing trend for organic farmers to be, on average, younger than their non-organic counter-parts. Employees in organic systems were most likely to be aged 36 to 55, with a significant proportion falling within the 26 to 35 bracket and only a small minority aged over 56. This is compared to the average age of 58 for non-organic Australian farmers. Organic farms are now enjoying welcoming back younger generations to the farm, bringing with them tertiary

and TAFE experience.Reflecting the experience of the broader agricultural

sector, organic farmers have suffered during the recent drought, and at the time of this survey many organic growers are continuing to experience drought impact. The drought has considerably influenced results of this report, albeit in some sectors this has been the case for over seven years. This impact is noted in reported diminished exports of Australian organic oil seeds and cereals, while dampening what had been strong growth in livestock export products earlier this decade. The return of these commodities to the levels of the early 2000s is not expected until 2012 and will be dependent upon a return to a normal long “cycle” of dry and wet on the eastern seaboard of Australia.

Having noted this, the horticultural sector has not been as affected by water availability as its conventional counterparts, although water scarcity in some regions has led to farmers obtaining farms in other regions or states to maintain supply. Some farmers did experience very poor cropping but expect this to pick up with wetter conditions.

Organic consumers Organic consumption continues to increase as acceptance grows amongst traditionally conventional produce buyers. Some 60% of consumers surveyed purchase organic food at least occasionally (up from 40% in 2008), and women remain the primary purchasers.

Organic fruit and vegetables are the most commonly purchased organic products. They are most likely to be trialled by new or experiential organic consumers and 70% of organic consumers buy from these categories at least once a week.

Health and a concern for the environment remain the most common reasons for consumers to buy organic, while animal welfare, non GMO status, and better tasting food are also commonly perceived benefits of organic.

Major barriers to purchasing organic products remain price and availability. Poor appearance of organic food is significantly less of a barrier than has been reported in the past as more professional supply chains ensure only highest quality items reach final markets and as higher supply volumes have pushed some seconds products to processing leaving higher grade products for the retail shelf.

australian organic market report 2010 - orgprints.orgorgprints.org/19267/4/19267.pdf · australian...

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