With the organic food sector, in many markets, in a state of exponential growth, the industry is hopeful that a new trade deal between the US and EU could significantly boost sales in both markets. MJ Deschamps reports.
A new deal signed between Brussels and Washington could herald a new era for the organic food sector. Under the transatlantic organic equivalence agreement, which was signed on 15 February and comes into effect on 1 June, organic products certified in the EU or US may be sold as organic in either region.
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And organic producers on both sides of the Atlantic can see the benefits. The agreement negates the previous requirement for organic exports to obtain separate certifications for local standards and will consequently cut the costs associated with additional fees, inspections and paperwork, Jake Lewin, chief certification offer at California Certified Organic Farmers (CCOF), suggests.
“As a result of this agreement, we expect that more than 800 CCOF farmers and processors will see a reduction in their overall fees and complexity of certification,” he says.
According to Amie Johns, quality manager at the Soil Association, the UK’s largest organic certification body, reduced barriers to trade and lower costs could mean an increase in trade between the world’s two largest organic producing regions.
“The mutual recognition of the [US] National Organic Program (NOP) and the EU organic regulations will lessen restrictions on trade. This requirement may have deterred businesses in the past. So, as a result, we would expect to see an increase in trade of organic ingredients and products,” she says.
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By GlobalDataThe EU market for organic food and beverages in the 2009/10 marketing year generated sales of approximately US$26bn, while sales of organic food and beverages in the US in 2010 totalled US$26.7bn. Excluding perhaps some notable exceptions like the UK where organic sales have struggled in recent years, the sector is witnessing faster growth than the rest of the food industry.
The market for organic food in the EU as a whole has grown 7% year-on-year for the past decade, Gillian Westbrook, general manager at the Irish Organic Farmers and Growers Association (IOFGA), notes.
“With this growth, we have also seen a growth in employment on organic farms and in the whole organic sector – this is set to increase as the US market opens up to organic products,” she says.
Similarly, in the US the organic sector has grown rapidly, creating jobs at four times the national rate, according to Laura Batcha, executive vice president at the US-based Organic Trade Association (OTA).
“The US organic sector continues to exhibit healthy growth despite the current economic climate – in 2010, the US organic food sector grew by 7.7%, compared with 0.6% growth for the conventional food industry.”
It is hoped, Batcha continues, that a liberalised trading environment will help increase the already stellar pace of growth in the organic sector.
“Up to this point, US organic agriculture has operated largely in an environment rife with trade barriers and has not seen the advantages of the trade surplus in US agriculture as a whole,” she says.
Prior to this agreement, the EU was identified by the US organic food and farming sector as its largest untapped export opportunity, Batcha explains, although she insists the deal will be good for organic producers in each region. “Not only will US companies be able to export more products in a more expeditious way to the EU, but the EU will be able to export ingredients needed by US companies.”
Moreover, the IOFGA’s Westbrook asserts that it is unlikely that the trade deal will result in a cannibalisation of sales, with producers in one region increasing revenues at the expense of manufacturers in the other. She suggests that organic goods that are produced easily and competitively in the US will not be imported from the EU as a result of the deal, or vice versa.
Instead, negotiators envisaged that trade will focus on specific products that are either not available in the other market or of extremely high quality.
Overall though, Westbrook claims more organic products will be available in both areas as a result of this agreement, particularly in the canned or dried goods sectors.
Above all, the recognition that each region’s organic certification programmes are equivalent, means it should be easier for producers on both sides of the Atlantic to trade. There is one notable exception, which covers the use of antibiotics.
USDA organic regulations prohibit the use of antibiotics except to control invasive bacterial infections in organic apple and pear orchards, while EU organic regulations allow antibiotics only to treat infected animals. So, for all products traded under this partnership, certifying agents still must verify that antibiotics were not used for any reason.
That apart, the deal looks to have opened potentially lucrative new markets for producers in the US and the EU.
However, the issue of GM could have an impact of US producers. EU consumers are generally wary of GM products but there are also some in the US that will now look for EU-made organic products, Westbrook suggests.
“[GM] has been a huge area of discussion in the negotiations…there is greater consumer resistance among EU consumers to GM foods than in the US. With regard to these differences, having this agreement in place allows greater choice for the EU consumer. In relation to market opportunities in the US, many informed consumers who are anti-GM may look for EU certified organic food as they are aware that there is very little GM cultivation in the EU comparable with the US,” she says.
However, speaking from a US perspective, Batcha is quick to play down the significance of the divide in attitudes over GMOs.
The EU has a labelling regulation that sets limits for GM thresholds. Any product that contains levels of GM material that go above those thresholds cannot be sold in the EU unless it is labelled as genetically engineered. “And since an organic product cannot be labelled as genetically engineered, it couldn’t be sold as organic,” Batcha observes.
“As part of the agreement, both sides have agreed to collaborate and share information on best practices to prevent contamination of organic crops with GMOs,” she adds.
So, the organic sector on either side of the Atlantic is to be looking to the future with optimism. The new trade deal has been welcomed as a significant milestone that will result in increased trade between the two regions and could, potentially, help quicken the rate of growth for the category as a whole.
