While food companies are being constantly blamed for rising levels of obesity and bad diet, the organic boom is evidence of the contrasting trend in the market towards healthier eating. However, writes Ben Cooper, keeping up with rising demand has been difficult and is unlikely to get any easier with the boom showing no sign of slowing up.

With all the bad publicity and alarm generated by bad diet, junk food and rising levels of obesity, the boom in the organic sector must provide most welcome relief for a beleaguered food industry.

For the objective observer, it is hard not to remark on a certain dichotomy – or even polarisation – in the food sector, as genuine concerns over unhealthy diet prevail and increase, while there is a clear tendency among other consumers towards healthier foods and, in particular, organic produce. Moreover, it is clear that the extent of the organic boom is not being exaggerated.

According to a recent report from just-food.com, Global market review of the organic food market – forecasts to 2012, the global organic food and drinks market is estimated to have reached US$36.7bn in 2005. Growth rates across different countries range from 15% to 22% a year, against typical overall food and drink growth of between 2% and 6% per annum.

However, while the organic boom is clearly one of the “good news” stories in the food industry at the moment, strong growth in one area can of course bring its own problems. For the organic market, these appear to be focused in two areas – maintaining supply and guaranteeing authenticity.

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In some areas of the market, the industry is finding it tough to keep up with rising demand. This shows that the organic boom is no fiction and up to a point it is a good problem to have, but clearly supply issues need to be reconciled. Scarcity of supply will slow growth and threatens to undermine the organic sector’s massive potential.

The most notable area where demand has failed to keep pace with supply is in the meat market. The recently published Sommers Organic Survey indicated that 75% of consumers in the US had bought organic at least once in the past month but the survey also showed that demand was still outstripping capacity in the organic meat category.

Organic meat and poultry is likely to be the fastest growing organic segment in the US over the next two years, with the market forecast to rise by 33% by 2008. But 60% of respondents in the survey reported that organic meats are not easily available, and some 75% said they would buy organic meat if they could find it.

Research from Organic Monitor also points to strong growth in the organic meat sector in the US, fostered in part by the BSE outbreak in US and Canadian herds in 2003. The market grew by 51% last year, according to Organic Monitor, and has grown by 150% since 2002. But Organic Monitor also points to supply issues. The report said the US market for organic meats has become highly import-dependent, particularly in pork and beef, with product coming from Latin America, Australasia and Canada. The study said US producers are deterred by high production costs, lack of certified slaughterhouses and processing plants, and inadequate distribution infrastructure.

The recent news that the retail giant Wal-Mart plans to increase its organic ranges is further evidence of the strength of the organic boom – and augurs well for the future – but in the short to medium term will do little to ease supply problems. It was reported that Wal-Mart had asked Kellogg to produce organic cereal lines, and other major food corporations are also thought to be interested in supplying the retailer with organic lines.

However, some believe that major supermarket chains will struggle to cater for the organic market. Paul Spencer of UK organic farm company Chegworth Valley told just-food: “Supermarkets will struggle to be a real platform for selling organic food because of the foods’ seasonality and the small number of producers out there who are able to supply at the massive level required.”

While one underestimates the power of the likes of Wal-Mart at one’s peril, it is interesting to note that a distrust of major corporations and in particular the big supermarket operators is one of the key drivers behind the organic boom identified in just-food’s report.

The ever-increasing demand for organic produce also brings problems of credibility and authenticity. For the growth to be sustained, consumers have to have confidence that the products they are buying are organic and the criteria defining what is and what is not organic have to be made clear.

There is clearly consumer demand for reliable certification of organic products, as suggested by a recent survey commissioned by US food group ConAgra. The survey showed that 95% of American shoppers are influenced by quality seals and marks, such as organic.

In Europe, at a recent meeting of the EU Council of Ministers for Agriculture, ministers called for the introduction of a logo that would “provide clear information on the content of the product”. A majority of the 25 EU member states are backing a move to introduce a compulsory EU organic label to certify that foods have been produced to prescribed organic criteria.

It is little wonder that so much concern is being expressed over adequate certification and clear consumer communication. In any boom market, there is always a danger that less scrupulous operators may seek to cash in. With organic goods commanding a significant price premium and products in short supply, the temptation to do so will be considerable.

For more on just-food.com’s report, Global market review of the organic food market – forecasts to 2012, go to www.just-food.com/store