Organic sales growth has slowed and a third of UK organic farmers are losing money. But British supermarkets remain publicly bullish about the prospects for organic food. And as long as the supermarkets have the customers, the market is going to be there, say the farmers.

Farmers, particularly in the dairy sector, are expressing concern in other European countries. Although the growth continues and some governments appear very keen, the reality of organic production is looking less attractive to the uncommitted farmer. Those who wanted to go organic to achieve premiums over cut-throat commodity markets have found the market much less reliable than they’d hoped.

The National Farmers Union, which covers England and Wales, surveyed its members earlier this year to see how organic businesses were performing. “The survey we did showed that around one third of organic farmers were losing money,” the union’s organic advisor Joanna Jeffery told

Huge surpluses of organic milk

Farmers feel they have been stung over milk. “We have still got a huge surplus of organic milk in this country,” Jeffery said. “A lot of organic milk is being sold at conventional prices, some of it even below the conventional price.” The milk problem is widespread, and has done much to make farmers across Europe wary of going organic. A third of the organic milk produced in France is reported to be selling as conventional, with French dairy producers calling for a campaign to promote organic products.

Even so, the England and Wales NFU’s organic specialist remains bullish about the prospects for organic sales. “In a nutshell, organic lines make retailers a lot of money,” Jeffery said. “If you’ve got input from retailers the market will continue to grow just as fast as before.”

OFF confident of maintained growth

Julian Wade, executive secretary of the Organic Food Federation, one of the UK’s main organic certification bodies, also felt the sector could continue to grow strongly, even after the spectacular growth that has already taken place. “The rate of growth has been incredibly high,” he told

“Growth of
organic food
has slowed to
around 16%”

One retailer which makes much of wanting to be at the forefront of the organic sector’s growth is Tesco. It has already announced that it wants to quadruple its own organic sales to a value of £1bn (US$1.56bn) a year. “That target followed in-depth customer research,” Tesco spokesman Jonathan Church told “They wanted to buy more organic. And they wanted to buy a greater range. That led to the billion pound target.”

Tesco has already, said Church, responded to the consumer research by increasing its organic range to over 1,100 items.

Organic growth slowing

But despite Tesco’s bullishness, growth in sales of organic food is slowing. According to the Soil Association’s Organic Food and Farming Report 2001, growth in the organic food market slowed to 33% in Britain in the year to April 2001, compared with 55% growth the year before. Figures for 2001/2002 are due to be published at the Association’s conference in London later this month, although the government’s Action Plan on organic food predicts growth of 20%, which would bring sales in the sector to “over £950m,” or still less than Tesco’s target just for itself. Sector experts say growth has slowed even since that figure was published, to around 16%.

Margaret Beckett, the minister in charge of the Department for the Environment, Food and Rural Affairs (DEFRA), has talked about expanding the area of organic production in Britain to around 10%. Some campaigners are talking about 30% of the area being organic, compared to less than 4% now. At that point, they assume, 20% of all the food sold in Britain will be organic.

The idea has caused come concern in the organic sector. In particular, Organic Farmers and Growers, the second largest organic certification body in the UK, covering around 25% of organic farmers, has expressed concern to ministers that the market won’t be able to absorb a sharp increase in area. “We don’t necessarily agree with the conviction that 30% is the best way forward,” operations manager Stephen Belton told “We think a market-led approach is the best strategy.”

DEFRA, in a piece on the prospects for growth which accompanies the organic action plan, does accept that there is a need to look at where the demand is coming from. “In a consumer-led market experiencing rapid growth, there has been a tendency to ignore the importance of market development as a component of the policy mix, which has tended to focus on supply push policies.”

The NFU’s Joanna Jeffery is happy that the slower demand growth does not mean the bubble’s burst. “When the organic sector took off the growth was tremendous,” she said. “Yes, the growth is plateauing. But it doesn’t mean that there’s going to be less demand from consumers. The future market has great potential.”

“We think a
is the best

Tesco is also convinced that the growth is there. “We monitor customer patterns and the market is growing strongly,” said Jonathan Church.

Do consumers want lower prices?

Where the two differ is on the effect of cutting prices. “They do want to buy more organic, but it needed to be more affordable,” Church said. But the NFU’s specialist reckoned the market was not too price sensitive. “Some retailers have tried putting organic lines at conventional prices on a trial basis. What I’ve heard is that it didn’t increase sales,” she said.

The German farm ministry stresses the need to keep a balance between demand and supply. When consumer minister Renate Kuenast officially opened the national organic portal in early September, she stressed that it would be “the modern platform for information and communication for all, from the farmer to the consumer”.

The NFU’s Joanna Jeffery would like to see some of that here. “Consumers should be educated on the advantages of organic food,” she said. And information would stop farmers getting into organic production in the hope of premiums that never materialise. “From the angle of a producer of a commodity like milk it’s a case of looking at your marketing and getting better supply chain information with which to make business decisions,” she said. “A lot of them didn’t have any statistics when they converted.”