What next for the expanding organic sector?

Opportunities for fresh-produce organic growers are plentiful, research suggests.

Organic produce: growers encouraged by fact that availability of organic products is improving in supermarkets - image: HW
Organic produce: growers encouraged by fact that availability of organic products is improving in supermarkets - image: HW

Given its reliance on manual labour, the organic fresh-produce sector is no doubt acutely aware of the many uncertainties that have arisen out of Brexit. It may therefore be relieved to learn that, according to the Soil Association's newly published Organic Market Report 2017, the UK's sturdy organic market continues to offer them new opportunities despite these precarious times. Organic represents around 1.5% of the total UK food and drink market

The report, launched last week (21 February) in London, reveals, for example, that the UK's organic market is now in its fifth year of strong growth and worth £2.09bn. Moreover, total sales of organic products - including fresh produce and other groceries, textiles and beauty and well-being products - increased by some 7.1% last year.

Fresh-produce sales now make up 23.5% of the organic market - an increase of 10.3% compared with last year. Arguably, growers are encouraged by this sales boost because the Soil Association also reports an increase in applications for certification from processors and producers, with the number of farmers applying for Soil Association certification up by 13.5%.

"It's a positive time for organic as it ticks lots of boxes for consumers," says Soil Association certification business development director Clare McDermott. "Organic is extremely relevant for trends towards eating better food, knowing where your food comes from, avoiding pesticides or antibiotics and 'free from' diets. Increasingly, we're seeing consumers choose organic as a shortcut to a healthy lifestyle and this will continue. Despite uncertainty around Brexit for us all, it brings lots of opportunities too, particularly for export of British organic and more product innovation."

Key trends and areas of opportunity

McDermott also highlights some of the key growth areas for the organic sectors, areas that could offer new business opportunities for fresh-produce suppliers. Sales of preserves and spreads, for example, grew by 27% in 2016 to make this one of the fastest growth categories. Sales of chilled savoury convenience foods also shot up, by 22%, and sales of fresh fruit increased by 17%.

With the trend for convenience in mind, Ocado head buyer Rose Price notes: "We are looking for a better range of ready meals and ready-prepared products. We have a small range but it's not extensive enough." She adds that she is happy to work with new suppliers and says she sees the future of organic continuing to grow. Furthermore, Soil Association chief executive Helen Browning points out that there are a lot of opportunities in the market for organic pulses.

Organic growers might also like to take note of the fact that the availability of organic products in supermarkets is improving. Organic Market Report 2017 states that more than 40% of Soil Association certification licensees say "new listings in supermarkets" are a key reason why their sales increased last year.

While Sainsbury's, Tesco and Waitrose have 75% of organic supermarket sales between them, the discount supermarkets such as Lidl, Aldi and Costco are now stocking more organic products to attract "more informed customers", the report observes. In organic sales, everyday categories such as fruits, vegetables, poultry, milk, eggs, oils, vinegar and home baking have grown the most, it adds.

There are also new opportunities in the food service and restaurant sectors because high street restaurant chains and visitor attractions are including more organic products on their menus. Schools and nurseries are also serving more organic food, according to the report.

Securing organic market after Brexit

The Soil Association also divulged that it intends to play a key role in supporting licensees, farmers, producers, processors and retailers to manage the current uncertainty and make sure that there are positive outcomes for the organic market.

Speaking at the report's launch, Browning said: "Brexit does throw up some real uncertainties whether you are organic or not. So many of you will be worried about trade arrangements, and there's no doubt that the way all of this pans out will have a huge impact on our opportunities and threats going forward - and the same with issues such as labour. So many of our horticultural and processing business depend on labour from elsewhere. So there are some real thorny issues in that."

Helpfully, as highlighted in its report, the Soil Association plans to work with Defra, The UK Register of Organic Food Standards and national organic forums, with some of the issues it intends to examine including:

- The redefinition of organic regulations to make sure that UK organic retains its status as a regulated, high-integrity sector with effective access to Europe and further afield for imports and exports.

- The need to gain clarity on future trade deals with Europe as well as the rest of the world.

- Future payments to farmers - including fresh-produce growers - for the public benefits they provide by going and staying organic. The report states: "Through the national organic forums we are calling for conversion and maintenance payments to continue until after we leave the EU. After we leave the Common Agricultural Policy, Defra ministers have suggested that assurance schemes, including organic certification, could play a larger role in qualifying farmers for environmental payments."

- The effect on the price of organic products. This is because the difference in price between organic and non-organic may change slightly with increases in the cost of inputs such as raw materials. But organic prices could rise at a slower pace.

Produce World Group

Cambridgeshire-based Produce World Group is one of the largest growers and suppliers of organic vegetables to major retailers. It grows organic vegetables both through its wholly-owned subsidiary Taylorgrown as well as through working with grower partners such as James Fosketts Farms.

The company's group managing director Matt Starbuck spoke to Horticulture Week at the launch of Organic Market Report 2017 about the ways in which the organic fresh-produce sector can prepare for the possible ramifications of Brexit. He opined that organic growers will have to be pragmatic to address the "headwind" of possible further inflation in the supply chain.

"We are concerned about possible labour shortages because in organic growing there's a greater reliance on manual labour, which is required for jobs such as weeding. We see it as a headwind and we would like to see that inflation passed down the supply chain. But, as we are realists, we know the initiative sits on us to increase productivity.

"We need to get more of the veg into the end bag. The reality is that a fair amount of the crops that are harvested don't meet the required specification of our customers. So dropping that specification or finding an alternative use for that (produce), such as processing, is a possible solution.

"We also need to develop new technologies on the farm and in the packhouse, which is why we are involved in new research projects. Anything that can provide a new level of automation on the farm is needed. But right now a lot of this technology is just in its infancy. It's being tested or being developed by those countries where they are growing on a much larger scale than us.

"But many organic growers are small-scale and growing fresh produce in rotation. It's a difficult challenge but we are approaching it by working really closely with other partners in the industry. By working on the same problem together we are giving ourselves our own security."

Starbuck also backs up the Soil Association's observation that there are many new opportunities cropping up for organic products in the food service sector. "We are developing in that sector at the moment. We are carefully trying to match up supply and demand. Most of those opportunities are coming from customers who are taking a more pragmatic view to the specification of products."

£2bn - Total value of UK organic market

Key facts - Organic growth in 2016

- Supermarket sales of organic produce grew by 6.1% last year.

- Independent retailers' sales of organic products increased by 6.3%.

- Sales of organic products through home delivery were up by 10.5%.

- Sales of organic food into the food service market rose by 19.1% in 2016 to be worth a total of £76.6m.

Case Study - Tesco's organic sales

Supermarket giant Tesco has reported that its organic food sales are at their strongest for a decade. Last year organic sales rose by 15%, with fruits and vegetables being the most popular choice for shoppers. Sales of organic fruits and vegetables - including apples, bananas, carrots, salads and root vegetables - were up by nearly 17%.

Tesco organic food spokesperson Tina Moore says: "Due to our long-term partnerships with suppliers and producers across the UK, we've been able to improve the quality, range, availability and price of our organic products for customers. We are seeing that shoppers are increasingly looking to buy organic food but it needs to be affordable and consistently high-quality all year round for it to be considered a viable option."

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