Australian Organic Market Report 2008

The first official Australian organic data in four years has been revealed by Biological Farmers of Australia. After "The Australian Organic Industry – A Profile" by the Federal Government Department of Agriculture, Fisheries and Forestry in 2004, the Australian Organic Market Report promises to be a new point of reference for the industry. Independently researched by the University of New England’s Organic Research Group, and commissioned by the Biological Farmers of Australia, the AOMR provides information regarding production and market value and will enable stakeholders to monitor the future growth of the certified organic market in Australia. The official launch took place at the Organic Expo in Darling Harbour Sydney. (Picture: BFA)

The report is considered to be a milestone in the twenty-year history of the rapidly developing organic sector. According to BFA Director and Standards Chair, for an industry which has somewhat been restricted by a lack of relevant and accessible information in recent years, the AOMR is a benchmark research document which promises to assist in the industry’s future monitoring and planning. The AOMR may serve as a key tool for decision making for potential and existing organic producers and marketers. It offers reference points for government, media and interested parties, since it allows for a better understanding of the nature, size and structure of the organic industry in Australia. (Picture: Gold Coast)

The organic sector is showing strong patterns of sustained growth. Total retail value in Australia has reached about AUD 623 million (EUR 368 million) . Still, with less than 1 %, this is a relatively small percentage of the total market value. The industry has benefited from growing professionalism and maturing in production, and from supply chain and marketing operations from both small and larger organic businesses. The organic farm gate value has grown over 80 % in four years, with some sectors contracting due to the drought, while others have developed considerably. The organic industry is consolidating and the average size of organic farms has increased, which highlights a trend towards professional farming at a larger scale. Challenges continue to be observed in co-ordinating organic production and supply chains.

Production of beef cattle, for example, has been a significant success story for the organic sector representing one seventh of the total industry farm gate value. Despite this, one third of organic beef was delivered into non-organic conventional markets and has not been included in current value organic market estimates. Processors, however, still claim a lack of access to consistent quality products, including beef and lamb. Poultry meat and egg operators have experienced a steady growth and almost all products are sold as certified organic. However, production has been highly sensitive to rising feed costs. Horticulture remains a major part 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. Organic dairy products show a future promise within the Australian marketplace as well as in export. Organic honey is also a growing sector. (Picture: BFA)

Australia still reports the largest surface area of certified organic land in the world with almost 12 million hectares. This is primarily accounted for by the vast areas of rangeland for organic cattle production used in Queensland and the semi arid rangeland of Queensland, New South Wales and Southern Australia. Across 90 % of Australia’s total certified land, Queensland has the largest area of all Australian states. New South Wales accounts for the highest number of organic operations in terms of number of individual certified organic businesses. Nationally, 2,750 certified organic operators were recorded at the start of 2008. They represent between 1.5 % and 2 % of the Australian farming population. (Picture: Lake Wivenhoe, Queensland)

Table: Market value figures in thousand AUD

No significant data is available on the value of alpacas, goats or aquaculture.

Australian organic food manufacturers are already producing a wide range of products like baby food, cereal products, cheeses, fruit juices, yoghurts, preserves, canned and jarred items, dried and frozen food, ready meals and other convenience foods. Increasing amounts of these products are exported to Asia, Europe and the US. (Picture: Anthony Bauer from Bauers Organic Farm)

Still, organic operators see a need for improvement in various areas. When surveyed, organic processors, manufacturers and importers commented upon the following issues in order of importance:

- Insufficient supply of raw ingredients like milk, meat and grains
- Inconsistent supply and quality of raw ingredients during the year
- Limited market outlets and, in some cases, low prices
- Limited access to abattoirs and other processing facilities
- Skilled labour is difficult to find and keep

Strong growth is increasingly demonstrated by the growing presence of organic products in mainstream food marketing. With the entry of major supermarkets like Coles, Woolworth, Aldi and IGA into the organic market, demand for organic products has reached a new level. There are more than 500 organic lines ranged in some larger stores now. Independent retail is maturing, evidenced by more professional offerings and continued strong growth in this sector.The recent growth is underwritten by a significant rise in imported organic grocery lines and processing ingredients - the ability of developing domestic production continues to be a key challenge for the organic market. (Picture: Anthony Beutel and his daughter from Googa Farms)

A response of 58 surveys was received from organic retail and wholesale traders. Most traders were located in the mainland Eastern States; their distribution largely reflects wider population trends. Total sales of organic products reported by survey respondent retailers and wholesalers were AUD 39 million (EUR 23 million), with about 90 % being domestic sales and 10 % exports. Fresh fruit and vegetables top the list due to the fact that they are the most common entry point products for new organic consumers and fresh food is perceived to be most vulnerable to chemical residues.

Table: Some important products reported by retailers and wholesalers

Consumer interest in organic product has been facilitated by a surge in farmers’ markets, home delivery and related direct marketing schemes, bringing consumers closer to the organic farm world than ever before. Organic consumption continues to increase as acceptance grows amongst traditionally conventional produce buyers. In a survey, 40 % of consumers stated they purchased organic food at least occasionally, and women were the primary purchasers. Fruit and vegetables were the most commonly bought organic products and they were most likely to be tried out by new or experimential organic consumers. 70 % of organic consumers bought from these categories at least one a week. Health, concern for the environment and a belief that organic food tasted better remained the three most common reasons for consumers to buy organic. Major barriers to purchasing organic products remained price and availability. Poor appearance of organic food was significantly less of a barrier than in the past as more professional supply chains ensured only highest quality items reached final markets. (Picture: Melbourne)

Only around 1 % of consumers were regular or almost exclusive buyers of organic products, with the remaining 39 % purchasing organic food to varying degrees and in varying amounts. There was some link found between higher education and the purchase of organic food, but this was not consistent across all studies. A further interesting finding was that consumers were more likely to want to avoid chemical residues in their fresh produce than in their processed food.

Table: Organic food purchased by organic food consumers at least once a week

Where consumers shopped for organic food depended upon their level of commitment to purchasing organics. The majority of new organic consumers started at supermarkets and as they became more committed, they moved their way to specialist shops. Since supermarkets were increasingly providing consumers with a larger range of fresh and processed organic food, shoppers who preferred one-stop-shopping had the opportunity to try organic products without making the effort to seek them out. The other growth area in terms of retail channels was farmers’ markets. Whilst a large amount of produce sold had not been certified organic before, these markets became a growing key source of organic food and also a vehicle for educating consumers about the farming practices involved.