Economy

Organic Australia

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There has been steady growth in the acceptance of organically grown produce in Australia, and every sign that it is a long-term trend. By JASON BAKER of IBISWorld.

By Jason Baker

In recent years there has been a strong increase in demand for organic produce, despite the higher prices consumers pay for it.

Moreover, organic food is moving into supermarkets, instead of being provided solely by health food and specialty stores.

There are no official industry figures, but farm-gate values for organic products in Australia in the early 2000s were estimated to be about $100 million.

However, estimates of retail values differ greatly, varying from less than $100 million for 2000-01, to $250 million and $400 million, which is the retail value in 2003 put by the National Association for Sustainable Agriculture, Australia (NASAA).

According to Biological Farmers of Australia, the organic produce market has been growing at 20–30% a year and is estimated to account for 11% of the total gross value of production.

The trend to organics has already seen Tasmania’s largest apple orchard converted to organic production. In the past, organic farming has been criticised for delivering lower yields and being more labour-intensive than traditional techniques.

However, recent findings cast doubt on such claims, as it appears that comparable farms have lower costs under organic farming systems due to reduced inputs of fertiliser, chemicals, fuels and machinery.

Europe is the key export market for Australian organic products, at least in quantities exported. Australia records its exports only in weights, not value. In 2001, Europe accounted for more than 70% of Australian organic exports, with the main destinations being Britain, Italy, Switzerland, France, the Netherlands and Germany.

Organic produce is also fast increasing in popularity, and in the US it has become an important part of the products promoted by retail giant Wal-Mart. A similar trend may become evident in Australia, as rising incomes encourage consumers to switch to higher quality. Another option for the industry is to focus on the market for processed fresh produce.

There is contention as to whether organic food has benefits over non-organic foods. Evidence that organic crops contain higher levels of important nutrients has been published by scientists recently.

American researchers have discovered that organically grown kiwi fruit had significantly higher levels of vitamin C and polyphenols – compounds associated with health benefits including reducing cholesterol, improving circulation and preventing cancer.

When buying organic food, a consumer feels that they are purchasing a superior product. Organic food might lose this appeal if it were to be mass produced, widely available and processed.

So as the organic industry swells, we may see a move from a niche to mainstream focus of the products, but the success of the industry will be reliant on the final consumer.

 

IBISWorld supplies business information databases, including industry reports, company reports and business indicator reports. www.ibisworld.com.au

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