Organic sectors mixed in economic downturn

Posted by Isobel Drake on 17th December 2008

Tighter economic conditions are impacting some organic sectors and producers, and by-passing others, according to the Biological Farmers of Australia (BFA).

Speculation on whether organic items are in the ‘dispensable luxury’ category when consumer spending curbs, have not been upheld in the organic meat and dairy sectors, but fruit and veg may be under pressure.

Alister Ferguson, National Sales Manager for The Australian Organic Meat Company (Sanger Australia), said sales show Australian consumers have not cut down on organic beef – and that a lower dollar has strengthened export opportunity.”We are still seeing good, steady growth in orders,” he reported.

Mr Ferguson advised that retail sales domestically had grown by around 40% in the past four months; in part due to the increased capacity of organic meat processors to supply organic items.

He added that Australian organic beef consumers are proving committed, with demand remaining robust. “They might switch to more affordable secondary meat cuts like mince and sausages – but they still want organic,” he noted.

Ian Campbell, an organic dairy producer near Goondiwindi in Queensland, has sold record levels of organic dairy products in past months – but is yet to decide whether this is because they’re marketed as organic.

Mr Campbell believes sales have stayed strong because of product quality. “We’re getting more retailers taking our products than they have before -we get most feedback in the first instance on product taste,” he said.

The verdict on current market conditions is still out for organic fruit and vegetable growers, however.

Elaine Murray, an organic vegetable grower in Coleambally, NSW, reported that the organic vegetable market is most affected by the price of comparable conventional vegetables, and the drought.

Ms Murray said that when the conventional vegetable market is over-supplied and prices slump – as they have recently – an abundance of cheaper conventional options can impact organic sales. “When the margin between organic and non-organic increases, there is evidence organic fruit and veg is a more difficult choice for consumers,” she stated.

She noted that, despite this, stock was still turning over well at the moment. “However anyone producing items that are not high quality may struggle to obtain sales for a reasonable return,” Ms Murray concluded.

Dr. Andrew Monk, BFA Chair, claimed current market data indicates significant opportunity for the organic industry, but should be considered with a ‘by sector’ clause.

“Research this year showed organic farm gate sales have risen by over 80% over the last four years – but the organic industry is still a niche market and does not have ‘un-limited demand’,” he noted. “It is imperative new entrants know exactly which part of the niche they will fill, and look for real market gaps.”

He suggests those considering taking advantage of the “strong potential” for well planned organic production in the future should be in touch with BFA and operators in their market for more information.