European Organic Market - 2000

EUROPE BIO IMPORT COMPANIES AUSTRIA
1. Organic farming in Austria 1.1 Organic production Austria has the highest percentage of organically farmed agricultural land of all the European countries. In 2000 there were about 19 000 certified organic farms, or about 7 percent of all farms. Approximately 272 000 hectares were farmed organically. The average size of organic farms is 14 hectares. Most of the organic production takes place in mountainous areas, where permanent grassland prevails. The rate of conversion towards organic agriculture in Austria has slowed down in the last two years. While there is a stagnation of organic production, the marketing of organic products continues to increase. Currently, considerable amounts are marketed conventionally. While the increases in production were very high for most products until 1998, the level of production and marketing has remained stable since then. Exceptions are cereals and non-perishable vegetables, to some extent. The rapid increase between 1996 and 1998 was mainly triggered by subsidies. Most farms that benefited from subsidies have converted to organic farming; therefore, further increases will be mainly market driven. On average, production has more than doubled over the past four years for all product groups. The highest increases are found with pork, but this has to be seen in relation to the very low overall production level. Nonperishable vegetables rank second, while fresh vegetables have shown a rather modest increase. According to data supplied by VNÖ ("Verein der Naturkostläden Österreichs", an umbrella organization of natural food stores in Austria), the Agrarmarkt Austria (AMA) estimated that Austria experienced an annual growth in organic sales of about 10-15 percent in 1999, among the lowest in Europe. 1.2 Governmental policy When Austria joined the EC in 1995, producer prices dropped dramatically. Therefore, conversion to organic farming was advocated as the survival strategy for small-scale farming. This contributed significantly to a greater acceptance of organic farming within the agricultural system. The Austrian Government had already started to give subsidies for conversion to organic agriculture in 1992. In 1995 a horizontal agro-environmental programme under EC Regulation 2078/92 was effected. The programme, called Österreichisches Programm für umweltgerechte Landwirtschaft (Öpul), was slightly adjusted in the year 2000 and extended for five years (see Table 1). The payments per ha increased and are presently as follows: Table 1: Subsidies for organic production under the agro-environmental programme (ÖPUL) Category Arable land Meadows Vegetables, strawberries Horticulture, tree nurseries, hops Source: BMLF. 1998 S4 000/ha S3 000/ha S6 000/ha S10 000/ha 2000 4 500 3 450 7 000 to 9 000 11 000

Table 2: Total organic production of fruit and vegetables 1999 Product (tonnes) Potatoes Other storable vegetables (carrots, onions, etc.) Fresh vegetables (tomatoes, green pepper, lettuce, cucumber, etc.) Total vegetables Total fruit Total production 12 000 6 000 3 000 21 000 6 000 Indirect marketing 10 000 5 000 2 500 17 500 5 000 Direct marketing 2 000 1 000 500 3 500 1 000

Source: (BMLF, 2000) The Austrian market for organic fruit and vegetables. Virtually no official statistics are available for the organic sector on fruit and vegetables in Austria. This underlines the minor importance of this sector within Austrian agriculture. Import data for organic and conventional products are not separated. Market partners and importers were reluctant to supply hard data. The Austrian market of organic products in general is dominated by supermarket chains, which are in the process of establishing their own organic labels. They were disinclined to release any data, as they fear loss of competitive advantages. Therefore, in order to at least get a general picture of the situation, the author has made estimations and rough calculations based on estimates. These estimations were cross-checked with market experts and seem to be realistic. However, the results have to be seen in the light of these limitations. 2.The Austrian market for organic fruit and vegetables 2.1 The organic market In 1999 the total organic turnover was estimated at S2.9 billion, or 1.8 percent of the total food market. The annual growth rate is estimated at 10-15 percent. About 70 percent of the turnover is made in urban areas. Table 3: Organic production marketed as organic 1996-1999 (indirect marketing channels only) Product 1996 1997 1998 1999 Average growth rate/year 32.14 225 8.33 25 65 34.4 34.1 150

Beef (numbers) Pork (numbers) Poultry (numbers) Milk (mill. litres) Eggs Cereals (tonnes) Potatoes (tonnes) Other less perishable vegetables (carrots, onions) (tonnes)

3 500 6 200 7 800 8 000 1 000 5 000 10 000 10 000 150 000 75 160 000 100 200 000 135 200 000 150

500 1 500 1 600 1 800 000 000 000 000 16 22 000 28 000 38 000 000 5 500 9 500 13 000 13 000 1 000 2 600 5 000 7 000

Perishable vegetables (tomatoes, green 2 000 2 000 2 500 2 500 pepper, lettuce, cucumber, etc.) (tonnes) Total vegetables (tonnes) Total fruit (tonnes) Source: ARGE- Biolandbau. 8 500 14 100 20 500 22 500 1 120 2 150 1 500 1 200

6.25

41.2 1.7

VNÖ expects that the share of organic products within the total turnover in the food sector will rise to more than ten percent (compared to the present two percent) within the next ten years (VNÖ, 2000). Although this might be an optimistic statement, there is potential for a steady market-driven growth of the organic sector. 2.2 Sales of organic fruit and vegetables About three percent of all fresh fruit and five percent of all vegetables sold in Austria are produced under certified organic production standards(RICHTER et al, 2000). Table 4 provides estimates of sales value using these percentages. The table shows that sales value of organic vegetables is estimated at S61 million, while organic fruit sales are estimated at S170 million. The value found in literature is S200 million (RICHTER et al, 2000). Table 4: Total sales value of fruit and vegetables and estimated organic sales value (in 1 000 Austrian shillings)

Total sales value 1999 Fresh vegetables Fresh fruit Total fresh fruit and vegetables Source: AMA, author's calculation. 5 011 543 5 629 830 10 641 373 2000 5 230 472 5 663 402 10 893 874

Estimated portion organic 1999 250 577 168 894 419 471 2000 261 523 169 902 431 425

2.3 Average prices at retail level and premiums over conventional products No statistical data is available for prices of organic products. Therefore, the authors had to rely on their own assessment, based on supermarket observations. Table 5: Assessment of premiums for organic (January 2001) Product Potatoes Carrots Onion Broccoli Oranges (Italy) Grapefruit Lemon Price organic 12.90/kg 10.90/kg 14.90-/kg 12.90 - 15.90/kg 19.90/kg 9.90/piece 16.90/kg Price conventional Premium (percent) 8.90 4.90 7.90 10.90 14.90 7.90 12.90 45 122 89 18- 45 33 25 31

Kiwi Apple Pears Tomatoes

2.90/piece 24.90/kg 29.90/kg 24.90/kg

1.66 19.90 24.90 19.90

74-135 25 20 25

Source: Authors¶ assessment, drawn from a sample of 3 major Austrian supermarket chains. The range of premiums for organic fruit and vegetables at the supermarket level is, on average, around 20-30 percent, in some cases they are much higher (for example, carrots). This corresponds well with the range of premiums found in literature on organic horticultural products. The assessment varies, however, according to price specials and can therefore be regarded only as indicative. Premium levels differ, depending on region as well as on the type of distribution channel. In natural food stores the prices for organic products are generally higher. Premiums paid to organic producers are estimated by market experts between 30-100 percent. 2.4 Distribution channels The main organic sales outlet is a supermarket. A sector analysis by the Austrian umbrella organization for natural food stores (VNÖ) shows that 66 percent of organic products are marketed by supermarkets, 22 percent by natural food stores and about 12 percent by direct marketing. For sales of organic fruits and vegetables these percentages differ, as shown in Table 6. Direct marketing through farm sales is the main sales channel for fruit and vegetables. Table 6: Distribution channels for organic fruits and vegetables 1996 Direct sale of farmers Delivering services of farmers¶ initiatives Natural food stores Supermarket 49 9 19 23

Source: BMLF, 1997, cit. In ZENNER/VON ZIEHLBERG, 1998, p. 62. Natural food stores cooperate with smaller farmers¶ associations, which are organized under the umbrella organization ÖIG (Österreichische Interessensgemeinschaft für biologischen Landbau). Marketing into the supermarket chains is organized by the farmers¶ association Ernte für das Leben, which has a daughter firm called "Ökoland". This firm collects the products for supply to supermarkets and also for export. The supermarket chain "Billa/Merkur" launched the organic food brand "Ja!natürlich" in 1994. All major supermarket chains (including discounters), such as Adeg, M-Preis, Maximarkt and Spar ("Natur pur" dairy products) now offer organic products. Within the supermarkets, "Billa/Merkur" with the "ja!natürlich" label (www.janatuerlich.at), holds about 70 percent of the organic market share, followed by the supermarket chain "Spar", with 20 percent. Spar has an organic label called "Natur pur" (www.naturpur.at). The two supermarket chains differ in their policy towards organic products. While "Billa" has a strong, central unit dealing with organic products only, Spar¶s organic products fall under the responsibility of each separate product department. Austria has about 150 natural food stores,many of which are very small. Recently an umbrella organization called "Verein Naturkostläden Österreichs" (VNÖ) was formed.About 33 natural food stores are members, most of which are small with only 3 shops that have more than S3 million annual turnover. They are concentrated in eastern and southern Austria.

The natural food stores fill the gap between supermarkets and farmers¶ shops and farmers¶ markets, which remain an important distribution channel for organic products. 2.5 Trends and attitudes A recent trend can be recognized towards the creation of "organic supermarkets", with a full range of products and more than 300 m² of floor space. The first organic supermarket opened in 1999 in Vienna. The strength of this distribution channel lies in the fact that it combines the convenience of ordinary supermarkets with the advantages of natural food stores (specialized in the organic sector and more detailed consumer information). A relatively new but growing segment is the provision of organic products in public canteens. Recent food scares motivated Government officials and labour unions to put more pressure on public canteens to incorporate a higher share of organics into their purchases. According to market research reviewed, Austrian consumers in general still prefer fresh products to convenience products and rank health higher than time-saving. Regarding quality criteria, "freshness" is ranked first (68 percent), followed by "natural" (27 percent) and "origin" (20 percent). Austrian origin is regarded important by 19 percent. (BMLF, 1997). For horticultural products, the trend of sales since 1996 shows a varying picture (Table 7). While the share of production marketed as organic potatoes and other storable vegetables has increased, fresh (and perishable) vegetables and fruit sales have been almost stagnant. Only a slightly positive trend is expected in the long run by market experts. The market seems to be too fragile, and therefore, market partners are unwilling to take a risk with perishable products. Table 7: Annual growth rate of marketed production in organic horticulture 1996- 1999 Product (tonnes) Potatoes Other storable vegetables (carrots etc.) Total vegetables Total fruits Source: ARGE- Biolandbau. Based on the market research reviewed, 54 percent of Austrians at least occasionally buy organic products. The typical consumer of organic products buys fruit and vegetables (79 percent), milk and milk products (61 percent) and cereals (52 percent). Consumers of organic products are usually those with higher income and higher education in the urban population. The organic "fundamentalists", those who strictly buy organic products, still favour direct sales in farmers¶ markets, on-farm sales or natural food stores. This group is becoming smaller, however, while the group of occasional buyers is growing. Since all major supermarkets offer a share of organic products, the turnover of organic sales has increased considerably. 2.6 Constraints to market development Constraints to market development are found on production as well as marketing sides. 1996 1999 Average growth rate/year(percent) 5 500 13 000 45 1 000 7 000 8 500 22 500 1 120 1 200 200 8.3 55 2.4

Fresh vegetables (tomatoes, green pepper, lettuce etc.) 2 000 2 500

On the production side, due to climatic constraints, Austria is limited to a certain range of products. Most farmers producing organic vegetables are small-scale farmers who have a considerable history in direct sales. In the fruit and vegetable sector direct sales still play a major role. Production of small-scale farms cannot be increased to meet the requirements of supermarkets. Conversion of large-scale farms is difficult as their specialization prevents the nutrient cycling and pest management required in organic farming. Therefore, a high percentage of the fruit and vegetables (conventionally and organically produced) needs to be imported. On the marketing side, consumer attitudes and price expectations are the strongest limitations. Austrian consumers prefer regional products. Freshness is very important for buying, especially in the vegetable sector. For some consumers (especially for the ecologically conscious) ecological transport is relevant since transit, especially in the Alpine regions, is a major issue of the ecological debate. For organic products, the confidence in certification mechanisms is important. The highest confidence is reached through direct sales by the producer. Direct sales further reduce exact price comparisons. Most supermarkets offer organic products under their own labels. Trust in the labels of supermarket chains is less than in the labels of producers. Producer labels are found more frequently in natural food stores and on-farm shops. Sales via supermarkets has increasingly reached new consumers¶ groups, but as they offer organic and conventional products side by side, the price becomes the main criterion of choice. 3.Imports of certified organic fruit and vegetables into Austria 3.1 Market access EC Regulations regarding market access are applied. Besides the Regulation on organic production, there are market regulations for fruits and vegetables and processed products in general. Within the frame of these market regulations, the common norms (trade classifications) for fruit and vegetables are followed. Imports and exports of fruit and vegetables are furthermore restricted by licences and quotas. Licences are needed amongst others for the import of fresh garlic from China, tomatoes from Morocco, and for processed fruits and vegetables according to EC rule (EG) Nr. 1921/95. The import volume of specific varieties of fruits and vegetables is monitored by an online system, whereby customs offices transfer data on imported quantities to the European Commission on a weekly basis (AMA; www.ama.at). Besides these general trade restrictions, the EC has special norms for organic products. In addition to the EC Regulation, all market partners in Austria require certification by an Austrian certification body (e.g. "Austria Bio Garantie") to be sure of adequate standards. 3.2 Total import of organic products No statistical data is available on import totals of organic products. Most key sources estimated the value of imports at S1 billion. Considering a total turnover of organic products of S3 billion, this would come to about 30 percent. Also, experts answering in a study on supermarkets (RICHTER et al, 2000) assume that about 30 percent of the organic products are imported. The main imports come from the Netherlands, France, Germany and Italy (CIR, 1999, p 38). The highest proportion of imports is fruit and vegetables. However, if converted into absolute numbers, these figures do not match those given for overall imports in the organic sector. As already mentioned, the totalvalue of imports is estimated to be S1 billion. The total value of the organic fruit and vegetable sector is estimated to be about S430 million (see Table 5). The total value of vegetables was estimated at S261 million. A 50 percent import share would mean about S130 million. The authors¶ assessment after discussions with market participants regarding organic vegetable imports resulted in

about S169 million. For the fruit sector, the authors¶ estimates resulted in a rough figure of S158 million. This would total up to S327 million. Therefore, considerable amounts of other products would need to be imported to reach that total. The amount of cereals imported, totals 2 000 tonnes (BMLF, 2000). Even under the assumption that the 20 percent (mentioned in Table 9) would total up to 7 000 tonnes (total production is 38 000 tonnes, see Table 2), this still cannot make up for the difference. It can only be assumed that there are a number of smaller items, such as processed products, which in total might add up to the reported value. On the other hand, it is also possible that the import value is greatly overestimated. 3.3 Total import of organic fruit and vegetables Market sources estimate that between 1-5 percent of total imports of fruit and vegetables are organic. Since 1999 total import value of fresh fruit was S5.4 billion, while fresh vegetables were valued at S3.2 billion (total value for imported fresh fruit and vegetable was S8.6 billion); organic imports are estimated to range between S86 million and S370 million. According to the report of the Corporate Intelligence on Retailing (CIR, 1999), about 70 percent of organic fruit and 40 percent of organic vegetables are imported. Given the figures (Table 4) for the sales value of organic fruit (S170 million) and vegetables (S261.5 million), this would mean a value of S104.6 million for vegetables and S119 million for fruit. The total import value thus would be S223.6 million. The authors¶ own assessment of major fruit and vegetable imports resulting from interviews with market participants gave a total of S176 million for vegetables and S158 million for fruits. This would total to S334 million (see Tables 8 and 9). Therefore, it can be assumed that the total import value is around S300 million. 3.4 Breakdown of organic fruit and vegetable imports by product According to market experts, there are two rules of thumb to be applied on the situation of imported organic fruit and vegetables: 1) The more perishable an organic product is, the less interested importers and retailers are. While this attitude is general and not restricted to the organic sector, the fact that the organic market is still weak and that retailers cannot rely on known consumption patterns, contributes to this situation. Non-traditional products (like exotic fruit and vegetables) are especially perceived to have a higher commercial risk. 2) The premium for organic products over conventional products is a critical factor. This is true for all organic products. However, it applies especially to imported organic products as trust in foreign certification is low and organic products are easily substituted by conventional products if there is a high premium. In the long term it is expected that premiums will decrease, especially in supermarkets. These restrictions influence, for instance, the situation with bananas. On the one hand they do not store very long, but on the other hand, their premiums are the highest within the group of tropical fruits. Off-season organic berries (strawberries, etc.) and other perishable fruit are not imported in substantial amounts as the market is not yet stable enough and the risk of losses is high. Exotic fruit (mango, papaya, etc.) fall into a similar category. There is no organic demand for these fruits. They are highly priced luxuries and do not constitute a substantial share of the daily consumer purchases. Table 8 provides estimates on imported organic vegetables.

Table 8: The main imported organic vegetables Product Zucchini Kohlrabi Broccoli Potatoes Onions Carrots Fennel Tomatoes Others (green pepper, cherry tomatoes etc.) Total 9 400 Quantities (tonnes) Value (ATS 1000) 2 700 2 500 1 000 900 700 1 200 300 100 67 500 17 500 17 000 7 000 7 000 18 000 7 500 2 000 32 500 176 000

Source: author¶s assessment, estimations out of interviews with key informants. As for organic fruits, the main products sold are oranges, followed by lemon, apples and kiwi. The results are given in Table 9. Table 9: The main imported organic fruits Product Oranges Lemon Kiwi Apple Others (bananas, pears, mango, avocado) Total 8 800 Quantities (tonnes) Value (ATS 1000) 4 000 3 400 1 000 400 65 000 50 000 20 000 8 000 15 000 158 000

Source: author¶s assessment, estimations out of interviews with key informants. 3.5 Trend for each product Strong increases have been seen for organic zucchini and fennel. However, imports of organic tropical fruit is growing slowly, as particular organic quality is not requested, and the total quantity is low. Market sources expect a rather strong positive trend for citrus and carrots (as the domestic supply cannot meet the growing demand), especially in the baby food sector. 3.6 Main importers Main import structures for organic fruits and vegetables include direct imports by supermarkets, general import wholesalers on contract with supermarkets, specialized importers for organic products and specialized importers for fruit and vegetables. Supermarkets: some of the big chains, like "Spar", import themselves. Presently, they import organic fruit and vegetables from producer cooperatives in Mediterranean countries. "Billa" imports through wholesalers who are also in the conventional fruit and vegetable business. It seems, however, as if they are only involved with logistics, since all organic farmers supplying "Billa" (also those outside Austria) need a contract with the

label "ja!natürlich". "Billa" does not only issue a frame contract but also negotiates price and quality. "Billa" usually issues long term contracts to potential producer groups for the most important products. This is true for Austrian producers and for producer groups in other countries Specialized importers of organic products supply other distribution channels (natural food stores, specialized fruit and vegetable shops, small processors in gastronomy, etc.). Most operate either via Austrian daughter firms of German importers (e.g. "AL Naturkost" in eastern Austria), or they operate directly from Germany (Dennre, Bodan), as the Austrian market is comparably small and as "AL Naturkost" does not import directly from the exporting country but via importers in Germany. Conventional importers of fruits and vegetables have a very limited share of organic products so far. They have a relatively stronger position in western Austria, while organic specialists especially cover Vienna and eastern Austria. There is a growing interest among some conventional importers to move towards dealing with organic products, but one major constraint they raise is the strong market position that is built up by "Billa", contracting with only a few importers. Others: some organic food processors need components (such as potato starch or white sugar) in limited amounts. " Bioservice" (a daughter firm of the biggest organic farmers¶ association "Ernte für das Leben") specializes in importing such products. "Hipp", a major processor, is the largest producer of organic baby food. For vegetables there is a specialized firm that deals with domestic, as well as imported, products (carrots, onions, potatoes, etc.). According to "Hipp Austria" (Gmunden), tropical ingredients are imported for the central firm in Pfaffenhofen/Germany and the Austrian firm mainly receives final products. Another processor, specialized in dried fruit and mixtures with cereals (for muesli), is "Naturprodukte Perlinger". It imports and exports dried fruit (partly only relabelling, with distribution via supermarkets). 3.7 Product specification Products are only marketable if they comply with the requirements of the trade classification in categories "Extra, I or II". The classification system acts according to the Austrian federal law on quality classes. According to importers, the reduction of storage life due to the prohibition on use of storage chemicals does not affect organic products in their sector. This is a major problem, however, on the retail level. Some retailers try to increase shelf life of sensitive organic products by packaging organic fruits and vegetables in cardboard boxes with plastic wrap, but that contradicts the consumers¶ expectations of "natural" and "freshness". 3.8 Prices at import level AMA gives import prices for organic and conventional products. Prices vary considerably according to the country of origin. While some importers claim that prices are almost the same as for conventional products, others claim that a 10-15 percent premium is charged for oranges and lemons. According to supermarket chains, oranges and lemons from Italy (the main organic products) achieve a premium of up to 30 percent. The difference might be explained by the fact that some supermarket chains have their regular suppliers, while others buy on the daily market. An assessment was made, comparing price lists of German wholesalers specialized in organic products, which also export to Austria, with the price list of an Austrian importer of conventional fruit and vegetables. Table 10: Prices and premiums for selected organic products on import level (Jan. 2001) Product Price organic (ATS) Country of origin Price conventional (ATS) Country of origin Premium %

Tomatoes Lettuce Green pepper Onions Apples Oranges Lemon Bananas

31.5/kg 133/kolli 34.65/kg 17.15/kg 20/kg 19/kg 18/kg 26.95/kg

Italy France Italy Italy Germany Spain Spain Dom. Rep.

25/kg 122/kolli 34/kg 18/kg 16/kg 19/kg 18/kg 22/kg

Spain Italy Spain Italy Italy Spain Spain Panama

26 9 2 25 22.5

Source: author¶s assessment. According to this assessment, the premiums for citrus seem to be practically nil. Tomatoes fetch a rather high premium. However, because of storage problems with organic tomatoes, the amount of imported tomatoes is low. Relatively high premiums are paid for bananas, however market experts attribute this to the small organic banana market. The low market share and the short shelf life result in the high premiums at the import level (according to one importer, it can reach up to 100 percent at times), which is a sort of risk payment. On the other hand, the high premiums restrict market development. 3.9 Major suppliers and main products The Austrian market for organic fruit and vegetables relies mainly on suppliers from the European Community. One reason is because retailers (and consumers) do not trust certification in overseas countries. Within the EC, no import restrictions exist. Therefore, European countries are the main sources of origin. However, sometimes consumers are reluctant to buy non-Austrian products. As some countries are regarded as practising intensive agriculture, many organic consumers do not buy organic products originating from them. The main suppliers of fruits and vegetables are in southern Europe or in Mediterranean countries. Table 11 shows a variety of countries of origin, for which data has been taken from lists of importers and retailers showing the country of origin. It has to be kept in mind, however, that the quantities for most of these products are very low. The main import season for many products is the off-season (winter). Potatoes are imported only in spring, especially for the asparagus season (which are eaten traditionally with boiled potatoes) when fresh, but domestically produced potatoes are not available and the old stock is no longer of sufficient quality. Table 11: Main countries of origin for imported organic fruit and vegetables, major products, major season of supply Country Israel potatoes avocado tomatoes oranges, grapefruits, tangerines Product green pepper, Chinese cabbage Season of supply winter spring all year February to May all year

Italy

apples oranges lemons fennel, aubergines, green pepper, tomatoes, lettuce

winter October to March all year winter October to March winter/spring winter all year winter

Spain

oranges, lemons grapes cucumbers, cabbage, broccoli sweet potatoes

France

cabbage, lettuce garlic, shallots parsley

Greece Dominican Republic

oranges, lemons bananas

October - March all year all year

Source: author¶s assessment in shops, opinion of market experts. 3.10 Constraints to import growth Major marketing institutions (like the AMA) and the general agricultural policy inspire the general consumer to "buy Austrian". Many consumers consider Austrian products more natural and better than those from abroad. This idea is further fostered by the recent food scares in the meat sector (BSE and foot and mouth disease). The main constraint to import growth in the fruit and vegetable sector is the lack of confidence in the certification bodies of non-EC countries. A second constraint comes from organic farming associations (especially their biggest organization "Ernte für das Leben"), which are involved in the main organic labels of supermarket chains. Usually their market representative are consulted before new products are listed. They try to argue against products that can be grown in Austria or that substitute Austrian products (like organic apples from Argentina), and in general, retailers share this view. The third constraint is that consumers are unwilling to pay the premiums for organic products, especially at supermarkets, where consumers can choose between organic and conventional products. 4.Conclusions 4.1 Summary of key characteristics of the market More than half of the organic fruit and vegetables on the Austrian market are sold directly by farmers. Supermarkets sell about 23 percent of all vegetables, and natural food stores sell about 19 percent. Imported organic fruit and vegetables are sold either by supermarket chains (about 55 percent) or by natural food stores (about 45 percent). There is a significant demand for organic fruit and vegetables that cannot be produced domestically, mainly due to climatic conditions. However, consumers as well as retailers prefer domestically produced organic products, and only purchase imported products if they are not available in Austria. Imports from Mediterranean countries are preferred over imports from countries farther away. Retailers fear produce loss due to limited shelf life, and therefore, the highest imports are seen for those products that are not so easily perishable.

4.2 Main opportunities and constraints Opportunities for foreign exporters to supply the Austrian market are available because Austrian production cannot meet demand. Therefore, especially during wintertime, a range of fruit and vegetables has to be imported, including fruits, such as oranges, lemon, apples, kiwi, bananas, as well as off-season vegetables, among which zucchini, kohlrabi, broccoli and fennel are the leading products. However, retailers give priority to imports from producers in neighbouring countries, reducing prospects for developing countries to export organic products to the Austrian market. Exotic fruit and vegetables, such as papaya, mango or sweet potatoes are not demanded in large quantities and usually not in organic form. Retailers are mostly interested in products that store well. Apples come mainly from South Tyrol in Italy, a region with strong cultural ties to Austria. There are severe constraints to imports from developing countries:
y y

y y

Consumer perceive credibility of organic standards abroad as low. Prospective exporters need to ensure that the certification is comparable to European standards; The biggest organic farmers¶ association (Ernte) is a partner in almost all large-scale marketing projects and plays a key role in market access. It tries to obstruct products that might compete with domestic production (like apples or potatoes), unless off- season; Typically, organic tropical fruit is not so much in demand; and Retailers are reluctant to stock products with short shelf life. This applies especially to organic products, as retailers are unsure of the expected demand.

4.3 Entry strategy and recommendations for export development EC registration is a prerequisite for market entrance. Generally there are two possible strategies for market entrance into Austria: 1. Directly via supermarket chains, which have long-term contracts with exporting producer groups, or via wholesalers and importers. Retailers request the producer group in the exporting country to adhere to the international standards for organic production. In order to build up trustful relations, most retailers, especially supermarket chains, request the approval of a national Austrian certification body, like ABG. They, in turn, are affiliated to organic growers¶ associations, which are resistant to imports that might substitute domestic production. 2. Via specialized import firms that supply the natural food store sector. In this case, the Austrian market should not be seen independently from the bigger German market, as this is the traditional partner for imports of organic products. Many of the importing firms specialized in organic products either operate directly from Germany or are Austrian daughters of German firms. Entrance into the Austrian market thus, to a large extent, is via Germany. Also, natural food stores are linked to organic farmers¶ associations, which are sensitive to products that might substitute domestic production. Within the organic movement however, there is a strong sympathy for "fair trade" products. According to a recent study, 32 percent of Austrian consumers are interested in fair trade product.(Hörtner, 2001).Chances seem to be best for organic combined with "fair trade". This means that the rules for production do not only include organic standards but also social aspects. Austrian certification bodies apply reduced rates for certification of farmers¶ groups in developing countries, if involved in organic "fair trade" projects. The longterm trade relations, characteristic of the "fair trade" movements, are also found in contracts issued by Austrian supermarket chains. Therefore, the most promising entrance strategy seems to be close cooperation with Austrian organic growers¶ associations (and certification bodies), as well as with "fair trade" organizations. References

BMLF.(1999) Gruener Bericht - Bericht zur Lage der oesterreichischen Landwirtschaft. In: Bundesministerium fuer Land- und Forstwirtschaft, Vienna. BMLF (1997) Lebensmittelbericht, Bundesministerium fuer Land- und Forstwirtschaft, Vienna.http://www.bmlf.gv.at/download/dlpublik/LEBMBER.PDF CIR (Corporate Intelligence on Retailing) (1999): The European Market for organic foods. London GREGOR L. (2000) Naturkost-Fachhandel im Aufwind; Bioclub Aktuell Nov/Dez 2000 HAMM U.; MICHELSEN J. (1999) Der Markt für Ökolebensmittel in Europa. In: Agra-Europe, Sonderdruck, 43/99 HÖRTNER W. (2001) Vorbild Schweiz, Südwind 5/2001 POHL A. (2000) Organic Europe, Country report Austria, www.organiceurope.net/cuntry_reports/Austria/default.asp#10.3, 15.6.2000 RICHTER T. SCHMID O.; MEIER U.; HALPIN D.; BERGE P.; DAMRAY P. (2000) Internationale Untersuchung von Einzelhandelsunternehmen hinsichtlich ihrer Aktivitäten zur Vermarktung von Bioprodukten, FIBL, Switzerland (unpublished) VNÖ (2000) Eine goldene Zukunft für Bioprodukte (Presseaussendung Oktober 2000) ZENNER,S.; R. v. ZIEHLBERG (1998): Der Markt für Bioprodukte in Österreich.; Diplomarbeit am Lehrstuhl für Agrarmarketing des Instituts für Agrarökonomie der Christian-Albrechts-Universität Kiel Annex I - Importers of tropical fruits Importer Johann Ischia & Co Im- und Exportgesellschaft mbH & Co Amraserstr. 6 6020 Innsbruck/Tirol Tel: +43/512/52015-0 begin_of_the_skype_highlighting 0 end_of_the_skype_highlighting Fax: +43/512/52015-15 Obst Huber Fruchtimport GesmbH Neinergutstr. 28-30 4600 Wels Tel: +43/7242/404-0 begin_of_the_skype_highlighting 0 end_of_the_skype_highlighting Fax: +43/7242/404-147

+43/512/52015-

+43/7242/404-

Main importers that have a stall at the main wholesale market for fruits and vegetables in Vienna- Inzersdorf. Firm

Ahorner josef Ges.m.b.H. B 1/1-8 Tel: 01/61002 H. Dorfinger C12/137-138 01/616 99 40 Import firms specialized in organic products Al Naturkost Schulgasse 35 2542 Kottingbrunn Tel. 02252 77218 Natürlich Weber A- 3932 Kirchberg/Walde 52 Tel: 02854 20417 Fax: 02854 631016 [email protected] Operating from Germany Bodan Verteilerdienst Bruchfelderstr. 6 88662 Überlingen Tel: 0049 7553 8240 begin_of_the_skype_highlighting 8240 end_of_the_skype_highlighting Fax: 0049 7553 6118 [email protected] Dennree Versorgungs GmbH Hoferstr 11 95183 Königshof/Töpen Tel: 09295-180 · Fax: 09295-1850 German actors in the organic food sector are also found under: http://www.naturkost.de/herst/grosshandel.htm Annex II - Organic farmers organizations Umbrella organizations ARGE Biolandbau, Wickenburggasse 14/9 1080 Vienna Tel: 0043 1 4037050 begin_of_the_skype_highlighting 4037050 end_of_the_skype_highlighting http//:www.bioclub.at ÖIG Österreichische Interessensgemeinschaft für biologische

0049 7553

0043 1

Landwirtschaft Schlag 14; 2871 Zöbern Tel: 0043 2642 865319 begin_of_the_skype_highlighting 865319 end_of_the_skype_highlighting http//:www.oekoland.at Farmers Associations Arche Noah 0bere Strasse 40 3553 Schiltern Tel: 0043 2734 8626 begin_of_the_skype_highlighting 8626 end_of_the_skype_highlighting BAF Verband der biologisch wirtschaftenden Ackerbaubetriebe Österreichs 2164 Gut Prerau, Tel. 02523/8412 Fax 02523/8412 Biolandwirtschaft Ennstal: Bahnhofstr. 182 8950 Stainach Tel.: 0043 3682 24521 254 begin_of_the_skype_highlighting 254 end_of_the_skype_highlighting Fax 03623/20117 [email protected] www.bioland-ennstal.at Demeter Bund Hitzinger Kai 127/2/31 1130 Vienna Tel.: 0043 1 8794701 begin_of_the_skype_highlighting 8794701 end_of_the_skype_highlighting Fax 01/8794722

0043 2642

0043 2734

0043 3682 24521

0043 1

DINATUR Verein für fortschrtittliche kontolliert biologische Landwirtschaft (Barbara Fink-Spann) Schlag 14 A-2871 Zöbern Tel.: 02642/8651-19 Fax: 026242/8651-9 [email protected] www.dinatur.at ERDE &SAAT (Katharina Keplinger) Hanriederstr.8 A-4132 Lembach Tel.: 07286/7517 Fax: 07286/7517-20 [email protected] www.oekoland.at/erde_saat

ERNTE für das Leben, Verband organisch biologisch wirtschaftender Bauern Europaplatz 4 4020 Linz Tel.: 0043 0732 654884 begin_of_the_skype_highlighting 0043 0732 654884 end_of_the_skype_highlighting www.bio-ernte.at FREILAND Verband Wickenburggasse 14/9 1080 Vienna Tel.: 01 4088809 Fax 01/402 78 00 [email protected] HOFMARKE Dachverband für biologische Landwirtschaft und Direktvermarktung (Mag. Martin Tragler) 4553 Schlierbach Nr. 226 Tel.: 07582/61404-0 Fax: 07582/61404-4 [email protected] www.hofmarke.at KOPRA Konsumenten Produzenten Arbeitsgemeinschaft (DI Franz Rauch) Hirschgraben 15 A-6800 Feldkirch Tel.: 05522/79687 Fax: 05522/79687-11 [email protected] www2.vol.at/kopra LEBA Lebensqualität aus Bauernhand Buntweg 14 5611 Zams Tel 0043 5442 65765 begin_of_the_skype_highlighting 65765 end_of_the_skype_highlighting Ökowirt Informationsservice für Bauern und Konsumenten (DI Wolfgang Pirklhuber) Feyregg 39 A-4552 Wartberg Tel.: 07587/7177 Fax: 07587/7177-29 [email protected] www.oekoland.at/oekowirt ORBI Fördergemeinschaft für ein gesundes Bauerntum Nöbauerstr. 22 4060 Leonding Tel.: 0043 732 675363 begin_of_the_skype_highlighting 675363 end_of_the_skype_highlighting www.bioclub.at/orbi

0043 5442

0043 732

Verein organisch biologisch wirtschaftender Bauern Weinviertel (Johann Kettler) A-2053 Peigarten 52 Tel.: 02944/8263 Fax: 02944/8402 [email protected] www.oekoland.at/kettler Annex III - Organic certification bodies ABG Austria Bio Garantie Königbrunnerstr 8 A-2202 Enzersfeld Tel. 02262/672212 Fax 02262/674143 [email protected] (covers all Austria) BIOS Biokontrollservice Österreich Feyregg 39 4552 Wartberg Tel: 07587/7177 14 Fax 07587/7177 11 (covers all Austria) LACON 4122 Arnreit 13 Tel. 07282/7711 Fax 07282/7711 4 (covers all Austria) SLK Landwirtschaftliche Kontrolle Ges.m.b.H. Maria-Cebotari Straße 3 5020 Salzburg Tel. 0662/649483 Fax 0662/649483 19 [email protected] www.slk.at (only for Salzburg, Carinthia, Upper Austria, Styria and Tyrol BIKO Verband Biokontrolle Tirol Brixnerstr 1 6020 Innsbruck Tel. 0512/5929-336 Fax 0512/5929 212 (only for Tyrol) Lebensmittelversuchsanstalt Blaasstr. 29 1190 Vienna

Tel. 01/3688555 Fax 01/3688555 20 (covers all Austria) SGS Austria Controll & Co Ges.m.b.H. Johannesgasse 14 1015 Vienna Tel. 01/5122567 Fax 01/5122567 9 (covers all Austria) Fair trade organizations Trans Fair Österreich Helmut Adam Wipplingerstraße 32, 1010 Vienna Tel: 01-5330956 Fax: 01-5330957 EZA Dritte Welt 8, Plainbachstr. 5101 Bergheim Tel: +43 662 452 178 begin_of_the_skype_highlighting 178 end_of_the_skype_highlighting Fax: +43 662 452 586 [email protected] Fair trade in Germany GEPA Gewerbepark Wagner, Bruch 4 42279 Wuppertal Tel: +49 202 26 68 30 begin_of_the_skype_highlighting 30 end_of_the_skype_highlighting Fax: +49 202 266 83 10 [email protected] Fair Trade e.V. www.fairtrade.de El Puente GmbH Hildesheimerstr. 59 D-31177 Harsum Tel: 05127-98860-0 Fax: 05127-9886028 [email protected] [email protected] [email protected]

+43 662 452

+49 202 26 68

BanaFair e.V. Langgasse 41 63571 Gelnhausen Tel: 06051-8366-0 Fax: 06051-8366-77 [email protected] [email protected] [email protected] http//:www.banafair.de Annex IV - Other sources of information Herbert Allerstorfer Marketing Director of "ErntE für das Leben Europaplatz 4, 4020 Linz Tel: 0732 654884/16 [email protected] Alexandra Pohl: ARGE Biolandbau Wickenburggasse 14/9 A- 1080 Vienna Tel: 01/4037050 [email protected] SPAR Supermarket Taborstr. 95, 1200 Vienna Tel: 01/3300539-726 Fax: 01/3303322 Person responsible for fruits and vegetables: Harald Rauchegger [email protected] BILLA Supermarket IZ NÖ Süd Str.3 Obj.16 2355 Wr. Neudorf Tel: 02236/600 6930 Fax: 02236/600-7690 Person responsible for fruits and vegetables: Thomas Rogy [email protected] Organic Supermarket Stefan Maran Tel.: 01/4818880-18 Verein Naturkostläden Österreich VNÖ R. Liebing, Rosensteingasse 84

1170 Vienna Tel: 01/4802047 [email protected] http//:oekoland.at/vnoe AMA Agrarmarkt Austria Dresdnerstr. 70 1200 Vienna Tel.: 01/33151 http//:www.ama.at ARGE Bio-Landbau/BIO CLUB Wickenburggasse 14/9 A-1080 Vienna Tel.: (07114) 22 13 14 http://www.bioclub.at/bioclub.htm Magazine: Bio Club Aktuell Federal Ministry of Agriculture, Forestry, Environment and Water Affairs Stubenring 1 A-1012 Vienna Tel: (+43 1) 711 00-0 begin_of_the_skype_highlighting (+43 1) 711 000 end_of_the_skype_highlighting Fax: (+43 1) 711 00-2127 http://www.bmlf.gv.at/frame.p html?file=/ge/lebensm/bio_lex/index.htm OEKOLAND http//:www.oekoloand.at Magazine: Ökoland

BELGIUM
Introduction The first conversions from conventional to organic farming took place during the 1960s, but significant numbers of farmers only began organic farming in the last ten years or so. Most organic farmers are found in the Walloon Region, where conventional farming in the hilly region is already extensive (mostly pastures for dairy production), enabling farmers to be certified organically without major changes in their farming practices. Conventional agricultural practices in the northern part of the country, the Flanders Region, are rather intensive, especially in the case of production of fruit and vegetables. Although fewer farmers have converted to organic farming so far in this part of the country, a recent policy adjustment, in which subsidies per hectare for organic vegetable production more than tripled in Belgium, is expected to lead to a significant increase in the number of organic farmers in the Flanders Region over the next few years.

In 1999, the number of organic farmers was 550 (Table 1), while it increased to 636 during the year 2000 (an increase of almost 16 percent) (Ministry of Agriculture, 2001). Besides these organic farmers, 571 certified organic enterprises are found: 529 wholesalers, packers, distributors, etc. with the remaining being importers (42). Despite the growth rate observed during the last decade (average annual growth rate of about 20 percent), organic farming is still a small sector in Belgium, accounting for about 1 percent of total area under agricultural production. Table 1: Number of (organic) farms per region and percentage of total farms (1999) Total number of farms Number of organic farms Percentage Source: Heuschen, 2000 During the year 2000, the total area under organic production increased from 18 515 hectares to 20 663 hectares (an increase of almost 12 percent). The highest growth was in organic pasture land. The area under organic horticultural production (including flowers) accounts for 3.6 percent of the total organic surface (751 hectares (Table 2)) (Ministry of Agriculture, 2001). Table 2: Area under organic production (including under conversion) and percentage increase, by region (2000) Total organic agriculture(including pastures) Area (ha) Walloon Region Flanders Region Belgium Total 16 905 3 758 20 663 Increase in %(compared with1999 figure) 6.8 43.5 11.4 Of which organic horticulture(including flowers) Area (ha) 205 546 751 Increase in %(compared with1999 figure) 34.6 12.6 17.9 Flanders Region 42 289 172 0.41 Walloon Region 21 558 378 1.75 Belgium (total) 63 848 550 0.86

Source: Ministry of Agriculture, 2001. 1.Organic farming in Belgium The main part of the certified organic area is dedicated to pastures for dairy farming (about 75 percent). The second main usage is cereal production (9 percent of total organic area). Organic production of fruit and vegetables is modest (3 percent), and is mostly found in the Flanders Region. The distribution of the area under organic fruit and vegetable production per region is given in Table 3 (1999). Table 3: Fruit and vegetable area (in conversion, organic and cumulated) per region, 1999 Year 1999 Flanders Region Fruits In conversion (ha) Organic (ha) Cumulated (ha) 55.5 139.4 194.9

Vegetables Walloon Region Fruits Vegetables TOTAL Fruits and vegetables

32.1 12.4 1.4 101.4

257.1 47.6 66.6 510.7

289.2 60.0 68.0 612.1

Source: Ministry of Agriculture, 2001. The most common products among vegetables are potatoes, carrots, cabbage and onions, while apple is the main organic fruit produced, followed at a distance by pears. Quantities per product could not been obtained. 1.1 Governmental policy on organic farming In Belgium, Council Regulation (EEC) No. 2092/91 applies for organic farmers, processors, traders, etc. The state authority for organic farming is the Ministry of Agriculture (Direction Générale 4 (for plant production) and Direction Générale 5 (for animal production)). The Ministry recognises two inspection bodies: Blik and Ecocert. Both are accredited according to EN 45005 and EN 45011. Farmers and processors who meet the private standards of Biogarantie and Nature & Progrès (in addition to the official standards for organic production) may use the labels Biogarantie® (mainly used in the Flanders Region) and Nature & Progrès (used in the Walloon Region, see Figure 1) (Heuschen, 2000).

Figure 1: The logos of Nature & Progrès and Biogarantie

Direct support for organic farmers has been granted since 1994 by the Belgian Government. In 2001, the annual subsidy per hectare for vegetable production more than tripled, from ¼300 per hectare to ¼930 (during the first two years of conversion, average figure) (see Table 4). The other support amounts have not been changed. Table 4: Government support per hectare (2001) Land use Annual crops eligible for arable area payment (such as cereals and oilseeds) Other annual crops Pastures Vegetable crops
st

1st and 2nd year of conversion (in ¼) 180.52 300.87 297.47 1 year: 991.57

Following 3 years (year3-5) (in ¼) 111.55 223.10 173.52 743.68

2nd year: 867.63 Perennial crops (fruit trees) Source: Ministry of Agriculture (2001). Other state support activities include co-financing of two research centres for organic agriculture: (i) Proefcentrum voor de biologische teelt (PCBT) (in the Flanders Region); and (ii) Centre technique pour le développement de l¶agriculture et de l¶horticulture biologique (CEB) (in the Walloon Region). These centres concentrate on field experiments of organic agriculture. 1.2 Production constraints As the above has made clear, despite remarkable growth figures over the last years, organic farming in Belgium still represents only one percent of total agricultural production. In the northern Flanders Region intensive conventional production methods require a major change in farm management if converted to organic farming. The subsidy per hectare supported by the Belgian Government has not been sufficient to attract many farmers. In 2001 the premium per hectare for vegetable production more than tripled. It is now expected that also the northern part of the country will become more organic. However, organic production lags behind demand. Bearing in mind the conversion period of three years, it will not be before 2004 that national production of organic vegetables could catch up with demand. Therefore, a significant share of Belgian organic vegetable consumption is likely to continue to be imported. One problem identified by various market operators is the lack of µorganic spirit¶ among farmers. Many of the farmers interested in conversion are said to be interested in the level of the subsidy per hectare only, instead of seriously committing themselves to other farming practices. Many see an attractive income alternative for the short term, but do not look at the longer term. This observed lack of commitment might result in a large number of newly converted farmers not continuing organic farming after a few years. 2.The Belgian market for organic fruit and vegetables The total value of organic sales in Belgium are estimated at BF6 billion (2000), of which about one quarter is organic fruit and vegetable sales. 2.1 Sales of organic fruit and vegetables in value and volume Although organic products have been sold on farms and in some specialized organic shops since the first farmers started producing organically in the 1960s, the awareness of most consumers of the availability of organic fruit and vegetables started once the main supermarket chains included these products in their assortment, about 10 years ago. The first retailer to carry organic products was Delhaize, which started in 1989, followed by Colruyt and GB (now owned by French retailer Carrefour) in 1991. Those supermarkets requested the organic products to be (at least) of the same quality as non-organic products, not accepting any inferior physical appearance of the product. Moreover, the taste of the organic products had to be as good (or better) compared to the conventional products. Initially, only a few products were displayed, namely those readily available after the domestic production season (mostly vegetables with a longer shelf life, such as potatoes, carrots and onions). Gradually, over the last 10 years, more and more products and varieties have been included, and the availability throughout the year (including imports during the off-season period) has increased, resulting in a current annual supply of over 50 fresh fruits and vegetables. However, the initial products mentioned above (potatoes, carrots, onions) remain the ones with the highest sales volumes. 842.46 743.68

The strongest growth of the Belgian organic market has been observed in the second half of the 1990s, especially during the last three years (1998-2000). Fuelled by major food scares, including the dioxin crisis that hit Belgium hard, the organic market boomed. Immediately after the outbreak of the dioxin crises in 1999, in which high levels of dioxin and other toxics were found first in chicken meat and eggs and later in other foodstuffs as well, organic sales were up 80 percent from the preceding year. Average annual growth rates of 50 percent were observed during the 1998-2000 period. No statistical data on processing and marketing of organic products, or on their development, is available (Heuschen, 2000). Therefore, what follows is based on information obtained through face-to-face and telephone interviews with traders and retailers. Total sales of organic fruit and vegetables in 2000 were estimated at BF1.5 billion (¼37.2 million). This is a rather reliable estimate since most informants, both at wholesale and retail level, confirmed this figure. Total volume is estimated at around 15 000 tonnes, of which the major part (70-80 percent) is vegetables (locally grown or imported from nearby countries such as the Netherlands or France). The major sales outlet is supermarkets, at some distance followed by specialized organic shops, and lastly by other distribution channels (see section 2.3). The main products include (in decreasing order of magnitude): potatoes, apples, onions, carrots, cabbage (red and white), tomatoes, broccoli, cauliflower, bananas, and kiwi, among others (see Table 5). 2.2 Average prices at retail level Figures on prices at retail level and premiums over conventional products are difficult to obtain, and vary widely among different products and during different seasons throughout the year. However, anecdotal information obtained from market sources and some non-representative samples obtained by the author, suggest that the average price premium ranges between 30 and 50 percent over conventional products, with exceptions beyond that range. These observations confirm earlier assessments of price premiums in Belgium (Michelsen et al, 1999) in which premiums for vegetables were estimated at 40 percent above the conventional price, and for fruits at 50 percent. Table 5: Market for organic fruit and vegetables by product Product Potatoes Onions Cabbage (white/red) Cauliflower Broccoli Carrots Leek Celery Lettuce Cucumber Tomatoes Peppers Other Quantity (in tonnes) Vegetables 1 600 - 1 700 1 100 - 1 200 850 - 900 700 - 750 800 - 850 1 000 - 1 100 450 - 500 350 - 400 500 - 550 450 - 500 750 - 800 650 - 700 n.a.

Fruits Apples Bananas Kiwi Oranges Berries Pears Other TOTAL 1 350 - 1 400 800 - 850 650 - 700 550 - 600 200 -225 850 - 900 n.a. 14 000 - 15 500

Source: Author calculations based on information obtained from market sources. During some of the interviews it was felt that on average the price premiums have gone down over the last ten years. Many expressed the expectation that, in view of the increasing market size and the increasing number of organic producers, wholesalers and outlets, the decline in price differences between organic and conventional products was likely to continue during the forthcoming years. 2.3 Distribution channels Distribution channels are generally short: it takes only a few handlers to get the product from the field (or import harbour) to the final sales outlet. Two wholesalers (Biofresh and Biomarché) account for an estimated 70-80 percent of all wholesales of fresh organic fruit and vegetables. Biofresh, which besides organic fresh fruit and vegetables trades in other fresh products such as dairy products, meat and vegetarian specialities, supplies only specialized shops (no supermarkets). Out of the total 700 of these outlets, over 50 percent are supplied by Biofresh. Biomarché, specialized in fruit and vegetables, is the only supplier of Delhaize, a supermarket chain. Biomarché has some packaging lines, where the organic products which are bought in bulk, are packed in bags, nets and trays (legislation requires organic products sold in outlets where also conventional products are available to be packed separately). Other distributors include Brava (a cooperative with about 50 farmers under contract) and some small companies.

Figure 2: The Belgian organic market for fruit and vegetables

Source: Author¶s calculations based on information obtained from market sources In 2000, an estimated 60-70 percent of all organic fruit and vegetables was sold in supermarket chains (almost 10 000 tonnes with an estimated value of ¼24 million or BF975 million, see Figure 2). The major part of this is sold by Delhaize, which accounts for an estimated 30 percent of total organic fruit and vegetables sold in Belgium. The other two main supermarket chains selling organic products are GB and Colruyt. These three supermarket chains have their own organic brands, of which the logos are shown in Figure 3.

Figure 3: the bio-brands of supermarket chains Delhaize, Colruyt and GB (Carrefour)

Sources: www.delhaize-le-lion.be, www.colruyt.be and www.gb.be An estimated 25 percent of organic fruit and vegetables is sold in specialized shops (3 750 tonnes with an estimated value of ¼9.3 million or BF375 million). The remaining are farm sales, subscription schemes, weekly markets and so-called µfood-teams¶ (groups of consumers, mostly neighbours, buying collectively organic products). New in Belgium is the µorganic supermarket¶, which only sells organic products. In March 2001 the first organic supermarket called µBio Square¶ was opened in Uckel, an economically wealthier neighbourhood of Brussels. The relatively small shop (120 m2), which operates under the logo of Delhaize, is expected to be the first in a series of five fully organic outlets, to be operational before the end of 2002. At the time of writing of

this report (mid 2001), Bio Square has been open for about four months, and sales are said to be four to five times higher than expected. The main problem faced is supply to the shop, i.e. logistics. Another supermarket chain, Colruyt, is said to have a similar initiative forthcoming. 2.4 Consumer attitudes The profile of organic consumers has not yet been studied (Heuschen, 2000); at least no studies are publicly available. However, in an issue of BioVisie (Blivo, 2000), the quarterly magazine of the organic sector in the Flanders Region, two questionnaires concerning organic food products (not just fruit and vegetables!) are quoted. Although the outcomes of the research does not necessarily fully reflect the attitude of all Belgian consumers towards organic products (respectively 1 000 and 750 persons replied), the results give some useful indications.
y y

y

y

y

More than half of the respondents (55 percent) buy no (or almost no) organic products. The most important considerations when purchasing a product (both organic and conventional) are the price and its freshness, followed by the physical appearance and taste. Whether the product is organic or conventional comes after these aspects in the consumer¶s choice. Sixty percent of the respondents said that the Belgian dioxin crisis (see 2.1) had no influence on their purchasing behaviour. However, 20 percent replied that the crisis had changed permanently their purchasing behaviour. The remaining 20 percent bought more organic products during the crisis, but their organic purchases decreased slowly after the scandal, eventually reaching pre-crisis levels. About half of the respondents are not familiar with the Biogarantie label (the label used in the northern part of Belgium where the assessments took place). Organic brands are generally not known (over 55 percent of respondents do not recognize an organic product). Many others have doubts about the reliability of the organic labels. More than three-fifths consider the price of organic products too high.

The report concludes that it is a likely that the number of organic clients is not increasing very fast, and that the market growth comes mostly from more purchases per organic consumer. Anecdotal information obtained from market sources suggest that the typical organic consumer belongs to the higher educated, higher income strata, often having young children. It is no coincidence that the new Delhaize organic supermarket µBio Square¶ is situated in Uckel, an economically wealthier neighbourhood of Brussels, where many of these typical organic consumers live. 2.5 Trends The market has been growing at growth rates of up to 50 percent over the last few years. This growth, fuelled by food scares in conventional products, is realized through a combination of higher amounts per organic products sold (partly thanks through import based year-round supply) as well as the introduction of new organic varieties. New products that recently have been launched in the organic market, include cherry tomatoes (imported from Israel and Italy), red pomelo and vacuum packed maize and red beet, among others. Monthly magazines published by the main supermarkets dedicate more and more space to organic food. In order to enhance and strengthen awareness among consumers on organic products, these magazines contain information about new products, explanations about what the organic labels stand for, and provide recipes for organic cooking. Some specialized organic shops have joined forces in this µconsumer-education¶ and jointly print similar brochures. Another trend observed is the use of biodegradable packaging for many organic products (see Figure 4). (Poirier, 1999.)

Figure 4: Biodegradable packaging: an extra selling point for the environmentally-conscious organic food consumer

Source: www.colruyt.be 2.6 Main constraints to market development It is expected that the organic market will continue to expand rapidly, and demand will continue to surpass domestic supply. The major food scares that have hit the European continent in general and Belgium in particular over the last few years have permanently eroded confidence in conventional products among groups of consumers. However, as referred to in paragraph 2.3, about half of the respondents to a questionnaire are not familiar with the Biogarantie label and over 55 percent of the surveyed persons do not recognize an organic product. Moreover, more than 60 percent consider organic products too expensive. Based on this information it seems valid to conclude that the fast growth of organic sales in Belgium over the last years is the result of high volumes bought by one group of consumers, whereas other groups of consumers are not (yet) familiar with organic products and/or do not buy these due to various reasons, among which the significant price difference between organic and conventional fruit and vegetables is the overriding argument. Therefore, constraints to further market development include a combination of lack of awareness among certain groups of consumers and the price difference between organic and conventional products. Supermarket chains are poised to take a leading role in consumer education through their monthly magazines, but also a promotional campaign at national level could enhance consumer awareness of organic products and reduce the current lack of knowledge and misunderstanding. Moreover, the noted shortage in supply of organic fruit and vegetables, due to the low domestic production, has a slackening influence on further market growth. To what extent the low domestic supply provides opportunities for organic exporting countries, in particular developing countries, to meet Belgian organic demand, will be analyzed in Section 3.

3.Imports of organic fruit and vegetables 3.1 Market access For imports of organic fruit and vegetables into Belgium, Council Regulation (EEC) No. 2092/91 applies. However, organic certification is only one of the requirements needed to enter the market. As has become evident in the previous section, supermarket chains (in Belgium by far the leading outlet for sales of organic fruit and vegetables) require high product standards as they do not accept any inferior quality or taste. Therefore, post-harvest handling and transport are key, and must ensure that the product reaches the consumer in top quality. 3.2 Total imports of organic fruit and vegetables As in most other countries where market surveys have been carried out for this publication, no official data on imports of organic fruit and vegetables exist in Belgium. In February 2001, a new project with the title "Bio-theek" was started, coordinated by BioForum, the Belgian umbrella organization for the organic sector. The objective of the project is to collect and disseminate for free the most recent data available on production, consumption, imports and exports of organic products. However, since the information is not expected to be available before early 2002, what follows in this section is an analysis of imports of organic fruit and vegetables based on interviews with importers and traders. During the analysis, a wide range of uncertainties and other difficulties were faced, which, include, among others:
y y

y

y

y

Although Belgium is a net importer of organic fruit and vegetables, re-exports do exist as well. Precise information on re-exported quantities could not be obtained. Related to this, trade flows within the European Community (EC) do not necessarily reflect the country of origin of a product. Especially in the case of the Netherlands and Belgium, which thanks to their geographical location and infrastructure are important entrances into the European hinterland. Many products imported into these countries are re-exported to other European countries. Therefore, organic fruit and vegetables imported into Belgium from the Netherlands (a major supplier to the Belgian organic market for fresh horticultural products) are not necessarily produced in the Netherlands. Belgium is home to a significant number of food processing industries, including organic processors, where fresh fruit and vegetables are processed into canned or frozen products. These industries import significant amounts of fresh organic horticultural products, but those products are not sold on the fresh organic market (and are therefore not included in the BF1.5 billion organic horticultural market value) (see Section 2.1). The market survey was carried out in late February - early March 2001, a time of the year with typically high imports, due to a lack of local supply. Some market sources provided data based on the weekly amounts traded during the market survey, from which annual totals were derived by multiplying by 52 (weeks). Obviously, the seasonality of many products is likely to cause a certain standard deviation in the total amount imported. Moreover, the unusual high precipitation in Belgium during the second half of 2000 resulted in many crops not having been harvested. Therefore, in the period when the market survey was carried out, imports were even higher than normal for that time of the year, which might result in an overestimation of annual imports of fresh organic fruit and vegetables.

These points, combined with a certain reluctance among some traders and importers to provide detailed information, imply that this section is based on rough estimates. Therefore, caution should prevail when drawing conclusions based on the information provided.

Table 6 gives estimated ranges of quantities of organic fruit and vegetable imports (year 2000), as well as the main countries of origin. For some products imports account for 50 percent of supply (e.g. for potatoes, onions, carrots, apples, pears, etc.), while for other products the imported share is between 70 and 80 percent (e.g. broccoli, celery, tomatoes). Import rates for fruits such as kiwi, oranges and banana, etc., are naturally 100 percent, as no domestic production exists. Total imports are estimated to range between 10 000 and 11 000 tonnes, or about two-thirds of all organic fruit and vegetables consumed domestically. Table 6: Imports of organic fruit and vegetables by product (year 2000) Product Potatoes Onions Cabbage (white/red) Cauliflower Broccoli Carrots Leek Celery Lettuce Cucumber Tomatoes Peppers Garlic Asparagus Other Apples Bananas Kiwi Oranges Berries Pears Other TOTAL Quantity (in tonnes) 800 - 850 550 - 600 650 - 675 500 - 550 575 - 625 500 - 550 225 - 275 300 - 350 375 - 425 450 - 500 600 - 650 600 - 650 75 - 100 < 25 n.a. 650 - 700 800 - 850 650 - 700 550 - 600 150 - 175 500 - 550 n.a. 10 000 - 11 000 Countries of origin Vegetables Netherlands, Italy, Spain, Egypt Netherlands, France, Italy, Spain Netherlands, France, Netherlands, Italy, France, Spain Netherlands, Italy, Spain Netherlands, France, Spain Italy, Spain, France Italy, Spain, France, Italy, Spain, France, Netherlands, Italy, Spain, Morocco, Israel Netherlands, Spain, Morocco Argentina Argentina n.a. Fruits Netherlands, Argentina, New Zealand Dominican Republic, Ecuador, Peru, Colombia, Burundi, Rwanda Italy, New Zealand Spain, Italy, Israel France, Italy, Spain Netherlands, Argentina, New Zealand n.a. -

Source: Author¶s calculations based on information obtained from market sources. Imports from countries outside the EC other than those listed in Article 11 of Council Regulation (EEC) No. 2092/91, are registered at the Ministry of Agriculture. The information describes the imported product, the country of origin and the certification bodies involved, but does not provide quantitative information (Table 7).

Table 7: Imports of fresh organic fruits and vegetables from third countries in 2000 Product Grapefruit Bananas Country of origin South Africa Colombia Peru Ecuador Dominican Republic Burundi Rwanda Apples (organic and in conversion) Pineapple Avocados Passion fruit Papayas Mango Zucchini Egg-plant Leek Asparagus Plums Lime New Zealand Togo Burundi/South Africa/Mexico Burundi Burundi Rwanda/South Africa/Mexico Burundi Burundi Burundi Burundi South Africa Mexico Control body in third country Ecocert International Ecocert International BCS-Öko Garantie Q.A.I BCS - Ökogarantie Ecocert International Ecocert International S.G.S-Netherlands Ecocert International Ecocert International Ecocert International Ecocert International Ecocert International Ecocert International Ecocert International Ecocert International Ecocert International Ecocert International Ecocert International Control body in Belgium Ecocert Belgium Ecocert Belgium Ecocert Belgium Blik vzw Blik vzw Ecocert Belgium Ecocert Belgium Blik vzw Ecocert Belgium Ecocert Belgium Ecocert Belgium Ecocert Belgium Ecocert Belgium Ecocert Belgium Ecocert Belgium Ecocert Belgium Ecocert Belgium Ecocert Belgium Ecocert Belgium

Source: Ministry of Agriculture, 2001 and market sources. 3.3 Re-exports Re-exports of organic fruit and vegetables do exist in several western European countries, including France, the Netherlands and Belgium. Belgium imports a number of products from France and the Netherlands, and it is therefore difficult to verify, especially for temperate zone products, if imports into Belgium consist of reexports from these countries, or if these products are produced in France or the Netherlands. An example of the difficulty to analyse trade-flows include kiwifruit imported into Belgium. Information provided by the Ministry of Agriculture in Belgium, the State Authority responsible for import licenses for organic products from countries other than those listed in Article 11 (as described in Council Regulation (EEC) 2092/91), does not mention any imports of organic kiwi from New Zealand, although the fruit is readily available on the market. Zespri, a New Zealand kiwi producer and importer into Belgium, reports that it sells about one-fifth of their organic kiwis in the Netherlands, while one Belgium wholesaler stated that they buy µall non-EC imports¶ from Eosta, an organic wholesaler in the Netherlands. Therefore, it seems likely that part of the New Zealand kiwi fruit is, through the Belgium offices of New Zealand producers/importers, imported into the Netherlands, from where it continues its journey (back) to Belgium. The fruit from New Zealand is finally consumed in Belgium,

but no import licenses concerning imports from non-Article 11 countries are registered at the Ministry of Agriculture in Belgium. 3.4 Main importers Some of the main importers include the wholesale companies Biofresh and Biomarché (see section 2). Other major importers include foreign companies such as Zespri (New Zealand), Enzafruit (New Zealand) and Capespan (South Africa). Although based in Belgium, their activities include all major European markets. De Grieck and Havenbedrijf Noord are among the bigger domestic importers. Contact details of the main importers are provided in Annex I. 3.5 Constraints to import growth At first sight, no major constraints to imports exist. Demand in the Belgium organic market is expected to continue to outgrow domestic supply and therefore imports are likely to keep their prominent position in the supply of organic fruit and vegetables. Additionally, some traders referred to the ongoing discussion on the energy balance per organic product (all energy used during the lifecycle of the product: production, transport, storage, cooling, etc.) and noted that this does not necessarily discriminate against imported products. Some market sources indicated a clear preference for fresh (off-season) organic products shipped in from countries far away over domestically produced products which are stored for some months in cooled warehouses (µBetter a fresh pear from the southern hemisphere, than a domestic pear which has been stored for 4 months¶). Despite the high percentages of imported organic fruit and vegetables, one should note that the main part of imports originates from other European countries. Therefore, prospects for third countries to export to the Belgian market do exist, but for certain products and during certain months face strong competition from European organic supply. 4.Conclusions and market opportunities for developing countries The major food scares that have hit the European continent in general and Belgium in particular over the last few years have permanently eroded confidence in conventional products among groups of consumers, resulting in fast growth of the organic horticultural market over the last three years, with annual growth rates of 50 percent. Demand for organic fruit and vegetables in Belgium has outgrown domestic supply, resulting in significant imports over the past decade. A relatively small number of Belgian farmers have converted away from conventional farming practices so far and although a recent policy adjustment, in which subsidies per hectare for organic vegetable production more than tripled, is expected to lead to an increase in domestic organic supply, imports are likely to remain the main source of fresh organic fruit and vegetables. Despite the generally high percentage of organic imports in Belgium, most of these products are imported from other European countries, such as the Netherlands, France, Italy and Spain. Imports from outside the EC are much smaller, and include countries like Morocco, Egypt, Israel, New Zealand, Argentina, the Dominican Republic, Burundi and Rwanda, among others. The best commercial prospects for developing countries¶ organic horticultural exports to Belgium are seen for off-season temperate products as well as for exotic fruits. It should be stressed that the combination of organic certification requirements, the controls involved, and the high quality requirements of the product¶s taste and physical appearance make professional post-harvest handling, storage and transport key features, in order to succeed in delivering fresh organic products in top condition to the Belgian consumer. References Biogarantie (2000), Liste des operateurs par code postal, Biogarantie, St. Joris Weert, November 2000

Blivo (2000a), BioVisie, Quaterly magazine, various issues (September 1999, December 1999, March 2000, October 2000 and December 2000), Blivo, Berchem, 1999 and 2000 Blivo (2000b), Evolutie biologische landbouw, Blivo, Berchem, 2000 Boer&Tuinder (2001), Nog heel wat werk aan de µbio¶winkel, and Bioconsumptie in stroomversnelling, 16 February, 2001 CELCAA (1999), Minutes of the first meeting of the Standing Group on <<Organic Farming>> of the Advisory Committee on <<Agricultural Product Qualtity and Health>>,on 13 October 1999, Comité Européen de Liaison des Commerces Agro-Alimentaires, Brussels, 1999 Heuschen, C. (2000), Organic farming in Belgium, http://www.organic-europe.net/country_reports/belgium/default.asp Michelsen, J. et al (1999), The European Market for Organic Products: Growth and Development, Organic Farming in Europe: Economics and Policy, volume 7, Ministry of Agriculture (2001), L¶agriculture biologique, Ministry of Agriculture, Brussels, February 2001 Poirier, J. (1999), The Agri-Food Market in Belgium, The Canadian Embassy in Belgium, August 1999 USDA (1999), Belgium-Luxembourg Organic, The number of Organic Farmers in Belgium has the Potential to Increase Ten-fold, US Embassy, Brussels www.colruyt.be www.delhaize-le-lion.be www.gb.be Annex I Umbrella organization for organic sector Bioforum Chemin de la Haute Baudecet 1, B-1457 Walhain Tel. 32-81-601540 Fax 32-81-600521 Organic farmers organizations Belbior Statiestraat 164 C 2600 Berchem Tel. 32-3-287 37 72 Fax 32-3-287 37 71 [email protected] UNAB Union Nationale des Agrobiologistes Belges Secretariaat: Philippe Loeckx, Le Quesniau 14,

7870 Montignies-Lez-Lens, Tel./Fax 32-65-227260 [email protected] Organic processors organizations Probila-Unitrab Kerkplein 5 9667 Horebeke Tel. 32-55-456741 Fax 32-55-456742 Secretariaat: Leuvensebaan 368, B-3040 Sint-Agatha-Rode Tel. 32-16-470198 Fax 32-16-470199 [email protected] Biogarantie BP1, Stationstraat 24 B-3051 Sint-Joris-Weert Tel. 32-16-470198 Fax 32-16-470199 [email protected] Consumers organizations Nature et Progrès Rue de Dave 520 5100 Jambes Tel. 32-81-303690 Fax 32-81-310306 [email protected] VELT Uitbreidingstraat 392c 2600 Berchem Tel. 32-3-2817475 Fax 32-3-2817476 [email protected] http://gallery.uunet.be/velt/ Organic extension services and information BLIVO vzw Instituut voor Voorlichting en Onderzoek vzw, Statiestraat 164 c te 2600 Berchem Tel. 32-3-287 37 70, Fax 32-3-287 37 71 [email protected]

Carab asbl Chem. de la Haute Baudecet 1, B-1457 Walhain Tel. 32-81-601540 Fax 32-81-600521 http://users.swing.be/carab/ Certification ECOCERT Belgium bvba Schermlaan 85 B-1150 Brussels Tel. 32-2-7794721 [email protected] http://www.ecocert.be BLIK vzw Statiestraat 164 B B - 2600 Berchem Tel. 32-3-2873750 Fax 32-3-2873751 [email protected] www.blik.be Other Vlaams Informatiecentrum Over Land- En Tuinbouw Leuvenseplein 4 te 1000 Brussels Tel. 32-2-5106391 Fax 32-2-5106393 [email protected] http://www.vilt.be Importers and wholesale Belfruco N.V. Rostockweg 1 2030 Antwerpen Tel. 32-3-540 5990, Fax: 32-3-541 6543 (fruit imports) Biofresh N.V. Dirk Thienpont Fortsesteenweg 40 2860 St. Katelijne Waver Tel. 32-15-56 0160 Fax 32-15-56 0185 [email protected] www.biofresh.be (packer and importer)

Biomarché Dirk van den Broek Z.l. rue de la Basse Sambre 24 B-5140 Sombreffe Tel. 32-71-82 31 00 Fax 32-71-82 31 09 [email protected] Capespan Continent (North) Atlantic Houses 10th floor Noorderlaan 147 2030 Antwerpen Tel. 32-3-546 0900 Fax 32-3-546 0909 www.capespan.be [email protected] (importer of fruits) Döhler België GCV, Schuurhovenveld 1131 3800 Sint-Truiden Tel. 32-11-69 01 11 Fax 32-11-69 01 90 (fruit imports) Mondi Foods Gammel 91 Rijkevorsel Ms Schellekens Tel. 32-3-314 65 55 Fax 32-3-314 89 56 Mr Paul Vieftsema (Importer) Havenbedrijf Noord Stadswaag 7/8 2000 Antwerpen Mr Frederic Claeys Tel. 32-3-541 31 06 Fax 32-3-542 3368 (importer) S-In-O bvba Postbus 4 2860St. Kateline Waver Tel. 32-15-55 59 08 Fax 32-15-55 01 54 Mr Isag (importer) Atalanta CV Vlaanderenlaan 4A 8970 Poperinge Tel.: 32 - 57-33 55 99

Fax; 32-57-33 43 00 (importer vegetables) Bio-DS nv Rechtervaartoever 49-51 9800 Deinze Tel. 32-93-81 85 55 Fax 32-93-81 85 60 (importer potatoes) Degrieck nv Igor Donckels Werkenstraat 43 B-8600 Vladslo Tel. 32-51-51 01 84 Fax 32-51-50 15 19 [email protected] (importer vegetables) Enzafruit New Zealand Tongersesleenweg 135 3800 St. Truiden Tel. 32-11-68 99 99 41 Fax 32-11-67 39 56 (importer apples/pears) Maya Oude Kuringerbaan 2 3500 Hasselt Tel. 32-11-87 30 64 Fax 32-11-87 30 64 (importer vegetable specialities) Zespri International nv De Keyserlei 5 Postbus 43 B-2018 Antwerpen Tel. 32-32-31 13 24 Fax 32-32-317411 or 32-32-010891 [email protected] (importer of kiwi fruit) Retail Delhaize Alain Hautman Broekooi 5 1731 Asse (Zellik) Tel. 32-24-812614 Fax 32-24-812618 [email protected] www.delhaize-le-lion.be

Colruyt Ms Martine van Schoorisse Brussels Tel. 32-2-236 01040 www.colruyt.be GB (Carrefour) www.gb.be Government Ministry of Agriculture, DG 4 Mr Ch. Papeians or Mr Olivier Wastiaux WTC3 - Simon Bolivarlaan 30, 6th floor 1000 Brussels Tel. 32-2-208 32 11 Fax 32-2-208 37 05 Other EUCOFEL European Union of the Fruit and Vegetable Wholesale, Import and Export Trade Mr Luc Hellebuyck, Secretary General a.i. 29 Rue Jenneval B - 1000 Brussels Tel. 32-2-736 1584 Fax 32-2-732 1747 [email protected] Haest Consultancy for the Organic Sector Mr Carol Haest Parvis Saint-Roch 1 B-1325 Chaumont-Gistoux Tel. 32-10-68 1387 Fax 32-10-68 112 [email protected]

DENMARK
Introduction Although a small country, both in population (5.3 million) and in geographical size (43 094 sq. km), Denmark has become one of the pioneers in promoting organic agriculture, and in producing and marketing organic food and beverages. The rapid development of the sector throughout most of the 1990s is a result of strong cooperation among three parties, i.e. Government authorities, farmers and the retail trade, in particular Co-op Denmark (FDB), which have all been working towards a common goal.

In 1993, FDB made a policy decision to drastically lower the retail prices of organic products, which enormously stimulated sales. In 1995, the Government issued an Action Plan for the Advancement of Organic Food Production in Denmark, of which most of the recommendations have been implemented. In January 1999, the Ministry of Food, Agriculture and Fisheries published Action Plan II (prepared by the Organic Foods Council) to support organic development during the period 1999-2003. It provides policy guidelines and recommendations on organic farming (e.g. conversion), product and quality development, marketing and distribution, export marketing, training, research, etc. It is also significant that a number of organizations have been founded over the years to promote organic farming, food production and trade, including: Danish Association for Organic Farming (LØJ) in 1981; The Organic Foods Council (set up by the Government) in 1987; the Organic Service Centre (ØLC) in 1992; and the Danish Organic Trade Association in 1998. The latter is an association of suppliers and processors of organic food and beverages with the purpose of promoting sales of organic products, benefiting both domestic and foreign producers. 1.Organic farming in Denmark During the five-year period 1996-2000, organic farmland, including fully converted and "under conversion" land, increased from 46 171 hectares (of which 20 193 ha were fully converted) to 165 258 hectares (of which 93 354 ha were fully converted). During the same period, the number of organically run farms increased steadily from 1 166 to 3 466. In 2000, the total organic farmland (including "under conversion") accounted for 6.2 percent of total Danish farmland, whereas the "fully converted" farmland accounted for 2.3 percent. Organic farmers accounted for 6.2 percent of all Danish farmers in that year. In terms of geographical importance, Jutland is the most important area with 73.5 percent of the organic farms and about 85.2 percent of the total organic land (2000). In comparison, the corresponding figures for Zealand were 20.8 percent and 12 percent, and for Funen 5.7 percent and 2.8 percent, respectively. The average organic farm size was 55.2 ha in Jutland, compared with 27.4 in Zealand and 23.6 in Funen. The country average was 47.7 ha. 1.1 Organic fruit and vegetable production Fruit and vegetable production only accounts for a fairly small share of organic farming. In 2000, there were 1912 ha of organic vegetable production (fully converted), according to Plantedirektoratet. This included 1 424 ha in Jutland, 372 ha in Zealand and 116 ha in Funen. Of the total, 1 716 ha were used for vegetables, and 197 ha were used for fruits and berries. In terms of vegetable and root crops, potatoes were the most important, with 821 ha; followed by carrots, with 404 ha; onions, with 75 ha; cabbage, with 55 ha; leeks, with 41 ha; and mushrooms, with 8 ha. Another 293 ha were used for "other vegetables" and 19 ha were used for greenhouse vegetable production. As far as fruits and berries are concerned, apples were the most important with 66 ha (in 2000); followed by tree fruits (e.g. cherries), with 51 ha; black currants, with 43 ha; strawberries, with 29 ha; and bush fruit, with 7 ha. While production figures in terms of quantity are not available, it should be mentioned that production has increased considerably in recent years, though fluctuations are common due to climatic conditions, etc. 1.2 Major producers of organic fruits and vegetables Amongst the many organic producers of fruits and vegetables in Denmark, the following major ones should be mentioned, as they are also active in the distribution of organic products, including sales of imported organic fruits and vegetables:

y

y y y y

Biodania, which is a cooperative, coordinates production and sales to the major supermarket chains, wholesalers and box schemes for its 65 members, which together account for a major part of total organic fruits and vegetable sales. Some members, including the following also operate commercial pack houses: Svanholm Gods, Skibby (Zealand) produces fruits and vegetables and fruit juices; Blære Frugtplantage, Aars (Northern Jutland) produces fruits and vegetables; Gartneriet Marienlyst, Harlev (Eastern Jutland) produces vegetables; and Søris I/S, Ølstykke (Zealand) produces mainly carrots and potatoes.

The following producers (non Biodania-members) should also be mentioned:
y

y

Barritskov (in Eastern Jutland) is the largest organic farm in Denmark. Main crops include vegetables, including cabbage, salads, fennel, celery leaves and culinary herbs. Barritskov, in partnership with three other farms (Ringstholm, Billeslund and Krogerup) together farm a total 900 ha of cropland. The total production of Barritskov and part of its partners¶ is sold through a box scheme/Internet company www.aarstiderne.com (see section 2.4); Danorganic A/S (a fusion between Fælles Grønt and Danespo), which consists of more than 50 producers of vegetables, including potatoes, carrots, onions and beetroot.

1.3 Exports/re-exports of organic food Research carried out by the Organic Service Centre (ØLC) indicates that exports, including re-exports of organic food and beverages amounted to about DKr 237 million in 2000. The growth rate was very high during the period 1999-2000, and is expected to reach 30-40 percent in 2001. Fruits and vegetables, including fresh and processed, constituted the third largest export item in 2000, after dairy products and cereals, and were in the DKr22-26 million range, two-thirds of which were fresh produce. In total, 45 companies exported organic food, six of which exported fresh fruits and vegetables and two exported processed fruits and vegetables. The main export markets for organic fruits and vegetables are the United Kingdom, Germany and Sweden. 1.4 Government policy on organic farming Although, generally speaking, most Danish farmers have been reluctant to go into organic farming, a significant switch has taken place over the last decade. This is partly a result of market pressure and partly due to Government policy. The Government started to grant subsidies to organic farmers and various organic projects in 1988. In order to promote organic farming, the Government has introduced a number of subsidies. Under one scheme (50 percent financed by EC), starting in 2001, farmers may apply for the following subsidies (of relevance to fruit and vegetable producers):
y y y y

A conversion subsidy (DKr450 per ha per year); A µgeneral¶ subsidy (DKr600 per ha per year); A "special regional" subsidy (DKr500 per ha per year); and A special conversion subsidy for organic plant production (in years 1 and 2: DKr2 000 per year; in year 3: DKr 1 200 per ha; in years 4 and 5: DKr500 per ha/per year).

Another scheme offers subsidies for specific projects that seek to further the production and marketing of organic products. The target group includes farmers, processors, research and trial institutions, learning institutions and consumers. Up to 40 percent of product development and marketing components of such projects can be given in subsidy.

Some other schemes have components that could also benefit organic farmers and processors, e.g. one scheme (EC co-financing) provides support (17-25 percent of total project costs) to companies that invest in processing selected organic product groups, including fresh and processed fruits and vegetables. Another Government programme is actively promoting the use of organic products by municipal and other public institutions. 2. The Danish market for organic fruit and vegetables 2.1 The market for organic food and beverages Although there are no official statistics, it can be estimated that the Danish retail market for organic food and beverages reached close to DKr3 000 million in 2000 (exclusive of 25 percent VAT), corresponding to about 2.5-3.0 percent of the total food market. The figures do not cover the institutional and catering market for organic food, which is believed to still be fairly small. It is significant that retail sales of organic food and beverages have increased sharply since 1993, though it must be pointed out that growth slowed down considerably in 2000. 2.2 Sales of organic fruit and vegetables The lack of official statistics makes it impossible to give a complete and exact picture of the market for organic fruits and vegetables. However, the figures given in Table 1 may provide a useful overview. Table 1: Retail sales of organic fresh fruits and vegetables - 2000 (estimates in tonnes) Vegetables Potatoes Carrots Onions Tomatoes Other vegetables Total vegetables Fruits Tropicals Citrus Apples, pears, others temp. zone Total fruits Total fruits and vegetables 700-800 1 750-2 250 2 000-2 500 (4 450-5 550) or ca. 5 000 24 450-27 850 or ca. 26 000 Everything is imported Everything is imported At least 80% is imported About 95% is imported Tonnes 7 500-8 000 7 000-7 500 1 400-1 500 1 100-1 300 3 000-4 000 Comments Production -exports+imports Same Same Same (2/3 imports) Same

(20 000-22 300) or ca. 21 000 About one-third is imported

Note "Other vegetables" and "Fruits, others temp. zone" cover a wide range of products, including those listed in section 3.2. Source: Compiled by ITC from trade information (producers, importers, distributors, retailers), Ecoguide 99 and Sall&Sall Report (September 2000). With regard to organic vegetables, potatoes, carrots and onions together account for just over 80 percent of sales. Other major items include the following, mostly domestically produced: cauliflower, broccoli, mushrooms, white cabbage, iceberg salad, China cabbage, leeks, Brussels sprouts, red cabbage and lettuce. With regard to organic fruits, apples and pears, oranges and lemons and bananas are probably the most important items, estimated to account for around three-quarters of total organic fruit sales.

Overall, it has been estimated that retail sales of organic fruits and vegetables account for 5-6 percent of total fruit and vegetable sales, which is twice as much as for the total range of food products taken as a whole. Table 1 does not include catering and institutional sales, for which figures are difficult to obtain. Some trade sources put estimates at 5-10 percent of retail sales, which would indicate total sales of organic fresh fruits and vegetables around 27 500 tonnes. 2.3 Prices It is beyond the scope of this chapter to provide a detailed analysis on prices. However, it seems that, on average, price premiums are amongst the smallest, if not the smallest, in all the markets covered by this survey. As mentioned before, in 1993 FDB made a policy decision to drastically lower its retail prices on organic food. Since then, strong competition amongst major retailers has kept prices fairly low. A cursory check in a number of supermarkets (February 2001) did not reveal any clear pattern in the case of fresh fruit and vegetables, although a certain premium is normal for most products. However, there were also several examples where no premium existed; for example, in the same store organic cherry tomatoes from Italy were sold at the same kilo price as non-organic cherry tomatoes from Spain. See also section 2.6 on constraints to market development. 2.4 Distribution channels for organic fruit and vegetables It is estimated that supermarket chains sell a maximum of 70 percent of organic fresh fruit and vegetables (more for organic foodstuffs as a whole), because of strong sales through subscription/box schemes, farm gate and fresh market sales and other alternative channels, which together may account for more than 20 percent, leaving about 10 percent to other retailers and food service. The following retail and distribution organizations are the most important in the organic food trade: Co-op Denmark (FDB) - the Danish co-operative retail and wholesale society - is the country¶s largest retail group, with about 33 percent of the overall food market. It comprises the supermarket chains Brugsen, Lokal Brugsen, DagliBrugsen, SuperBrugsen and Kvickly (which together have close to 900 retail outlets) and around 12 OBS! hypermarkets (owned jointly with NKL in Norway and KF in Sweden). Most organic products are marketed under the Ø logo (see section 3.1), although some items are sold under other organic logos. FDB also promotes its own organic brand Natura. IRMA, owned by FDB, is an upmarket supermarket chain with about 55 retail outlets in the Copenhagen area. It offers a broad range of organic products, including fruits and vegetables. Together with SuperBrugsen, it is the Danish retailer with the highest percentage of organic food products. In general, both FDB and IRMA obtain their imports through NAF International (see section 3.3.). Dansk Supermarket A/S is the second largest retail group in Denmark, with about 27 percent of the total food market. It comprises the following supermarket chains: føtex (a supermarket chain, with over 60 outlets throughout the country); Bilka (12 hypermarkets selling food and everyday goods); NETTO (a chain of discount shops with about 300 outlets in Denmark [which is promoting organic food aggressively] and more than 300 in the United Kingdom, Germany and Poland). The group¶s strategy is that Bilka and føtex should offer the broadest possible range of organic products, also in fresh produce, whereas NETTO has a more limited range. Most items are sold under the Ø logo, although own brand labelling is becoming increasingly important. Imported produce is marked "importeret økologisk for Dansk Supermarked Indkøb I/S", when the Ø logo cannot be used.

Although the group imports some organic fruits and vegetables directly, it buys most products from Danish producers and importers, both Biodania members and others. Dansk Supermarket Indkøb i/s does the purchasing for Bilka and føtex, while NETTO does its own buying. SuperGros A/S is the country¶s largest wholesaler in daily goods, including foodstuffs, supplying a number of independent supermarkets and other retailers, like the supermarket chains Favør, Spar Danmark A/S, SuperBest, ISO Supermarked (partly owned by ICA of Sweden) and Rema 1000 Danmark A/S. Retail organizations supplied by SuperGros A/S account for close to 30 percent of the total Danish retail market for food. Fruits and vegetables are a major product group, within which organic fresh produce is growing in importance. Although the company imports certain products directly, it always buys organic fruits and vegetables from Danish producers/packers in order to obtain the Ø logo and minimize the certification problems, etc. Blære Frugt; Danorganic and Gartneriet Marienlyst are the principal suppliers. E-commerce and box schemes Barritskov¶s www.aarstiderne.com is a subscription based sales system (or box-system), which offers consumers a weekly delivery of fresh organic fruits and vegetables, produced by Barritskov or other Danish producers, including Biodania members, such as Svanholm and Blærefrugt, or foreign producers. Imported products are usually obtained from Solhjulet A/S. The company seems to control an important and growing share of the organic fruit and vegetable market. Another 20 smaller companies also run box schemes, some of which use the Internet to some extent, e.g. for promotion. Catering and institutional trade (food service) Although organic foodstuffs are of relatively little importance in this sector, the catering and institutional trade is expanding, and considerable growth is expected in the future. According to Action Plan II, there is a lack of appropriate distribution channels, although it seems that several distributors are now organized to exploit the potential in this sector. Trade sources also indicated that there is a lack of products, specially prepared and packed for the sector, e.g. salads and vegetables, as well as semi-processed items. Further to the companies mentioned in section 3.3, other important suppliers of fruits and vegetables to this sector include the following: -Solhjulet A/S -Svanholm Catering -Rønnely -Flint & Hvids -ØKOterminalen -Frydenholm -MN Catering -H. Lembcke A/S -FDB

2.5 Consumer habits and product preferences According to a Note on consumption (compiled by the Organic Service Centre in August 2000), in 1999 less than 1 percent of Danish households bought only organic foodstuffs, while 6-7 percent apparently never bought organic foodstuffs. Heavy-users (households that spend more then 10 percent of their food budget on organic foodstuffs) accounted for 15 percent of all households and for 64 percent of total organic sales. Medium-users (spend 2.5-9.9 percent of the food budget on organic food) and light-users (spend less than 2.5 percent on organic food) together accounted for about 36 percent of total organic sales. In other words, 85 percent of all households account for just 36 percent of total organic sales. Consumption is biggest in the Copenhagen region. In 1999, 37 percent of heavy-users lived there, though the region accounted for only 24 percent of all households. About 90 percent of consumers bought some organic

products within a given three-month period, whereas the proportion in the rest of the country varied between 67 percent and 82 percent. Generally speaking, consumers less than 40 years old buy more organics than older age groups, although it differs considerably according to product group. For example, potatoes, carrots and other vegetables enjoy a fairly high organic-share amongst consumers over 60 years. It is interesting to look at the relative importance of various product groups. For those products that are sold in organic form, the organic share amounted to 5 percent of total sales in 1999. There were significant variations between different products, e.g. 25 percent for oatmeal (breakfast cereal) and 2 percent for beef. In the case of vegetables, the organic share was 15 percent for carrots, 4 percent for onions and potatoes, and 5 percent for frozen vegetables. The organic-share for organic fruit is much smaller, probably not more than 1-2 percent, although it is considerably higher for certain products, e.g. lemon. It should be noted that the organic share for most products is much higher in those retail organizations, e.g. FDB and NETTO, which promote organic products specifically. Although the motives for purchasing organic food vary considerably according to product groups and consumer profiles, they are basically related to health, environment, animal ethics, quality and taste. In general, health is the dominating motive, according to recent research. In the case of fruits and vegetables, health and environmental considerations appear to be the two major ones; consumers consider that the absence of chemical residues is extremely important. As in other countries covered by this survey, consumer confidence in the organic origin of the product is of the greatest importance. In the Danish market this is strongly illustrated by the role played by the State-controlled Ø logo, which enjoys a high recognition value and is considered by most buyers of organic foodstuffs as an important product guarantee. A survey undertaken by Danmarks Statistik (February 2000) indicates that 83 percent of consumers know the Ø logo and that 63 percent have confidence in Danish Ø-branded products, although only 19 percent have confidence in Ø-branded imported products, and 38 percent have very little confidence. Furthermore, 85 percent of consumers have little or no confidence in foreign organic products without the Ø logo. In general, confidence in foreign products declines as the geographical distance from Denmark widens. 2.6 Constraints to market development Although the Danish market has developed strongly in recent years, a number of constraints still hinder the full exploitation of market potential. According to the above-mentioned Note on consumption and other research, the following points are significant: Price considerations remain the single most important reason why consumers do not purchase more organic foodstuffs; this is true, although to various degrees, whether consumers are heavy-users, medium-users or light-users. As a rule of thumb, a price premium of 20 percent over conventional products seems to be the maximum accepted in most cases. Recent research found that nearly 40 percent of consumers were willing to pay 10 percent extra for organic food, while only 20 percent were prepared to pay 30 percent. However, for many consumers the price premium in absolute terms may also play an important role. For example, a premium of 20 percent on a low price item, e.g. milk, may correspond to only DKr1-2., whereas the same premium on a pack of meat may correspond to DKr10-20. Quality in the broad sense of the word (appearance, taste, packaging, etc.) remains another very important factor for most consumers; generally speaking consumers expect a similar quality as for a conventional product, although they may expect even higher quality because of the higher price paid for an organic product; in the case of fruits and vegetables, appearance is an important factor.

Availability and time factor are other constraints, either because a number of food items still do not exist in organic form, or because certain organic products are not found in a given consumer¶s usual food store, or even the organic version of a product may be difficult to find in the store, as organic products are often less well exposed. Lack of knowledge about organic food, including standards and regulations for certification, etc. is also a constraint in many cases. 2.7 Sales promotion and advertising As mentioned at the beginning of this chapter, organic food has been promoted jointly by the agricultural sector, the food industry, the retail sector and the Government. Although FDB, the biggest organic retailer, has sold organic food on a small scale since 1981, sales really took off only in 1993. The retail group decided to cut the prices of organic products drastically at the same time as it broadened its product range substantially. A nation-wide marketing campaign, including advertising in national newspapers and television as well as the group¶s own weekly promotion leaflets, was successfully undertaken. Consumer information campaigns and advertising by other major retail organizations also helped to develop the market to its present level. With sales of organic food slowing down (even stagnating in some cases, e.g. fruit and vegetables), according to some traders, since mid-1999 and through 2000, the organic retail trade has started to refocus its activities. A good example is the FDB chain SuperBrugsen, which has selected about 75 stores (out of more than 300 stores) with a high organic profile. The concept includes a large number of organic products (400 items compared to about 200 items in the Lokal- and Dagli¶Brugsen), the appointment of one person in each store being responsible for all aspects of organic marketing, intensive training of staff, etc. and targeted promotion and advertising. Another example is IRMA, which has restructured its organic assortment, focussing on those items that are profitable. In both cases, fresh produce remains amongst the principal items. Similar strategic thinking takes place in other major retail organizations. The discount chain NETTO (part of the Dansk Supermarket group), for example, was reportedly undertaking major promotion activities during the time of this survey. It seems to concentrate on a relatively small number of selected fresh fruits and vegetables. For example, only the following import items were found in a central store in Copenhagen (February 2001): broccoli, cauliflower, parsley, apples, grapes, lemons and oranges. It should be noted that the alternative distribution channels, in particular subscription/box schemes, like aarstiderne.com, are currently promoting fresh fruits and vegetables quite aggressively and are increasing their market shares. 3. Imports of organic fruit and vegetables 3.1 Market access In 1987, the first Danish legislation on organic farming and organic food was introduced with the Act on Organic Farming. Since 1991, however, the production and sale of organic products have been regulated by the EC through Council Regulation (EEC) No. 2092/91 of 24 June 1991 and its subsequent amendments. Additional provisions that apply in Denmark are included in the Executive Order on Organic Farming Production (No. 757 of 3 October 1999) and the Organic Foods Act (No. 118 of 3 March 1999), etc. Only farms approved by the Danish authorities may market and sell their products as organic. They are controlled by the Danish Plant Directorate. Processors, importers and packers must likewise be inspected and approved to handle organic products, which is the responsibility of the Danish Veterinary and Food Administration.

The Ø logo is a state guarantee that the final preparation and packaging of the organic food in question has been carried out by a company in Denmark approved by Danish authorities. In the case of imported products, the necessary permits and certificates are checked. Imported ready-packaged organic food and beverages, whether from the EC or from third countries, are not usually allowed to carry the Ø logo. This explains why most organic foodstuffs are imported in bulk form for processing, preparation or repacking in Denmark. This also applies to fresh organic fruit and vegetables, always sold pre-packed (and not loose) in Denmark, and mostly with the Ø logo, although imported organic fresh produce is also found in food stores without the Ø logo. 3.2 Imports of organic fruit and vegetables There are no official trade statistics for organic products, but figures in Table 2, which are based on trade source information, are meant to provide an overview on imports of organic fresh fruit and vegetables. As shown, total imports amounted to about 12 000 tonnes in 2000, corresponding to almost half of total sales in Denmark. Vegetable imports are somewhat larger than fruit imports, although it seems that growth has been strongest in fruits. Fresh fruit and vegetables constitute one of the most important organic product groups sold in Denmark, and, as shown below, several imported items have become quite significant. Fresh vegetables According to Ecoguide, an estimated 5 200 tonnes of vegetables, roots and tubers were imported in 1998. More recent figures have not been published, but trade sources estimate that imports amounted to 6 000-8 000 tonnes in 2000. Depending on the size of domestic vegetable production, imports have fluctuated considerably throughout the 1990s. Table 2: Imports of organic fresh fruit and vegetables - 2000 (estimates in tonnes) Tonnes Total vegetables Fruits Bananas Other tropical (pineapple, mango, etc.) (Total tropical) Citrus Apples, pears, others temp. zone Total fruit Total fruits and vegetables 500-650 150-200 700-800 or ca. 750 Mainly pineapple and mango Comments 6 000-8 000 or ca. 7 000 Fluctuates according to the size of domestic production and exports

1 750-2 250 or ca. 2 000 1 750-2 250 or ca. 2 000 4 200-5 300 or ca. 4 750 10 200-13 or ca. 11 300 750

Source: Compiled by ITC from trade information (importers, distributors, retailers). The main imported vegetable items (in alphabetic order) are:
y

asparagus (Italy, Spain, the Netherlands, Argentina and Greece); according to an importer, demand is there only during the European season, i.e. roughly April-June, when consumers are used to eating asparagus;

y y y y y y y y y y y y y y y y y y y y y

broccoli (Italy, Spain); beet root (the Netherlands); cabbages (France; Italy, the Netherlands); capsicum (the Netherlands; Italy, Spain, Egypt); carrots (Israel, Spain, the Netherlands, Italy), mainly March-July; cauliflower (Italy); cherry tomatoes (Israel (biggest), Italy, Morocco); corn (Israel, Italy); cucumbers (the Netherlands, Morocco, Spain); fennel (Italy, Spain); garlic (Italy, France, Argentina, India, Egypt, Morocco); green beans (the Netherlands, Spain, Egypt); herbs, e.g. parsley (France, Spain, Italy, Israel, Greece); leeks (France, Belgium, the Netherlands); mushrooms (Italy, the Netherlands); onions (the Netherlands, Italy, Spain), throughout the year; potatoes, including early potatoes (Israel, Cyprus, Italy, France, the Netherlands), imports start from countries in the South to countries in the North, as the year proceeds; salads (France; Italy, Spain, the Netherlands); spring onions (France, Belgium, the Netherlands, Italy, Spain, Egypt); squash/courgettes (Italy, Spain, France, the Netherlands, Belgium); and tomatoes (Italy, Spain, Israel, Morocco).

The main import items are usually carrots, potatoes, onions, tomatoes, cabbage, cucumbers, as well as salads, which together may account for more than half of total vegetable imports. The Netherlands is probably the main supplier of most of these products, followed by France, Italy and Spain. It appears that there are very few suppliers from developing countries, although some products are included in imports from the Netherlands (Dutch re-exports) and maybe other countries. Although domestic producers currently meet only about two-thirds of demand for vegetables, Danish consumers are less confident with regard to the organic origin of imported products and usually buy them only if domestic produce is insufficient or if they are not produced in Denmark, e.g. certain herbs and salads. Fresh fruit Based on trade source information, imports of organic fruits and berries are estimated to have been in the range of 4 500-5 500 tonnes in 2000, which meet about 95 percent of market requirements. Though imports overall do fluctuate from year to year, it is generally of little significance, except for a few items like apples, where local production fluctuates a lot because of climatic and other reasons. The main imported fruit items (in alphabetic order) are:
y y y y y y y y y

apples (Italy, Germany, the Netherlands, Argentina, the United States, New Zealand), mainly during the period March-September; avocados (Israel, South Africa, Spain); bananas (the Dominican Republic, Colombia, Costa Rica, Ecuador, Honduras and Peru), imports include normal bananas, red bananas and baby bananas; clementines (Italy, Spain); coconuts, during the winter months; grapefruit (Israel, Italy, South Africa); grapes (Italy, Spain, France, South Africa); kiwi fruit (Italy, France, New Zealand, Chile); lemons (Greece, Italy, Spain, Israel, Argentina, Uruguay), all year round;

y y y y y y y y y y y

limes (Egypt, the Dominican Republic, Honduras); mandarins (Italy, minor imports from Argentina); mangoes (Israel, Guinea, Brazil); melons (Spain, Italy, Greece); oranges (Italy, Spain, Greece, Argentina); papayas (Israel), very little sales; passion fruit, purple variety (Israel), little sales; peaches and nectarines (Italy, Spain, Greece); pears (Argentina, USA, Italy, Germany, the Netherlands), mainly during the period FebruarySeptember; pineapple (Israel, Guinea), although the problem with ethylene has almost stopped the supply; and plums (South Africa).

Of these, the most important import items are usually apples, lemon, oranges, bananas, pears, clementine and kiwi (together about three-quarters of all fruit imports, according to one importer). With the notable exception of bananas, and to a smaller extent pineapple and mango, there is very little demand for tropical fruit, although there are some sales of papaya and occasionally others. With the exception of tropical fruit, there are few suppliers from developing countries. Most imported non-EC fresh fruits and berries, whether tropical, citrus or temperate zone fruits, is obtained through traders in the Netherlands. 3.3 Importers of organic fruit and vegetables The major importers of organic fruit and vegetables include the following:
y

y y

Solhjulet, which is a wholesaler/distributor of a broad range of organic products (about 1 400 items) to food manufacturers, the catering/institutional sector, smaller retail stores and alternative channels. The company is one of the biggest importers, if not the biggest, of organic fresh fruits and vegetables. It also imports fruit juices and concentrates, mainly apple and orange; Danorganic A/S (see paragraph 1.2); The following are members of Biodania: - Svanholm } As discussed in paragraph 1.2, these importers - Blære Frugt } are basically producers and packers, but they - Marienlyst Gartneri } also import large quantities of foreign produce. - Søris Gård } They are all major suppliers to the major supermarket chains.

y

H. Lembcke A/S (50 percent owned by Fyffes plc of Ireland)is a major importer of conventional fresh fruit and vegetables and is also a significant importer of organic produce.

As mentioned, the following two leading retail groups obtain a major part of their import requirements from Danish importers, although they usually import part of their requirements direct:
y y

NAF International imports organic fruit and vegetables for its members (cooperatives) in Denmark (FDB, including IRMA), Norway and Finland; and Dansk Supermarked Indkøb i/s imports organic fresh fruits and vegetables for føtex and Bilka.

3.4 Constraints to import growth Most, if not all, of the constraints discussed above in relation to the market for fruits and vegetables as a whole also apply to imported products. Imported fruits and vegetables will find buyers in an expanding market more easily than in a declining one. More specifically, the following constraints should be mentioned:

y y

y

y y

Denmark is a small market, and in the case of vegetables, domestic production is relatively high, which limits the import potential considerably; Consumers show a fairly strong preference for domestically grown fruits and vegetables, followed by produce grown as close to Denmark as possible, which disfavours exporters in developing countries, except for tropical and some sub-tropical products, which are not grown in Denmark or in neighbouring countries; Danish consumers¶ strong preference for products carrying the Ø logo likewise disadvantages imported products, unless they have obtained the right to be Ø-labelled through repacking or processing in Denmark; The lack of market informationand marketing intelligencein developing countries, in particular at the producer level; The problem of certificationremains one of the most significant constraints for producers and exporters in developing countries, as Danish importers usually prefer to buy from EC countries or so-called Article 11 list countries (see chapter 1).

4.Conclusions and market opportunities for developing countries Although a small country, Denmark has become an important market for organic foodstuffs with a retail market value estimated at approximately DK3 000 million in 2000, corresponding to an estimated 2.5-3.0 percent of the total food market. This probably represents the highest organic market share in the world. As shown earlier, the market has grown very rapidly between 1993 and 1999, enjoying annual growth rates of between 25-50 percent, according to trade sources. However, from mid-1999 and throughout 2000, market growth slowed down considerably and almost stagnated for some product groups, including fresh organic fruits and vegetables. While some market players felt this strongly, other companies actually managed to increase their market share, and in early 2001 there were positive signs that strong growth, although probably less than in recent years, may resume. It is interesting to see what happened in the Danish market, as a similar development may eventually take place in other markets that are currently growing very rapidly, but where the organic share of food sales has not yet reached the Danish level. During the years of rapid growth Danish supermarkets invested heavily in aggressive promotion, not only through advertising, but also through competitive pricing and extensive product ranges. At the same time organic products were increasingly used by the major retailers to enhance their profiles vis-à-vis consumers. Finally, consumers were becoming more and more conscious about health and environmental issues. There are a number of reasons why market growth started to slow down in 1999. In many ways the market had reached a more mature stage and competition had become significantly stronger, while supermarkets were decreasingly using organic products as part of their overall promotional strategies and as a means to compete between themselves. Supermarkets increasingly insisted on similar profit margins for organic products as for conventional items. In other words, the organic food market is, at least to some extent, joining the mainstream market, as far as supermarket decision-makers are concerned. As mentioned above, there are several indications that the Danish market for organic foodstuffs, including organic fruits and vegetables, will increase further in the years to come. Firstly, the major supermarket chains are refocusing their activities in the area of organic products, typically concentrating and targeting their marketing efforts, e.g. in product assortments, training of staff, attention to specific consumer groups and selection of specific retail outlets with a high organic profile. Secondly, alternative distribution channels, e.g. subscription/box schemes and other forms of direct sales to consumers, like "farm gate" and fresh produce markets, appear to be growing rapidly. For example, the principal subscription sales system has increased its customer base from about 1 200 in early 2000 to more

than 10 000 in early 2001. The Internet is also playing a growing role, whether as a direct sales tool or as a marketing tool. The alternative channels in turn are likely to increase pressure on major supermarket chains to fight for market share. Thirdly, the organic share is still only about 3 percent of total food sales (about 5-6 percent for fresh fruits and vegetables). As shown earlier, heavy-users currently account for 64 percent of total organic sales, while they constitute just 15 percent of all households. This means that 85 percent of households buy just 36 percent of the total, which leaves a big potential for organic products, as more households become heavy-users. Finally, Government policy continues to promote the production and consumption of organic foodstuffs, including sales to the catering and institutional sector (food service), which is still under developed. In conclusion, it is strongly believed that the Danish market for organic foodstuff will continue to grow and might double in size within the next five to seven years. As far as developing countries are concerned, market opportunities exist for most fruit and vegetable products listed in section 3.2, in particular those that are not produced in Denmark or are produced outside the domestic season, although most items are imported throughout the year. The main constraints faced by exporters in developing countries continue to be the certification problem and the strong Ø logo, combined with the fact that almost all importers prefer to buy from other EC countries (including products from third countries) and so-called Article 11 list countries (currently only 6 countries: Argentina, Australia, the Czech Republic, Hungary, Israel and Switzerland), as this appears to be less complicated and less time consuming. Bearing the above in mind, the following suggestions may be useful for developing country exporters of organic fruits and vegetables:
y

y

y

y

To target the Danish market through intermediaries in other EC countries, where certification has already been obtained, while at the same time identifying and building up close relationships with the Danish buyer in order to acquire market knowledge and improve bargaining position; To create a partnership with a major Danish importer, including the organization of certification in the country concerned, storage, transportation, selection of products and target group, how to obtain the Ø logo, etc.; To experiment with new products and packs, in co-operation with Danish importers and distributors, including the introduction of special packs and cuts of fresh fruits and vegetables/salads, as well as processed and semi-processed items, for the catering and institutional sector; and The relatively small Danish market may be suitable for small and medium-sized producers in developing countries who are looking for partners within the EC, but whose production may be too small to meet the requirements of bigger markets. References

Økoguide 1999 (Ecoguide), Michael Borgen www.ecoguide.dk and www.ecoweb.dk. Project report on organic food, Klaus Sall [email protected]. Action Plan II www.dffe.dk/publikationer/Actionplan-II-UK/actindex.htm. Note on consumption and Note on Danish exports (The Organic Service Centre) www.okologiens-hus.dk and www.organic-export.dk. The Plant Directorate www.plantedir.dk.

Annex Selected addresses* Major importers of fresh organic fruit and vegetables Biodania a.m.b.a Grønttorvet 6 DK 2500 Valby (Copenhagen) Tel.: +45 3630 2429 begin_of_the_skype_highlighting 2429 end_of_the_skype_highlighting Fax: +45 3630 2479 [email protected] www.biodania.dk/ (co-operative, coordinates production and sales for producer members) Blære Frugt Kelddalvej 33 DK-9600 Års Tel: 9866 6090 Fax: 9866 6011 DanOrganic A/S Vesterbjergevej 1 DK-7280 Sdr. Felding Tel: 9719 8899 Fax: 9719 8903 [email protected] www.danorganic.dk H. Lembcke A/S Grønttorvet 244-260 PO BOX 427 DK-2500 Valby (Copenhagen) Tel: 3615 6222 Fax: 3615 6223 Gartneriet Marienlyst Tåstrupvej 86 DK-8462 Harlev Tel: 8694 2167 Fax: 8694 1043 N.A.F. International Amba Fanøgade 15 DK-2100 Copenhagen Ø Tel: 3916 9000 Fax: 3916 9080 [email protected] www.naf.dk

+45 3630

Solhjulet Storhedevejen 32, Taul DK-8850 Bjerringbro Tel: 8668 6444 Fax: 8668 6275 [email protected] www.solhjulet.dk Svanholm Import Svanholm Allé 2 DK-4050 Skibby Tel: 4756 6656 Fax: 4756 6667 www.Svanholm.dk Søris I/S Sørisvej 2A DK-3650 Ølstykke Tel: 4733 4003 Fax: 4733 4017 Major retail and distribution companies Dansk Supermarked Indkøb i/s Bjødstrupvej 18 DK-8270 Højbjerg Tel: 8930 3030 Fax: 8672 5487 [email protected] FDB Roskildevej 65 DK-2620 Albertslund (Copenhagen) Tel: 4386 4386 Fax: 4386 4811 [email protected] www.fdb.dk SuperGros A/S Knud Højgaards Vej 19DK-7100 Vejle Tel: 7010 0203 Fax: 7572 3528 [email protected] www.supergros.dk Irma A/S Korsdalsvej 101 DK-2610 Rødovre (Copenhagen) Tel: 4386 3822 Fax: 4386 3809

ISO Supermarked Vermlandsgade 51 DK-2300 Copenhagen S Tel.: 3154 8411 Fax: 3154 3142 [email protected] www.iso.dk NETTO I/S Industribuen 2 DK-2635 Ishøj Tel: 4356 8811 Fax: 4354 3288 Catering and institutional trade (food service) MN Catering Fuglebakken 94 DK-2000 Frederiksberg (Copenhagen) Tel: 3834 3812 Fax: 3834 3822 Økoterminalen Tømrersvinget 16 DK 6360 Tinglev Tel: +45 7364 3350 begin_of_the_skype_highlighting 3350 end_of_the_skype_highlighting www.oekoterminalen.dk/ Flint & Hvids Torslundevej 79 DK-2635 Ishøj Tel: 4068 0111 Fax: 4355 1998 Rønnely Maglebjerg 3 DK-4520 Svinninge Tel: 5926 5658 Fax: 5926 6595 Garneriet Marienlyst (see above for contact details) FDB (see above for contact details) Svanholm Catering (see above for contact details) Solhjulet A/S (see above for contact details)

+45 7364

H. Lembcke A/S (see above for contact details) Box schemes and e-commerce Aarstiderne Barritskovvej 34 DK-7150 Barrit Tel: 7026 0066 Fax: 7026 0067 [email protected] www.aarstiderne.com Selected importers of processed fruit and vegetables Urtekram A/S Klostermarken 20 DK-9550 Mariager Tel: 9854 2288 Fax 9854 2333 [email protected] www.urtekram.dk (dried and canned fruits, nuts and vegetables, etc.) Unikost A/S Over Hadstenvej 58 DK-8370 Hadsten Tel: 8698 0144 Fax: 8698 0048 [email protected] www. Jan-import.dk (dried fruits and nuts, etc.) F-I Mejerifrugt Hestehaven 3 DK-5260 Odense S Tel: 6613 1370 Fax: 6613 4410 (fruits and berries for the dairy industry) Sunprojuice.dk A/S Huginsvej 2-4 DK-4100 Ringsted Tel: 5767 1177 Fax: 5767 1145 [email protected] (fresh and frozen fruits and berries) Hans Kjaer Trading A/S Piniehøj 23 DK-2960 Rungsted Kyst Tel: 4557 1312

Fax: 4557 0048 [email protected] (fruit juices, concentrates and pulp, frozen fruits) Government offices, other organizations and associations, etc. Det Økologiske Fødevareråd (The Organic Foods Council) Strukturdirektoratet Toldbodgade 29 DK-1253 Copenhagen K Tel: 3363 7300 Fax: 3363 7333 Landsforeningen Økologisk Jordbrug (LØJ) (The Danish Association for Organic Farming) Økologiens Hus Frederiksgade 72 DK-8000 Århus C Tel: 8732 2700 Fax: 8732 2710 www.okologiens-hus.dk Økologisk Landscenter (ØLC) (The Organic Service Center) Økologiens Hus Frederiksgade 72 DK-8000 Århus C Tel: 8732 2700 Fax: 8732 2710 www.okologiens-hus.dk www.organic-export.dk Øgruppen (Danish Organic Trade Association) Økologiens Hus Frederiksgade 72 DK-8000 Århus C Tel: 8732 2725 and 4015 0766 Fax: 8732 2710 [email protected] Demeterforbundet (The Demeter Association) Birkum Bygade 20 DK-5220 Odense SØ Tel: 6597 3050 Fax: 6597 3250 Økologiens Hus Frederiksgade 72

DK-8000 Århus C Tel: 8619 9445 [email protected] www.ecoweb.dk/biodyn/ Danish Veterinary and Food Administration Mørkhøj Bygade 19 DK-2860 Søborg Tel: 3395 6000 Fax: 3395 6001 [email protected] www.vfd.dk (Administers organic production rules on labelling and inspection) The Plant Direktorate Skovbrynet 20 DK-2800 Lyngby Tel: 4526 3600 Fax: 4526 3610 [email protected] www.pdir.dk

FRANCE
Introduction With an estimated value of organic food sales of US$850 million, France ranked fourth in 2000 in Europe, behind Germany, the United Kingdom and Italy. Although France was a pioneer country in organic agriculture in the 1980s (see section 1 below), organic food sales grew at a comparatively low rate until the mid-1990s. For this reason, a large share of domestic organic production was exported to other European countries, in particular Germany. However, the organic market has expanded rapidly since the late 1990s. Many industry analysts believe the current high growth rate will continue in the next five years. 1.Organic farming in France In the 1980s France was a pioneer country in organic agriculture, accounting for 45 percent of total EC organic land. However, organic farming did not spread as fast as in other European countries in the 1990s. As a result, in 1999 France ranked fifth after Italy, Germany, Austria and Spain, with only nine percent of the EC organic acreage (Eurostat, 1999). Land farmed organically represented 371 000 ha in 2000, i.e. 1.3 percent of the total agricultural area, which is below the EC average. Between 1999 and 2000, organic acreage has risen by 17 percent, mainly driven by an increase in cereals and forage crops. According to the French Observatory on Organic Farming (ONAB, 2001), there were 9 283 organic farms, accounting for about 1.4 percent of all farms in 2000. Organic fruit and vegetables were cultivated on 27 945 ha (including vines and land in transition to organic agriculture) in 2000, accounting for 7.5 percent of total organically cultivated land. There are no official data on the volumes produced, but French production of organic fruit and vegetables is estimated by the author at some 70 000 tonnes for 1999. ONAB is currently carrying out a more detailed study to assess the volumes of each product.

1.1 Production of organic vegetables Over 2 100 farms grow organic vegetables. The main regions of production are Brittany and, to a lesser extent, the Rhone Valley and the Southwest. The principal products in terms of acreage are potatoes, cabbage, lentils, pumpkins, lettuce and artichokes (see Table 1). Table 1: Acreage of organic vegetables and legumes in 1999 (in ha) Vegetable acreage Organic In transition Organic + in transition Acreage variation1998 to 1999 Legumes & potatoes Lentils Chickpeas Potatoes Fresh vegetables Garlic Artichokes Asparagus Root beet Carrots Celery Cabbage Cucumber Pumpkin Shallot Endives Spinach Beans Melons Turnips Onions Peas Leeks Radish Lettuce Tomatoes Other vegetables Non specified Total Source: ONAB. 1.2 Production of organic fruit 477 161 681 41 96 40 24 79 13 418 3 255 34 85 27 78 47 18 93 63 66 5 123 51 97 1 979 5 054 14 15 108 10 74 44 1 2 0 267 0 21 8 13 0 27 25 3 2 5 11 7 37 1 7 406 1 109 491 176 789 51 170 84 25 81 14 685 4 276 41 99 27 105 72 21 95 68 77 12 160 52 104 2 386 6 165 -5 36 36 -27 1 34 -17 12 36 10 -35 52 39 28 -1 25 26 -9 21 241 59 14 6 -30 71 25 21

Over 2 200 farms grow organic fruit. The main production regions are the Rhone Valley, the Mediterranean rim and the Southwest. Normandy is important for its production of cider apples. The leading products in acreage are chestnuts, apples, plums, apricots, kiwifruit, almonds and cherries. Table 2 provides the breakdown of acreage by product. Table 2: Acreage of organic fruit and tree nuts in 1999 (in ha) Fruit acreage Stone fruits Apricots Cherries Peaches Nectarines Plums Pipfruit Cider apples Apples Pears Tree nuts Almonds Chestnuts Walnuts Hazelnuts Citrus Clementines Oranges Grapefruits and Pomelos Berries Blackcurrants Raspberries Blueberries Figs Strawberries Kiwifruit Other Unspecified TOTAL 118 603 318 37 98 4 53 27 24 41 21 51 122 78 558 3 735 113 390 300 9 5 1 0 69 18 15 33 15 91 68 1 075 2 967 218 1 119 712 65 97 4 44 93 45 61 60 57 223 166 1 756 7 145 26 52 41 17 -6 -0 -17 12 28 29 -3 -6 37 47 64 28 169 416 106 99 157 56 281 591 180 -4 5 16 Organic In transition Organic+in transition 99/98Variation 215 135 103 10 429 121 80 35 4 214 405 225 157 19 567 18 4 13 -5 0

Source: Observatoire National de l¶Agriculture Biologique, 2000. The growth rate of areas cultivated in organic fruit and vegetables has increased in recent years (Table 3). However, growth is not as high as for some other organic product groups, such as cereals, and, depending on the year, is inferior or equal to the national average for all organic products. In particular, the growth rate of organic fruit output is relatively low. This is mainly due to technical constraints. No rotations are possible in

orchards; thus, pest pressure is higher than in organic annual crops. The lack of adequate organic pesticides compounds this problem. However, the level of difficulty varies across products. Organic production is easier with kiwi, tree nuts and mirabelle plums than with pipfruit, such as apples and pears, or stone fruit like peaches (Du sol à la table, 2000). The current trend is for an increase of the area planted in kiwi, apricots, peaches, berries and tree nuts. Table 3: Recent variations in production of organic fruit and vegetables Vegetables fully organic incl. in conversion Fruits (exc. vine) fully organic + in conversion 97 99 2000 99/2000 4 000 ha 5 054 ha 6 257 ha + 19% 4 400 ha 6 165 ha 7 371 ha 3 200 ha 3 735 ha 5 089 ha 4 500 ha 7 145 ha 8 210 ha + 16%

Source: Observatoire National de l¶Agriculture Biologique, 2001. 1.3 Support to organic farming In 1997, the French Government launched a FF60 million action plan to develop organic farming (Plan pluriannuel de développement de l¶agriculture biologique). The Plan has the ambitious objective of increasing the number of organic farms to 25 000 and the area cultivated organically to 1 million ha (3 percent of the agricultural area) by 2005. In 1999 the Ministry of Agriculture doubled, and, in some cases, tripled, financial support to farmers who converted to organic production methods. Research on the production, marketing and consumption aspects of organic fruit and vegetables is also being developed in collaboration with the Ministry of Agriculture, National Institute for Agricultural Research (INRA), Interprofessional Office for Horticulture (ONIFLHOR) and Permanent Assembly of Chambers of Agriculture (APCA). More technical research is carried out by Technical Institute for Organic Agriculture (ITAB) and Technical Centre for Fruits and Vegetables (CTIFL). 2. The French market for organic fruit and vegetables 2.1 Estimate of market size Total sales of organic food in France were estimated at FF6 billion in 1999 (INRA, 2000), which accounted for approximately 10 percent of total organic food sales in the European Community (EC). Preliminary estimates indicate that total organic sales could be close to FF7 billion in 2000. With a population of 60 million, the average per capita expenditure on organic foods was below the EC average of FF106 (Sylvander, 1999). Organic food accounts for less than 1 percent of the household food expenditure. From 1990 to 1997, sales grew on average by 12 percent annually (Sylvander, 1999), while in many other EC countries the growth rate was estimated at 25 percent over the 1991-96 period (Michelsen et al., 1999 and Lampkin, 1999). Fruits and vegetables accounted for 25 percent of retail sales in 1998 - the second largest segment of the organic market after cereals (Figure 1). As total organic retail sales stood at slightly over FF4 billion in 19981, retail sales of organic fruit and vegetables were therefore estimated at approximately FF1 billion. In view of the rapid growth in organic food sales, retail sales of organic fruit and vegetables in 1999 are estimated to range between FF1.1 and 1.2 billion. There are no official data on the quantities of organic fruit and vegetables produced, exported and imported, although the ONAB is planning a study on this topic. It is therefore difficult to provide an estimate of the total volume of organic fruit and vegetables sold on the French market. However, based on various industry sources, the volume of domestic production can be estimated at 70 000 tonnes for the year 1999.

Fig. 1: Share of French Organic Food Market in 1998 % of total organic sales

Source: Bio convernge, 1999 About half of it is directly marketed by farmers, while the other half is marketed by primary market operators (PMOs, operators who buy from French producers or foreign suppliers and sell to wholesalers or retailers). There were some 70 PMOs in 2000 (L¶Echo, 2000). Most of them have been involved in the organic sector for a long time. A few are mainstream conventional fruit and vegetable operators who have diversified into organic fruit and vegetables. The combined volumes sold by PMOs are estimated at some 60 000 tonnes for 1999 (calculation based on the volumes declared by each PMO; see Rivry, 2000; Du sol à la table 2000). A substantial share (estimated at 30 to 35 percent) of the organic fruit and vegetables produced in France is exported to the United Kingdom, Scandinavia, Germany and Switzerland, where prices are reportedly more remunerative than in the domestic market. This trade pattern has existed since the origin of organic farming in France. However, the share of exported production has recently fallen, as domestic consumption has been expanding. Currently, French exports can be estimated at approximately 22 000 tonnes on the basis of exports indicated by PMOs. Imports of organic fruit and vegetables were estimated at some 25 000 tonnes in 1999, based on the survey of the major French importers (see section 3 below). The volume sold on the French market is equal to domestic production, plus imports, minus exports, which gives an estimate of 73 000 tonnes. Figure 2 summarizes the flows of organic fruit and vegetables in the French market. Fig. 2: Production and marketing of organic fruit and vegetables in France (1999) (Author¶s estimates based on industry surveys)

2.2 Marketing and distribution channels The number of specialized natural food stores was estimated at 1 500 in 2000. One-third of these stores belong to retail chains. Biocoop, La Vie Claire and Rayons Verts have a national coverage, while chains, such as Satoriz, Naturalia, Croq¶nature, Dame Nature, La Vie Saine and Eau Vive have a regional coverage. Organic foods were primarily sold in specialized stores until the early 1990s. Since then, however, supermarkets have been increasingly involved in the marketing of these products and have become the leading retail outlet (Figure 3). Retail companies, such as Monoprix, Carrefour, Auchan and, more recently, Leclerc, now carry organic foods. It is estimated that at the end of 1999 large scale retailers accounted for almost half of total organic food sales (Sylvander, 1999). Natural food stores have responded by increasing the average size of their outlets, creating "organic supermarkets". With a number of organic supermarkets (over 200 square meters) estimated at 170 in 2000, France is the European leader. BioCoop had 190 shops in 2000, 100 of which larger than 200 square meters. Fig.3: Organic Distribution Channels in France (in 1998)

Source: GIRA-Point de vente, Dec 1999 Although conventional supermarkets have become prominent in the overall sales of organic foods, the situation is quite different in the specific case of organic fruit and vegetables. These are mainly produced by small-scale

farmers who market their production either directly to consumers or through cooperatives or other forms of organization. As explained above, about half of the domestic production (35 000 tonnes) is directly sold by organic farmers. These direct sales (on the farm or in local markets) were estimated at approximately FF400 million in 1999. On the other hand, the combined turnover (including exports) of primary market operators (those who buy from producers and sell to wholesalers or retailers) was estimated between FF400 and 500 million (Biomag, 2000; Du sol à la table, 2000). At retail level, sales by specialized stores (organic or health foods shops) account for 32 percent of total sales. Biocoop now has 150 organic outlets in France. Sales by supermarket chains accounted from FF150 to 200 million, thus representing almost 20 percent of total sales (Figure 4). The involvement of large-scale retailers has remained limited thus far (see section 2.5 below). A weekly box scheme has been operating in France since 1998. Households subscribing to the scheme (called Le Campanier) receive a weekly basket of organic vegetables and/or fruit. The scheme covers Paris and its outskirts and distributes some 1 100 boxes weekly. The turnover for 2000 is estimated to range between FF3 and 4 million. The parent company is in the Netherlands (see the chapter on the Netherlands for an explanation on the concept). Fig. 4: Main distribution channels of organic fruit and vegetables in 1999 (author's estimate)

2.3 Consumption Consumption of organic foods has been rising steadily in recent years. The main buyers tend to belong in the categories of people aged over 65, middle-class households of 1 or 2 persons, and residents in large cities. A study (Benevise et al., 2000) shows that 73 percent of surveyed households know about the existence of organic foods. Among them, only nine percent regularly consume these products, while 31 percent sometimes do and 58 percent never. A later survey by the consumer magazine Que Choisir (2001) shows that 77 percent of respondents know the term organic agriculture and that 66 percent of them consider it as a sign of quality. Sales of organic fruit and vegetables are growing, although the growth rate is lower than for other categories of organic products. The fastest growing segments are to be found in processed foods. Foods based on milk, meat and soya, for example, are experiencing a strong increase in turnover. The market share of organic fruit and vegetables is comparable to the average market share of all organic foods in France and was estimated at 1 percent in 2000 (L¶Echo, 2000). However, there are differences across products. It seems that vegetables have a higher market share than fruits. For example, lettuce is reported to have a 1.9 percent share, which could be explained by the fact that pesticide residues cannot be eliminated at home by peeling unlike other vegetables. 2.4 Prices

The average retail price for organic products in France for the period under study is 25 to 35 percent higher than for conventional products. While retail prices differ from one outlet to another, specialized organic food stores tend to price their items higher than supermarkets. Indeed, one report mentioned price differences of up to 50 percent in some cases between supermarkets and specialized shops for organic products in general (Piason, 1999). It seems that the price variations with conventional products are even wider for organic fruit and vegetables, which are highly perishable products. It is not rare to find a price difference of 100 percent between an organic fruit and the conventional equivalent. Due to the small supply base, the average price premium for organic fruit and vegetables can vary considerably from one week to another and across regions. The wide variations in prices can be partly explained by a lack of efficiency in the operation of the market, in particular due to the imperfect transmission of information. The Service des Nouvelles des Marchés (SNM) provides information on prices in southern France. Also available are weekly market analyses showing price during the previous week (http://www.snm.agriculture.gouv.fr). Full access to SNM services requires a paid subscription. 2.5 Market Prospects The growth rate of the organic market in France - about 12 percent annually during most of the 1990s - has risen to some 20 percent annually for the past three years. Recent food safety problems, such as BSE, dioxin contamination and the uncertainty surrounding the safety of genetically modified foods have raised demand for organic products. According to a recent survey by Organic Monitor (2001), the organic vegetables market is forecast to grow by more than 30 percent per year. According to the author¶s calculations based on an industry survey, the combined turnover of organic fruit and vegetables at PMO level increased by 20 percent between 1999 and 2000. Bio Convergence has forecasted that the market for organic fruit and vegetables would double between 1996 and 2002, exceeding FF1.2 billion by 2002 (Figure 5). Fig.5: Forecast for Organic Food Market growth 1996-2002 $ million, wholesale prices

Source: Bio onvergence - based on interviews with trade The future of the organic fruit and vegetable market in France will, to a large extent, depend on the attitude of supermarket chains. Although many of these products are currently sold in local open-air markets, future sales growth is expected to come mainly from supermarket chains. Indeed, they seem to be the only type of operators which have the financial, organizational and advertising power needed to develop a new market.

So far, supermarket chains have taken different stances toward selling organics. Although most recognize that it is very positive for their image (carrying organic produce is said to convey the ideas of quality of life, food safety and respect for the environment), few have so far developed a wide range of organic products. This trend is even more marked for organic fruit and vegetables, which account on average for only 0.5 percent of organic food sales in supermarkets, far below animal products (see Table 4). It seems that the lack of supply, irregular deliveries, small-size suppliers and the perishable nature of organic produce has acted as a deterrent to many. Moreover, organic fruit and vegetables are usually sold packed in supermarkets in order to avoid confusion with conventional fruit and vegetables. This further raises their costs and creates problems to many organic producers who are not equipped with packing facilities. This non-aggressive attitude of large scale retailers has been an important constraint to the expansion of organic fruit and vegetables in France, unlike what has been occurring in other European countries (Denmark, Switzerland, Sweden and the United Kingdom), where supermarket chains drive the rapid growth in sales of organics. One notable exception is Monoprix, which strives to occupy the upper end of the market and has developed a range of organic products for more than ten years. The recent arrival of Carrefour, Europe¶s largest retailer, in the organic market is also expected to boost sales. Table 4: Share of selected organic product groups in total organic sales by supermarket Product group Eggs Milk Meat Fresh fruit and vegetables Source: Linéaire, 1999. Until recently, the fact that demand for organic food was higher than supply inhibited operators from investing in promotion. However, the past two years witnessed a rise in promotional activities. One example is le printemps bio (organic Spring), a national, annual promotion week carried out by the organic industry from producers to distributors with the support of the Ministry of Agriculture. Consolidation of the French organic fruit and vegetables sector is expected as the market continues to grow. Mergers of suppliers and vertical integration are forecast. This should lead to economies of scale and closer links between supermarket chains and suppliers. Consequently, the marketing chain is expected to shorten, leading to more efficient distribution and lower retail prices. 2.6 Constraints Several significant constraints must be addressed if organic fruit and vegetable sales are to reach a substantial share of the market. First, the high prices of these products remain a major deterrent for consumers. Most consumers accept to pay a maximum difference of 30 to 35 percent over the price of conventional fruit and vegetables (Hortirève, 1997). As seen in the previous section, the price difference is often greater than this maximum. A second important constraint is the lack of information on the products and organic farming in general. Although more information on this topic has been available recently (through the general press and the media), the share of French consumers who do not know precisely what the concept of organic agriculture covers has increased (Sylvander, 1998). Percentage of organic sales 7 3 1.5 0.5

Third, some consumers believe that there are no differences between organic and conventional products, or at least that it is not worth paying a higher price for the small difference that might exist between the two products. A fourth important issue is the existence of doubts as to the integrity of organic products. A substantial number of French consumers seem to think that the system of control and certification is not totally reliable and that some conventional products may be sold under an organic label. The distrust is higher for imported organic fruit and vegetables than for those that are produced domestically, which can potentially pose a problem to supplying countries. Finally, the lack of availability of organic fruit and vegetables in mainstream shops does not encourage consumption. The French organic horticultural sector is fragmented, and the quantities supplied by market operators are small. As a result, it has been difficult for supermarket chains to forge strong relationships with suppliers, thus discouraging the large-scale retail sector from getting significantly involved in organic fruit and vegetables. 3.Imports 3.1 Regulations and policies Organic fruit and vegetables entering France are subject to the same basic requirements on quality, labelling, sanitary and phytosanitary characteristics as conventional fruit and vegetables. In addition, the importer must be able to demonstrate that the products have been produced and handled in accordance with the recognized EC standards. Organic production, labelling, certification and imports in France are governed by the EC 2092/91 Regulation. Organic products produced in France must be certified by a certification agency accredited by the Ministry of Agriculture. At the time of writing, there were five accredited agencies in France (Ecocert, Qualité France, Ascert International, Qualité Nord Pas de Calais and Usale), but this may change over time. Interested producers and exporters should consult the French Ministry of Agriculture to obtain an updated list of accredited certification bodies. Certified products can carry the Agriculture Biologique (AB) logo issued by the Ministry of Agriculture. The logo shows that importers and distributors are registered with an organic certification body of an EC member state. It is meant to give French consumers clear assurance that the product is genuinely organic. Organic products from EC countries must be certified by a certification body which is officially accredited by the relevant authority in its country of origin. For organic products sourced from countries outside the EC and not on the EC Article 11 list (see Chapter 1, Regulation in the EC) an import certificate is needed. Importers wishing to import organic fruit and vegetables from these countries have to provide the Ministry or one of the above certification bodies with detailed evidence of the equivalence of production rules and effectiveness of control in the country of origin. The French certification body studies the application file and give its opinion to the Ministry for decision. 3.2 French importers of organic fruit and vegetables There are some 15 importers of organic fruit and vegetables in France, some of which import only small quantities (a few hundred tonnes per year) on an irregular basis. Most, however, also buy domestic products. Many importers are located in the Southeast (Perpignan, Cavaillon), a horticultural production area, or in the Rungis wholesale market near Paris, where many fresh produce importers are based (Annex I). The two largest importers are Bioprim and Pronatura in the Southeast. Many importers also have other functions, such as wholesaler or distributor. Many re-export to other EC countries (e.g. BioDynamis, BioPrim, ProNatura). Some importers are organic producers (or cooperatives)

who have decided to develop importing in order to better respond to their clients¶ needs for regular year-round supplies (e.g. AgroBioDrom, FRDP). Some producers have formed associations or joint-ventures across borders, as in the case of Uni-vert (French and Spanish producers) and Imago (Spanish and Moroccan producers). Conversely, some importers have taken over organic farms to secure regular supplies. For example, ProNatura has bought organic farms in Brittany and Morocco, while Exodom has decided to invest in production in Cameroon. 3.3 Current volumes of imports According to the USDA, total imports of organic foods into France in 1998 were valued at FF300 million and averaged 30 000 tonnes (Zygmont, 2000). Total imports account for about 10 percent of the organic food market in value. Some 40 percent of imports in volume come from the so-called "third countries" (i.e. non-EC countries). France¶s trade balance is in deficit for most organic plant products, including fruit and vegetables. There are no official figures of total imports of organic fruit and vegetables, as customs offices do not distinguish organic and conventional products2. According to industry estimates, imports account for approximately one third of the organic fruit and vegetables sold in France. A recent survey estimates that this share could even reach 50 percent in 2001 (World Organic News, 2001). The Ministry of Agriculture (Direction de la Production et des Echanges Internationaux) has calculated figures based on importer requests for import certificates from third countries. However, these figures are not very accurate, as they are only forecasts of imports, and do not correspond to actual imports. Moreover, the data is not sufficient to evaluate the total volume of imports, since it ignores both EC suppliers and the six third countries on the Article 11 list, some of which are important suppliers of organic fruit and vegetables. A large share of imports comes from the EC. Even tropical fruits, which are chiefly produced outside the EC, may be imported into the Netherlands or Belgium and re-exported to France. It is therefore indispensable to carry out direct surveys of the French importers to have a more precise idea of French imports of organic fruit and vegetables. Estimate of total imports based on a survey of French importers FAO conducted a survey of the 15 French importers of organic fruit and vegetables, using questionnaires. The survey had two main goals: to evaluate current imports of organic fruit and vegetables, and to assess the prospects for market growth in the next three years. Although the rate of reply to the questionnaire was relatively low, phone and direct interviews generated the information sought from all importers but two. Importers were asked about the origins and volumes for each product category. The detailed figures by product are presented in Tables 5 and 6. Some 1 000 tonnes of products were of unspecified nature (i.e. no differentiation between fruit and vegetables). When this amount is added to the totals of Tables 5 and 6, a figure of 23 000 tonnes is obtained. Allowing for small quantities that were not mentioned by importers and a few importers who did not reply to the survey, a total of 24 000 to 25 000 tonnes can be considered a reasonable estimate of French gross imports of organic fruit and vegetables in 1999. These imports would account for about one third of the organic fruit and vegetables sold in France. However, the existence of significant re-exports means that the actual share of imported produce is lower. This figure of 25 000 tonnes is very low when compared to gross imports of fruit and vegetables which stood at over 3.6 million tonnes in the same year. Imports of organic fruit are greater than those of organic vegetables. Citrus account for more than half of organic fruit imports. Tropical fruit (pineapple, banana, mango, avocado, passion fruit, papaya and litchi)

account for 15 percent of imports. The most imported temperate fruits are apples, followed by grapes, peaches and nectarines. The most imported vegetables are tomato, broccoli, carrot, courgette and pepper. A table with more details on the countries of origin is provided in Annex III. Table 5: Imports of organic fruit into France by origin in 1999 (tonnes) Origin apple apple, pear apricot avocado banana citrus (undif.) orange lemon tangerine pomelo coconut date grape guava kiwifruit mango melon nectarine papaya passion fruit peach, nectarine pear pineapple strawberry watermelon other fruits Total fruits (rounded) 9 300 63 18 9 1 000 1 900 9 2 900 4 431 242 33 12 386 45 386 4 115 42 7 7 6 1 6 1 1 272 2 30 113 3 2 30 114 3 EC 1 790 100 155 132 343 400 2 966 1 314 733 125 327 1 1 422 581 90 40 25 3 18 908 91 41 447 3 18 200 10 48 561 248 571 Third countries Total Art. 11 countries (*) Other third countries Total third countries 10 15 25 1 814 100 155 380 914 400 3 873 1 405 774 570 3 18 272 2 145 156 10 7 6 1 431 287 386 67 18 9 12 200

Source: FAO survey of importers (2000) (*):Australia, Argentina, Hungary, Israel and Switzerland. Table 6: French imports of organic vegetables by origin in 1999 (tonnes) Origin artichoke EC 48 Third countries Total Art.11 countries(*) Other third countries Total third countries 48

broccoli cabbage carrot celery cherry tomato courgette cucumber endives fennel fresh ginger garlic green beans lettuce onion pepper potato pumpkins sweet potato tomato other vegetables

1 550 93 1 393 32 60 312 4 17 131 5 41 60 138 363 120 3 21 343 756 324 50 205 50 1 122 0 1 150 2 242 400 3 150 58 60 324 50 263 110 1 2 364 400 4 300 2 11 5 2 11 363 12 60 363 16 317 317

1 550 81 1 710 32 60 675 16 17 131 5 43 11 60 467 413 383 113 22 2 707 1 156 9 700

Total Vegetables (rounded) 5 400

Source: FAO survey of importers (2000) (*):Australia, Argentina, Hungary, Israel and Switzerland. 3.4 Trend From 1993 to 1998, French imports of organic foods rose by 20 percent annually. The survey indicated that the growth of organic fruit and vegetable imports in 2000 was some 30 percent. This figure confirms that after a long period of slow growth, the French market has started to pick up and growth is now closer to the trend observed in northern European countries. Importers were also asked what were the products that had the fastest growth in sales and for which demand was likely to continue to grow in the next two or three years. Among tropical fruits, banana and mango were growing relatively fast. The same was true for oranges. However, importers warned that there was already an abundant supply of organic citrus and that the market was about to be in a surplus situation. In the case of bananas, while demand continues to be strong, it seems that it increases less rapidly than supply. Production of organic bananas has been growing rapidly in the Dominican Republic, Colombia, Ecuador, Mexico and other tropical countries. Consequently, prices for organic bananas have decreased significantly since the end of 1999. In temperate fruit, apple imports were growing fast in 2000. As for vegetables, the fastest growing product was carrots. 3.5 Suppliers According to importers, about two-thirds of French imports of organic fruit and vegetables come from EC countries (see Table 7). Spain accounts for half of the total quantity with almost 8 000 tonnes. Spanish exports

are split evenly between fruit (mainly citrus and some stone fruit) and vegetables (courgettes, peppers, tomatoes). Italy is France¶s second largest supplier and mainly supplies fruit (citrus and apples). Together with Spain, it accounts for 87 percent of French imports from the EC. The third EC supplier of France is the Netherlands (mainly vegetables), but imports are far smaller than those from Spain and Italy. Table 7: Origin of organic fruit and vegetables imported into France in 1999 (tonnes) Origin EC EC (undif.) Italy Italy, Portugal, Spain (undif.) Italy, Spain (undif.) Netherlands Spain Spain, Italy, Greece (undif.) EC Total Third article 11 countries Total other third countries Argentina Australia Israel art. 11 Cameroon Dominican Rep Egypt Guinea Côte d¶Ivoire Morocco New Zealand South Africa Tunisia USA Other Total oth. Third country Other unspecif. Grand Total (rounded) Source: FAO survey of importers (2000). (*): the Moroccan export control authority declared about 2000 tonnes for 1999/2000. Total Countries 12 200 9 700 40 100 710 30 70 10 40 30 1 930 2 940 3 180 4 320 30 1 000 1 000 10 20 3120 (*) 1 000 100 3 700 100 9 300 320 50 640 1 010 470 430 20 800 1 140 10 30 30 Fruit Vegetables 1 400 3 000 200 800 200 200 200 3 700 100 5 400 340 F&V (undif.) Grand Total 1 600 3 800 200 1 200 300 7 400 200 14 700 660 50 1 470 2 180 480 430 20 40 100 3 830 30 80 30 40 30 5 110 7 290 1 000 23 000

According to the survey¶s findings, non-EC countries account for one-third of French imports. The main supplying countries by continent are:
y y y y y

Africa: Morocco, Cameroon, Côte d¶Ivoire, Guinea, Tunisia and South Africa; Asia: Israel, Turkey; Latin America and the Caribbean: Dominican Republic and Argentina; North America: United States (small quantity); and Oceania: New Zealand and Australia.

Countries on the Article 11 list accounted for less than 10 percent of imports in 1999. The leading supplier of this group is Israel, with an estimated total of 1 500 tonnes (pomelo, avocado, carrot, potato, tomato). Argentina, the only developing country on this list, ranked second and supplied some 700 tonnes of citrus (oranges) and vegetables (onions) in 1999. Third countries which are not on the Article 11 list accounted for approximately 25 percent of French imports of organic fruit and vegetables in 1999. The leading supplier in this group is Morocco, which accounts for more than half of exports of this group. It supplies vegetables (mainly tomatoes, plus courgettes, peppers, cucumbers and green beans) and citrus fruit (from October to April). Far behind Morocco are Cameroon (pineapple, mangoes, papayas) and the Dominican Republic (bananas). Supplies from the Dominican Republic are underestimated, as some bananas are first imported into the Netherlands or Germany and then re-exported to France. This applies to imports from many third countries. Actual supplies of organic bananas can be estimated at over 1 000 tonnes. The other suppliers export much lower volumes. Among them are Tunisia (vegetables), South Africa (citrus in summer), the United States (apples), Guinea (tropical fruit), Madagascar (tropical fruit), Mexico (oranges), New Zealand (kiwi and apples in summer) and Egypt. 3.6 Re-exports There is a significant re-export trade in organic fruit and vegetables among European countries. France has long been a supplier of Germany, Switzerland and Scandinavian countries. It has exported a significant share of its production and also some products imported from countries with which it has historical trade links (Morocco, Tunisia and West African countries). For instance, Exodom imports from Cameroon and supplies Belgium. Imago imports from Morocco and re-exports to Belgium, Switzerland and Germany. Perpignan in southeastern France is an important hub for international trade in fruit and vegetables, including organic produce. It was not possible to assess the precise shares of re-export for each product, but the volume is high. Some importers declared that they re-export more than 60 percent of the volume marketed (even 80 percent in one case). The most re-exported products are citrus and vegetables from Spain, Italy and Morocco, and tropical fruit from sub-Saharan Africa (Cameroon, Guinea and Madagascar). France¶s export market has evolved differently over the last four years. Demand has decelerated in Germany but has been growing strongly in the United Kingdom and in Scandinavian countries. 3.7 Constraints to import growth Importers indicate that demand is greater than domestic supply for many products. Demand for organic fruit and vegetables in France has been growing rapidly. An annual growth rate of some 20 percent is expected over the next few years. Given the time required to convert to organic production (from two to three years), it seems that a significant share of the growing demand will be met by imports. However, there are a number of constraints to imports from third countries.

Firstly, developing countries wishing to export citrus and temperate fruit and vegetables during the European production season are likely to face strong competition from other EC countries, in particular Spain and Italy. EC countries enjoy duty-free access to France as well as an EC-wide regulation on organic farming, which means that their organic products do not need to be certified twice from a legal point of view. (However, in practice, retailers often require a certification label from their own country.) Production has been growing rapidly in these countries, boosted by support from both national governments and the EC (including financial support during conversion), and it seems that they will soon have enough production in many products to meet demand. Secondly, many French consumers prefer locally-grown foods to imported ones. Organic traders therefore respect this preference and give priority to domestic products. The two largest French organic importers import products from all over the world. However, most of their suppliers are in neighbouring countries, even for a commodity like banana, which is often re-exported from European countries (in particular the Netherlands). When there are no French products available, importers try to buy from neighbouring countries, mainly Spain and Italy. Furthermore, a French magazine (LSA, 1999), echoed doubts about the integrity of imported organic products. The French cooperative association (Confédération française des coopératives agricoles) stated that without appropriate certification controls the term "organic" might be misused in developing countries. Thirdly, French traders wishing to import organic products from third countries which are not on the Article 11 list need to obtain a special certificate from the French authorities for each transaction. Although the procedure has been simplified, it can still take a long time (up to two months), which is too long for products that are highly seasonal and perishable. Fourthly, exporters have to be able to provide steady supply of high quality products. Most traders and retailers now consider that organic products must have a quality equivalent to that of conventional products. For those developing countries which have started organic farming only recently and lack the technical knowledge, exporting perishable organic products and meeting the high quality requirements of the importers is a considerable challenge. The regularity of supply is also a critical requirement of supermarket chains. Finally, it is very likely that in the long term some temperate products which are currently imported will be grown locally; this means that imports of these items would have to face increased competition from local production. The French Ministry of Agriculture has made it a priority to increase domestic organic production, in an effort to reduce France's dependence on imports. 4.Conclusion: market opportunities for developing countries Total retail sales of organic fruit and vegetables in France were estimated to range from FF1.1 to 1.2 billion in 1999. The market has been growing steadily and is forecast to expand by some 20 percent annually for the next 2 years, exceeding FF1.5 billion in 2002. Despite this rapid growth, sales of organic fruit and vegetables still accounted for only one percent of total retail sales of fresh fruit and vegetables in 1999. A notable constraint to their market expansion has been the lack of involvement of large scale retailers, unlike what has been occurring in northern European countries, where supermarket chains drive the rapid growth in sales of organics. However, this could change with the recent arrival of Carrefour, Europe¶s largest retailer, in the organic market. The involvement of conventional producers and market operators in organic agriculture is also set to increase supply. Most trade operators indicate that demand tends to be slightly higher than domestic supply, but that the gap can easily be met by imports, so there is no real shortage on the French market. Imports of organic fruit and vegetables are still low, albeit growing. They were estimated at approximately 25 000 tonnes in 1999, thus representing only 0.7 percent of French gross imports of fruit and vegetables. The main suppliers are European countries (mainly Spain and Italy) and, to a lesser extent, Mediterranean third countries (Morocco, Israel). Imports from other regions are presently low.

Among developing countries, Morocco is the only country which exports significant volumes of organic fruit and vegetables to France. Its main exports are citrus and vegetables (tomatoes, courgettes, peppers). Morocco competes with Spain in the products and the supply period. The Dominican Republic exports organic bananas to France directly and indirectly through importers based in other EC countries. The other developing countries supply smaller quantities (from a few dozen tonnes to a few hundred tonnes annually, depending on the country) of tropical fruits (mangoes, papayas, pineapples, mainly from sub-Saharan Africa), off-season vegetables (tomatoes, courgettes, peppers) and citrus (from Argentina and South Africa). A substantial share of the imported products is re-exported towards northern Europe. Given the time required to convert to organic production (from two to three years), a significant share of the growing domestic demand for organic fruit and vegetables will have to be met by imports. Consequently, the French market offers opportunities to developing countries which can supply good-quality organic produce now and in the short to medium term. In the longer term, the products with the best opportunities are those which cannot be supplied in large quantities by other EC countries. Tropical fruits have a good market potential, as demand is currently much higher than supply. Several importers indicated a lack of good quality organic fruit, such as pineapples, mangoes, avocados, guavas and litchis. Suppliers must bear in mind that they will need to meet quality standards which are as high as those that apply to conventional products. Demand for organic bananas is also high, but potential exporters should pay attention to the rapid expansion of production in Latin America and the Caribbean. Organic citrus also offer interesting outlets, but mainly for off-season citrus. There is no shortage during the European production season due to the strong presence of Spain and Italy on the French market. Some importers fear that there might be a surplus of organic citrus in the coming years. Organic vegetables and temperate fruits seem to have a good market potential if produced and exported off-season, i.e., at the time of the year when European production is low. Therefore, they offer promising opportunities, primarily to countries in the Southern Hemisphere. Notwithstanding the real export opportunities, potential exporters should be aware that there are several important constraints. Organic traders tend to prefer buying domestically or from EC countries. This preference can be partly explained by consumer preferences and doubts about the authenticity of the organic claim for foods produced in countries where the system of organic certification and control is little known. Moreover, traders wishing to import organic products from third countries need to obtain a special certificate from the French authorities for each transaction. Although the procedure has been simplified, it can still take a long time (up to two months), which is too long for products that are highly seasonal and perishable. Some commentators view this process as a non-tariff barrier to trade. However, these constraints should ease as countries establish systems of organic certification that are recognized as equivalent to the European ones. Finally, the higher price of organic produce remains an important constraint, as in other European countries. There is much uncertainty surrounding the future of the price differential with conventional products. Over the last two years, prices for organic fruit and vegetables have remained stable in current value, which means slight erosion when inflation is taken into account. Most traders expect prices to decline to some extent as supply rises to meet demand and the organic distribution chain becomes more efficient through mergers and vertical integration. Some sources in the organic trade sector are concerned about the arrival of large conventional producers in the organic market. They warn that supply will suddenly surge when these producers complete conversion to organic farming. This surge could disrupt a market that is still very small, thus causing prices to fall. Other traders do not share these concerns and consider that demand will continue its strong rise, thereby keeping on a par with supply. Larger quantities of organic produce should give rise to economies of scale at both production and distribution level. As organic production tends to be more labour intensive than conventional production methods, there may be some longer term comparative advantage among developing country exporters who have certified organic products combined with relatively low labour costs. The price decrease is also expected to be caused by the improvement of organic production techniques, which should reduce production costs. However, it is

difficult to say when this will happen, as it also depends on the rate of growth of demand. It is nevertheless probable that the price premium for organic fruit and vegetables will eventually be lower than the current level. Caution is therefore needed. Nonetheless, this expected price trend will not necessarily mean lower profits for organic producers, as higher sales volumes could potentially more than offset lower unit prices. Profits will ultimately depend on the relative variations of prices and quantities. Exporters of developing countries wishing to export organic fruit and vegetables to France should contact importers who are specialized in these products (see list in Annex). Specialized importers know both the administrative process and the technical requirements for handling imports of organic fruit and vegetables. Selling directly through specialized wholesalers or supermarket buyers may be difficult, as these networks are difficult to penetrate and are often not aware of the constraints faced by exporters in developing countries. References Bénévise, F. et Tuddenham, M. (2000) Deleau, P. (1999) Du sol à la table (2000) L¶ECHO des Min (2001) L¶ECHO des Min Hortirève (1997) "L¶agriculture biologique: une production en forte hausse mais qui reste inférieure à la demande", Institut Français de l¶Environnement, Orléans, France "Le bio fait recette: jusqu¶à quand?", Points de Vente, Décembre 1999, nº 789 "Fruits et légumes: des premiers résultats encourageants", Juin 2000, nº 45, Le Haillan, France Dossier Bio, janvier 2001, n. 164, Paris, France "Les tendances d¶achat des fruits et légumes biologiques", Octobre 2000, Paris, France "La consommation des légumes biologiques en France (mémoire d¶étudiants ENITH) (Dir. M. Briard et B. Sylvander) "Marché des produits biologiques en France en 1999", A. Le Floc¶h-Wadel et B. Sylvander, INRA-UREQUA, décembre 2000, Nantes, France "Organic food and beverages: world supply and major European Markets", International Trade Centre UNCTAD/WTO Geneva, Switzerland "The European market for organic products: growth and development", Universität Hohenheim, Stuttgart, Germany Résultats 2000. Observatoire National de l¶Agriculture Biologique. Juillet 2000. Paris, France The French Market for Fresh Organic Vegetables, 2001 "France: organic food report 1999", USDA Foreign Agricultural Service, Washington DC, USA N. 380, March 2001, Paris, France "Fruits et légumes frais - Les raisons de s¶emballer", BioMag, Août/Sept. 2000, nº 3, Paris, France "Process of concentration commences in France", Eurofruit Magazine, April 2000, London, UK "Les tendances de la consommation de produits biologiques en France et en Europe: conséquences sur les perspectives d¶évolution du secteur", INRA-UREQUA, Le Mans, France

INRA (2000)

ITC UNCTAD/WTO (1999) Michelsen, J., Hamm, U., Wynen, E. and Roth, E. (1999) ONAB (2001) Organic Monitor (2001) Piason, F.J. (1999) Que Choisir (2001) Rivry, C. (2000) Seguin, T. (2000) Sylvander, B. (1999)

Sylvander, B. (1998) World Organic News (2001) Zygmont, J. (2000)

"Le marché des produits biologiques et la demande", INRAUREQUA, Le Mans, France French veg market set to grow by 30%, 10/05/01, Agra Europe Ltd, London, UK "US organic fruit: export opportunities and competition in the international market", USDA Foreign Agricultural Service, Washington DC, USA Annex I Addresses of organizations in the organic sector

AFAQ-ASCERT-INTERNATIONAL Certification body 116, avenue Aristide Briand 92225 BAGNEUX Tel: +33 1 46 15 70 68 begin_of_the_skype_highlighting 68 end_of_the_skype_highlighting Fax: +33 1 46 15 70 69. BIOCONVERGENCE Umbrella organization for processors and traders 16, rue Claude Bernard 75321 PARIS Cedex 05 Tel: +33 1 44 08 72 99 begin_of_the_skype_highlighting 99 end_of_the_skype_highlighting Fax: +33 1 44 08 17 00 [email protected] BIOCOOP Consulting Firm 17 rue Théophile Gautier 65000 TARBES Tel: +33 1 44 07 72 99 begin_of_the_skype_highlighting 99 end_of_the_skype_highlighting Fax: + 33 1 44 08 17 00

+33 1 46 15 70

+33 1 44 08 72

+33 1 44 07 72

CREDOC - Centre de recherche pour l¶étude et l¶observation des conditions de vie Research Centre for the Study and Observation of Living Conditions 142 rue du Chevaleret 75013 PARIS Tel: +33 1 40 77 85 61 begin_of_the_skype_highlighting +33 1 40 77 85 61 end_of_the_skype_highlighting Fax: + 1 40 77 85 09 DEMETER France Association (farmers, processors, tradres, consumers) B.P. 286

67606 SLESTAT Cedex Tel: +33 3 88 82 88 78 begin_of_the_skype_highlighting 78 end_of_the_skype_highlighting Fax: +33 3 88 82 88 78 ECOCERT Certification body B.P. 47 32600 L'ISLE JOURDAN Tel: +33 5 62 07 34 24 begin_of_the_skype_highlighting 24 end_of_the_skype_highlighting Fax: +33 5 62 07 11 67 [email protected] http://www.ecocert.fr (under construction) Fédération Française de la Diététique French Dietetic Federation: federation of several professional unions organizing the DIETEXPO trade show in Paris 14 terrasse Bellini 92807 PUTEAUX Tel: +33 1 47 75 03 09 begin_of_the_skype_highlighting 09 end_of_the_skype_highlighting Fax: +33 1 47 55 03 09 Ministère de l¶Agriculture et de la Pêche Ministry of Agriculture and Fisheries 30 rue Las Cases 775340 PARIS Cedex 07 Tel: +33 1 49 55 57 03 begin_of_the_skype_highlighting 03 end_of_the_skype_highlighting Fax: +33 1 49 55 56 01 Web: www.agriculture.gouv.fr Direction Générale de l¶alimentation Bureau des labels et des certifications de produits 175, rue du Chevaleret 75646 PARIS Cedex 13 Tel: +33 1 49 55 80 03 begin_of_the_skype_highlighting 03 end_of_the_skype_highlighting Direction des Politiques Economique et Internationale Bureau des signes de qualité et de l¶agriculture biologique 3, rue Barbet de Jouy 75349 PARIS SP 07 Tel: +33 1 49 55 59 02 begin_of_the_skype_highlighting 02 end_of_the_skype_highlighting Fax: +33 1 49 55 57 85 Contact: Frédéric UHL

+33 3 88 82 88

+33 5 62 07 34

+33 1 47 75 03

+33 1 49 55 57

+33 1 49 55 80

+33 1 49 55 59

Service des Nouvelles des marchés/Centre de Perpignan Avenue de Milan 66000 PERPIGNAN Tel: +33 4 68 56 50 60 begin_of_the_skype_highlighting 60 end_of_the_skype_highlighting Fax: +33 4 68 56 64 50 [email protected] www.snm.agriculture.gouv.fr Mouvement de Culture Bio-Dynamique (DEMETER) Group of professionals and consumers involved in organics 5, Place de la Gare 68000 COLMAR Tel: +33 3 89 24 36 41 begin_of_the_skype_highlighting 41 end_of_the_skype_highlighting QUALITE FRANCE Certification body 18, rue Volney 75002 PARIS Tel: +33 1 42 61 58 23 begin_of_the_skype_highlighting 23 end_of_the_skype_highlighting

+33 4 68 56 50

+33 3 89 24 36

+33 1 42 61 58

Observatoire National de l¶Agriculture Biologique (ONAB) APCA Sous- Direction des Politiques Agricoles et Rurales (SDPAR) 9, avenue George V 75008 PARIS Tel: +33 1 53 57 11 58 begin_of_the_skype_highlighting +33 1 53 57 11 58 end_of_the_skype_highlighting Fax: +33 1 53 57 10 05 Contact: Guillaume QUEGUINER QUALITE Nord - Pas De Calais Certification body 241-1, avenue de la République 59110 LA MADELEINE Tel: +33 3 28 38 94 81 begin_of_the_skype_highlighting 81 end_of_the_skype_highlighting Fax: +33 3 28 38 90 87 USALE Certification body Place du Champs de Mars 26270 LORIOL SUR DRÔME Tel: +33 4 75 61 13 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +33 4 75 85 62 12.

+33 3 28 38 94

+33 4 75 61 13

ETRAB - Syndicat Europeen des transformateurs et distributeurs de l¶agriculture biologiques European professional union of processors and distributors of organic food 40 av. des Terroirs de France, 75 611 PARIS cedex 12. Tel.: +33 1 44 74 53 56 begin_of_the_skype_highlighting +33 1 44 74 53 56 end_of_the_skype_highlighting Fax: +33 1 44 74 52 76 http://www.setrabio.com/setrab/default.htm Synadis - Syndicat National des Distributeurs spécialisés de produits Biologiques et Diététiques Union of distributors involved in organics 62, rue Fonneuve 33500 LIBOURNE Tel: +33 5 57 25 38 14 begin_of_the_skype_highlighting +33 5 57 25 38 14 end_of_the_skype_highlighting Fax: +33 5 57 51 47 17 Importers/Distributors/Wholesalers Agrexco France Sarl 16 rue du Séminaire PO Box 312 94153 RUNGIS Cedex Tel: +33 1 41 80 82 82 begin_of_the_skype_highlighting 82 end_of_the_skype_highlighting Fax: +33 1 46 86 99 59 (Importer, organic products from Israel) AgroBioDrom Quartier Saint Martin 26270 Loriol Tel: 33 4 75 63 86 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: 33 4 75 63 86 01 [email protected] Alterbio France Sarl 5 rue Levasseur ZI Saint Charles 66000 PERPIGNAN Tel: +33 4 68 68 38 38 begin_of_the_skype_highlighting 38 end_of_the_skype_highlighting Fax: +33 4 68 68 38 29 accueil: [email protected] Service commercial: [email protected] Service communication: [email protected]

+33 1 41 80 82

33 4 75 63 86

+33 4 68 68 38

http://www.alterbio.com (Producer, importer) Arcada Domaine du Blazy 47130 PORT SAINTE MARIE Tel: +33 5 53 87 20 24 begin_of_the_skype_highlighting 24 end_of_the_skype_highlighting Fax: +33 5 53 87 26 18 [email protected] (Importer-distributor, packer) Contact: Mr Roland Charade BioCash Distribution 281 avenue du Marché de la Gare MIN Espace n.13 34047 Montpellier Tel: 33 4 67 58 68 58 begin_of_the_skype_highlighting 58 end_of_the_skype_highlighting Fax: 33 4 67 58 59 70 (Import, wholesale) Bioprim 530 Av de Milan ZI du Grand SaintCharles 66000 PERPIGNAN Tel: +33 4 68 54 79 79 begin_of_the_skype_highlighting 79 end_of_the_skype_highlighting Fax: +33 4 68 54 57 68 [email protected] (Importer, packer and wholesaler) Bonneterre (Group Distriborg) 1 place des Planteurs 94538 RUNGIS Cedex Tel: +33 1 49 78 25 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +33 1 46 87 91 68 [email protected] (Import, Distribution) Contact: Eugenie Nurit Dynamis France 54 avenue de la Villette 94637 RUNGIS Cedex Tel: +33 1 45 60 43 44 begin_of_the_skype_highlighting 44 end_of_the_skype_highlighting Fax: +33 1 46 87 44 05 [email protected] Contact: Mr Markus Zeiher (Import, Export)

+33 5 53 87 20

33 4 67 58 68

+33 4 68 54 79

+33 1 49 78 25

+33 1 45 60 43

Exodom 28 bd Jules Carteret Lyon 6907 PO Box 7025 69348 LYON Cedex 07 Tel: +33 4 37 28 73 50 begin_of_the_skype_highlighting 50 end_of_the_skype_highlighting Fax: +33 4 37 28 73 54 [email protected] http://exodom.com Contact: Mr Jean-Pierre Imele (Import, Export) FRDP Clos de Capely, les Valayans 84210 Pernes les Fontaines Tel: 33 4 90 12 10 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: 33 4 90 12 10 09 Contact: Mr Montluçon (Import, distribution) IMAGO TUTTI VERDI Marché Saint Charles PO Box 5129 66031 PERPIGNAN Tel: +33 4 68 68 40 40 begin_of_the_skype_highlighting 40 end_of_the_skype_highlighting Fax: +33 4 48 68 40 48 [email protected] (Importer) Contact: Mr Garcia Pronatura MIN 68 PO Box 70 84953 CAVAILLON Cedex Tel: +33 4 90 78 73 04 begin_of_the_skype_highlighting 04 end_of_the_skype_highlighting Fax: +33 4 90 78 73 14 [email protected] http://www.pronatura.com (Importer and trader) Contact: Patrice Brechette Richard de Nyons 40, avenue des terroirs de France 75012 Paris Tel: 33 1 44 74 54 97 begin_of_the_skype_highlighting 97 end_of_the_skype_highlighting Fax: 33 1 44 74 51 53 [email protected]

+33 4 37 28 73

33 4 90 12 10

+33 4 68 68 40

+33 4 90 78 73

33 1 44 74 54

UNI-VERT Route de Bellegarde 30129 MANDUEL Tel: +33 4 66 20 75 25 begin_of_the_skype_highlighting 25 end_of_the_skype_highlighting Fax: +33 4 66 20 75 26 [email protected] Contact: Mme Sophie or Mr Hans (Producer, importer) ViaBio 21, rue des Iscles BP 15 13834 Chateaurenard Cedex Tel: 33 4 90 94 12 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: 33 4 90 94 02 68 E-mail: [email protected] Hypermarket/supermarket chains selling organic produce Auchan 200 rue de la Recherche 59656 VILLENEUVE-D¶ASCQ Cedex Tel: +33 3 20 67 55 78 begin_of_the_skype_highlighting 78 end_of_the_skype_highlighting Fax: +33 3 28 37 61 39 E-mail: [email protected] Carrefour PO Box 75 Zae de Saint Guénault 1 rue Jean Mermoz 91002 EVRY Cedex Tel: +33 1 60 91 37 37 begin_of_the_skype_highlighting 37 end_of_the_skype_highlighting Fax: +33 1 60 79 44 98 Centre Leclerc 149 rue Saint Honoré 75001 PARIS Tel: +33 1 46 62 52 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +33 1 46 62 96 00 Cora/Loceda Hyperselection PO Box 81 Domaine de Beauboug 77183 CROISSY-SURBEAUBOURG Tel: +33 1 64 62 65 00 begin_of_the_skype_highlighting

+33 4 66 20 75

33 4 90 94 12

+33 3 20 67 55

+33 1 60 91 37

+33 1 46 62 52

+33 1 64 62 65

00 end_of_the_skype_highlighting Fax: +33 1 64 80 40 51 Monoprix SA 3 rue Paul Cézanne 75008 PARIS Tel: +33 1 40 75 15 15 begin_of_the_skype_highlighting 15 end_of_the_skype_highlighting Fax: +33 1 40 75 15 16 Specialized retail chains for organic products Aux Rayons Verts (60 shops) 41 rue Léon Blum ZA La Neuvillette 51100 REIMS Tel: +33 3 26 87 22 90 begin_of_the_skype_highlighting 90 end_of_the_skype_highlighting Fax: +33 3 26 04 88 79 Biocash Distribution (Central Buying) 281 avenue du Marché Gare MIN Espace No 13 34047 MONTPELLIER Cedex 1 Tel: +33 4 67 58 68 58 begin_of_the_skype_highlighting 58 end_of_the_skype_highlighting Fax: +33 4 67 58 59 70 Biocoop (180 shops) 22 cours Gambetta 65000 TARBES Tel: +33 5 62 34 10 37 begin_of_the_skype_highlighting 37 end_of_the_skype_highlighting Fax: +33 5 62 44 15 96 http://www.globenet.org/adome/0bioccop.html La Vie Claire (Group Distriborg - 120 shops) 35 avenue du1er mai 91127 PALAISEAU Cedex Tel: +33 1 64 53 83 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +33 1 64 53 83 01
1

+33 1 40 75 15

+33 3 26 87 22

+33 4 67 58 68

+33 5 62 34 10

+33 1 64 53 83

A report by USDA (Zygmont, 2000) indicates that sales of organic foods are expected to reach US$1.25 billion (over FF8 billion) in 2000, but this figure seems overestimated.
2

The European Commission has recently approved a regulation which will require Member

States to record the quantities of organic products entering the countries. However, this system is not expected to be implemented before 2002, at the earliest.

GERMANY
Introduction Germany is the country with the longest tradition in organic farming and marketing for health products. The first reform shops (Reformhäuser) opened more than 100 years ago as part of a food reform movement. About 25-30 years ago the first natural food stores were founded. Mainly carrying organic products, they expressed criticism of industrial society and presented an alternative to conventional grocery trade. Together with growing organic agricultural production they experienced double-figure growth rates. Only many years later (early 1990s) supermarkets entered the field. Today, Germany is one of the largest organic markets in the world, though currently with lower growth rates than other countries like the United Kingdom. Being one of the largest markets, Germany is also one of the biggest importers of organic products. The recent BSE crisis and other food scares appear to have a positive impact on the organic market because of rising health awareness among consumers. 1. Organic farming in Germany 1.1 Main production regions Whereas there was a decline in the number of conventional farms, decreasing from 648 803 in 1990 to 429 000 in 1999, or 34 percent, organic agriculture spread very quickly during the last 10 years and reached 12 740 farms by the end of 2000 with 546 023 ha under organic production. The organic share of 3.2 percent of the total agricultural area and 2.9 percent of the total number of farms (2000) is slightly above the western European average. Approximately 80 percent of all organic farms in Germany are members of one of the nine German organic producer organizations. AGÖL (Arbeitsgemeinschaft Ökologischer Landbau) is the umbrella organization of some of the producer organizations. Most of the organic farms are located in the federal states (Länder) of Baden-Württemberg and Bavaria in southern Germany, a pattern that developed after the Second World War. After the reunification of Germany in 1990, organic farming also spread quickly in the former German Democratic Republic (GDR) where organic farming was previously prohibited. Nevertheless, a very small number of farms had practised organic farming methods and nowadays, farmers convert to organic agriculture there, especially in agricultural regions with poor soils (classified as disadvantaged areas). The designation of large conservation areas with restrictive conditions on agriculture that can be easily fulfilled by organic farmers has lead to further conversion. Now the highest ratio of organic farms is in eastern Germany. 1.2 Main products As there are no statistical data on the production or consumption of several organic crops, this subject has to be approached through data on land use by organic farms and data on sales of different product groups. The production side does not necessarily reflect the main product groups sold in the market place since many products are imported.

Table 1 presents the cropping pattern of farms in German producers' associations, where orchards and market gardens are included. Table 1: Cropping pattern on farms of German producers¶ associations in 1997/98 Crop Total of which: Cereals Legumes Root crops: - Potatoes Oil Plants Vegetables: - Vegetables for processing - Carrots - Cabbage - Onions - Red beets Fruit: - Fruit for processing - Pome fruit - Small fruit Medicinal herbs, herbs Wine Permanent grassland Special crops 89 824 14 858 4 371 - 4,119 9 115 4 408 - 504 - 666 - 186 - 206 - 381 2 710 - 460 - 393 - 127 267 1 578 155 705 9 055 44.0 2.6 0.8 2.6 1.2 25.4 4.2 1.2 Hectares 354 006 Percentage of total organic acreage

Source: ZMP, 1999 (www.organic-europe.net). The most important organic crops in Germany (based on hectares planted) are cereals, followed by legumes and oil plants. Unfortunately, no data are available on value, as yields and values of the different crops can be very distinct from their relative land surface. For example, vegetables and, especially, fruit can have a very high value but their share of agricultural land surface is very small. From ZMP figures (Zentrale Markt- und Preisberichtstelle für Erzeugnisse der Land-, Forst- und Ernährungswirtschaft GmbH), it appears that out of the total of 354 006 ha in German associations, 4 408 ha were under organic vegetable production and 2 710 ha under organic fruit production, which corresponds to approximately only 2 percent of the total surface under organic farming. This compares to a share of 18 percent for organic fruits and vegetable in total organic food sales. There were 1 385 organic fruit orchards and around 650 organic market gardens in Germany at the end of 1999 out of a total of 11 748 farms which were included in a survey on land use and cropping patterns. However, not only organic market gardens are producing vegetables. Most of the organic farms produce some basic vegetables like potatoes, onions and carrots, because crop rotation schemes on organic farms include more crops than on conventional farms.

From Table 1 it can be deduced that potatoes, carrots, beet roots and cabbage are important vegetables in German organic production and consumption, although the number of hectares might not correspond relatively with the yield or value. The most important organic fruit crop in Germany is apples, produced and sold from September through April. There are no data available on total sales or the growth rate of production of the different crops. 1.3 Government policy and support systems for organic farming Due to the federal structure of Germany (16 Bundesländer) there are many different approaches to supporting organic farming. In every Land (Federal State), a different range of programmes is offered to help organic farmers, and the requirements for participation in equivalent programmes may differ. The support given to organic farming covers production, certification and marketing. From 1989, organic farmers in Germany received support under the EC programme for more extensive agriculture when converting to organic agriculture. From 1994 farmers could receive support under Council Regulation (EC) No. 2078/92, concerning agricultural production methods compatible with requirements for the protection of the environment and the maintenance of the countryside. Not only converting farms, but also existing organic farms could participate in this programme. The annual subsidies for arable farming and grassland were about DM 245 (¼125) per hectare (DM196, or ¼100, for existing farms) and DM1 176 (¼600) for permanent crops (DM980, or ¼500) for existing farms). The different Länder could diverge from these sums to a certain extent. Since the year 2000, support has been granted under the Rural Development Regulation of Agenda 2000 (Council Regulation [(EC)] No. 1257/1999). Besides direct support to farmers, marketing initiatives are also supported. Subsidies are granted for producer-based marketing organizations, for processing and for development of marketing concepts (i.e. regional marketing initiatives). With the current BSE crisis, new initiatives in favour of organic farming may be introduced, as public awareness has been raised. The new Minister of Agriculture and Consumers' Protection has recently set a goal of 20 percent for the organic share of agriculture to be reached within the next 10 years. 1.4 Production constraints Until recently, the organic market was a niche market. Only in the last few years have big supermarket chains entered the field. In the past, this market was not sufficiently attractive for producers in general to consider conversion to organic farming on a large scale. Besides, organic farming requires a certain conviction, while many conventional farmers are convinced that their farming techniques are not harmful to the environment and that they follow good agricultural practices. The costs of conversion to organic farming, including a heavier workload, are not fully covered by the subsidies to farmers. Especially intensive conventional farms with higher costs of conversion were often not attracted by the programmes. Also, a certain consciousness or spirit goes along with organic farming, and people have to be committed and enthusiastic. On the other hand, intensive agriculture is being criticized, especially intensive animal production. Because of these changes, organic farming will most probably experience an upswing. 1.5 Destination of production Very few raw materials and fresh organic products are exported. Only nine percent of the domestic production of wine is exported, six percent of the cereals and three percent of the fruit production. This means that nearly

the entire domestic organic production is consumed in Germany. However, exports of processed and packaged organic food products (e.g. important organic brands, like Rapunzel) are considerable. 2.The German market for organic fruit and vegetables According to Bundesverband Naturkost Naturwaren, the most important product groups sold in specialized natural food shops in 1999 in terms of value were fruit and vegetables with an 18 percent share of total organic sales. These are followed by milk and milk products (16 percent) and bread and bakery products (12 percent). Another 49 percent of sales are divided among products like tea, coffee, sweets, oils, fats, honey, spreads, pasta, dried fruits, nuts etc. The share of meat and sausages amounted only to 4 percent in 1999. These figures are expected to at least double in 2001 due to the BSE crisis, provided supply is available. 2.1 Sales of organic fruit and vegetables Due to the absence of reliable statistical data, it is very difficult to make exact statements on sales. One study conducted by Michelsen, Hamm, Wynen and Roth (1999) states that the market share of organic vegetable sales was 2.6 percent (by value) of the total fruits and vegetable market in 1999. There was a growth rate of approximately 15 percent per year between 1993 and 1997 for organic vegetable sales in Germany. The annual growth rate for organic fruit sales between 1993 and 1997 was 8 percent, while the market share (value) amounted to 2 percent in 1999. If we consider that natural food store sales of fruits and vegetables were 18 percent of their total organic sales, the total value of their organic fruits and vegetable sales amounted to DM250 million in 1999. Assuming that these stores have a market share of 35 percent of total organic sales, total sales of organic fruit and vegetables could be extrapolated to about DM700 million in 1999. In the year 2000, it was estimated that there was a total turnover of organic products of DM4.5 billion, which implies a share of fruit and vegetables sales of around DM800 million. Exact data on sales per product and their growth rates are not available. By means of interviews with some market players it was attempted to draw an approximate picture of the situation but not all market partners were willing to give data. In particular, the large supermarket chains are extremely secretive on this point. The supply of organic vegetables at wholesale level is currently very varied: year round, retailers can order at least 100 different vegetable products, including potatoes, herbs and mushrooms, while about 30 to 50 different fruits are offered year round. The most important basic vegetables sold in Germany are:
y

Potatoes, carrots, onions and cabbage.

The most important specialty vegetables are:
y

Tomatoes, zucchini, cucumbers, cauliflower, broccoli and lettuce.

The most important fruits sold are:
y y

A year-round assortment from different production regions in the world: o Apples, kiwis, avocados and lemons Seasonal: o Oranges, pears, nectarines, peaches, raisins, strawberries, cherries and plums

The most important tropical fruits are:

y y

Year-round: o Bananas and coconuts Seasonal: o Mangoes and pineapples

Apples and bananas are by far the most consumed fruits, followed by oranges (by quantity). The total organic banana market in Germany can be estimated at around 10 000 tonnes per year. Organic apple consumption is estimated to be about 13 000 tonnes (3 000 tonnes of which are imported). This compares to a conventional German apple production of 970 000 tonnes. The most important vegetables are potatoes followed by carrots, red beets and onions (by quantity). Calculated from an average yield and a certain percentage of imports, the quantities sold in tonnes of the following vegetables for fresh consumption can be very roughly estimated: Potatoes: around 75 000 tonnes Carrots: around 35 000 tonnes Red beets: around 18 000 tonnes Onions: around 10 000 tonnes Cabbage: around 10 000 tonnes The agricultural season in Germany is from March to October, which means that most of the crops grown in the fields are harvested in October, before the first frost sets in. Potatoes, carrots, onions and apples are harvested until autumn and then stored and sold until spring. If possible, German wholesalers, retailers and consumers prefer to buy German or even regional products, rather than products from distant suppliers. The biggest German production of fruits and vegetables is from June to October which coincides with a considerable decline in sales within Germany due to the summer holiday season. Sales drop by up to 30 percent from May to October. Highest sales are in winter, especially before Christmas. This means that foreign exporters of fruits and vegetables can profit from the peak season. 2.2 Prices and supply of organic fruit and vegetables There are no official data on price levels for organic products. However, ZMP (Zentrale Markt- und Preisberichtstelle für Erzeugnisse der Land-, Forst- und Ernährungswirtschaft GmbH, www.zmp.de) in Bonn collects prices from organic farmers and publishes them in the Ökomarktforum, weekly and monthly. The following table shows prices of selected products sold at farm gate to consumers. Table 2: Selected vegetables and fruits sold in Germany at farm gate to consumers in April 2001 Product Prices in DM including VAT from: 1.20 2.40 2.50 1.95 2.20 Prices in DM Average No. of farmers including VAT to: price that supplied data 3.00 4.50 4.95 4.00 4.90 2.10 3.23 3.38 2.96 3.21 208 38 85 68 91

Potatoes (1 kg) Carrots (kg, washed) Onions (kg) White cabbage (kg) Red beet

(kg) Lettuce (piece) Apples (kg) 2.50 3.00 3.50 6.95 3.22 4.53 16 297

Source: ZMP, Ökomarktforum No. 17. The prices collected at farm level include fruit and vegetables sold on farm directly to the consumer, the wholesaler and the retailer. Prices on farm in Germany generally vary considerably for the same product. The wholesale prices for the same product tend to differ less as there is more transparency and competition between the companies and fewer market players. At the retail level, prices differ mostly according to the type of outlet. A natural food store is often more expensive than an organic supermarket or a conventional supermarket that sells organic products. The latter try to stay in a range of premiums of about 20 percent over conventional products, though often they do not. The availability of organic products may differ from conventional ones. If, for example, there is a sufficient supply of conventional tomatoes but a shortage of organic ones, the latter are much more expensive and the price premium is much higher. The countries supplying organic fruit and vegetables often differ from those that supply conventional products. Whereas in the conventional market most of the fruits and vegetables can be delivered year round, this is still not the case for organic products. For example, there is usually a shortage of organic cucumbers in winter, which leads to much higher prices than for conventional ones. This applies also to organic tomatoes in winter, when demand is high and supply is low. In summer, the supply of German organic lettuce can lead to keen competition and falling prices due to the vacation season when consumption is low. While price premiums can vary significantly, producer prices tend to stagnate, and costs for logistics tend to fall as bigger quantities are traded. As a result, prices at retail level tend to decline. Products that consumers expect as part of a basic assortment (such as potatoes, onions, carrots, cabbage, salads and apples) differ in price depending on whether they are available from German production (cheaper) or have to be imported. Other basic products that have to be imported are lemons, kiwi and bananas. Seasonal basic products include oranges (not available during the summer months from Italy and Spain). Whether there is a demand for organic oranges at that time must be weighed against the difficult summer market situations. For tropical products, like mangoes and pineapples, consumers are less price sensitive. 2.3 Distribution channels for organic fruit and vegetables Organic fruit and vegetables are mainly sold through the following channels, listed according to their importance:
y y y y

Natural food stores (35 percent share of the overall organic market); Supermarkets (24 percent share of the overall organic market); On-farm sales and market stalls (20 percent share of the overall organic market); Box schemes.

The remaining 21 percent of the overall organic market are marketed through other outlets such as bakeries, butchers, etc. Sales of organic fruits and vegetables in natural food stores and supermarkets are about 18 percent of all organic products. On-farm shops, market stalls and box schemes sell primarily vegetables and fruits.

2.3.1 The natural food stores In Germany, there are about 2 000 natural food stores that carry a wide range of certified organic products. Usually, they offer the biggest assortment of organic fruit and vegetables in the trade. Most German products are delivered to the stores in returnable boxes and sold loose. Many of the natural food stores still do not have cooled presentation facilities, so often vegetables do not look as fresh as they could. However, this situation is steadily improving. Total sales at natural food stores rise by about 10 percent per year. 2.3.2 The supermarkets Most of the supermarket chains carry organic food products. For vegetables and fruit, they often concentrate on basic products like potatoes, carrots, onions, apples, bananas and kiwi. In order to distinguish organic products from conventional ones, they are often sold pre-packed or labelled under the supermarkets¶ own organic label. Supermarkets are believed to have a big potential for organics, especially if they enlarge their assortment and give fruit and vegetables more shelf space. There are several supermarket chains that carry organic fruit and vegetables like Rewe, Edeka, Tengelmann and Tegut. Rewe is the most important distributor of organic products in Germany with, according to trade sources, a turnover of DM3 million, and is also believed to be the biggest retailer of organic fresh fruit and vegetables. Rewe sells 200 different organic products. Their main fresh products are potatoes, onions, lemons and carrots. Bananas from the Dominican Republic are in the assortment. Edeka¶s best selling vegetables are potatoes and carrots. Tegut is a smaller supermarket chain based in Fulda. In general, they carry the biggest, freshest and best presented organic assortment with about 1 000 organic products. They sell up to 70 fruit and vegetable products. In some outlets organic produce account for 15-30 percent of total fruit and vegetable sales. 2.3.3 On-farm shops, market stalls and box schemes Consumers like to visit farm shops as they want to buy directly from the producer and thus have a higher degree of confidence in the organic origin of the product (although most of the products sold in farm shops seem to be bought from wholesalers and are not their own production). The assortment comprises mostly fresh products, i.e. fruit, vegetables, milk products, cereals, bread and bakery products. Very often they are the biggest clients for wholesalers, as far as vegetables and fruits are concerned. Quite often farm shops also run market stalls on the local markets. Some of them have started box schemes, which means that consumers get boxes with mixed vegetables and fruits of the season or boxes with a complete assortment sent to their homes. This is practical for people who have little time to go shopping or to visit the organic farmer who is usually located far away. Box schemes are also believed to have a big potential in Germany, and their growth rate is considerable (30-40 percent per year), according to trade sources. 2.3.4 Other trade channels for fresh fruits and vegetables i) Catering Fresh fruit and vegetables are also sold to catering companies. This is still not very common but is increasing. In specialized processing companies, the fruit and vegetables get washed, cut and packed in plastic bags without any chemical preservatives. It is very important to work in clean conditions as the hygienic requirements are very high. After production and packaging, the fruit and vegetables are sold to catering companies and used over the next four-five days. Catering companies also use frozen organic vegetables. This channel is not yet well developed, as in the past there were not many good processors/packers. This is changing now. Companies like Käpplein in Waghäusel or Bios in Hamm now have big and modern facilities.

Other obstacles for sales through this trade channel are the higher prices for organic products as food services for employees in canteens require low prices. Aramark is planning a general organic line for their 500 canteens throughout Germany. Other catering companies offering organics include Eurest and companies that supply, for example, the universities. ii) Internet Some companies like UnitednatureX (currently the biggest in this field) have started to trade organic products via the Internet. They also sell fresh products. The ordered products are delivered to the consumers at home, as in the case of box schemes. As this is a new business, the sales development in this channel has to be observed, and predictions are difficult. The UnitednatureX b2b (business to business) and b2c (business to consumer) platforms together reached a turnover of DM33.32 million (¼17 million) for all organic products last year. The share of fresh products is supposed to be much smaller than in shops or market stalls. The best selling fruits and vegetables are: bananas, kiwi and cucumbers. A number of b2b and b2c platforms are involved in the whole range of products, including imported products. Web addresses are provided in Annex II. 2.4 Opportunities and constraints to market development at retail level With the ongoing BSE crisis and other food scares, conventional markets for meat are collapsing. Consumers are becoming more health conscious, and the organic market is therefore predicted to grow faster than previously expected. According to recent press releases, the Bundesverband Naturkost Naturwaren (BNN) expects an overall market growth of about 25 percent in 2001. This is significant, as a considerable market growth is necessary to enable more farmers to convert to organic farming with the potential to sell their products in the organic market at premium prices. The higher prices of organic products are one of the biggest obstacles to market growth, though prices tend to fall due to the increasingly large quantities traded. Also, not all consumers have trust in organics. As there is a large number of different organic labels in Germany, consumers tend to get confused. However, with the ongoing BSE crisis, consumers are becoming more informed on organic farming. But it is still often difficult for consumers to find a good selection of organic products as the number of natural food stores is not that big and not all supermarkets carry organic products or they only offer a small assortment. As the Government wants to promote organic farming, the whole organic sector should benefit in the longer run. There are also discussions on having one organic national label only, which would lead to less consumer confusion and help further promote organic products. 2.5 Prospects for processed fruits and vegetables In the organic market place there is a big variety of processed organic fruit products, while processed organic vegetables are available to a lesser extent. Processed organic fruit and vegetables include:
y y y y y

Dried and soft-dried fruits (for snacks, muesli and muesli bars); sultanas, figs, dates, apricots, mangoes, bananas and pineapple: the main brands are Rapunzel, Davert and Mavideniz; Dried vegetables, e.g. as soup ingredients; Preserves (fruits and vegetables); Pulps and purees (for juices, spreads, dairy products, banana and mango puree for baby foods, tomato products, etc.); Concentrates (aseptic or frozen; e.g. pineapple, orange, apple);

y y

Frozen products (either as ingredients or individually quick frozen [IQF]), berries and vegetables for sale in retail or catering packs); and Single strength juices (companies like Voelkel and Beutelsbacher offer a wide variety of single and mixed juices, the most sold juice being apple juice).

The market for these products is probably growing at roughly the same pace as the overall organic market, although growth may be stronger for some products. Nevertheless, the potential of different products strongly depends on product quality. In the organic market processed fruits and vegetables play an increasingly important role as "organic" consumers eat more vegetable products than other consumers. 3. Imports of organic fruit and vegetables 3.1 Market access As an EC member country, Germany applies the European regulations. Currently, the new regulation that forbids the use of ethylene in organic pineapple production (for flowering induction) poses a severe problem to the German market. Since February 2001 the market for fresh organic pineapples has collapsed nearly completely. The potential market demand of more than 1 000 tonnes cannot be supplied as most of the fresh pineapple producers need to use ethylene and can therefore no longer be certified. In addition, all fresh fruits and vegetables in Germany must be traded and labelled according to categories (Handelsklassen I and II). These categories refer to the size and optical appearance of the products. Some years ago, most of the organic products fulfilled only Handelsklasse II, due to their smaller size or spots on the skin. Nowadays, traders require Handelsklasse I, which means that fruits and vegetables must be very well graded (with a higher loss for the producer), before they enter the trade. 3.2 Imports of organic fruit and vegetables Demand for organic products is much higher than organic production in Germany. The highest import ratio in comparison to the domestic market is for fruits, with an estimated 56 percent, followed by oilseeds (50 percent), vegetables and wine (36 percent), poultry (20 percent) and cereals (10 percent). Few meat and milk products are imported. This may be partly because there was no EC Regulation for animal organic products until 2000. The market situation may change in the future. In the case of cereals, eggs, poultry and many vegetables, Germany mainly buys from neighbouring countries. Forty-five percent of all fruits and vegetables sold in Germany are imported. If we consider the extrapolated figure of total organic fruit and vegetable sales of DM800 million, the value of imported organic fruits can be estimated at about DM360 million. The main supplying countries for organic fruits and vegetables in Germany are Spain, France and Italy, while imports from the other countries are less important:
y y y y y y y

Spain: citrus, avocados, tomatoes, zucchini, spring vegetables, such as carrots, onions, potatoes, etc.; Italy: citrus, apples, raisins, tomatoes, zucchini, spring potatoes and vegetables; France: vegetables, such as cauliflower, broccoli, salads, onions, herbs, garlic, etc. and fruits, such as citrus, nectarines, raisins, pears, etc.; Netherlands: tomatoes, cucumbers, salads, chicory, mushrooms, cabbage and apples; Dominican Republic: bananas, mangoes and coconuts; Israel: citrus, avocados, all sorts of spring vegetables (potatoes, onions, carrots etc.), tomatoes and a range of exotic fruits and vegetables; and New Zealand: kiwi and apples.

There is currently no crop that can be delivered 100 percent year round from German production. Even apples have to be imported in small quantities in the autumn to fill the gap between demand and supply. The most important fruits traded in Germany are bananas, with a market volume of approximately 10 000 tonnes. Mangoes, pineapples and papayas each represent only about one-tenth of this quantity. Bananas now come mainly from the Dominican Republic. Previously, the main supplier was the Canary Islands (Spain), but the production is now sold only to mainland Spain. Besides, these bananas are more expensive than the ones from the Dominican Republic, due to higher labour costs. Fresh pineapples and papayas come from Cameroon, Guinea and Ghana. How the pineapple market develops in the future will depend mainly on the decision of the EC regarding the use of ethylene. If it remains forbidden, only a sharply reduced supply of organic pineapple will be available. Mangoes are supplied by the Dominican Republic, Brazil, Cameroon, Guinea and Israel. Mangoes could be sold in much larger quantities if available throughout the year. The German consumer prefers to buy the big mango varieties (calibre 8-14), whereas the smaller mangoes, which are often produced in developing countries, are not accepted by the market. Table 3: Overview of the most important imported fruits and vegetables by origin Product Fruits Banana Apple Mango Pineapple Papaya Kiwi Citrus Avocado Countries of Origin Dominican Republic, Colombia Germany, Argentina, New Zealand Israel, Cameroon, Guinea Cameroon, Guinea, Ghana Cameroon, Guinea, Ghana New Zealand, Italy Italy, Spain, Greece, Argentina Spain, Israel, South Africa Quantities imported (Estimates) approx. 10.000 tonnes approx. 3 000 tonnes approx.1 000 tonnes potential approx. 1 000 tonnes approx. 500 tonnes n.a. approx. 10 - 15 000 tonnes n.a. approx. 2 000 tonnes approx. 7 000 tonnes imports relatively low German tomatoes only in the summer months, around8090% imported same situation as for tomatoes

Vegetables Onion Germany, Holland, Spain, Argentina, Israel Carrot Potato Tomato Cucumber Germany, Israel, Italy, Spain Germany, Egypt, Spain, Israel Germany, Holland, Italy, France, Spain, Israel Germany, Holland, Belgium, Spain, Morocco, (Israel: mini-cucumbers) Green Beans Germany, France, Italy, Morocco, Egypt

a few hundred tonnes

Author¶s own sources, 2001. 3.3 Main importers and wholesalers specializing in organic fruit and vegetables

y

y y y y

y

Lehmann Natur is one of the leading importers and distributors to supermarkets, specialized in fruits and vegetables. They offer pre-packed vegetables and fruits under supermarket brands but also sell under their own label, "Ökogarten"; A group of wholesalers has founded Biotropic, an importer of organic tropical fruits and vegetables, for sale to natural food stores; Based at the Münchner Großmarkt is Ernst Weber, an importer of fruits and vegetables (fresh, deep frozen and processed) from tropical and European countries; Heribert Schramm is an importer based in Kehl, close to the French border. The company imports products from Europe and also exotic products and works as a wholesaler; Wholesalers specializing in fresh fruit and vegetables include Landlinie, TerraFrischdienst and Handelskontor Willmann. Handelskontor Willmann, based in Stuttgart, mainly trades Demeter products. They are primarily a wholesaler, and to a lesser extent, importer. Landlinie also imports, and the manager organizes and supports projects in Morocco. Organic wholesalers carry up to 150 fruit and vegetable products; Dennree in Töpen is the biggest national wholesaler which sells an entire range of organic products, including fresh fruit and vegetables to natural food stores. They are partners of Savid (banana exporters) and distribute their bananas from the Dominican Republic.

A number of regional wholesalers supply natural food stores with the entire range of products. They buy from importers and trade mainly regional fresh products, if possible. Usually, supermarkets import organic products via their associated importers for conventional products. 3.4 Product specifications in Germany Fresh fruits and vegetables are traded according to categories (Handelsklassen, see above) which means that they have to be classified and marked by the producer/packer. In supermarkets products are usually sold prepacked and labelled to distinguish them from the conventional products. Labelling and pre-packing is done by the importer/distributor in Germany, e.g. Lehmann Natur or Landlinie. In natural food stores returnable boxes are used for German and regional products which are mostly sold loose. German traders are obliged to return all packaging material at their own cost. This also applies to retailers. Returnable boxes are therefore attractive for the organic trade. 3.5 Prices at import and wholesale level According to trade sources, price premiums range between 10-50 percent at import levels, but can also be lower or higher, depending on actual supply. The tendency is that prices are falling due to economies of scale (bigger quantities, logistics and handling becomes more efficient). This does not necessarily mean that producer prices are also falling. Table 4 below shows examples of sale prices at wholesale level of fruits and vegetables, which are mainly imported (compiled from July 2000-April 2001). If the margins of importers (around 10-20 percent) and wholesalers (around 35 percent for all organic products) are deducted, one can very roughly estimate the price importers might pay producers (including transport, insurance, etc.). However, it should be noted that all import prices also heavily depend on quality and quantities traded and should not be the only basis on whether to convert to organic farming. Export prices should always be based on a serious cost calculation. As market prices differ very much according to qualities, quantities, etc., a market check (sending samples to importers) helps exporters to obtain a substantial feedback on the actual market situation. Table 4: Sale prices at wholesale level of fruits and vegetables (July 2000-April 2001)

Product Bananas (18 kg) Mangoes (4-5 kg) Oranges (9-12 kg) Lemons (6 kg) Potatoes (5-15 kg) Carrots (10-12 kg) Onions Red beet (5-6 kg) Cabbage (white)

Origin Dominican Republic

Approximate price/unit DM3.20 - 3.30/kg year round DM6 - 8/kg DM2.20 - 2.99/kg DM2.20 - 2.70/kg DM0.95-1.90/kg(early potatoes) DM1.29 - 1.99/kg DM1.75 - 1.85/kg DM1.55 - 2.50/kg DM1.39 - 2.30/kg DM1.35 - 2.10/kg

Pineapples (10-11 kg) Cameroon, Guinea Italy, Morocco, Spain, Greece Italy, Spain Germany, Spain Germany Spain Germany, Italy, Argentina Germany, Spain Germany, Spain

Dominican Republic, Brazil, Guinea DM5 - 7/kg

3.6 Opportunities and constraints to import growth Imports of fruits that are not yet supplied year round like mangoes could easily increase if there were enough supply. Also interesting are counter-season products (mainly German winter time), particularly specialty vegetables (see 3.2) and processed fruits and vegetables (frozen, pulps, preserves, dried, etc.) with a market potential, as described earlier. Constraints to import growth are poor quality (optical aspects, bad grading, damaged products upon arrival to Germany). A major problem for importers is the lack of reliability of exporters as well as problems with communication, packaging and logistics. 4. Market opportunities for developing countries 4.1 Main opportunities and constraints As mentioned earlier, the most important tropical fruit traded is banana. At the moment, the Dominican Republic is the main supplier but importers are always looking for new sources. For organic banana production it is important to find a production site which is free of Black Sigatoka, a disease which cannot be dealt with in organic farming. Good logistics, access to a harbour with regular services to Europe in cooled containers, etc. is also very important. The shipping time should not be too long as organic bananas are more perishable than conventional ones. The supply of mangoes and avocados does not presently cover the demand. Pineapples currently can only be sold as organic if carbide is not used for floral induction. Apples and pears are interesting products during the off-season in Europe (only valid for countries in the Southern hemisphere). Oranges from developing countries might have a chance during the European off-season (June-September), although July/August is the low selling season in Germany. Also consumers expect oranges to be of orange colour and therefore tropical green oranges are not accepted by the German buyers. Tomatoes and specialty vegetables are also interesting to supply during the German winter time, provided that efficient logistics and cooling chains are at hand. Some exotic fruits can find a niche market. Market introduction might be difficult, though, and costly if the products are not yet known to the German consumer. In general, the German consumer is not as open to new products as consumers in the Netherlands or the United Kingdom, for example. Unknown products are very costly to introduce to the consumer. In addition, it is very important to fulfil the quality requirements of the market, and to produce the required varieties at the time they are needed.

4.2 Entry strategy and recommendations for export development Before starting an export business, it is important to analyse what products can be produced best in the country concerned, as competition between different developing countries and with European countries (e.g. for oranges, lemons, avocados, etc.) will occur. An up-to-date check of the target markets before conversion is crucial. Nevertheless, the problem is that between the market check and the possible first shipment three years may pass because of the necessary conversion period. Also, a market has to be found for the products in conversion, which are generally not traded in the organic market in Germany. This usually makes it difficult for exporters/producers. Therefore, it is advised that exporters look for an importing partner and that they develop an export project together. A good starting point may be to visit an organic trade fair, such as Biofach (Nuremberg) to get personal contacts in the business. Furthermore, producing good quality products is very important (good post-harvest handling, cooling facilities, packaging, good, fast and reliable logistical chain are needed). It is important to have the necessary technical know-how in organic production. A feasibility study conducted by experts is very useful before taking the decision to convert to organic agriculture. Contact details of consultants in your country or international ones can be obtained from IFOAM and GTZ (see Annex I). Annex I Selected addresses Major importers, traders, processors Lehmann Natur GmbH Am Churkamp 20 D - 47059 Duisburg Tel.: +49 - 203 - 932 550 begin_of_the_skype_highlighting 550 end_of_the_skype_highlighting Fax: +49 - 203 - 932 5599 [email protected] www.lehmann-natur.com (importer, distributor for supermarkets) Biotropic (see Lehmann Natur) (importer for natural food stores) Ernst Weber Naturkost Postfach 75 09 54 D - 81339 München Tel.: +49 - 89 - 746 3420 begin_of_the_skype_highlighting 3420 end_of_the_skype_highlighting Fax: +49 - 89 - 746 34222 [email protected] (importer and wholesaler) Naturkost Schramm Ludwig-Winter-Strasse 6 D - 77767 Appenweier Tel.: +49 - 7805 - 96680 begin_of_the_skype_highlighting 96680 end_of_the_skype_highlighting Fax: +49 - 7805 - 966880 [email protected] www.naturkost-schramm.de (importer and wholesaler)

+49 - 203 - 932

+49 - 89 - 746

+49 - 7805 -

Landlinie Lebensmittel Vertrieb GmbH & Co. KG An der Hasenkaule 24 D - 50345 Hürth Tel.: +49 - 2233 - 974510 begin_of_the_skype_highlighting 974510 end_of_the_skype_highlighting Fax: +49 - 2233 - 9745199 [email protected] www.landlinie.de (importer and wholesaler) Terra Frischdienst Gross-Berliner-Damm 83 D - 12487 Berlin-Johannisthal Tel.: +49 - 30 - 631 05 16 begin_of_the_skype_highlighting 16 end_of_the_skype_highlighting Fax: +49 - 30 - 631 69 75 (wholesaler) Handelskontor Willmann GmbH Tafingerstr. 8 D - 71665 Vaihingen Tel.: +49 - 7042 - 9570 begin_of_the_skype_highlighting 9570 end_of_the_skype_highlighting Fax: +49 - 7042 - 957129 (wholesaler) Dennree Versorgungs GmbH Hofer Str.11 D - 95183 Töpen Tel.: +49 - 9295 - 180 begin_of_the_skype_highlighting 180 end_of_the_skype_highlighting Fax: +49 - 9295 - 1850 [email protected] (wholesaler and importer) Rewe AG Domstr. 20 D - 50668 Köln Tel.: +49 - 221 - 1490 begin_of_the_skype_highlighting 1490 end_of_the_skype_highlighting Fax: +49 - 221 - 149 9000 (distributor and supermarket chain) Bios Gabriele Rempe GmbH Grossmarkt-Frischezentrum D - 59010 Hamm Tel.: +49 - 2381 - 543250 begin_of_the_skype_highlighting 543250 end_of_the_skype_highlighting Fax: +49 - 2381 - 5432540 www.bios-hamm.de (processor of fruits and

+49 - 2233 -

+49 - 30 - 631 05

+49 - 7042 -

+49 - 9295 -

+49 - 221 -

+49 - 2381 -

vegetables for catering companies) Bio-Betrieb Käpplein GmbH Am Fernmeldeturm 6 D - 68753 Waghäusel Tel.: +49 - 7254 - 60975 begin_of_the_skype_highlighting 60975 end_of_the_skype_highlighting Fax: +49 - 7254 - 950228 (processor of fruits and vegetables for catering companies) Beutelsbacher Fruchtsaftkelterei GmbH Birkelstr. 11 D - 71384 Weinstadt-Endersbach Tel.: +49 - 7151 - 995150 begin_of_the_skype_highlighting 995150 end_of_the_skype_highlighting Fax: +49 - 7151 - 9951555 [email protected] www.beutelsbacher.de (producer of juices) Voelkel KG Pevestorf 23 D - 29478 Höhbeck Tel.: +49 - 5846 - 9500 begin_of_the_skype_highlighting 9500 end_of_the_skype_highlighting Fax: +49 - 5846 - 95050 (producer of juices) Hipp-Werk Münchner Str. 58 D - 85276 Pfaffenhofen a.d.Ilm Tel.: +49 - 8441 - 757 481 begin_of_the_skype_highlighting 481 end_of_the_skype_highlighting Fax: +49 - 8441 - 757 492 (producer of baby foods) Grüner Punkt Naturkost GmbH Schwanenkirchner Str. 28 D - 94491 Hengersberg Tel.: +49 - 9901 - 1842 begin_of_the_skype_highlighting 1842 end_of_the_skype_highlighting Fax: +49 - 9901 - 1875 [email protected] (distributor of fruit pulps and aromes)

+49 - 7254 -

+49 - 7151 -

+49 - 5846 -

+49 - 8441 - 757

+49 - 9901 -

Organizations, institutions and certifiers in the organic sector IFOAM (International Federation of Organic Farming

Movements) Ökozentrum Imsbach D - 66636 Tholey-Theley Tel.: +49 - 6853 - 5190 begin_of_the_skype_highlighting 5190 end_of_the_skype_highlighting Fax: +49 - 6853 - 30110 [email protected] www.ifoam.org GTZ (Gesellschaft für Technische Zusammenarbeit) Programmbüro Sozial- und Ökostandards Postfach 5180 D - 65726 Eschborn Tel.: +49 - 6196 - 791462 begin_of_the_skype_highlighting 791462 end_of_the_skype_highlighting Fax: +49 - 6196 - 797173 [email protected] www.gtz.de (German Technical Assistance to Developing countries) Ökoprüfzeichen (ÖPZ) GmbH (German organic label) Rochusstrasse 2 D - 53123 Bonn Tel.: +49 - 228 - 9777700 begin_of_the_skype_highlighting 9777700 end_of_the_skype_highlighting Fax: +49 - 228 - 9777799

+49 - 6853 -

+49 - 6196 -

+49 - 228 -

Selection of certifiers, that are very experienced in inspection and certification or building up of local certification bodies outside of Germany (developing countries) BCS Ökogarantie GmbH Cimbernstrasse 21 D - 90402 Nürnberg Tel.: +49 - 911 - 424390 begin_of_the_skype_highlighting 424390 end_of_the_skype_highlighting Fax: +49 - 911 - 492239 [email protected] www.bcs-oeko.de Ecocert GmbH Sulte 20a D - 37520 Osterode Tel.: +49 - 5522 - 951 161 begin_of_the_skype_highlighting 161 end_of_the_skype_highlighting Fax: +49 - 5522 - 951 164 [email protected]

+49 - 911 -

+49 - 5522 - 951

GfRS (Gesellschaft für Ressourcenschutz) Prinzenstr. 4 D - 37073 Göttingen Tel.: +49 - 551 - 58657 begin_of_the_skype_highlighting 58657 end_of_the_skype_highlighting Fax: +49 - 551 - 58774 [email protected] www.gfrs.de IMO Institut für Marktökologie Paradiesstr. 13 D - 78462 Konstanz Tel.: +49 - 7531 - 915273 begin_of_the_skype_highlighting 915273 end_of_the_skype_highlighting Fax: +49 - 7531 - 915274 [email protected] Annex II

+49 - 551 -

+49 - 7531 -

Sources of information on the German organic market (Web sites, magazines, directories...)
y y y y y

y y

y

www.n-bnn.de (Bundesverband Naturkost Naturwaren; Association of Organic traders in Germany) www.ifoam.org (Web site of IFOAM with interesting links) www.naturkost.de (Web page for consumers of Verlag Gesund Essen GmbH in Schaafheim) www.green-tradenet.de (E-commerce, b2b- platform and information) www.zmp.de (Web site of ZMP - Zentrale Markt- und Preisberichtsstelle GmbH, Rochusstrasse 2, D 53123 Bonn, Tel.: +49 - 228 - 977 7173 begin_of_the_skype_highlighting +49 - 228 - 977 7173 end_of_the_skype_highlighting, Fax: +49 - 228 - 977 7179, E-mail: [email protected] www.eco-world.de (market information and organic directory) www.biopress.de (Web site and magazine about the organic market) bioPress Fachmagazin für Naturprodukte, bioPress Verlag, Schulstr. 10, D - 74927 Eschelbronn, Tel.: +49 - 6226 - 4351 begin_of_the_skype_highlighting +49 - 6226 - 4351 end_of_the_skype_highlighting, Fax: 40047, E-mail: [email protected] www.gtz.de

Selected b2b and b2c platforms: www.unitednaturex.com www.green-tradenet.de www.naturabella.com

ITALY
Introduction Italy presents a success story in organic fruit and vegetable production, taking advantage of favourable climate and agronomic conditions and close geographic access to major markets. Organic farming growth in Italy is rapid and the domestic organic market is taking off. Relatively high financial support for organic producers has played an important role in the rapid production development.

Unfortunately, bureaucratic impediments have thus far made it very difficult for importers to bring organic fruits and vegetables directly into Italy. Most organic import trade is therefore triangular. As the Italian consumer is not wedded to purely local organic produce there are opportunities in the rapidly growing but so far small market for organics. Article 11 certification would make the exporters' job far easier. 1.Organic farming in Italy Since 1998, Italy is the European country with the largest area farmed organically as well as with the highest number of organic farms. The Italian organic sector has exhibited one of the largest average annual growth rates in Europe in the past years: the certified organic and in-conversion utilized agricultural area (UAA) has increased from about 5 000 hectares in 1985 to some 960 000 hectares in 1999, almost 200 times as much. A similar path is found for the number of organic farms, passing from 600 to above 49 000 in the same period. Data for 2000 give an organic area of 1 040 377 hectares.

Figure 1. The development of organic farming in Italy

Source: 1985-1992 estimates from various authors; 1993-1999 GRAB-IT & FIAO. Growth in the number of organic farms and in organic land area was relatively slow and steady in the first years, but since 1992, annual growth has been significantly higher than before, with some slowdown in the past two years. The increasing growth seems related to the implementation of EC Reg. 2092/91 on certification, which took off in 1992 and was finalized in 1995, as well as EC Reg. 2078/92 on support to environmentally friendly farming - including organic farming - which was implemented between 1993 and 1996 in the different regions of Italy. Although not all certified land has received support according to EC Reg. 2078/92, the support paid to organic farmers is still one of the major causes of Italy¶s large organic sector. A domestic market for organic food did not develop until recently, so growth in the number of Italian organic farmers seems partly built on financial support and partly on exports. The individual regions of Italy have developed quite differently: major growth has recently taken place in the southern regions and on the islands, which altogether account for about 70 percent of total organic UAA in Italy (INEA, 1999). No detailed official information is available on acreage and production of organic horticulture in Italy. The Ministry of Agriculture provides data, which are not disaggregated at the crop level but only on the basis of farm types. Horticultural holdings1 in 1999 represented 6.7 percent of total organic UAA.

In general, organic horticulture is not as policy-supported as cereal and fodder production. Despite the estimated income losses due to conversion to organic farming, vegetable farming generally does not receive higher payments than other land. Organic fruit orchards, on the other hand, generally receive higher subsidies than other crops, but often these still do not cover all income losses related to organic fruit growing. However, only part of the total output goes into organic market channels, and, therefore, is paid for with price premium. There is room for further reduction in producer prices resulting from a larger supply entering the market in the future. The main organic fruit produced in Italy are citrus (mainly lemons and oranges), apples and peaches, while the main vegetables are tomatoes, carrots, lettuce, cauliflower, onions and fennel, though, again, no data on actual production exist. More than 50 percent of fruit producers are located in Sicily; other regions specialized in organic fruit production are Campania and Friuli, though in these regions the organic sector is weak. In Emilia Romagna traditionally a strong fruit producing region - organic fruit production is still not very developed, though its importance is recently increasing with the entrance in the organic market segment by two large cooperatives Conerpo and Apofruit. Vegetable production follows a similar geographic pattern, given that most organic vegetable producers are located in the southern regions of Sicily and Apulia, together totalling more than half of the land of vegetable farmers (Zanoli, 2000). Trends of organic fruit and vegetable production are positive, though recently retail sales are increasing at higher rates (over 40 percent per year) than production. 1.1 Policy support Support for organic farming is provided within the EC framework (EC Reg. 2078/92 until 2000; and EC Reg. 1257/99 as from 2001). In 19982, the organic support measure accounted for 27.5 percent of the total EC Reg. 2078/92 agro-environmental expenditure: 175.2 million euros were paid to 539 528 ha (approximately 325 euros/ha on average). It has to be noted, though, that in most cases, the organic subsidies played the role of direct-income support to marginal regions and areas, boost the supply of organic products sold as organic on the market. This is also an explanation of the uneven distribution of organic farming in Italy and its concentration in the marginal areas. In general, the motivations behind the different levels of adoption of organic farming in the regions may be summarized as follows (INEA, 1999):
y y

y

y y

No financing of low-input farming measures of EC Reg. 2078/92 in some regions,while organic farming receives subsidies. This has boosted the adoption of organic farming. Insufficient or non-existent differentiation of subsidies between low-input and organic measures. In this case, organic farming is disadvantaged, especially if prescriptions of low-input measures are comparatively less stringent. Insufficient level of subsidies and low differentiation of subsidies between different crops. In general, farms with cereal and forage crops have benefited (and adopted) the most, while few vegetable farms have adopted organic farming, due to insufficient subsidies compared to income losses. Lack of technical advice and extension services for organic farming. The higher level of bureaucracy (forms to be filled, etc.) compared to other farmers, which has particularly discouraged the adoption of organic farming by small farms and aged farmers (the majority in many rural areas). As some farmers express, it is strange that organic farmers are the ones who need to demonstrate that they do not use harmful substances, while other farmers can use toxic pesticides and other potentially dangerous inputs without asking for any authorization or filling any form.

The Italian Government has recently established a tax on pesticides, of which the revenues should partly be devoted to promote the market (and specifically domestic demand) of organic products. However, no form of organic market support is currently implemented.

2. The Italian market for organic fruit and vegetables 2.1 Market size No official data exist on the market of organic products in Italy, and most existing estimates are based on previous work of the authors. Therefore, there are no official data on the quantities and values of organic fruit and vegetables produced, exported and imported. Total retail sales of organic food in Italy is estimated by the authors at Lit2 038 billion (little less than 1.1 million euros) in 2000. Italy mainly exports raw products (of which fruit and vegetables account for about 50 percent) and mainly imports processed organic foods. Fruits and vegetables are estimated to account for 27 percent of total retail sales in 2000 (see Table 1), approximately Lit550 billion. The volume of domestic production of fruit and vegetables is estimated to be, respectively, 474 000 and 44 000 tonnes. Only part of it goes to the organic market; some 30 percent is still sold in the conventional market for various reasons3. Most of it is marketed by primary market operators such as BRIO (organic turnover: Lit31 billion), ECOR (Lit30 billion), APOFRUIT (Lit30 billion), CONERPO (Lit13 billion) and MUSTIOLA (Lit30 billion), who also act as import/export agents. APOFRUIT and CONERPO trade in conventional products, too; all others are specialized in organic farming. Citrus represent 63 percent of Italian fruit production, with more then 150 000 tonnes of oranges and around 100 000 tonnes of lemons. Table 1. Food retail sales in Italy in 2000 by category Share (percent) Categories Bread and cereals Meat Fish Dairy products and eggs Fruit Vegetables Oils and fats Alcoholic beverages Non-alcoholic beverages, including juices Other TOTAL Source: ISTAT & Authors¶ estimates. A very large share of organic fruit and vegetables is exported to other EC countries (mainly northern Europe) and Switzerland: 50 percent of the vegetables produced and 60 percent of the fruit. Michelsen et al. (1999) reported a higher share for fruit in 1997 (70-80 percent), but since then the domestic demand has increased. In any case, the high fruit export values are mainly due to citrus exports. Imports of organic fruit and vegetables are estimated at about 17 000 tonnes, of which 55 percent is represented by bananas. The total import value is approximately Lit35 billion at wholesale prices. 2.2 Distribution channels Value Organic Conventional Organic (Lit million) 16.3 39.5 804 966 23.2 6.6 13.6 6.4 10.9 5.2 4.9 4.8 8.2 100.0 2.0 0.0 16.9 19.0 8.0 4.0 0.5 3.0 7.1 100.0 40 758 344 403 387 199 163 031 81 516 10 189 61 137 144 690 2 037 888

Until 1993, organic fruit and vegetables in Italy were sold only in specialized organic outlets (about 750, herbalists included) through direct farm sales and in occasional organic open-air markets. Few supermarkets sold organic convenience foods, such as wholemeal pasta, tomato sauce, etc. In 1993, Brio (at that time a ltd. company owned by five organic cooperatives, now a company with a turnover of about Lit31 billion and whose equity capital is worth Lit1 billion in 2000) inserted fruit and vegetables in a Coop supermarket near Treviso, in the north-eastern region of Veneto. The test resulted positive: after a few months, organic fruit and vegetables represented 10 percent of the sales volume of fruit and vegetables and about 1 percent of the total turnover. Coop (which is the largest supermarket chain in Italy) extended the organic line (at first "Coop naturali e biologici", now "Coop Agricoltura Biologica") to other outlets in northern Italy, followed by their major competitors. In 1996, there were 130 supermarkets (and hypermarkets) with organic corners; in 1999, there were 624. At present there are about 1 400 (out of 6 200), most of them running private labels. The highest share of supermarkets selling organic fruit and vegetables is in northern Italy, which is the richest area of the country (Tuttobio, 2001): 71 percent totalling to 1 005 outlets (491 in 1999). In central Italy there are 315 outlets (113 in 1999); in the south, 67 (16 in 1999) and 52 on the islands (Sicily and Sardinia: none in 1999). The most important chains are (in alphabetical order): French-owned Auchan/SMA, A & O; Austrian-owned Billa, Colmark, Conad, Coop, Crai, Despar, Esselunga; and French-owned (Carrefour) GS, Il Gigante, Iper, Pam. Not all of them sell organic fruit and vegetables in their entire distribution network. Marketing policies of supermarket chains vary. Coop, Esselunga and Conad are investing in advertising, merchandising and promotion; others seem to have chosen a "me too" policy. The most relevant actors are Coop (which announced its decision to gradually eliminate conventional fruit and vegetables from its range, with organics as premium line and low-impact - IPM products - as mass line) and Esselunga, whose organic range includes about 300 items (convenience, dairy, fruit and vegetables) and who carried out a major advertising campaign. In 2000, the number of supermarkets with an organic fruit and vegetables corner exceeded the number of specialist outlets (less than 1 000 throughout Italy, especially in northern and central Italy). However, as the most relevant range in supermarkets consists of no more than 300 items, the importance of specialized organic outlets (with a mix of 1 000 to 2 500 items) is confirmed, although they have lost their channel primacy. In fact, organic specialized shops show a positive trend both in sales and in new openings: while conventional shops are closing (in 1993, there were 263 686 food shops in Italy; in 2000, 141 000) and retail sales concentrate in larger supermarkets and in hypermarkets, while organic ones are increasing in number and enlarging at the same time. Furthermore, in the last years, a few franchising chains (Naturasì4, Bottega e Natura) have opened and now own around 40 outlets mainly located in central and northern Italy. Figures 2 and 3 show the main distribution channels of organic food in Italy as well as of organic produce. Currently, supermarkets do not buy their fruits and vegetables directly from the producer, but refer to specialized wholesalers or consortia of growers: both are good targets of non-EC companies who want to enter the Italian market. Figure 2. Distribution channels for organic products in Italy (source: authors¶ estimates)

Figure 3. Distribution channels of organic fruit and vegetables in Italy (source: authors¶ estimates)

2.3 Consumption and domestic demand Organic consumption accounts for little less than one percent of household food expenditure. A recent, unpublished survey by ISMEA-NielsenCRA5, using their Telematic Panel of 3 500 households and asking focused questions, has given a more realistic picture of the market size. A total of 29 percent of consumers declared to occasionally buy one or more organic products less than once a week, while 5.6 percent declared to buy in three out of the five convenience product categories (cereals, fruit, vegetables, milk and dairy products, meat) at least once a week. Of these, only some are correctly informed on the definition of

organic products. This gives a percentage of regular and well informed self-declaring consumers of organic products of 1.3 percent. Indeed, one of the major obstacles for an increase in demand of organic products in Italy, is lack of information and confusion for the consumer. In the above-mentioned survey, using a seven-item scale of consumer information, only 15 percent of respondents are classified as "highly informed"; 54 percent have a very low level of information and confuse organic products with "natural", "low-input" or even "wholemeal" and "macrobiotic" products. Among these, almost 15 percent believe that organic products are produced only in Italy, and the remaining simply do not know if imported products could be labelled as "organic". 2.4 Prices The average retail price for organic fruits and vegetables is 50 to 200 percent higher than the conventional one. Generally, consumers pay a higher premium for vegetables than for fruit (especially carrots, onions, garlic and potatoes); nevertheless, some imported fruit, like bananas, are sold at prices ranging from 100 to 200 percent higher than non-organic ones. Prices are slightly higher in specialized shops than in hyper/supermarkets, but this is not necessarily the norm, and in some cases the quality differs.6 Prices are highly dependent on seasonal factors - this is also true for conventional produce - though most specialized shops tend to avoid stocking off-season produce, both for commercial and ecological reasons.7 Weekly wholesale prices are reported at the E-BIO Web site; for the northwest area, by the Turin Municipality Web site. Web addresses can be found in Annex V. A sample of wholesale prices is reported in Table 2. Table 2: Wholesale prices of organic fruit and vegetables in Italy - 2000 Products, cultivars, calibre Orange (cv. Tarocco) Lemon Apple (cv. Golden) 75-80 Pear (cv. William) 22-24 Carrot, washed Onion (golden) Lettuce (cv. Romana) Potato (white starch) Tomato * all prices in Lit/kg Source: E-BIO & ISMEA. 2.5 Market development In the past two years, domestic demand has grown at very high rates. Fruit and vegetables are the largest growing sector of organic demand, which is coupled with the decreasing demand of meat and dairy products, after the recent BSE scares. Consumer confidence needs to be restored and an increase in vegetarianism and in fruit and vegetable consumption is foreseen and even suggested by Health Authorities. Altogether, this has positively influenced organic produce demand in the last months. Databank (2000) reports an increase of 200 October-December* average Organic Conventional Premium price (%) 1 800 1 800 1 700 3 000 2 000 1 600 2 500 1 450 3 400 950 1 050 990 1 900 800 650 1 450 700 1 800 89 71 72 58 150 146 72 107 89

percent in fruit and vegetable retail sales in hyper/supermarkets between 1997 and 1999, and 133 percent in 1998/99. These rates are even higher, according to interviewed wholesalers, for 2000. Globally, according to the authors¶ estimates, fruit and vegetable retail sales have grown at a rate of 80-90 percent per year in 19982000, as is also reflected in the growth of the total organic sales of the major wholesale companies, whose balance sheets are easily accessed at http://www.cerved.it Organic specialized shops are growing too, but not as fast. In the future, an expansion of specialized retailer chains, such as Naturasì and Bottega e Natura, is foreseen, as well as a more serious entry of other major modern retailers, such as Auchan and Carrefour. Most of the threats to demand growth can be seen in consumer information, which, as already mentioned, is one of the major constraints to a larger organic market share. A promotion and information campaign will be launched soon by the Government, in order to increase the domestic demand of organic food. If it is effective, it is likely that a larger share of consumers (the mainly sceptical, non-informed or doubtful of the actual safety of organic food) will enter the market on a more frequent basis. Achieving a market share of 5 percent by 2010 (around Lit10 000 billion at 2000 constant prices) is a possibility. 3. Imports 3.1 Regulations for import Italy follows the basic EC Regulation on organic food products (EC Regulation n.2092/91). Organic products originating from non-EC countries may be imported and marketed only if products are grown (and eventually processed) and certified according to procedures equivalent to those of the EC. With Circular letter n.3 (16 June 2000), the Ministry of Agricultural Policies (the Italian designated authority) settled new procedures on how the imported foods are to be labelled as organic. The importer has to send an application to be included in the "National list of importers of organic products" to the competent authority (the same Ministry) and to the selected inspection body (in Italy nine national inspection bodies are authorized under the authority and supervision of the Ministry). If the exporting non-EC country is included on the list (article 11), import can begin immediately, but if the country is not included, the importer has to present a special form. If the inspection body is EC based, proof of its authorisation in its country has to be provided; if the body is non-EC based, it has to present a certificate declaring that production rules are equivalent to those laid down by Article 6 of Reg. 2092/91 and detailing which Authority is competent for setting the standards and performing surveillance on the body¶s activity. The inspection body must present a report on production (or harvesting of wild products or processing), geographical location and access roads, the kind of business and property of them. Enclosed in the report are: maps in which organic, non-organic and non-cultivated plots are singled out; a description of crops and of growing techniques used (including fertilizers, plant protection products); a list of public institutions and bodies connected to the producer; date of entry into the control system; a declaration stating that, for at least three years before harvesting, only products composed and substances listed in Annexes I and II of EC Reg. 2092/91 were used; a declaration stating that the harvest of wild products is not harmful for the environment and the species. Finally, facilities used for processing, handling and storage must be detailed. After having acquired these documents, the Ministry considers whether the production, harvesting and processing standards, as well as the inspection and certification system, meet the requirements of EC Reg.2092/91. The selected certification body cannot assist the importer with the file and cannot reveal any information on the procedure. From 1994 to 2000, 118 applications for organic import were presented, but only 59 were approved. However, the procedure for importing is a very bureaucratic approach; the Italian Ministry has accumulated a six-month backlog, and another three months are required to close it. Moreover, authorization is valid only for one year. In an attempt to avoid this bureaucracy, most Italian wholesalers buy triangularly: Italian companies do not buy raisins from Turkey or bananas from Uganda, but from Germany, the Netherlands and other countries in which the competent authority makes the work of importers easier.

The growing Italian organic market increases the need for imports, and several companies have started cooperation programmes with non-EC countries; operators are pressuring the Ministry to simplify procedures without evident results so far. 3.2 Estimates of current total imports by volume and value Direct imports are mostly bananas from Colombia. Apart from this, imports from producing countries are generally done triangularly with other European countries (mainly the Netherlands).8 The reasons for this are manifold: The bureaucratic difficulties to obtain organic import certificates from the Italian Ministry of Agricultural Policies: more than six months of delays and, in some cases, refusals, are reported by the operators. Most certifying bodies operating in Italy in the past years have been too busy to cope with the Italian organic boom and have not given particular attention to third countries' import trade. Recently, however, there are signs of change, and some certifiers have established joint ventures, especially in Mediterranean countries (i.e. Egypt), to certify organic produce imports. The size of the Italian domestic organic market is still relatively small, and most wholesalers prefer triangular solutions because it allows smaller quantities (and smaller stock volumes/higher stock rotation) and can be organized in partnerships with operators who are often buyers of Italian exports (non-cash transactions). The authors conducted a survey of the seven major importers/wholesalers of organic products in Italy, using questionnaires sent by e-mail and followed by telephone or personal interviews. The aim was to evaluate current levels of imports of organic fruit and vegetables in Italy, as well as accessing future trends and prospects for market growth in the next years. Based on this survey, just under 17 000 tonnes is estimated to have been imported into Italy in 2000, but as mentioned, the majority of these imports are not directly imported from the producing countries but actually re-exported by other EC countries to Italy. Concerning fruit imports, bananas are the second largest import, followed, respectively, by apples and kiwi. Much smaller quantities include strawberries, avocados, mangoes, papayas, pineapples and other fruits. Dried nuts and sultanas account for less than two percent in volume of total imports and about three percent in value. Among vegetables, carrots and onion account for more than 75 percent of imports in quantity, followed by potatoes. Minor quantities include cabbages, cauliflower and aubergines. 3.3 Italian importers of organic fruit and vegetables The main importers of fruit and vegetables coincide with the three main primary market operators (ECOR, BRIO and APOFRUIT), which also act as importers, with the exception of ADRIAFRUIT, which specializes in bananas, and ORGANICSUR, which specializes in imports from Colombia and Argentina. Some residual import is also done by processors. A list of wholesalers and processors who also act as importers, is found in the Annex. Excluding imports from Colombia (bananas) and Argentina (apples and pears, onions and off-season citrus), most of the produce is not imported directly from producing countries but triangularly with the first importer in other EC countries. The largest Italian importer is ADRIAFRUIT, which trades in bananas and runs the trademark µBio Adria¶ for its organic line. The company reports a continuous and constant increase of demand for organic produce. The company imports an average of five containers per week (1 000 boxes per container, average weight per box 18.14 kg, total 90.7 tonnes/week); it imports triangularly from Ecuador and Peru through other EC countries (large conventional banana importers). While the price of non-organic bananas fluctuates between Lit20 000

and 30 000 per box, the price of organic bananas is fixed at Lit38 000 per box (duty and taxes charged), with a premium price of 43 to 82 percent. ADRIAFRUIT also imports off-season pears (43 tonnes/year) from Argentina through another Italian conventional importer and is interested in starting the import of pineapples, mangoes and cherry tomatoes. As mentioned before, the Italian Ministry of Agricultural Policies complicates direct import from the country of origin; therefore, ADRIAFRUIT is currently importing triangularly from other EC countries, and has taken the Ministry to court for not having issued certificates in time, upon request. Table 3: Imports of the most relevant organic fruit and vegetables into Italy per product - 2000 Products Vegetables Garlic Carrots Onions Peppers Potatoes Other vegetables Total vegetables Fruit Oranges Apricots (incl. dried) Plums (incl. dried) Apples Pears Kiwis Bananas Almonds Hazelnuts Other dried fruit Other fruit Total fruit Total fruit and veg. * Million Lit Source: Authors¶ estimates. Smaller volumes of organic produce are imported by ORGANICSUR, which trades with many countries (see their Web page for a complete list) but specializes in banana imports from Colombia (around 1 300 tonnes/year) and Argentina (where it owns a farm of 155 ha). ORGANICSUR, however, is the largest Italian direct importer specialized in organic products. It only trades organic products and owns direct import certificates from the Italian Ministry of Agricultural Policies, as well as commodity-specific import licences. The company has been growing at a rate of 50 percent per year in the last two years and is interested in new contacts. tonnes 120 1 840 1 360 120 800 40 4 280 60 28 20 495 1 350 950 9 235 72 66 148 60 12 484 16 764 value* 720 2 400 1 560 400 960 64 6 104 60 146 144 1 485 3 900 3 800 18 470 228 224 724 240 29 421 35 525

Another large importer is VEROBIOFRUTTA, which bought a fruit farm in Argentina (about 10 hectares), producing about 400 tonnes of apples and 200 tonnes of pears. Since pears are in high demand in the Italian market, due to the relatively difficult organic management of pear orchards, the company is considering increasing pear production at the expense of its apple orchards. ECOR¶s main imports consist of bananas (400 tonnes/year), apples (200 tonnes/year) and smaller quantities of pears and carrots, while BRIO¶s imports are mainly bananas (580 tonnes/year), carrots (460 tonnes/year), onions (340 tonnes/year), potatoes (200 tonnes/year) and pears (450 tonnes/year). Neither ECOR nor BRIO import directly. A small direct importer is SWEET, only importing nuts and other dried fruit (especially sultanas and apricots). 3.4 Suppliers Most importers declare that they import from other countries of the EC. Some vegetables (e.g. cabbage, cauliflower) are imported directly from EC countries, others from Egypt (e.g. lettuce, carrots). According to the authors¶ survey, most of the imports originate outside the EC and are imported into Italy through triangular partnership with other EC importers. The main supplying countries are: Africa: Egypt, South Africa, Cameroon and Angola; Asia: Turkey, Israel; Latin America and the Caribbean: the Dominican Republic, Argentina, Colombia and Peru; and Oceania: New Zealand. Minor suppliers are other EC countries such as Spain (avocados), Austria (onions), and the Netherlands (carrots, potatoes). Some imports tend to be concentrated in some import countries, due to comparative advantages (such as climate and lower labour costs) and in order to reduce transport costs. For example, most apples, pears and oranges come from Argentina; grapefruit from Israel; carrots and garlic from Egypt9; cabbage and cauliflower from Poland. Bananas come from Ecuador, the Dominican Republic, Peru and Colombia; pineapples10 from Cameroon and the Dominican Republic. Argentina and Ecuador account for the largest overall volumes. 3.5 Re-exports The specific situation of Italian organic imports and its legal and bureaucratic constraints does not render reexporting attractive for commercial companies. However, within partnership agreements some apples and pears that are directly imported from countries on the "article 11 list" are re-exported to other EC countries (mainly to Germany), together with other domestically grown fruit and vegetables. Nevertheless, this practice concerns only residual import volumes. 3.6 Trends and constraints to import growth Importers declare that the trend is to increase imports, especially of those products for which the demand exceeds domestic production (onions, carrots, potatoes, peppers, cucumbers, aubergines, lettuce, regarding vegetables; kiwis, apples, pears and melon, regarding fruit), as well as of typical tropical fruits (pineapples, mangoes, avocados, coconuts). From the results of the authors¶ survey of importers and wholesalers, an annual growth rate ranging from 30 to 50 percent is expected for the next years. Imports of dried nuts and raisins will rise more slowly (around 20 percent globally in the next 3 years), especially based on processors¶ demand. The major constraint to import into Italy for "non-article 11 listed" countries is, as already mentioned, bureaucracy. Import certificates can take up to eight months to be released, and in some cases are not released at all. For this reason, some non-European Mediterranean countries (e.g. Egypt) are already working on equivalency, in order to increase organic export capacities, especially of vegetables. IMC (one of the Italian

certification bodies) has established a joint-venture in Egypt for equivalency certification in the near future. However, if the procedure is simplified, an increase of imports could particularly benefit those neighbouring Mediterranean countries that can provide off-season, high value-added products to Italian importers. Second, some products will never enter the market during the Italian production season due to the large quantities produced in Italy; this applies to citrus fruit (lemon is the most exported product according to BRIO). At the same time, processors are looking for imported raw materials which are cheaper than those produced in Italy; this applies to tomatoes, carrots and celery and, in the future, possibly to concentrated citrus juice as well. Third, although Italian consumers have no particular strong preferences for locally-grown foods, many specialized shop managers do prefer trading local products (especially vegetables), for ecological reasons. Fourth, apart from organic standards, traditional quality standards (e.g. calibre, maturation levels) are more and more a pre-requisite for entering the market. Most importers - even if triangular - want to ensure the total traceability of the products and often require to be able to do their own inspections in addition to those provided by certification bodies. Finally, at present, the hyper/supermarket chains do not operate directly on the import market, but use the main wholesalers as intermediaries. In the near future, they could decide to enter the import market themselves, and this could change some long-established import partnerships. So far, importers BRIO and ECOR have favoured cooperative producers and established medium to long term contracts, without requiring any entry fee; in the future, however, the retail groups might follow a different strategy, based on higher competition, initial entry fees and spot purchases. 4.Conclusions: market opportunities for developing countries In Italy, which has the largest organic sector and the largest potential supply in the EC, the domestic demand has recently started to increase significantly. A cautious scenario is that five percent of total food consumption could be organic by 2010, given the large increase of retail sales in the last months and the recent findings of the most recent consumers sample surveys on purchase intentions of potential organic consumers11: around 12 percent of informed consumers occasionally buy organic products and the repurchase intentions are quite high. At present, 30 percent of the Italian organic produce still goes into the conventional market without premium prices; 50 percent of the remaining 70 percent is exported. Nevertheless, part of the increase of demand will probably be met through imports because some of the most demanded products (e.g. onions, carrots, apples and pears) are not easy to grow organically in intensive farming areas due to the lack of farmers¶ technical knowledge, as well as to insufficient organic advisory services. Marginal areas can produce high demand quality products (e.g. potatoes) but at higher costs, due to low productivity in those areas and poor accessibility. Organic imports will most likely continue to be in the above mentioned products, as well as tropical products (bananas, pineapples, avocados, coconuts). The globalization of food habits is also taking place in Italy, resulting in an increasing demand of tropical products, once only sold in major cities and during certain periods of the year. In this respect, Mediterranean countries (especially Turkey, Egypt, Tunisia and Libya) have good prospects to export to Italy (if the bureaucratic problems are resolved at Ministry level) due to long-standing commercial relationships with other food (e.g. olive oil) and non-food (e.g. fibres) sectors. In some cases, exports could even develop in the form of pre-processed (e.g. concentrated juices) or processed (e.g. canned tomatoes) products, which in general will be branded in Italy or other EC countries. Other developing countries may find exporting more difficult, especially compared to exporting to other EC countries with a longestablished tradition of import trade for agricultural commodities (such as Holland or France). These export opportunities are in part counterbalanced by some existing or potential constraints, concerning:

The need for specific organic import certificates and long, bureaucratic procedures for potential exporters (for countries that are not on the "Art.11 list"). The early stage of the domestic organic market in Italy, making it a risky market due to the relatively small size (also in financial terms) of most market operators and to the high volatility of prices and demand (especially after periodic food scares, such as the BSE crisis, dioxin, etc.). The expansion of Genetically Modified Organisms (GMOs) in the agricultural sector is likely to be higher in potential exporting countries than in Italy and Europe. Some Italian and European consumers are particularly concerned about GMOs in their food, and, although EC organic standards specifically ban the use of GMOs in organic production, there is always the potential risk of genetic pollution, especially in large open field areas which often prevail in developing countries. In the future, traceability will be a strong requirement for most EC importers, as well as absolute absence of GMO contamination of imports. Since organic agricultural production (but not necessarily processing) is generally more labour intensive than conventional farming, in the long term third-party developing countries might have some comparative advantages in selling their products to Italy and Europe, especially those who can certify equivalence, according to Article 1112. But the relatively small size of the organic market combined with potential non-tariff barriers, such as traceability requirements, non-GMOs residues and similar concerns, could reduce these opportunities and the profitability for organic exporters. References Agricesena (eds.) (1998): L¶ortofrutta biologica in Italia: dati di produzione e mercato, dattiloscritto, Agrobiofruit, Cesena. Bagnara G.L. (1994): Il consumatore di prodotti biologici: analisi della domanda e potenzialità del mercato. Rivista di frutticoltura, 4. Compagnoni A., Pinton R., Zanoli R. (2000): "Organic Farming in Italy", in GRAF S., WILLER H. (eds.): "Organic Agriculture in Europe: Current Status and Future Prospects of Organic Farming in Twenty-five European Countries", SÖL, Bad Durkheim. Crescimanno M., Guccione G., Schifani G. (1998): Contributo alla conoscenza del ruolo dell¶agricoltura biologica nel settore primario della Sicilia. Economia Agro-alimentare, 3(1). Michelsen J., Hamm U., Wynen E., Roth E. (1999): The European market for organic products: growth and development. Technical Report of the FAIR3-CT96-1794 Project "Organic Farming and the CAP", dattiloscritto, South Jutland University Centre. Naspetti S. (2000): L¶analisi motivazionale nel marketing ecologico: il caso dei prodotti biologici, unpublished Ph.D. thesis, Ancona. Pinton R., (2000): "Sempre complicate le importazioni di biologico", Informatore Agrario, Nov. Santucci F.M., Marino D., Zanoli R: (1996): Canali di commercializzazione e comportamenti d¶acquisto dei prodotti alimentari biologici in Italia. Atti del Convegno "L¶agricoltura biologica: problemi e prospettive", Università degli Studi di Cassino, 17-18 maggio 1996. Kappa, Roma. Various Authors (2001): TUTTOBIO 2001, Organic Yearbook, Distilleria, Forlì.

Zanoli R (1999): Economic performance & potential of organic farming, comunicazione al Convegno "Organic Farming in the European Union - Perspectives for the 21st Century", 27-28 maggio 1999, Baden/Austria. Zanoli R. (1997): L¶agricoltura biologica. In INEA (a cura di), Annuario dell¶agricoltura italiana, Vol. L (1996), il Mulino, Bologna. Zanoli R. (1998): L¶agricoltura biologica. In INEA (a cura di), Annuario dell¶agricoltura italiana, Vol. LI (1997), il Mulino, Bologna. Zanoli R. (1999):The organic boom in Italy", Ecology & Farming, 22. Zanoli R. (2001): Fattori di sviluppo dell¶agricoltura biologica, in Marino D., Zanoli R. (eds.) Innovazione e ambiente. Figure professionali e fabbisogni formativi per l¶agricoltura biologica. Tellus, Rome, in print. Zanoli R. (2001): 66) "Prodotti biologici e mercato alimentare" (Atti del Convegno della Società Italia di Economia Agro-alimentare: "Il sistema agro-alimentare nazionale alla vigilia del terzo millennio", Ancona, 30 giugno - 1 luglio 1999), Ancona, in print. Annex I List of major current or potential importers Wholesalers Adria Fruit Piazza Rossetti 2/8 16129 Genova phone ++39 010 5767229 fax ++39 010 5767249 E-mail: [email protected] Bananas Apofruit Scarl Via Ravennate 1345 47023 CESENA (FO) phone ++39 0547 643111 fax ++39 0547 643166 E-mail: [email protected] Web: http://www.apofruit.it Baule Voiante SRL Via Mattei 48/11H 40138 BOLOGNA phone ++39 051 534104 fax ++39 051 538869 E-mail: [email protected] (only nuts, dried fruits, processed products) Besana SPA Via Ferrovia 206 80040 SAN GENNARO VESUVIANO (NA) phone++39-081-86.59.111

fax 0039-081-865.76.51 begin_of_the_skype_highlighting 865.76.51 end_of_the_skype_highlighting (only nuts and dried fruits) Brio SPA Via Manzoni 99, 37050 Campagnola di Zevio (VR) phone ++39/045/8951777 fax ++39/045/8731744 E-mail: [email protected] Web: http://www.briospa.com (work in progress at 02.15.2001) Ecor SPA Via Palù 27 San Venedemiano TV phone ++39 0438 7704 fax ++39 0438 770447 E-mail: [email protected] Ki Group SPA Via Marchesi 9 10093 COLLEGNO TO phone ++39-011-717.67.00 fax ++39-011-725.983 E-mail: [email protected] Web: http://www.kigroup.com/ (only nuts, dried fruits, processed products) Mustiola International SRL Via Ravennate 801 47023 Cesena FO phone ++39 0547 632020 fax ++39 0543 631518 E-mail: [email protected] Noberasco SPA Regione Bagnoli 5 17031 ALBENGA (SV) phone ++39.0182-5631 fax ++39.0182.5400 (only nuts and dried fruits) Organicsur Via Andrea Costa, 112/2 40067 RASTIGNANO (BO) phone ++39.051.626.0361 fax ++39.051.626.5252 E-mail:

0039-081-

[email protected] Web: www.organisur.it Sweet Via Duchessa Isabella 6 10011 AGLIÈ (TO) phone ++39.0124.429.011 fax ++39.0124.429.928 E-mail: [email protected] (only nuts and dried fruits) Veritas Biofrutta SPA Via San Francesco 5 36060 MAROSTICA (VI) phone ++39.0424-471.920 fax ++39.0424.471.921 E-mail: [email protected] Verona Bio Frutta Scarl Via dell¶industria 3 37059 Zevio VR phone ++39 045 7851701 fax ++39 045 7851576 E-mail: [email protected] Processors Abafoods SRL Via Ca¶ Mignola vecchia 1775 45021 Badia Polesine RO phone ++39 0425 594489 fax ++39 0425 594496 E-mail: [email protected] (needs concentrated juices) Cotrapo Scarl Via Trento 778-2 45024 Fiesso Umbertiano RO phone ++39 0425 740274 fax ++39 0425 741322 E-mail: [email protected] Confruit Via Emilia Ponente 4 48018 Faenza RA phone ++39 0546 623411 fax ++39 0546 621548 E-mail: [email protected] Web: www.ilpuntog.it Hans Zipperle SRL Via M. Valier 3 39012 Merano BZ

phone ++39 0473 274100 fax ++39 0473 274222 Hero Italia SPA Via E. Fermi 6 37135 Verona phone ++39 045 8097111 fax ++39 045 8097200 Trade services Biofoodtrading Via Moretto, 17 25082 - BOTTICINO (BS) phone ++39 030.2691796 fax 0039 030 2191026 E-mail: [email protected] Web: http://www.biofoodtrading.com Main hyper/supermarketchains selling organic produce13 Billa Italia SRL Via Postumia 15 35010 CARMIGNANO DI BRENTA (PD) phone ++39.049.942.34.44 fax ++39.049.943.02.44 Conad-Consorzio Nazionale Dettaglianti scarl Via Michelino 59 40127 BOLOGNA (BO) phone ++39.051.508.111 fax ++39.051.508.247++39.051.508.414 E-mail: [email protected] Web: www.conad.it Coop Italia scrl Via del Lavoro 6-8 40033 CASALECCHIODI RENO (BO) phone ++39.051.596.111 fax ++39.051.596.304++39.051.596.218 Web: http://www.e-coop.it Despar Italia scrl Via Caldera 21 20153 MILANO (MI) phone ++39.02.409.091 fax ++39.02.409.18.177

Esselunga Via Giambologna 1 20090 LIMITO (MI) phone ++39.02.92.367 fax ++39.02.926.72.02 Finiper Via Mameli 19 27054 MONTEBELLO DELLA BATTAGLIA (PV) phone ++39.0383.894.511 fax ++39.0383.592.257 Grandi Magazzini e Supermercati Il Gigante SPA Via Clerici 342 20091 BRESSO (MI) phone ++39.02.240.42.51 fax ++39.02.26.22.43.02 GS SPA - Carrefour Via Caldera 21 20153 MILANO (MI) phone ++39.02.48.251 fax ++39.02.482.02.325 PAM Via delle Industrie 8 30038 SPINEA (VE) phone ++39.041.549.51.11 fax -39.041.999.393 Rinascente/Gruppo Auchan Strada 8, Palazzo N - Milanofiori 20089 ROZZANO (MI) phone ++39.02.575.81 fax ++39.02.57.51.24.38 Selex CommercialeMarkant Italia SPA Via Cristoforo Colombo 51 20090 TREZZANOSUL NAVIGLIO (MI) phone ++39.02.484.571 fax ++39.02.48.45.77.00 Annex II Specialized organic retail chains NATURASÌ SRL Via Mura S. Bernardino, 1 37123 VERONA (VR) phone ++39-045-8030021 fax ++39-045-8031371 E-mail: [email protected]

Web page: www.naturasi.com 23 points of sale BOTTEGA E NATURA Via Crea, 10 10095 GRUGLIASCO (TO) phone ++39-011-77708948 E-mail: [email protected] 15 points of sale Annex III Fair trade organizations Commercio Alternativo Via Darsena 176/a 44100 Ferrara (FE) phone ++39.0532.772.009 fax ++39.0532.52.845 CTM Via Macello 18 39100 Bolzano (BZ) phone ++39.0471.975.333 fax ++39.0471.977.599 Equoland Via Pantano 5 50013 Campi Bisenzio (FI) phone++39.055.890.382 fax ++39.055.890.266 Equomercato Via Brighi 21 22603 Cantù (CO) phone++39.031.706.857 fax ++39.031.711.912 Macondo Via Giovanni da Verrazzano 6/b 90142 Palermo (PA) phone ++39.091.547.771 fax ++39.091.541.443 Ram Via E. Figari 76 16032 Camogli (GE) phone ++39 0185.773.061 fax ++39.0185.773.061 Roba dell¶altro mondo Via Rizzo 17 16035 Rapallo (GE)

phone++39.0185.54.830 fax ++39.0185.53.619 There are about 400 points of sale of fair trade products, linked with the above mentioned import organizations, which buy directly or by means of European partner companies. They sell only packed foods (jams, marmalades, juices, dried fruits etc.). Retail prices are usually lower than those in specialist organic shops, as they are run by volunteers. Annex IV Certification bodies and other organizations of the organic sector AIAB Certification body Strada Maggiore, 29 40125 BOLOGNA phone ++39-051-272986 fax ++39-051-232011 E-mail: [email protected] Web page: www.aiab.it Ass Suolo e Salute Certification body Via Abbazia, 17 61032 FANO (PS) phone ++39-0721-830373 fax ++39-(0)721-830373 E-mail: [email protected] Web page: www.suoloesalute.it BIOAGRICOOP Certification body Via Fucini 10 40033 CASALECCHIODI RENO (BO) phone ++39-051-6130512 fax ++39-(0)51-6130224 E-mail: [email protected] Web: www.bioagricoop.it BIOS Certification body Via Monte Grappa, 7 36063 MAROSTICA (VI) phone ++39-0424-471125 fax ++39-0424-476947 E-mail: [email protected] CODEX Certification body Strada Naviglia, 11/A 43100 PARMA (PR) phone ++39-0521-7759001 fax ++39-0521-775900

CCPB Certification body Via Barozzi, 8 40126 BOLOGNA phone ++39-051-254688 fax ++39-051-254842 E-mail: [email protected] Web: www.ccpb.it ECOCERT Certification body C.so delle Province, 60 95127 CATANIA phone ++39-095-442746 fax +39-095-505094 E-mail: [email protected] IMC Certification body Via Pisacane, 53 60019 SENIGALLIA (AN) phone ++39-071-7928725 fax ++39-071-7910043 E-mail: [email protected] Web: http://www.imcdotcom.com QC&I Certification body Villa Parigini, Loc. Basciano 53035 MONTERIGGIONI (SI) phone ++39-0577-327234 fax ++39-0577-327234 E-mail: [email protected] Web: www.qci.it GRAB-IT Organic Research,Market research c/o DIBIAGA-Universityof Ancona Via Brecce Bianche 60125 ANCONA (IT) phone ++39-071-2204929 fax ++39-071-2204858 E-mail: [email protected] Pinton Organic Consulting Organic market consultants Via Falloppio, 5 35121 PADOVA (PD) phone ++39-049-8764648 fax ++39-049-652664 E-mail: [email protected]

Associazione per l¶Agricoltura Biodinamica Biodynamic association Via Privata Vasto, 4 20121 MILANO (MI) phone ++39-02-29002544 FIAO Umbrella body grouping most certification bodies Via Barozzi, 8 40126 BOLOGNA phone ++39-051-254688 fax ++39-051-254842 E-mail: [email protected] IFOAM Italy Group Organic movement Via dei Tigli 2 33034 FAGAGNA (UD) phone ++39-0432.800.371 fax ++39-0432.800.371 E-mail: [email protected] Annex V Other sources of information a. Web sites BIOFOODTRADING.COM As they present themselves, it is a data bank associated with a sort of virtual "blackboard" which can be looked up in Internet. One of the few gateways for the organic e-commerce in Italy, aiming to link supply and demand. On demand, Biofoodtrading can also give a practical aid during national and international negotiations thanks to:
y y y

staff able to speak English, French, German, Spanish, Russian; professional staff qualified in food matters, agronomy and hygiene (with a modern analysis laboratory at your disposal); staff able to give legal, commercial and financial advice.

http://www.biofoodtrading.com NATURABELLA From the home page: "Naturabella is an Internet trading company focusing on the organic food and natural product sector. We are using innovative tools and exploiting the power of the Internet in order to meet the demand with the best supply available". A virtual marketplace for organic food and drinks, they have quite an extensive catalogue ranging from baby food to canned fruit and vegetables. http://www.naturabella.com. AGRICOLTURA BIOLOGICA

One of the first born e-commerce sites, though not too rich in terms of a companies database. However, it has a very nice look and a lot of general information is provided. http://www.agricolturabiologica.com. BIOMARKET Another e-commerce site, for both organic and other "green" products (eco-soaps, herbs, etc.). http://www.biomarket.it BIONET A Web site useful for its section on organic regulations. http://bionet.tbg.it:80/stbg/BioNews/news. COMUNE DI TORINO - OSSERVATORIO PREZZI PRODOTTI ORTOFRUTTICOLI BIO A site managed by Turin Municipality, with wholesale organic market prices updated to the previous month. http://www.comune.torino.it/mercati/listinobiologico/ E-BIO This site provides weekly wholesale organic price analyses with trends. Run by Edagricole, an Italian publisher of agricultural related books and magazines (owned by the General Confederation of Italian Industry by means of Il Sole 24 Ore, the best Italian economic newspaper in circulation). http://www.edagricole.it/ CERTIFICATION BODIES Laws and regulations, news, info (but only in Italian) are presented on the sites www.aiab.it, www.ccpb.it, www.amab.it, www.suoloesalute.it, b. Directories TUTTOBIO Now in its sixth year, it is the most complete and renown directory of organic products in Italy. Unfortunately it is published only in Italian. It contain a list of more than 2 400 companies producing or trading in organic products, including processors and importers. It also has some useful informative sections, mainly for the consumer. It is published by Distilleria EcoEditoria, which also publishes a bi-monthly fax newsletter as well as a general information Web site. http://www.biobank.it BIOPUGLIA A very complete site managed by IAM-CIHEAM with a lot of information on the organic market and a lot of documents, academic literature and an R&D database.

http://www.biopuglia.iamb.it/
1

These are defined on qualitative grounds by the farmers themselves and by certification inspection bodies as "predominantly devoted to fruit and vegetable production". This means that the figures shown do not necessarily represent land used only for horticulture, but also include other land use (mainly cereals and pastures).
2 3

For 1999, EC Reg. 2078/92 expenditure data measure by measure are not available.

Many farmers with marginal and small holdings only produce for agro-environmental income support (organic aid) and have too small quantities to be sold to wholesalers who often are not located in the same areas. Besides, the cost of certification (apart from inspection) can be too high for such farmers, and they prefer selling locally without any certification.
4

The same chain has also launched the logo CarneSì, specialized organic butcheries. Altogether, the Naturasì/Carnesì outlets sum up to 25.
5

This survey was supervized by Raffaele Zanoli on behalf of INIPA-AGER, the research body of the major Italian national farmers union (Coldiretti).
6

Often specialized shops tend to offer higher quality local produce or Biodynamic grade in order to distinguish from supermarkets.
7

Some organic specialized retailers dislike the energy consumption associated to longdistance imports and try to "educate" the consumer to buy seasonal produce.
8

However, pears and apples are imported from Argentina, and some grapefruit and dates from Israel (countries with equivalence regimes according to EC Reg. 2092/91).
9

Egypt is a growing supplier of most labour-intensive vegetables, such as carrots, garlic, onions, potatoes, etc., in and off-season.
10

Until an EC official note blocked pineapple imports due to the chemicals used in the fruit setting and development phase.
11

These are the already mentioned, unpublished ISMEA-NielsenCRA telepanel survey and the unpublished telephone random sample survey of 800 Italian households performed by Prof. Zanoli¶s team at the University of Ancona.
12

Equivalence, indeed, reduces the certification costs: apart from other considerations, inspection is also a labour intensive activity and doing it in the exporting country by local inspectors is cheaper than by higher paid EC inspectors, coming especially from the importing countries.
13

Actually no Italian supermarket imports organic fruits and vegetables directly. If no changes will occur in organic import laws, third countries will have few chances of a large increase in sales volumes.

JAPAN
Introduction Proper analysis of the Japanese organic market is faced with the difficulty that until recently, no clear definition of "organic product" existed. Moreover, the voluntary guidelines (i.e. not mandatory) on sustainable agriculture issued by the Japanese Ministry of Agriculture, Forestry and Fisheries (MAFF) in 1992 and applied until the year 2000, did not require independent organic certification. "Organic food" translates into "Yuki Shokuhin" in Japanese. However, "Yuki Shokuhin" means a food product that contains low or no chemicals added in the growing and production process (Agriculture and Agri-Food Canada, 1997), and can be sub-divided into the following categories: 1. Organic: no chemicals have been used for more than three years; 2. Organic in transition: no chemicals have been used for a period between six months and three years; 3. No pesticides: no chemical pesticides have been used; 4. Reduced pesticides: the use of chemical pesticides is reduced more than 50 percent of the average pesticide application; 5. No chemical fertilizer grown: products grown without chemical fertilizer; and 6. Reduced fertilizer grown: products where the use of chemical fertilizers is reduced to less than 50 percent of the average fertilizer use. The above categories led to substantial confusion as to what rightly can be claimed organic agriculture or products grown and processed according to proper organic standards as defined in most other countries. A survey carried out by MAFF in the early 1990s showed that of 1 459 so-called organic farming households, only 32 percent practised chemical-free farming; the remaining 68 percent were classified as practising "reduced use of agro-chemicals" (OTA, 2001). In April 2000 new Japanese Agricultural Standards (JAS) legislation for organic agriculture was implemented. The revised JAS law also included regulations on the labelling of perishable organic products, which took effect on 1 June 2000, and on the labelling of processed food products, which took effect on 1 April 2001. The legislation was adopted to protect the consumer from many products appearing on the Japanese market which were inaccurately carrying the name "organic". Thus, only recently is there a clear definition and control on truly organic products and, therefore, data on genuine organic production. Sales and import data were not available at the time of writing of this report (June 2001). In this report "green labelled products" stands for all products which in Japanese are called "Yuki Shokuhin", but do not meet the JAS definition of "organic". Therefore, "green products" are those which fall under the categories 2 to 6 mentioned above. The reader should continuously keep in mind the definitional difficulty of the Japanese organic market. 1. Organic farming in Japan 1.1 Overview Production of organic crops in Japan is difficult, due to the scarcity of arable land, combined with the Japanese hot and wet climate conditions. However, a wide range of agricultural products are produced organically,

including rice, green tea, green vegetables, sweet potato, taro, pumpkin, potatoes, citrus and many other fruits. Discussions with different organic certifying agencies suggest that there are around 3 500 organic producers in Japan, farming a total area of less than 1 000 ha. Production trends for organic fruit and vegetables appear to be moving towards value added product lines, such as prepackaged salad mixes. The group certifying process provided for under the new JAS regulations enables group managers of several holdings to pool product and target specific markets. Japanese farms (both conventional and organic) are mostly small (less than 0.5 ha) with around 85 percent of farmers part-time with an average age of 65 years. Production from Japanese conventional farms is in decline, but it is expected that organically certified products will increase both in area of production and in the range of products presented to the market. 1.2 Government policy The new JAS regulations for product labelling formulated by MAFF have been operational since 1 April 2001. Box 1 gives the sequence of the main events that led to the legislation. Box 1:Organic standards in Japan: from voluntary rules to legislation On 1 April 2001, the proposed "organic" labelling law took effect in Japan. This box provides the sequence of the main events that led to the existing legislation. April 1992: MAFF produced organic labelling guidelines. It was not a law, so there were no penalties for non-compliance. 1998: MAFF decided to establish an Organic Certification rule in JAS law. July 1999: The concept of a revised JAS law was passed by the Diet (Congress). June 2000: The revised JAS law took effect. Producers and traders not complying with the regulations could be punished. April 2001: Control of the "organic" label took effect. Source: The Organic Standard, May 2001. The established JAS law is based on the CODEX guidelines for organic agriculture. Under the new regulation, organic certification bodies are required to be registered (accredited) with MAFF and are now called Registered Certification Organizations (RCOs) (see Figure 1). Specific regulations on imports and labelling requirements are given in section three of this chapter. The JAS programme is staffed by three persons and a manager. The MAFF Web page, http://www.maff.go.jp, provides information on JAS regulations. Copies of key documents can be downloaded from this site. To find out about the certification process, access the MAFF Web page or contact one of the registered Japanese certifiers (listed in Annex II). These agencies can provide updated information on Japanese and approved foreign certification agencies. Government policy aims at encouraging consumers to buy domestically produced products where and when they can. There is no support policy or specific funding for organic agriculture. Figure 1: Organic inspection system in Japan

Source: www.embargentina.or.jp 2.The Japanese market for organic fruit and vegetables Because there was no clear definition of organic products for a long time, it is difficult to estimate the market value of organic sales in Japan. Many sources give different numbers, sometimes with a factor ten difference. The historical broad interpretation of the term organic has meant that the data gathered on fresh fruit and vegetables covers all sales and does not categorize certified organic products. There are no Government records that identify certified organic product imports or local sales. However, the JAS regulations provide the mechanism and requirement for data on certified organic products to be gathered from 1 April 2001. It is estimated that the impact of the JAS regulations has resulted in a drop of up to 99 percent of products presented to the market as "organic". The International Trade Centre UNCTAD/WTO (ITC, 1999) estimates the value of organic retail sales in Japan in 1998 at US$1.3-1.5 billion. An Organic Trade Association (OTA) study released in early 2001 refers to two other sources: (i) an unnamed research report estimating the total retail value of the Japanese organic market in 1999 as approaching US$3 billion, including all six categories of organic and reduced chemical fertilizer and low pesticide inputs as described in the introduction; and (ii) the Japanese External Trade Organization (JETRO) which estimates that the organic market¶s retail value rose from approximately US$1 billion in 1995 to US$1.8 billion in 1996 and to US$2.5 billion in 1997 (OTA, 2001). One should note that all these estimates have been made prior to the implementation of the JAS legislation, and therefore include all six categories of "Yuki Shokuhin" (see introduction). Based on information obtained from market sources, it is estimated that the retail value of genuine certified organic products is around US$350 million, or about 1 percent of total food sales in Japan. Two sources confirm this number: a technical paper presented to the International Federation of Agriculture Scientific Conference, Basel 2000 (Tokue, 2000), and the above-mentioned OTA study. The latter used the value of organic domestic production at retail level, plus the value of imports in 1999, and adjusted for the expected growth rate in 2000. However, the report states that (compared with the much higher value given in the sources

referred to earlier) there is a large grey zone of products, which may be produced with low chemical pesticide and fertilizer inputs, but do not comply with strict organic standards (OTA, 2001). Therefore, total "green" product sales in Japan are estimated in an order of magnitude of US$2.5 billion, while genuine certified organic products account for US$350 million (or 12 percent of the total "Yuki" sales). While current organic sales are estimated at about one percent of total food sales, some market sources expect the percentage of organic sales in total food sales to increase to around five percent by 2005. However, the introduction of the new JAS regulations has somewhat slowed the overall impetus of organic production and promotion. The new regulations are said to have created a dilemma for traders, who have been selling large volumes of "green" low chemical input product as organic during the past decade. These "green" products, however, do not qualify as organic under the new standard. There has been a large investment in green food labelling by many of the major companies in Japan. However, green labelling could provide a stepping stone for producers to later move to certified organic status. 2.1 Sales of organic fruit and vegetables Organic sales are dominated by rice, wheat-based products, soybeans and a wide range of processed products. Fresh and frozen fruit and vegetables comprise less than five percent of the total certified organic trade. There is no precise data available on sales volumes of certified organic products, due to the definitional problem of "organic", as mentioned earlier. The main fresh organic products sold in Japan include:
y y

Vegetables: onions, carrots, potatoes, bell peppers, salad vegetables, broccoli, cabbage, asparagus, pumpkin, sweet potatoes, green beans, ginger and taro. Fruits: mandarins, kiwis, strawberries, oranges, bananas and some other tropical fruits.

Although growth is expected in the organic market as a whole, sales of organic fresh fruit and vegetables are unlikely to increase their market share in the near future, mostly because of the barrier presented by the random fumigation by port officials of all fresh food products entering Japan. Under the JAS, an organic product that has been fumigated cannot carry the organic label. Some market sources mention that fumigation is carried out for over 70 percent of a shipment, regardless of whether the shipment carries quarantine pests. 2.2 Average prices at retail level The premium for organic products varies but generally ranges from 20 to 30 percent above the price for conventional products, but can sometimes reach 100 percent. This trend is witnessed across most lines including imported kiwifruit and pumpkins. For example, at a JUSCO supermarket in Chiba, prices for fresh ginger differed as follows: imported organic, Y198; Japan grown, Y178; and non-organic imported from China, Y100 (January 2001). Also, green label potatoes from Hokkaido had a 50 percent premium (JUSCO) over imported potatoes. 2.3 Distribution channels The three main channels through which organic products are sold to consumers are: (i) the Teikei system; (ii) supermarkets; and (iii) home delivery. In the early days of organic marketing, virtually all sales found their way through the Teikei (box) system of direct supply. The Teikei (box) system, which promotes the direct distribution of products from farm to consumer, is based on the principle of the producers and consumers "shaking hands" and supporting each other. In some cases, the sales are coordinated by a distributor who works on behalf of the producers, while in

other situations, farmers directly mail or deliver to consumers. The first efforts of the Teikei system were coordinated by two groups: (i) the Japan Organic Agriculture Association, established in 1971; and (ii) the Nature Farming International Research Foundation. Supermarkets which handle organic produce are expected to source their products through food brokers and traders and wholesalers. Consumer cooperatives have "traditionally" sold organic products. They have a national membership of about 18 million people and represent about 15 percent of Japan¶s population. Cooperatives, such as the Kobe Cooperative based in Osaka, have purchased certified organic products for many years. With the introduction of the JAS, Kobe Cooperatives organic imports are limited to pumpkin and grapefruit. Supermarkets are a relatively new phenomena in Japan; while they stock organically certified products, green labelled products are becoming increasingly dominant in these stores. Companies, such as Dole Japan and JUSCO, and large cooperatives, such as ZEN-NOH (National Federation of Agricultural Co-operatives Association), have developed sophisticated green labelling and product promotion strategies linked to company monitored production programmes. For producers of small volumes of organically certified products aiming to secure premium prices for quality products, the supermarkets are unlikely to offer the returns available through specialist stores. According to the Japanese Economic Newspaper as of mid-2001, Nichirei, a large frozen-food importer in Japan, is expected to start selling frozen organic vegetables from China in supermarkets nation-wide. Nichirei was able to reduce prices by contracting with local Chinese vegetable farmers and processing the final product in China. Similarly, the leading supermarket retailer, JUSCO, began selling frozen spinach, green asparagus, onions and broccoli imported from China as part of their "Top Value Green Eye" private brand in late 2000 (FAS, 2001). At the wholesale level, it is estimated that:
y y y y y

Up to 25 percent of organic production is sold through distribution organizations which specialize in organic food; Fifty-five percent or more is sold through specialized home delivery networks, such as the Teikei system; Food brokers and traders handle about 5 percent; Wholesale and warehouse organizations handle about 5 percent; and Food processing and manufacturers handle about 10 percent.

A recent development includes organic sales through the Internet. Currently, there are 2 400 Internet sites offering green and organic products for sale. The total value of organic "e-sales" in Japan is not available. 2.4 Consumer attitudes to organic products The distributors and retailers interviewed as part of this study felt that the vast majority of consumers were not really aware of the difference between organic food products and green labelled products. Thus, when consumers see a green labelled product, they mostly feel that their food safety concerns are being met. Surveys of the organic market in Japan have thus not distinguished between organically certified products and other green labelled products. The result has been that the data produced has overestimated the production figures and trends for certified organic product demand in Japan. Another source (FAS, 2000), states that according to some supermarket representatives, the typical organic consumer is an upper middle-class housewife in her 30s or 40s with children. These women tend to have a university education and are concerned about health, rather than the environmental benefits of organic products.

Japanese consumers prefer to buy domestically grown products. There is a trend to increasingly buy on price and food safety assurances. Perfect shape and colour of a product are important but are no longer the key selling points. Food safety is now a major factor for consumers, combined with traceability of the product. A 1997 consumer survey indicated that many consumers prefer to purchase locally-produced organic produce over imported produce (Betteridge et al, 1997). Reasons for this, in order of priority, were:
y y y y

Certification was perceived to be more trustworthy than for imported produce; Local produce is perceived to be fresher than imported produce; The preservation of Japanese agriculture was an issue; and Eating food from one's own country was perceived to be a good thing.

If imported organic food was to be purchased, then Australia and New Zealand would be the respondents' second preferred option, followed by a number of other countries, all ranked according to the consumers¶ perception of which countries are the most clean and green. Retailers and distributors also highlighted changes in the buying patterns of many consumers. They noted that younger consumers (under 30 years of age), particularly for couples where there are two persons working in the same household, are purchasing more frozen and processed convenience foods. Table 1: Trend in organic frozen vegetables sales Total frozen organic vegetables (tonnes) Organic french fries(tonnes) Overall growth rate% 1997 1999 2000 627 744 750 241 267 300 15 1

Source: based on interviews with market sources. Note that french fries comprise around 40 percent of frozen certified organic vegetable sales. The remainder of sales is made up of a mixture of broccoli and carrots and frozen sweet corn. Importing frozen rather than fresh vegetables avoids the commercial risks of random product fumigation. 2.5 Constraints to market development One of the main constraints to market development of fresh organic products is the lack of consumer knowledge on the difference between organic and "green" products. Over the past few years 85 percent of consumers purchasing organic food have been buying "organic" produce primarily for food safety reasons without developing an awareness of the difference between certified organic and green labelled product (Tokue, 1999). Green label products are promoted as being chemical free, environmental friendly and safe for human health, which makes it difficult for consumers to distinguish them from organically certified food. Another constraining factor for further development of the organic market is the high price premium. Consumers are willing to pay a price premium of 10 to 20 percent above conventional prices (FAS, 2000), but many times price premiums are beyond that range. Additionally, a certain distrust of the legitimacy of organic products exists among groups of consumers, especially for imported certified products. Moreover, the product assortment is small and widely recognized organic brand names are absent (FAS, 2000). Finally, information to the consumer on the new JAS logo has been insufficient, and one source states that there is a serious danger that the confusion during the first year of JAS organic standards and logo will cause consumers to lose interest in and reliance on JAS organic certification (The Organic Standard, 2001).

3. Imports of certified organic fruit and vegetables into Japan 3.1 Market access: regulation, certification and labelling requirements Under the new JAS law (April 2001), all products labelled as organic must be certified by an RCO, and must display the JAS logo (Figure 2), as well as the RCO's name. Since the start of the implementation of the new legislation, 38 organizations have been registered as RCO. Although it is possible for foreign certifiers to register, so far, all RCOs are Japanese (The Organic Standard, May 2001). Figure 2: JAS organic logo

Source: http://www.pure-foods.co.jp/index2.html. For foreign organic exporters to the Japanese market, there are three ways to obtain permission for using the JAS logo. (i) Approved country status: awarded to countries with a certification system equivalent to Japanese organic law. The approval process is carried out by MAFF, which will review the standards and certification systems of each country applicant against the JAS before issuing approved country status. Certification bodies in an "approved" country abroad need to be registered at the MAFF, in order to be able to certify producers using JAS law. Once registered, the organic producer (abroad) is allowed to put the JAS logo on the package of the organic product before exporting it to Japan. (ii) As in the previous case, the fundamental requirement is to be approved as a country as equivalent to Japanese organic law. However, the difference is that the certification body abroad (which does not need to be registered at the MAFF) certifies the product as "organic conform to national organic standards". The product can be imported into Japan with the organic logo of the country of origin, and without the JAS logo. The JAS logo is put on the product by the importer before the product arrives at the market. (iii) Where a country¶s certification system has not been approved by MAFF as equivalent to JAS standards, certification can be gained either through a Japan-based and MAFF accredited organic certification agency (RCO), which carries out production and farm audits in the country of origin or through a local certification agency which has a reciprocity arrangement with a MAFF registered RCO. Ensure that you are up-to-date with any changes in these regulations; see Internet site http://www.purefoods.co.jp/index2.html. The new labelling requirements have created some complicated issues with organic processed foods. Processors that use imported products must have an RCO verifying that the materials comply with JAS standards. The deadline for these to take effect was originally 31 March 2001, but after protests from processors the MAFF postponed it to 31 March 2002. Therefore, all processors have one (additional) year to apply to an RCO and receive verification of equivalency for their raw materials (The Organic Standard, May 2001).

In producing and preparing organic products for the Japanese market, it is advised to work closely with the Japanese importers to ensure that all packaging, labelling and quarantine requirements are met. For new products or brands, the name is important. Care must be taken to avoid names that are not appropriate in Japan. Thorough market research is essential for any new product being developed for the Japan market. Importers and distributing companies, which have the knowledge of specific market requirements, are most useful in order to avoid unforeseen negative surprises. Phytosanitary requirements for each product can be obtained from the importer or the MAFF Quarantine Division (see MAFF Web page) on a crop-by-crop basis. It is important to note that compliance with these regulations does not guarantee that the product will not be fumigated even when hot air treatments have been applied and the products have been cleared by quarantine in the country of export. 3.2 Total imports of organics The total imports of fresh fruits and vegetables that would qualify under the JAS as organically certified product is unknown. Based on market sources, the value of imports of "Yuki" products (green labelled and organic) is estimated at Y8 billion (1999 figures). According to another source (Sogo market research firm), the total value of organic imports into Japan are estimated at US$90 million in 1999 (OTA, 2001). 3.3 Imports of organic fruit and vegetables and countries of origin There is no data available for organic fresh fruit and vegetable imports into Japan. Table 2 provides volumes of imported conventional fresh fruits and vegetables, as well as estimates on the percentage organic of these imports (percentages have been drawn from information provided by importers and distributors). Table 2: Main imported fresh fruit and vegetables (volume tonnes) Fruits Mango Papaya Pineapple Avocado Orange Limes Grapefruit Kiwifruit Berries Cherry Melons Banana Import 2000 % Organic Import 1999 Vegetables Total import % Organic Import 1999 9 606 <1 8 829 Broccoli 80 365 0 96 029 5 671 10 015 14 237 13 1596 72 268 954 42 159 5 518 16 727 34 632 1 100 115 0 0 <1 <1 0 <1 5 0 0 0 8 000* 5 005 8 8608 7 158 91 267 20 265 567 41 840 4 733 18 198 36 427 947 841 Bell Pepper Celery Tomato Asparagus Onion Lettuce Pumpkin Garlic Carrot Cabbage 8 543 6 567 14 141 24 492 260 999 2 060 143 401 28 646 38 827 18 943 0 0 0 <1 <.01 0 2 0 <1 0 6 490 6 173 24 710 163 629 3 217 144 360 25 624 59 162 71 207

<1% is an approximation drawn from discussions with distributors. *Organic banana imports estimated at 8 000 tonnes, but certification status unknown. 3.4 Suppliers New Zealand exports an estimated 1 500 tonnes of organic pumpkin and 2 300 tonnes of organic kiwi to Japan. Fresh organic exports from Australia include 100 tonnes of fresh carrots, 60 tonnes of fresh asparagus and a small quantity of mango.

Bananas have been sold in Japan from Colombia, Mexico and the Dominican Republic, labelled as organic. Currently only non-certified organic banana product lines (cavendish and lady finger varieties) are available, mostly from the Philippines, which supplies more than 70 percent of Japan¶s organic banana consumption. A large percentage of these bananas are marketed under a green label (reduced chemical). Because of publicity surrounding the Japanese Government¶s role in funding production of "safe" bananas in the Philippines over the past 12 years, many consumers purchase these bananas believing they are organic. Table 3 provides estimated organic horticultural imports into Japan for 2001, based on information supplied by importers and distributors. Table 3: Forecast of certified organic fresh fruit and vegetable - imports 2001 Fruits Mango Avocado Orange Grapefruit Kiwifruit Banana Total Volume (tonnes) Organic Vegetables Volume (tonnes) Organic 10 Asparagus 100 50 135 300 2 300 11 000 13 795 Total 2 750 Onion Pumpkin Carrot Ginger 200 2 000 400 50

Source: based on interviews with market sources Major countries that supply organic certified horticultural products include (ranking based on volumes exported to Japan): 1. United States (citrus, avocado, frozen vegetables, dried fruits, soy beans); 2. China (frozen vegetables, soy beans); 3. Australia (carrots, asparagus, wheat for noodles, rice, mangoes); and 4. New Zealand (kiwi, pumpkin, frozen vegetable, pouched sweet corn). Other countries exporting organic fresh fruit and vegetables to Japan include the Philippines (green label bananas and other fruit), Chile (kiwi), Argentina (beans) and the Dominican Republic (bananas), among others. 3.5 Main importers Contact details of the main importers of organic fruit and vegetables into Japan are given in Annex IV. 3.6 Prices at import There are many factors to be considered in establishing a price (fumigation losses, quality, volume, seasonal supply, promotion required, storage, local certification costs, transport costs, etc). Therefore, exporters, importers and distributors are reluctant to discuss prices paid. They are more comfortable indicating percentages paid above conventional products. Generally, the indication is that there is about a 20 percent premium paid for organically certified products. This is confirmed by one source, which states that organic vegetables are generally sold at a 20-30 percent price premium above prices for conventional vegetables (Agriculture and Agri-Food Canada, 1998).

3.7 Trends To reduce commercial risks, some companies are exporting fresh organically certified product but selling it under a "green" rather than an organic label. Green labelling is part of a marketing strategy developed by many Japanese companies to market fresh fruit and vegetables as safe food. These companies have developed their own unregulated food production practices and environmental management criteria that aim to minimize pesticide use and promote care of the environment by farmers. The programmes are monitored by the company¶s field staff to ensure that the farmers comply with the prescribed green production practices. The production procedures for green labelled products do not meet the JAS organic requirements. However, the main advantage of green labelled products is that if fumigated in the import harbour, the products are not required to be relabelled. Many of these "green" products are imported from the United States, the Republic of Korea and China. Prior to the implementation of the new JAS, many of these now green labelled products were labelled and sold as organic. 3.8 Constraints to import growth Imports of organic fresh fruit and vegetables into Japan are faced with some constraints, of which the most important are described below. (i) The high quality standards and phytosanitary requirements for imported fresh fruits and vegetables have a constraining effect on organic imports into Japan. The random fumigation of fresh organic products entering the country presents a major disincentive to export to Japan. Fumigation makes the organic fresh product lose its "organic" status, and consequently, the product can not be sold with an organic price premium. Hence, until more sophisticated phytosanitary treatments that are compatible with the JAS legislation are developed, a large part of the potential market for organic fresh fruit and vegetables will remain unfilled. (ii) Potential exporters of organic horticultural products to Japan need to undertake careful market research before new products are introduced into the Japanese market. Access to the market can best be gained once the trust of a Japanese importer and distributor has been obtained. This process must be regarded with respect and patience. (iii) The confusion between genuine organic certified products and other "green" or "health" products has made the majority of the Japanese consumers think that "green" and "organic" are exact synonyms and that both types of products are produced using the same farming practices. It is expected to take considerable time before the difference is understood by the majority of consumers. Until then, it might be difficult to sell an organic product at a higher price than a "green" product. 4.Conclusions and market opportunities Many (potential) organic traders see Japan as an attractive organic market to which to export. Its population (more than 126 million persons) has a high average income, and a significant percentage of that income (20 percent) is spent on food. The population is ageing rapidly, and health concerns have triggered wide attention for and demand of "safe" and "clean" food products. Moreover, domestic organic production is low given the difficulty of growing foods without chemicals in its warm wet production season. Although domestic production is expected to rise over the forthcoming years, demand for organic products will continuously outgrow domestic supply by far, resulting in potentially substantial volumes to be imported. This report has made apparent, however, that serious constraints exist which limit the organic market in its growth and frustrate imports of fresh organic fruit and vegetables. The most important constraint is the high phytosanitary requirements, which result in fumigation of imported organic products, which thereby lose their

organic label. Moreover, due to confusion of the definition of "organic food" during the last decade, Japan has a well-developed demand for "green" products. However, with the new JAS organic law as of April 2001, these green products are no longer allowed to be marketed as organic. Therefore, although the market for "green" products is well developed (with an estimated sales value of US$2.5 billion), the value of sales of certified organic products is estimated at only US$350 million. Additionally, careful market research needs to be carried out before a new product or brand enter the Japanese market. Access to the market can best be gained through a Japanese importer or distributor, but one needs to be aware of possible language difficulties and cultural differences. For organic products certified by foreign certifying agencies, the new JAS poses no new difficulties of a technical nature, although mechanisms for entry into Japan vary according to the status of that agency. Details on import rules are given in section three on imports in this chapter. Japanese newspapers have reported that the impact of the new JAS regulation may decrease domestic organic sales because many Japanese organic producers may not be able to meet the strict standards, thereby creating a demand for more imports (FAS, 2000). Despite the constraining factors, interviews with distributors and retailers have provided useful information on market opportunities. The following list is intended to provide an overview of opportunities in the Japanese market but is by no means intended to be exhaustive of the opportunities in Japan for new products:
y

y y y y y

Fresh organic fruit and fruit juices: Fresh fruit juices sold in juice bars have been popular in recent years. Despite the fact that some market sources suggested that the popularity of these juice bars is waning due to food scare issues, the fresh juice market is still of a significant size; Avocado: In recent years avocado has become more known and popular in Japan and fresh avocado (and products, such as oil) have potential; Processed fruit pulps: (particularly tropical ones) for various food products, including baby food. Popular pulps are banana and mango for food products and guava for fresh juice; Frozen vegetables: demand continues to increase for frozen vegetables, especially vegetable mixes; Convenience foods: pre-packed salads and other vegetables sold as convenience foods; and Other products with significant market potential include honey and herbal tea, among others.

The major advantage for frozen and processed products is that they are not fumigated upon arrival in Japan and can be sold as certified organic without any problem. If fumigation issues can be resolved, there will be a wide range of opportunities for fresh organic fruit and vegetables. Heat treatment plants (as established in e.g. Australia, Hawaii, Fiji, Tonga, Cook Islands and other countries), which use hot air to treat the skin of various fruits and vegetables to kill pests and skin pathogens, may provide a good alternative for fumigation. Foreign exporters, however, are likely to find severe competition from countries near Japan (e.g. China and the Republic of Korea). These countries, with generally low production costs and close proximity to Japan (an important factor in ensuring product freshness) have been rapidly expanding their fresh organic production over the past years. Organically certified soybeans from China are a major organic export to Japan. Improved product quality and Japanese consumer perceptions of improved environmental management also help to promote organic products from the Republic of Korea and China. References Agriculture and Agri-Food Canada, Study on Japanese Organic Food Market, 1997 http://ats-sea.agr.ca/public/htmldocs/e1524.htm

Agriculture and Agri-Food Canada, The Japanese Market for fresh Vegetables, 1998 http://ats-sea.agr.ca/public/htmldocs/e1988.htm Betteridge K., Gendall P., Bailey B., The Japanese Market for Organic Fruit and Vegetables, Massey University, New Zealand, 1997. FAS 2000, Organic Foods in Western Japan, US Embassy Japan, September 2000 FAS 2001, Organic Perspectives, May 2001, Foreign Agricultural Service, Horticultural & Tropical Products Division, http://www.fas.usda.gov/htp/organics/2001/may01.htm ITC, Organic Food and Beverages: World Supply and Major European markets, International Trade Centre UNCTAD/WTO, Geneva, 1999 OTA, Export Study, carried out by Organic insights Inc. for the Organic Trade Association, http://www.ota.com/exportstudy/exportstudytoc.htm, 2001 The Organic Standard, Japanese organic rules and implementation, May, 2001 http://www.organicstandard.com Web pages http://www.embargentina.or.jp http://www.maff.go.jp http://www.pure-foods.co.jp/index2.html Annex I JAS Regulations The Law Concerning Standardisation and Proper Labeling of Agricultural and Forestry Products (July 1999). Japanese Agricultural Standard of Organic Agricultural Product Processed Foods (January 2000). Japanese Agricultural Standard of Organic Agricultural Products (MAFF Notification No.59, January 2000). Technical Criteria of Certification of Manufacturers Concerning Organic Agricultural Products Processed Foods (MAFF Notification 818, June 2000). Technical Criteria of Certification of Production Process Management Director Concerning Organic Agriculture Products (MAFF Notification No. 819, June 2000). Technical Criteria of Certification of the Importer Concerning Organic Agricultural Products and Organic Agricultural Product Processed Foods (MAFF Notification No. 821, June 2000). Inspection Methods Concerning Production Processes of Organic Agriculture Products and Organic Agricultural Product processed Foods (MAFF Notification No. 830 June 2000). Technical Criteria of Certification of the Subdivider Concerning the Organic Agriculture Products and the Organic Agricultural Products Processed Food (MAFF Notification No. 829, June 2000). Annex II Japanese MAFF registered certification agencies which conduct certification for foreign producers

AISAC Address: 10-6 Sannohcho, Morioka-City, Iwate Telephone +81-19-626-3870 begin_of_the_skype_highlighting 3870 end_of_the_skype_highlighting ICS (International certification Services) Japan Address: 45-14 Chigasaki-Chuo, Tsuzuki-ku, Kanagawa Telephone + 81-45-949-4620 begin_of_the_skype_highlighting 4620 end_of_the_skype_highlighting JONA (Japan Organic and Natural Food Association) Address: 3-5-3 Kyobashi, Chuoku, Tokyo Telephone +81-3-3538-1851 begin_of_the_skype_highlighting 1851 end_of_the_skype_highlighting NOAPA (Nihon Organic Agricultural Products Association) Address: 2-7 Kanda-Tsukasacho, Chiyoda-ku, Tokyo Telephone +81-3-3295-5448 begin_of_the_skype_highlighting 5448 end_of_the_skype_highlighting OCIA (Organic Crop Improvement Association) Japan Address: 3-28-2 KandaOgawacho, Chiyoda-ku, Tokyo Telephone +81-3-5283-0187 begin_of_the_skype_highlighting 0187 end_of_the_skype_highlighting OMIC (Overseas Material Inspection Co Ltd) Address: 15-6 NihinbashiKabutocho, Choku, Tokyo Telephone +81-3-3669-5184 begin_of_the_skype_highlighting 5184 end_of_the_skype_highlighting Fax: +81-3-3669-5282 QAI Japan Address: KSP Building, 3-2-1 Sakado, Takatsu-ku, KawasakiCity, Kanagawa-City, Kanagawa Telephone +81-3-5413-7330 begin_of_the_skype_highlighting 7330 end_of_the_skype_highlighting Toyo B-net Address: 2-3-13 Kyobashi, Chuoku, Tokyo Telephone +81-3-3272-3741 begin_of_the_skype_highlighting 3741 end_of_the_skype_highlighting Internet Companies linked to green marketing initiatives

+81-19-626-

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+81-3-5413-

+81-3-3272-

Wize-system Co Ltd Mr Kenji Yamamoto http://www.wise-system.co.jp e-yuki-seikatsu Co Ltd Mr Takahiro Ito http://www.eu-ki.com Saibai-net Co Ltd Mr Hirotoshi Eto http://www.saibai.net Oisix Co Ltd Mr Eiji Fukui http://www.oisix.com Companies dealing in certified organic products Chikita Fruity Japan Co Ltd Plaza Monznen-Naka-Cho Building 3F, 1-4-8 Monzen-Naka-Cho, Koto-ku, Tokyo 135-0048 Telephone (03) 52458287 Daiei Co Ltd Hamamatsu-cho Office Centre building, 9F, 2-4-1, Shiba-koen, Minato-ku, Tokyo 105-8514 Telephone (03) 3433-9684 Dole Japan Ltd (main importer Ito Chu Trading Company) Sanbancho Yayoikan 6-2 Sanbancho Chiyoda-Ku Tokyo 102-0075 Telephone (03) 32371492 http://www.dole.co.jp/ Japan Produce Co, Ltd Daiichi-Nakamira Building 5F, 28-10 Shinkawa, Chou-ku, Tokyo 104-0033 Telephone (03) 3297-6211 JUSCO Co Ltd (Food Commodity Division) 5-1,1-Chome, Nakase, Mihama-ku, Chiba-shi, Chiba, 261-8515 Telephone (03) 432126164 Global Fruits Co Ltd Ikaida Building 7F, 3-14-8

Hacchobori, Chuo-ku, Tokyo 104-0032 Telephone (03) 3553-5444 Itochu Corp (Food Department) 2-5-1 Kita-Aoyama, Minato-ku, Tokyo 107-8077 Telephone (03) 3497-6255 Mitsubishi Corporation (Food handling division) Mitsubishi Shoji Building Bekkan 2-3-1 Maranouchi, Chiyoda-ku, Tokyo 100-8086 Telephone (03) 32106786 Mitsui & Co Ltd 2-1 Ohtemachi 1 Chome Chiyoda-ku, Tokyo 100-0004 Telephone (03) 32855668 http://www.mitsui.co.jp National Federation of Agricultural Co-operative Associations (ZEN-HO) 1-8-3 Otemachi Chiyoda-ku Tokyo 100-0004 (JA Building) Telephone (03) 32457126 http://www.zennoh.or.jp/ Nissho Iwai Corporation (Food Department) 2-5-8 Imabashi, Chou-ku, Osaka-shi, Osaka, 541-8558 Telephone (6) 6209-2860 Nissho Iwai Shokuryo Co Ltd (Food Division) 17-16 Nihonbashi Kozuma-cho, Chou-Ku, Tokyo 103-0016 Telephone (03) 5641-4070 Nikko Shoji Co. Ltd JAL Building 9F, 2-4-11, Higashi-Shinagawa, Shinagawa-ku, Tokyo 140-8638 Telephone (03) 5460-7177 Royal Co. Ltd Keika-kaikan Building, 1-1, Sunkist Pacific Co Ltd Zenkyoren Kojimachi Kaikan Building 3-5-1 Kojimachi, Chiyoda-ku,

Tokyo 102-0083 Telephone (03) 52109300 Sumisho Fruit Co. Ltd. CN Building 8F 2-8-3 Kiba, Kot-ku Tokyo 1350042 Sujaku Seikai-Cho Simogyo-ku, Kyoto-shi Kyoto 600-8841 Telephone (75) 344-8550 Union Co.Ltd Tojin Building 7F,44, Akashi-cho, Chou-ku, Kobe-shi, Hyogo 650-0037 Telephone (78) 392-4930 Tominaga Boeki Co. Ltd KDD Kobe Building, 12F, 83 Kyomachi, Chou-Ku, Kobe-shi, Hyogo 650-0034 Telephone (78) 393-1200 Tomen Co. Ltd (Food Department) Kokusai-Akasaka Building, East, 2-14-27 Akasaka, Minato-ku, Tokyo 107-8677 Telephone (03) 3588-6826 Takanabe & Co.Ltd 2-20-6 Ebie Fukushima-ku, Osaka Telephone (06) 64517616 Nichirei Corporation Nichirei Higashi-Ginza building 6-19-20 Tsukiji, Chuo-ku Tokyo, 104-8402, Sun Globe Food Inc OHTA Status Building 7F 3-9-1 Tohkai, OHTA-ku, Tokyo 143-0001 Telephone (03) 54923962 http://www.sgfd.co.jp/ Watari Co Ltd Kobe Office Sannamiya-kokusai Building 5F, 2-1-30, Hamabe-dori, Chuo-ku, Kobe-shi,

Hyogo 651-0038 Telephone (78) 231-1467 Zennikku Trading Co. Ltd (Food department) Shinagawa Inter city Building B 6F, 2-15-2, Konan, Minato-ku, Tokyo 108-6160 Telephone (03) 57698230 Processing companies with substantial organic interests Muso Co Ltd 3-7-22 Nishitenma, Kita-ku, Osaka 5300047 Telephone (06) 63166104 Mitoku Co Ltd Room 257 Tokyo Building 2-7-3 Maranouchi, Chiyoda-ku, Tokyo Mail: C.P.O Box 780 Tokyo, 100-91 Telephone (03) 32016701 Advisory Bodies Advisory services are provided by the certification organizations as well as: Agriculture and Food Audit System Co Ltd Ginza 5-10-13 TOYO Seimaiki Building 7F Chuo-ku Tokyo, Phone (03) 35721103 [email protected] ABC Food System 5-12-9-302 Nishsi Ikebukuro, Toshima-ku Tokyo, 171-0021, Telephone (03) 59534888 [email protected]

THE NETHERLANDS
Introduction The Netherlands is a leading agricultural producer and the third largest agricultural exporter in the world, after the United States and France. However, its organic agricultural sector, despite some efforts to catch up over the

last couple of years or so, when compared to overall agricultural production and/or to some other EC countries, is still rather small. With currently about 1.4 percent of total agricultural area under organic production and organic consumption being around 1 percent of total consumption, the organic market in the Netherlands is among the least advanced of Europe. During the major part of the 1990s, organic products were virtually sold only through specialized organic shops and subscriptions/farm sales (i.e. direct sales arrangements between farmers and consumers). Therefore, a wide range of consumers, who purchase their food in conventional supermarkets were not reached and did not become familiar with the existence of organic products. The introduction of organic products in supermarkets in the second half of the 1990s, as well as government policy to stimulate primary producers to convert to organic farming methods and to increase consumer awareness, contributed to a strong increase in organic sales in the Netherlands. The organic sector received a major boost when the leading Dutch retailer developed its own organic brand in 1998. 1.Organic farming in the Netherlands 1.1 Introduction The organic sector accounts for only 1.4 percent of total agricultural production, in spite of the dynamic growth of organic farms and the area under organic cultivation that took place over the last decade (Table 1). Table 1: Number of organic farms and area under organic cultivation (2000) Number of organic farms: 1 390 Of which certified: Of which under conversion: Total number of farms: Organic farms as % of total: Area under organic cultivation: Total area under cultivation: Organic area as % of total area: Source: EKO-Monitor, February 2001. During 2000, the number of organic farms increased by 174 to 1 390. Due to a support programme launched by the government in September 2000, which includes financial assistance to primary producers during the first years of conversion, the growth rate is expected to increase in 2001. The target of the policy is to have five percent of the total area under organic production by 2005 and 10 percent by 2010, or 200 000 hectares. The main production region is in the centre of the Netherlands, in the polders (ground which was formerly under the sea) of the province of Flevoland. The leading production cooperative is Nautilus, which has a total area of about 5 000 hectares. Graph 1: Number of organic farms and area under organic cultivation 1 121 270 100 545 1.32% 27 820 hectares 2 000 000 hectares 1.39%

The organic agricultural sector can be divided into the following product groups (percentages based on area under production): Vegetables 24.0 percent Fruits 5.2 percent Arable products 24.0 percent Livestock 42.5 percent Other (mushrooms etc.) 4.3 percent Fruits and vegetables account for almost 30 percent of the total of organic production, followed by livestock products. The fastest growing sector, however, has been the production of organic mushrooms; the number of mushroom farms doubled from 21 to 42 from October 1999-October 2000 (EKO-Monitor, October 2000). This brings the total estimated mushroom production at 130-150 tonnes/week, or 3 percent of total domestic mushroom production (Rabobank, 2000). Some organic products have a significantly higher market share than others. The organic dairy sector (excluding butter) accounts for a sales value of f.46 million, or 2.3 percent of total dairy sales (EKO-Monitor, October 2000), which is over 9 percent of total organic sales. Other important products include mushrooms (3 percent of mushroom production is organic) and apples (2.5 percent of area under apple production). 1.2 Organic vegetable and fruit production In 1999, total production of organic fruits and vegetables reached 65 000 tonnes, with an estimated productionvalue (at farm-gate level) of almost f.70 million. Total area under organic production is estimated at 2 100 hectares of which 1 800 ha is for horticulture, 260 ha for fruits and 40 ha for organic production in greenhouses (see Graph 2) (Productboard for Horticulture, 2000). 1.2.1 Vegetables grown in open field About 300 farms produce organic vegetables, on approximately 1 800 ha, or 2 percent of the total area under vegetable production. Total production is estimated at 50 000 tonnes. The most important products are onions (400 ha) and carrots (220 ha). The other major organic vegetables include butter-beans, cauliflower and chicory. These five vegetables account for over half of the area under organic vegetable production. Other products are broccoli, cabbage (white and red), leek and endive (Productboard for Horticulture, 2000). The yield of organic vegetable production is on average 70-90 percent of the yield of conventional production, as is shown in Table 2.

Graph 2: Organic fruits and vegetable production in the Netherlands in 1999 (area in hectares, production in tonnes and value in thousand guilders)

Source: Productboard for Horticulture, 2000.

Table 2: Yield of organic vegetable production compared with conventional Vegetable Endive Cauliflower Chinese cabbage Cabbage Beet Leek Sprouts Onions Carrots (small) Carrots (big) Source: PAV. 1.2.2 Vegetables grown in greenhouses Conventional production of vegetables in greenhouses is widespread in the Netherlands. However, greenhouse production of organic vegetables continues to be limited, with a total area of 40 hectares in 1999. Nevertheless, as shown in Graph 2, the total value of organic greenhouse production is an estimated f.20 million, a large total in the context of the small organic production total. The main vegetables produced are tomatoes (including different varieties such as cherry tomatoes) with 8 ha, cucumbers with 8 ha and paprika with 5 ha organic production in greenhouses is growing fast, but from a small base, and for the third quarter of 2000, the total area was estimated at 51 ha. 1.2.3 Fruits In 1999, the total area under organic fruit production was estimated at 260 ha, of which 180 ha was set aside for apples. Total organic fruit production is estimated at 4 000 tonnes (of which apples have the largest share with 2 500 tonnes), with a production value of f.8 million. The other main product is pears, and there are some other products produced in small quantities. Organic apple production is about 2 percent of the total apple production in the Netherlands, and, although this share is rising steadily, the number still lags behind other EC Yield in tonnes per hectares % organic compared with conventional 38 80 % 16 27 45 40 23 13 35 60 50 90 % 65 % 75 % 70 % 75 % 85 % 80 % 75 %

countries such as Italy and Germany. Conversion from conventional production to organic production is faced with a wide range of problems, including:
y y y

Production setbacks: insufficient means to protect the fruit from diseases cause lower yield (up to 50 percent less than conventional yields); Since 1 March 2000, the use of copper is prohibited; Economic factors during the conversion period; over the last few years (1998 and 1999) prices of apples were low. Poor yields and low expected earnings do not encourage farmers to convert.

1.3 Governmental policy on organic farming In order to stimulate farmers to convert away from intensive agricultural production in the Netherlands, which has highly pressured the environment during the 1980s and 1990s, and to increase consumer awareness of organic products, the Dutch Government has given financial support over the past years to convert to organic production. The so-called "Plan of Action 1997-2000",with a total support of f.116 million, has been followedup by a policy-plan called "An organic market to win". The new policy, announced in September 2000 for the period 2001-2004 (budget f.277 million), aims at enhancing the organic agricultural production and consumption, both to reach 10 percent of total production and consumption in 2010. More specifically, the policy aims at:
y y y y y

Professionalization of a demand-oriented organic chain; Maximal transparency and exchange of information among all actors in the organic market chain (producers, traders, retailers, etc.); Development and dissemination of knowledge; Stimulation of organic primary production in order that it responds to demand better; Other matters, such as fiscal arrangements and lower VAT on organic products.

2.Market for organic fruit and vegetables in the Netherlands 2.1 The organic market for foods The total amount of organic retail sales in the Netherlands differ according to various sources. An ITC study on organic food and beverages (ITC, 1999) states that total organic sales in the Netherlands were f.700-800 million for 1997. However, during interviews, many market sources estimated total organic sales at about f.500 million for 2000. In April 2001 Rabobank, a Dutch bank, estimated that sales of organic food in the Netherlands would rise to f.730 million at the end of 2001, accounting for 1.2 percent of total food sales. The bank estimated total sales of organic products to rise to f.870 million by the end of 2002. The specialized organic shops have been the main retail channel until the year 2000 and accounted for an estimated turnover of f.257 million - more than half of total organic sales. Supermarkets, until some years ago (virtually absent in the organic sector) have organic sales of around f.150 million. The biggest supermarket chain, Albert Heijn, which launched its own organic brand in 1998 ("AH biologisch"), had f.120 million in organic sales, a 78 percent share of total organic sales in supermarkets in 1999 (LNV, 2000). Other sales channels include weekly markets, subscription schemes and farm sales, which account for an estimated total of f.120 million. In March 2001 a consultant agency, Aurelia, estimated that at the end of 2001, supermarkets would have become the most important sales channel, with 45 percent of total organic sales, compared to 42 percent for specialized shops (Distrifood, 2001). In the period between 1995 and 1999, the number of specialized organic shops increased from 280 to 400. Over the same period, supermarkets that sell more than 15 organic products increased from 70 to over 4 000 (the total number of supermarkets in the Netherlands is 5 500). Therefore, organic sales through supermarkets is the fastest growing retail channel. In 1999, about 60 percent of consumers bought organic products in supermarkets, 30 percent bought them in specialized shops, and 15 percent through subscriptions or farm sales.

With the introduction of organic products in supermarkets, a wider range of consumers has been reached consumers who are less sensitive to health and "green" issues, but are more price conscious. This has, on the one hand, led to more people becoming familiar with and interested in organic products. These buyers are potentially new clients for specialized shops, as the availability of organic products creates an incentive to purchase beyond the assortment of the supermarkets. On the other hand, however, clients who used to buy some organic products in specialized shops and the rest of their food in supermarkets, might prefer the convenience of buying all their food at one place at a time. Therefore, this group of clients might abandon the specialized organic shops. Data available at the time of writing (mid 2001) show that, so far, these two opposite forces have balanced each other out; that is, the total number of clients going to specialized shops has not changed over the last year. The annual growth of around five percent in specialized organic shops has derived from higher purchases per client. The average expenditure per consumer in an organic specialized shop is estimated at f.22 (EKOmonitor, October 2000). However, the introduction of organic products in supermarkets, has put retail prices in organic specialized shops under pressure. In the forthcoming years much will depend on whether specialized shops will be able to develop into a sort of organic supermarket, as well as on the range of organic products supermarkets will continue to have. In order to combat increased competition from supermarkets in the second half of 2000, the specialized organic shops decided to modernize their outlets and to become a kind of small supermarket chain for organic products. The umbrella organization of specialized organic shops (NWO - Natuurwinkel Organisatie) recognizes that the growth of their organic sales lags behind growth rates in supermarkets due to the generally disordered, old-fashioned and limited surface in the outlets (Levensmiddelen-krant, 2 October 2000). An example of how the "ideal" organic shop would look is an outlet in Rotterdam called µDe Groene Passage¶ (The Green Passage). This small supermarket, sells a wide range and variety of products, including many fresh fruits and vegetables (see Picture 1). The increasing availability of organic fruit and vegetables in supermarkets seems to have a negative impact on subscription schemes. The fast growth of subscribers observed in the second half of the 1990s has stopped, and the number of subscriptions is going down slowly. Picture 1: Organic fruit and vegetables in organic supermarket De Groene Passage,Rotterdam

Source: Picture taken by author, October 2000.

2.2 Market for organic fruit and vegetables About two-thirds of domestic production of organic fruits and vegetables (42 000 tonnes) is exported, mostly to England, Germany, Denmark and Sweden. At the same time, retailers, especially supermarket chains, have expressed their concerns about insufficient domestic supply. Therefore, the lack of information and a non-optimal functioning organic chain seem to be important issues (Productboard for Horticulture, 2000). The explanation for the high number of exports of domestically produced organic fruits and vegetables is that consumers in neighbouring countries are willing to pay higher prices than local consumers. Producers and traders can obtain a significantly higher price for their produce abroad (see also "consumer attitudes"). 2.2.1 Domestic market for organic fruit and vegetables One-third of domestic production (23 000 tonnes) is sold through various domestic retail channels. Since imports of organic fruits and vegetables are estimated between 17 000 and 22 000 tonnes (see chapter IV), the actual size of the Dutch organic market for fruit and vegetables is estimated between 40 000 and 45 000 tonnes (1999 figures). The main fruits and vegetables sold are those which are readily available in all sales channels (i.e. specialized shops, supermarkets, subscription and farmers markets), as well as those which are available year round at a constant price and quality. These two points are interrelated, since supermarkets in particular, prefer to sell those products which are constantly available for a price with limited fluctuations in quality. The four most important organic fruit and vegetables are potatoes, onions, carrots, and mushrooms. Other major and fast growing items include cabbage, lettuce, cucumber and kiwi fruit, followed by apples and pears.1 2.2.2 Prices at retail level and range of price premium over conventional products Several sources (e.g. traders, retailers and various studies) indicate that price premiums over conventional fruits and vegetables range from 0 to 200 percent, depending on the product, season, outlet, etc. Precise figures could not be obtained, but the author¶sown observations during October 2000 (week 42) in different supermarkets throughout the country confirm the above price range. Price premiums for organic products were observed from 8 to 150 percent above prices for conventional products (see Table 3). Table 3: Retail prices (in Dutch guilders) of selected organic and conventional fruit and vegetables in supermarkets in the Netherlands and the percentage price premium. Name and Products Organic Place Price per unit (guilders) Konmar, Kiwi 3.49/4 The Hague pieces Apple Orange Potato 4.49/4 pieces 3.99/4 pieces % of organic Country of Price per Country of price above conventional origin unit origin price (guilders) New 1.69/4 New 106 Zealand pieces Zealand Italy Spain 2.39/4 pieces 2.49/4 pieces Netherlands Spain 88 60 101 Conventional

3.99/2 kg Netherlands 1.99/2 kg Netherlands

Albert Heijn, Utrecht

Kiwi Apple Cherry tomato Tomato

3.99/4 pieces 3.99/4 pieces

New Zealand

1.89/4 pieces

New Zealand Netherlands

111 67 18 33 75 8 34 122 111 56 34 150 50

Netherlands 2.39/4 pieces

4.69/0.25 Israel kg 3.98/4 pieces 3.49/4 pieces 2.69/kg

3.99/0.25 Netherlands kg Netherlands New Zealand Netherlands

Netherlands 2.99/4 pieces New Zealand 1.99/4 pieces

Plusmarkt, Kiwi Amsterdam Carrot Onion Potato Albert Kiwi Heijn, Amersfoort Pear Onion Potato C1000, Zwolle Potato

Netherlands 2.50/kg

1.99/0.75 Netherlands 1.49/0.75 Netherlands kg kg 4.99/2 kg Netherlands 2.25/2 kg Netherlands 3.99/4 pieces 2.99/kg New Zealand 1.89/4 pieces New Zealand Netherlands

Netherlands 1.79/kg

1.79/0.75 Netherlands 1.35/0.75 Netherlands kg kg 4.99/2 kg Netherlands 1.99/2kg Netherlands 2.99/2 kg Netherlands 1.99/2 kg Netherlands

Source: Author¶s observations, October 2000. 2.2.3 Distribution channels Specialized organic stores are the main outlet for organic fruit and vegetable sales, with around 50 percent of total sales, followed by subscription schemes, a popular way through which organic fruits and vegetables are sold. Every week subscribers receive a bag of fruits and/or vegetables, mostly those in season, but also imported produce. Subscription schemes are estimated to have grown to 40 000 in 1999, and stabilized since then (LNV, 2000). However, as mentioned before, the influence of supermarkets selling organic fresh fruits and vegetables has placed a strong competitive pressure on subscription schemes, and towards the end of 2000 a slight decrease in the number of subscriptions has been observed. Supermarkets rank third in sales of fruits and vegetables (in overall organic sales supermarkets are second, see above). Finally, a fourth retail channel is the boeren-markten (farmers markets), weekly markets where organic products are sold - often by the producers themselves (see Graph 3). These markets are found throughout the country. The main products sold include fresh fruits and vegetables, meat and milk. As of November 2000, there were 33 organic markets in the Netherlands (Ecomarkt, 2000). The umbrella organization for farmers markets (Stichting Landelijk Platform Biologische Markten) expects that the total number of these markets will continue to grow, reaching 50 in 2005. Graph 3: Dutch-produced organic fruit and vegetables: To where do they go?

Source: Productboard for Horticulture, 2000.

2.3 Consumer attitudes About 96 percent of Dutch consumers have heard of organic foodand know of the existence of organic certification labels, but around three quarters of them do not know what those labels stand for, nor are they able to indicate the advantages and disadvantages of certified organic products. The Ministry of Agriculture, Nature Management and Fisheries of the Netherlands distinguishes four different groups of consumers: (i) the µheavy users¶; (ii) the selective purchasers; (iii) the µconnoisseurs¶; and (iv) the µnon-connoisseurs¶ (LEI, 2000). For details on characteristics of each of these groups, see Table 4. Table 4: Profile of Dutch consumers Name of group Heavy users Percentage Characteristic 1-2 %
y y y y

Buy only organic food Buy in specialized shops Buy always some products in specialized shops Buy other food products in conventional channel

Selective purchasers

3-4 %

Connoisseurs Non-connoisseurs

± 35 % ± 56%

y y

Are informed about organic products, but buy them only sporadically Are poorly informed about organic products and never buy them

Source: LEI, 2000. To increase the share of organic food in total consumption,the µheavy users¶ and µselective purchasers¶ are identified as the most interesting. Research has been done on the main consumer determinants on whether or not to purchase organic products (LEI, 2000). These stimulating and limiting factors are given in Graph 4; the percentages give the importance of the factor. For about half of all consumers, the most important reason for buying an organic product is health (partly due to the guaranteed absence of chemical residues and GMOs). Other reasons are the environmentally friendly way of production and better taste. Graph 4: Stimulating and limiting factors for (non-)purchase of organic products

Source: LEI, 2000. Opposed to these stimulating factors, there is a series of limiting factors. Although precise percentages are not available, some market sources state that the prices for organic products compared with conventional products is the overriding limiting factor for Dutch consumers. Various traders and retailers confirmed this during interviews. They also mentioned that the average Dutch consumer considers health and environmental factors (i.e. stimulating factors; see Graph 4 above) as long as they are not reflected in higher prices. Even a low increase in price (up to 20 percent above conventional price) might prevent Dutch consumers from purchasing

organic products. The current price premium, however, is generally higher and in some instances much higher (up to 200 percent more) than the price for conventional products. Other limiting factors, besides the price, include: (i) limited availability of organic products in conventional retail channels (supermarkets); (ii) unfamiliarity of consumers with the EKO-label; and (iii) small-scale distribution, inducing higher costs, which in turn leads to a vicious circle of small turnover, therefore higher prices and consequently small turnover, etc. Moreover, some market sources indicate that many Dutch consumers distrust the reliability of organic labels and of the organic certified production process. 2.4 Constraints to market development Besides the attitude of consumers towards organic products and their price, there are other factors that may further limit market expansion. A comprehensive study carried out by KPMG for the Ministry of Agriculture, Nature Management and Fisheries (LNV, 2000) identified a wide range of bottle-necks in the Dutch organic sector, including: (i) lack of coordination of market players; (ii) no guarantee of the sales possibilities; and (iii) poor communication. The study maintained that the overriding limiting factor for further expansion of the organic fruit and vegetable market lays on the production side. Many farmers expect that prices for organic products at the farm-gate level will decrease in the forthcoming years. They are therefore less enthusiastic to convert from conventional production. A second factor depressing further market development is limited willingness to pay a significant price premium for organic products by Dutch consumers (see above). 3.Imports of organic fruit and vegetables 3.1 Market access: regulation and certification The basic regulations on organic imports are those set out in Council Regulation (EEC) No. 2092/91. However, organic certification is only one of the requirements needed to enter the Dutch market. Importers are requested to specify precisely the product profile, its quality standards and packaging/labelling requirements against which each delivery will be inspected. A major obstacle to supplying Dutch importers is the transport and storage of fruits and vegetables, which must adhere to organic regulations and must ensure that top quality products reach the consumer (ITC, 1999). The Ministry of Agriculture, Nature Management and Fisheries appointed SKAL as the organization accredited to certifying organic producers. SKAL also inspects and controls whether organic production requirements are met.

Regarding imports from third countries (those which are not on the EC list of third countries, as described in Council Regulation (EEC) No. 2092/91, Article 11), import licenses should be obtained through LASER2, based in Roermond. This authority is part of the Ministry of Agriculture, Nature Management and Fisheries.

3.2 Imports of organic fruit and vegetables Although the Netherlands does not collect official data on imports of certified organic products, it is a major importer. Dutch companies play an important role in import/export trade and large quantities (up to 80 percent) are re-exported, mostly to other European countries. It has been difficult to obtain reliable quantitative information on organic imports. In addition, interviews of importers have not always resulted in precise indications of imported quantities. Some traders have a restricted policy towards providing information on their imports, while for others, the Dutch market is only a small fraction of their total traded volume. For example, EOSTA, the largest Dutch organic trader in fruits and vegetables obtains 95 percent of its total turnover outside the Netherlands. Although based in the Netherlands, their main markets are Western Europe (Germany, United Kingdom and Scandinavia) and the United States. Another complicating factor in the compilation of data on imports of organic fruits and vegetables is that a large amount of imports go through Belgium (Antwerp). It is not always easy to obtain figures on imports from the country of origin. What follows is an estimation of imports, based on various sources of information, including interviews with importers and traders. As shown in Graph 3, about 35 percent of domestic production of organic fruits and vegetables (23 000 tonnes) remains in the country. Many sources commented that about half of the domestically consumed organic fruits and vegetables are imported. Therefore, the total domestic market for organic fruits and vegetables is estimated at around 42 000 tonnes, with imports ranging between 17 000 and 22 000 tonnes. Note that this is only a rough figure; generally, the percentage of imports in total consumption figure of organic fruits is higher (60 percent) than for vegetables (40 percent), with fluctuations during the year dependent on the domestic harvest. Some traders indicated that the imports of organic fruits are increasing fast, not only in absolute figures, but also compared with imports of organic vegetables. 3.2.1 Breakdown of organic fruit and vegetable imports by product Table 5 gives estimates of organic fruit and vegetable imports per product for the year 2000, based on interviews with importers and traders in the organic fruits and vegetables sector in the Netherlands. Apples, pears, citrus fruit, onions, bananas, grapes, kiwi and tomatoes are the major products imported. In smaller quantities, mangoes, avocados, garlic and ginger are also imported. Table 5: Net imports of certified organic fruits and vegetable (in tonnes), 2000 Product Citrus fruit Apples Pears Onions Bananas Kiwi Mango Estimated imports for domestic consumption(in tonnes) 5 500 - 7 500 2 500 - 3 500 1 500 - 2 500 500 - 1 000 750 - 1 000 2 500 - 3 500 Less than 500 Countries of origin Italy, Spain, South Africa, Argentina, Israel, Australia Chile, Argentina, Brazil USA, Argentina Argentina Dominican Republic, Colombia, Ecuador, Peru Spain, Israel New Zealand, Italy Burkina Faso, Guinea, Dominican Republic, Mexico, Israel, Brazil Mexico, Spain, Israel, South Africa Brazil, Honduras, Dominican Republic

Tomatoes 750 - 1 000

Avocados Less than 500 Ginger Less than 100

Garlic Grapes Others TOTAL

Less than 300 Less than 100 n.a. 17 000 - 22 000

Argentina Argentina Argentina, Chile n.a.

Asparagus Less than 100

Source: Author¶s calculations based on market survey. 3.2.2 Re-exports: destination and percentage Note that the above table tries to identify import quantities of products consumed within the Netherlands. Total imports of organic fruits and vegetables are much higher, since the Netherlands, due to its geographical location and well developed infrastructure with the major port of Rotterdam, is a main entrance gate for Europe¶s hinterland. Precise quantities of re-exports of these products could not be obtained, but are for some products only a small proportion is domestically consumed. For example, total imports of organic bananas are estimated at about 8 500 tonnes (preliminary figure for 2000), whereas the domestic consumption of organic bananas is estimated at around 750 tonnes. Therefore, over 90 percent of imported organic bananas is reexported. 3.3 Main importers and their principal products (contact details in annex) There are some major players in the Dutch organic market for fruits and vegetables. Most of them are involved in imports, exports and domestic trade. The organic market in the Netherlands is relatively small, and generally, these companies operate at a European rather than a Dutch scale. Calculations of the Greenery estimated that, in 1998, the main six market players had the following market share in the organic fruits and vegetable sector (Groenten en Fruit, 03/12/99): Eosta (25 percent), Zann (21 percent), Odin (12 percent), Nautilus (11 percent, Bick (5 percent) and the Greenery (1.5 percent). Based on interviews with traders and importers, it is expected that the Greenery¶s market share, through its Disselkoen Organic BV enterprise, will take up a position in the top three, mainly thanks to its organic exports. Note that the above list does not include Trabana. Specialized in the import of organic tropical fruit, Trabana is among the most important European importers of organic bananas, accounting for about 20 percent of total European imports of organic bananas (year 2000). 3.4 Constraints to import growth Although the Dutch organic market is growing, various factors might limit a further expansion of the market and/or organic imports. As already mentioned, the limited willingness of the average consumer to pay a price premium over conventional products of more than an estimated 20 percent is important. As long as the price gap between conventional and organic products continues at the same range (sometimes up to 200 percent), no sharp increase in demand is expected. At the same time, domestic organic production of temperate zone products (mostly vegetables) and greenhouse production (peppers, tomatoes and cucumbers) is catching up, stimulated through Government policy with subsidies for the conversion period. For these products, it is more likely that the Netherlands will become a major organic exporter instead of an interesting import market. Therefore, an increase in imports is most likely for other products, such as exotic and off-season fruits and vegetables. As referred to in part 2, there is a certain distrust among groups of consumers about the reliability of certification mechanisms abroad, which is an additional constraint to import growth. Moreover, generally,

importers and traders express their preference for products from those countries, from which the transport distances are shortest ("as close by as possible, as far away as necessary"). 3.5 Opportunities for imports from developing countries Despite the wide range of factors with a possible negative impact on a further increase in demand for organic fruits and vegetables in general, there are also opportunities for an increase in imports of certain products from third countries. Supermarkets, the fastest growing outlet in organic sales, prefer to sell year-round products at a stable price and quality. However, currently, they express that only a limited range of products meets those conditions. This is confirmed by research among 125 supermarket managers, in which 61 percent of those interviewed were dissatisfied with organic products, especially the price-quality ratio of organic fruits and vegetables (EKO-Monitor, October 2000). Therefore, in order to enable year-round supplies in sales outlets, developing countries, especially those in the southern hemisphere, could take advantage of this and supply the Dutch (and European) markets during the northern winter, when domestic production is virtually absent. Secondly, with the growing awareness among consumers of the existence of organic products among consumers and the increasing distrust in conventional products, a rise in imports of organic fruits and vegetables is likely for those products not produced in the northern hemisphere, especially exotics. Examples include, among others, banana, mango and pineapple. Finally, with the well established infrastructure and a long history of imports and re-exports, the Netherlands provides a significant gateway into the European hinterland. Dutch traders are highly experienced and are accustomed to working with producers from the initial stages of conversion and certification. Even if the growth of the Dutch organic market for fruits and vegetables continues to lag behind the growth in other European markets, imports into the Netherlands are likely to increase in the forthcoming years. 4.Conclusions and market opportunities for developing countries The Dutch organic market gained momentum in the late 1990s. Supported by Government policy, the number of farms being certified organic has sharply increased, with growth rates up to 30 percent per year. Furthermore, consumers have become more familiar with the national organic label (EKO-keurmerk), and organic sales have increased significantly during the last few years, although the growth has been from a small base and at a lower pace than in many other European countries. However, the Dutch organic market is expected to continue to grow, and with the introduction of organic products in the major supermarkets some years ago, a new group of consumers has been reached. Although consumers generally express concern about their health and the environment and indicate a preference for food being produced in a (more) sustainable way, the overriding limiting factor for further expansion of the organic market seems to be the unwillingness of the average Dutch consumer to pay a price premium of over 30 percent above the price of conventional products. Moreover, living in the world¶s third agricultural exporting country, Dutch consumers are used to pay low prices for agricultural products. A strong consumer price-consciousness results in the fact that about two-thirds of nationally produced fruits and vegetables are exported, mostly to countries close to the Netherlands, such as Germany and the UK. Producers and exporters frequently indicate that they get a higher price abroad; consumers in those countries are willing to pay a higher price. Supermarkets are increasingly important as a sales outlet for organic products. Moreover, it is expected that the specialized organic shops, still the main retail channel (in the year 2000), will become more professional in the next few years so as to be able to continue to compete with conventional supermarkets. The example of the "organic supermarket" in Rotterdam (see section 2) is what many interviewed traders and key informants

expect to be the way in which the major part of organic products will be sold in the Netherlands in the not so distant future. With Government policy targeted at more primary production converting towards organic methods, it is expected that domestic production will continue to grow during the forthcoming years. Based on the documents reviewed and interviews with key players in the trade and sales sectors of organic products, it seems valid to conclude that it is more likely that the Netherlands, a major agricultural exporter, will also become a major exporter of organic vegetables, especially for temperate zone products (mostly vegetables) and greenhouses products (peppers, tomatoes and cucumbers). Currently, supermarkets find it difficult to provide year-round fresh organic produce to their clients at constant prices (more importantly for fruits than for vegetables - which are mostly produced domestically). Therefore, in order to guarantee year-round organic supplies to consumers, high potential exists for those products which currently are not available throughout the year. Such off-season supplies provide clear opportunities for countries from the southern hemisphere, which have comparative advantages during the northern winter to provide fresh fruit. This will be especially the case for perishable fruits (such as grapes), which are more difficult to store. Opportunities for developing countries in exporting stonefruit and citrus fruit to the Netherlands might face serious competition from the already well established organic export sector in Spain and Italy. The often heard slogan "as close by as possible, as far away as necessary" underlines that (potential) importers will try to purchase their products in those countries from which transport to the Netherlands is minimal. A second important opportunity exists for tropical fruits and vegetables (which cannot be produced in Europe due to climatic conditions). These products are imported, allowing third countries to supply the market. Opportunities for other products are less clear. An important potential factor of growth lies in a lower price difference between organic and conventional products. Being a major importer and re-exporter, the Netherlands is an attractive entrance to the European organic market in general. The well established infrastructure and a long history of imports and re-exports in the Netherlands provides a significant gateway into the European hinterland. Most of the products entering the Netherlands through its port of Rotterdam continue their journey to neighbouring countries and Scandinavia. Dutch traders are highly experienced and are accustomed to working with producers from the initial stages of conversion and certification. This experience might be of great use for potential organic exporters in developing countries. References Biofood, Biologische AGF in de supermarkt groeit als kool, (fast growth of organic fruits and vegetables in the supermarket), page 7-11,September 2000 Ecomarkt, Biologische boerenmarkten (organic farmers markets), November 2000, http://www.ecomarkt.nl/boerenmarkt/ Distrifood, 2001, Supers overvleugelen natuurvoedingsspeciaalzaken, 24 March 2001, in: www.agriholland.nl/nieuws ITC, Organic food and beverages, World Supply and Major European Markets, Product and Market Development, Chapter 9: "The Netherlands", p.199 - p. 22, Geneva, 1999 LEI, Biologisch landbouw en Nederlandse consument (Organic Agriculture and the Dutch Consumer), Wageningen University and Research Centre, The Hague, March 2000

LNV, An organic market to conquer; Policy Document for Organic Agriculture 2001-2004, Ministry of Agriculture, Nature Management and Fisheries, The Hague, September 2000 LNV, Knelpuntenstudie biologische landbouw (Bottle-necks in Organic Agriculture), study done by KPMG for the Ministry of Agriculture, Nature Management and Fisheries, The Hague, September 2000 LNV, Evaluatie Plan van Aanpak Biologische Landbouw 1997-1999, Expertise centrum LNV, Ede, August 2000 Michelsen, et al, The European Market for organic Products, Growth and Development, Organic farming in Europe: Economics and policy, Volume 7, 1999 Platform Biologica, EKO-Monitor, various issues (February 2001, October 2000, May 2000, January 2000, October 1999), Utrecht, the Netherlands Platform Biologica, Op zoek naar nieuwe klanten, (Looking for new customers), Conference, September 2000 Productboard for Horticulture, De Nederlandse biologische groenten- en fruitsector in opmars?, Wilco van den Berg, Zoetermeer, September 2000 Rabobank, Biologische groeistuipen, Een verkenning van de ontwikkeling van aanbod en vraag in de biologische sector, Utrecht, March 2000 Rabobank, Biologische landbouw, Utrecht, May, 1998 USDA, Organic Products, Market for U.S. Apples and Pears, Foreign Agricultural Service, November, 2000 Annex Contact details ZANN Bio-Center Director: W. Rog Marconistraat 1-11, NL-3029 AE Rotterdam Tel: +31-10-4775688 begin_of_the_skype_highlighting 4775688 end_of_the_skype_highlighting Fax: +31-10-4775070

+31-10-

Eosta BV P.O. Box 348 2740 AH Waddinxveen Netherlands e-mail: [email protected] website: www.eosta.com Phone: 0031 (0) 180 63 55 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: 0031 (0) 180 63 83 43 Odin International BV Director: K. Bakker Postbus 225 4190 CE Geldermalsen Tel: +31-345-577133 begin_of_the_skype_highlighting

0031 (0) 180 63 55

+31-345-

577133 end_of_the_skype_highlighting Fax: +31-345-576848 Trabana BV Director: B. Schneiders Latexweg 12 1047 BJ Amsterdam Tel: (31) - 20 407 4455/33 Fax: (31) - 2- 497 2990 [email protected] Udea BV Vluchtoord 41 5406 XP Uden Tel.: +31 413 256700 begin_of_the_skype_highlighting 256700 end_of_the_skype_highlighting Fax: +31 0413 256156 http://www.udea.com The Greenery International Ben Linthorst Postbus 79 2990 AB Barendrecht Tel: (31) 180 - 655140 begin_of_the_skype_highlighting 655140 end_of_the_skype_highlighting Fax: (31) 180 - 655201 Nautilus Coöperatie Henk Leenstra Bronsweg 22 NL-8222 RB Lelystad Tel: +31-320-237000 begin_of_the_skype_highlighting 237000 end_of_the_skype_highlighting Fax: +31-320-280155 Agr. Production Coöperatie Biofruit Harmen Peters Eltenseweg 1, NL - 6915 KA Lobith Tel: +31-316-542042 begin_of_the_skype_highlighting 542042 end_of_the_skype_highlighting Fax: +31-316-542327 Activities: marketing association for fruit Products Manager Organics Albert Heijn Ms. L. van Gast, Proviancialeweg 11 Postbus 3000, 1500 HA Zaandam Tel: +31-75-6592218 begin_of_the_skype_highlighting

+31 413

(31) 180 -

+31-320-

+31-316-

+31-75-

6592218 end_of_the_skype_highlighting Fax: +31-75-6598644 [email protected] De Nieuwe Weme BV Postbus 90 8440 AB Heerenveen Tel: +31-513-630333 begin_of_the_skype_highlighting 630333 end_of_the_skype_highlighting Fax: +31-513-650170 Retailer Konmar BV De Werf 13 2544 EH Den Haag Tel: +31-70-3215121 begin_of_the_skype_highlighting 3215121 end_of_the_skype_highlighting Fax: +31-70-3291174 Retailer NWO (De Natuurwinkel/Gimsel/De Groene Winkel) Mr. Hartveld Postbus 193 3840 AD Harderwijk Tel: +31-341-464211 begin_of_the_skype_highlighting 464211 end_of_the_skype_highlighting Fax: +31-341-464204 De Groene Passage (Gimsel), Mariniersweg 1-31, 3011 NB Rotterdam Tel: 31 - 1- 233 1933 Organizations in the organic sector Platform Biologica Postbus 12048, 3501 AA Utrecht Tel: +31-30-2300713 begin_of_the_skype_highlighting 2300713 end_of_the_skype_highlighting Fax: +31-30-2304423 [email protected] www.platformbiologica.nl Umbrella association for organic sector LBI-Louis Bolk Instituut E.T. Lammerts van Bueren Hoofdstraat 24 NL-3972 LA Driebergen Tel: +31-343-517814 begin_of_the_skype_highlighting 517814 end_of_the_skype_highlighting Fax: +31-343-515611

+31-513-

+31-70-

+31-341-

+31-30-

+31-343-

[email protected] Landelijk Platform Biologische Boeren markten Jeep ter Heiden Postbus 353, NL - 1900 Castricum Tel: +31-251-67 15 07 begin_of_the_skype_highlighting 07 end_of_the_skype_highlighting Asociation for organic farmers markets VBP Vereniging biologische producenten Edisonstraat 26, NL - 3817 VN Amersfoort Tel: +31-33-4617734 begin_of_the_skype_highlighting 4617734 end_of_the_skype_highlighting Association of organic producers

+31-251-67 15

+31-33-

National authorities regulating labeling and importation of organic foods Ministry of Agriculture LASER P.O. Box 965 6040 AZ Roermond Tel: +31-475-355555 begin_of_the_skype_highlighting 355555 end_of_the_skype_highlighting Fax: +31-475-318939 CBI - Centre for the Promotion of Imports from developing countries WTC Beursbuilding, 5th floor Postbus 30009 3001 DA Rotterdam Tel: +31-10-2013434 begin_of_the_skype_highlighting 2013434 end_of_the_skype_highlighting Fax: +31-10-4114081 Skal P.O. Box 384, NL-8000 AJ Zwolle Tel: +31-38-4268181 begin_of_the_skype_highlighting 4268181 end_of_the_skype_highlighting Fax: +31-38-4213063 [email protected] www.skal.com Inspection, Certification LEI-DLO Agricultural Economics Research Institute Postbus 29703 2502 LS The Hague Tel: +31-70-3308341 begin_of_the_skype_highlighting 3308341 end_of_the_skype_highlighting

+31-475-

+31-10-

+31-38-

+31-70-

Fax: +31-70-3615624 [email protected] Wageningen University, Department of Ecological Agriculture and Society Prof. Dr. E.A. Goewie Haarweg 333, NL - 6709 RZ Wageningen Tel: +31-317-484448 begin_of_the_skype_highlighting +31-317484448 end_of_the_skype_highlighting [email protected] http://www.dpw.wageningen-ur.nl/eas/ Rabobank Utrecht Stafgroep Duurzame ontwikkeling Mr. Krouwel Director Sustainable Developments P.O. Box 17100 3500 HG Utrecht Tel: 31 - 30 - 216 3524 Secretary: Ms. Heuvel [email protected] American Embassy Philip A. Letarte Agricultural Councelor Lange Voorhout 102 2514 EJ The Hague Tel: (31) - 70 - 310 92 99 Fax: (31) - 70 - 365 7681 Ministry of Agriculture, Nature Management and Fisheries (LNV) Bezuidenhoutseweg 73 2594 AC Den Haag Paul Davina: 070 - 378 5507 Gabrielle Nuytens: 070 378 4665 Productboard for Horticulture Mr. Wilco van den Berg Louis Pasteurlaan 6 2700 AG Zoetermeer Tel: 079 - 347 07 07 Fax: 079 - 347 04 04 [email protected]

1 2

In the EC, much less organic fruit is generally produced than organic vegetables. LASER: Landelijke Service bij Regelingen (National Regulations Service)

SWEDEN
Introduction With a population of just 8.9 million people, Sweden is one of the European Community¶s (EC) smaller national markets for foodstuffs. Of the country¶s total supply of food and beverages, about 80 percent is produced domestically while imports account for 20 percent. However, for fresh fruit and vegetables, the import share is substantially higher, over 70 percent. Since the beginning of the 1990s, the Swedish Government has actively supported organic farming, resulting in a steady growth of organic land areas. Furthermore, several important market players within the retail, wholesale and industrial sectors have in recent years committed themselves to promote a wide range of organic food products. Despite the fact that the market for organic food products has shown double-digit growth rates of the past five years or so, especially within the dairy, cereal and the fresh produce sectors, the overall organic market share is still low, about one percent of the total food consumption. However, the large supermarket chains, which largely control the retail distribution of organics in Sweden, have all set ambitious targets for organic items that if implemented, would substantially increase the current market size. Trade sources are therefore confident that organic foods could account for three to four percent of the total Swedish food consumption within a few years. 1.Organic farming in Sweden 1.1 Overview on the development of organic agriculture Of Sweden¶s total land area, 450 000 square kilometres, half is covered with forest. Its arable land amounts to only 2 800 000 ha, about seven percent of the total land area. The temperate climate is favourable for farming, cold winters (that inhibit infestations of many crop pests) and warm summers (with days of long sunlight) allows production of high quality vegetables and berries. Nonetheless, agricultural conditions differ widely between regions, which is shown by the fact that farmlands in Scania in the south enjoys up to 100 days¶ longer growing season than in farmlands in the far north. Organic farming has since around 1990 become an increasingly important factor in the national agricultural policy. In 1994, the Swedish parliament set a goal that by the end of 2000, ten percent of the arable lands should be using organic methods. The goal was reached, in fact eleven percent of Sweden¶s arable land was in 2000 either certified organic or was using the national support programme for organic farming, the highest recorded share within the EC. The Swedish government launched a new overall target at the end of 1999 - 20 percent organic lands in 2005. At the same time the Ecological Farmers Association adopted a target that implies that by 2010, 30 percent of all farmland production should be organic. However, according to Swedish regulations, products produced at these farmlands may only be marketed or sold as "organic" if the cultivation has been certified by any of the two official national organizations for

control of organic farming, KRAV and Demeter. Of these, KRAV is the dominant control organization. Most Demeter members are also members of KRAV. The land area under KRAV control amounted to 139 000 ha at the end of 2000 corresponding to 5.1 percent of the total farmland (excluding permanent pasture lands). Grass and clover leis, including green manure and fallow fields, occupy the largest share of certified KRAVlands, about 67 percent, while the remainder mainly consists of lands for producing cereals (about 30 percent). Only a small fraction, or 1.5 percent, was used for production of fruit and vegetables (see Table 1.2). Approximately 3 300 Swedish farms were at the end of 2000 affiliated with the control system of KRAV, of which about 10 percent were engaged in production of fruit and vegetables. 1.2 Organic fruit and vegetable production At the end of 2000, the total farmland area under KRAV-certified fruit and vegetables production amounted to 2 300 ha, of which over 90 percent was under vegetables. 1.2.1 Production of fruit and berries Commercial production of organic fruit and berries covered about 210 ha in 2000, of which fruit accounted for 65 ha and berries for 145 ha. There has been a decline in the production area in recent years, but due to higher yields, the actual production output has been relatively stable. Apples is the main commercial fruit product, but small volumes of pears, plums, cherries, and whitehart cherries are also cultivated. There are at present only two commercial producers of organic apples in Sweden. The total production of commercial apples is approximately 20 000 tonnes per year, of which organic items account for 1-2 percent (200-400 tonnes). Within 3-5 years, the share should rise to 2-4 percent, according to one of the leading distributors. It should be noted that in addition to commercial growers, there is also a substantial production of home-grown apples for home consumption, approximately 50 000 tonnes. Due to lower yields, it is estimated that the cost to produce organic apples is 75-100 percent higher than conventional ones. The production of organic berries is almost entirely made up of strawberries, which is a very traditional Swedish dessert item, especially during the summer season. 1.2.2 Production of vegetables Organically outdoor grown vegetables account for approximately 5-6 percent of the total farmland area of production of outdoor grown vegetables in Sweden. However, since the yield of organic vegetable production is on average 65-75 percent of the yield of conventional production, the actual share of the total vegetables production is lower, approximately 3.5-4 percent. Since 1997, the area used for growing organic vegetables has shown a relatively modest enlargement, or about 8 percent. However, due to a rise in production yields, the actual increase in production is substantially higher. In 2000, production of organic vegetables covered an area of 2 100 ha, of which over 80 percent (or 1 700 ha) was used for growing of potatoes and carrots. It is estimated that organic potatoes account for about three percent of the total potato acreage. The remaining 400 ha was mainly used for the production of beetroot,

onions, cabbage, swede, peas, turnips, horseradish, leeks, and squash. Of these products, beetroot and peas are mainly intended for the domestic food processing industry. Due to climatic conditions, products such as tomatoes, cucumber and iceberg lettuce are difficult to grow organically in Sweden, which explains why the outdoor production of these items is very limited. On the other hand, production of these items in greenhouses is more important. Organic greenhouses covered about 80 000 square metres in 2000, of which 90 percent was made up of tomatoes and cucumber. Other important greenhouse products are green peppers, lettuce, and fresh herbs. Of the total acreage of greenhouses, organic production accounts for six percent. However, due to lower production yields, the organic share of the production is only four to five percent. Some products have a higher share, e.g. tomatoes, which account for five to six percent of the tomato production. One greenhouse product group has during the last couple of years shown a very large increase, namely organic vegetables grown, distributed and sold to consumers in pots. The product range comprises some 25 different products of which 45 percent consist of parsley, dill and chives, 30 percent of different kinds of lettuce, and 20 percent of fresh herbs. Table 1: Development of KRAV-certified farming 1995-2000 Conventional farmlands and organic KRAV-certified farmlands (including lands under conversion). Note that permanent pasture lands are not included in these figures. Cultivated acreage (hectares) of which: Year 1995 1996 1997 1998 1999 2000 2 767 000 2 812 000 2 799 000 2 784 000 2 747 000 2 747 000 KRAV-certified 44 000 71 000 95 000 103 000 122 000 139 000 KRAV share (%) 1.6 2.5 3.4 3.7 4.5 5.1 No. of KRAV certified - farmers 2 473 2 741 2 733 2 870 3 253 3 328

Source: KRAV.

Table 2: Type of crops on KRAV-certified farms 1999-2000 Organic farmlands (certified and under conversion by KRAV) including permanent pasture lands Acreage (hectares) Crops Fruit & vegetables Cereals Oilseeds Pasture, temporary & permanent Green manure & fallow fields Other 1999 2 278 44 614 2 343 95 184 10 519 526 155 463 2000 2 315 44 639 1 362 94 826 10 420 612 154 174 Share (%) 2000 1.5 29.0 0.9 61.5 6.8 0.3 100.0

Source: KRAV.

Table 3: Development of organic fruit and vegetables - farmlands 1997-2000 Organic farmlands producing fruit and vegetables, either certified or under conversion by KRAV Acreage (hectares) Crops Potatoes Vegetables - Carrots & other roots - Other vegetables Fruit & berries - Fruit - Berries 2 168 Source: KRAV. 2. The Swedish market for organic fruit and vegetables 2.1 Overview of the market for organic food and beverages During the past decade the Swedish market for organic food has expanded rapidly, about 20-25 percent annually, but had there been more supplies, the increase would have been even higher. There are now over 3 000 certified organic products in Sweden, of which approximately 200 are different kinds of fresh fruits and vegetables. Consumption of organic foods amounted in 2000 to roughly 90 000 tonnes by volume and SKr1 350 million by market value (incl. 12 percent VAT). This means that organic products have reached an estimated market share of about 1.3 percent by volume and 0.8 percent by value. It should be noted that these figures cover all consumption of food and beverages in both the retail and restaurant sectors. If only retail sales are included, the organic share is estimated at 1.5 by volume and 1 percent by value. In general, organic products have a much higher share within the retail sector, while the share within the restaurant sector is substantially lower. Another factor to consider is that the figures also include product groups, which today have no or few organic items available, such as fish and crustaceans, confectionery, and soft drinks, beer, and spirits. The organic consumption is at present dominated by dairy products and fresh fruits and vegetables, which together account for about 80 percent of the volume and almost 65 percent of the market value (see Table 4). Table 4: Consumption of organic foods - 2000 Note: figures are estimates based on information from trade sources. Consumption value incl. VAT (12 percent) Quantity (tonnes) Product group Dairy products, eggs & fats Fresh fruit & vegetables Share (%) 56 000 62 19 000 21 Value (SKr million) Share (%) 600 44 280 21 1 961 220 294 1997 1 244 704 1998 1 007 660 1999 1 444 581 165 416 253 77 176 2 278 2000 1 521 583 204 379 211 65 146 2 315 Share (%) 2000 65.7 25.2 8.8 16.4 9.1 2.8 6.3 100.0

Processed fruit & vegetable products Cereal & bread products* Meat & cured meats Fish & crustaceans Coffee, tea & cocoa Other food products** * Incl. rice and pasta

2 500 5 000 4 000 1 000 2 500 90 000

3 6 4 0 1 3 100

60 90 150 90 80 1 350

4 7 11 0 7 6 100

** Ice cream, chocolate, confectionery, sauces, sugar, spices, salt, honey and beverages (mineral water, soft drinks, beer, wine and spirits) Source: Fox Research (based on trade sources). 2.2 Market for organic fruit and vegetables The Swedish market for organic fresh fruit and vegetables amounted to about 19 000 tonnes in volume and SKr280 million (including VAT) in market value in 2000. This means that organic fresh produce had gained a market share of 1.4 percent by volume and 1.7 percent by value (see Tables 5 and 6). Trade sources estimate that the annual rate of growth has on average been 20-25 percent during the last five years. For 2001, a 30 percent increase is expected. The strong increase in demand is expected to continue also in the next few years. 2.2.1 Market for fruit and berries The consumption of organic fresh fruit and berries amounted to around 4 000 tonnes in 2000, which corresponds to a market share of 0.8 percent. By market value, the consumption amounted to about SKr80 million including VAT (share 1.1 percent). The main organic fruit items are bananas, apples and pears, and citrus fruits. Bananas, which was introduced as organic in Sweden in 1994, account for about half of the organic fruit supply. During 2000, consumption of organic bananas had increased to approximately 2 000 tonnes, which equals about 1.3 percent of the market for bananas (by value, the market share is 1.7 percent). The forecast for 2001 is 2 500 tonnes. As supplies increase, the organic market share is expected to reach at least 3-4 percent in the near future. Consumption of organic apples and pears amounted to about 1 000 tonnes in 2000, which corresponds to 0.8 percent of the supply of apples and pears. Even if the market for organic citrus fruit has expanded rapidly in recent years, it is still relatively insignificant, about 600 tonnes, well below one percent of the citrus fruit supply. The present product range mainly consists of oranges, satsumas, clementines, grapefruit and lemons. The relatively low market shares for both apples, pears and citrus fruits is mainly due to inadequate and infrequent supplies. Since these fruits all have a large market in Sweden, trade sources regard the organic items as having a much larger potential.

Kiwi has become a popular organic, since it has good durability. Other important organic fruit items are plums, peaches, melons, and grapes, as well as strawberries and other types of berries. There is also a growing consumption of organic tropical fruit, especially mango, papaya and pineapples. According to a leading retailer, there is high demand for the following organic fruit items: apples, pears, oranges, satsumas, lemons, grapes, papayas, passion fruit, figs, strawberries, raspberries, blueberries and currants. 2.2.2 Market for vegetables The consumption of organic vegetables amounted to approximately 15 000 tonnes in the year 2000, which equals 1.8 percent of the consumption of fresh vegetables. The estimated market value amounted the same year to SKr200 million (including VAT), equalling a market share of 2.1 percent. For 2001, the leading suppliers estimate a market increase of another 30 percent, which means that the market should reach almost 20 000 tonnes by volume and SKr260 million by value. Potatoes account for a little more than half of the Swedish market for organic vegetables (corresponding to about 8 000 tonnes in 2000). This means that organic potatoes have gained a 2.1 percent share of the market for fresh potatoes. However, within the retail segment, the market share is about 2.5-3 percent, while the share within the restaurant sector is well below 0.5 percent. Another important organic item is carrots, which during 2000 gained a consumption level of about 2 500 tonnes, corresponding to about three percent of the consumption of fresh carrots. Trade sources are of the opinion that if more organic potatoes and carrots were available, they would most probably achieve much larger market shares. Other important organic vegetables are tomatoes, cucumber, lettuce, onion, cauliflower, cabbage, mushrooms, paprika, avocado, and fresh herbs. Even if there are no official figures available, trade sources estimate that during 2000 the consumption of these products was about 4 500 tonnes. Even if there is a growing demand for all types of organic vegetables, retail trade sources list the following products as of especially high interest: garlic, peas, beans, asparagus, chilli peppers, okra, and different kinds of lettuce (including iceberg lettuce and endive), as well as mixed and sliced lettuce in ready-packed consumer packages. There is also a growing demand for fresh organic herbs (i.e. basilica, thyme, tarragon, coriander, savoury, marjoram, oregano, rosemary). The market for alternatives to potatoes, such as sweet potatoes and cassava, has also increased in recent years, which means that there should also be a market for such organic products. Table 5: Organic share of fresh fruit and vegetables - consumption and market value 2000 Direct consumption of fresh fruit and vegetables through the retail and restaurant sectors. Value refers to market value prices, incl. VAT (12 percent) Quantity (tonnes) Product group Certified organic products Conventional products consumption 19 000 1 303 000 1 322 000 Share (%) 1.4 98.6 100 280 16 680 16 960 Value (SKr million) Share (%) 1.7 98.4 100

Sources: Swedish Board of Agriculture, Fox Research (based on trade sources).

Table 6: and organic consumption of fresh fruit and vegetables - 2000 Note that while figures for consumption are taken from official data for 1999, the figures for organic consumption and market value are based on trade estimations for the year 2000. Market value is incl. VAT (12 percent) Quantity (tonnes) Products Fruit & berries Bananas Apples & pears Citrus fruit Other fruit & berries fruit Vegetables Potatoes Carrots Other vegetables vegetables fruit & vegetables 390 000 89 000 340 500 819 500 1 321 500 8 000 2 500 4 500 15 000 19 000 2.1 2 520 2.8 1 090 1.3 5 920 1.8 9 530 1.4 16 960 68 37 95 200 280 2.7 3.4 1.6 2.1 1.7 160 000 125 000 115 000 102 000 502 000 2 000 1 000 600 400 4 000 1.3 2 300 0.8 1 640 0.5 1 320 0.4 2 170 0.8 7 430 40 18 11 11 80 1.7 1.1 0.8 0.5 1.1 Organic share Organic (%) Value (SKr million) Organic Organic share (%)

Sources: Swedish Board of Agriculture, Fox Research (based on trade sources). 2.3 Distribution channels There are three main sectors for fresh fruit and vegetables in Sweden, the retail sector, the restaurant and catering sector, and the food industry sector. 2.3.1 Retail sector The retail sector accounts for 80 percent of direct food consumption. Two main subdivisions can be identified, supermarkets and specialized food stores. A Swedish market characteristic is that organic products are predominantly sold through supermarkets. Most of the supermarkets, especially the larger ones, therefore have a relatively wide range of organic fruit and vegetables.

The specialized food store sector which comprises health food stores, fruit stores, market halls and street markets, which have a relatively minor share of the organic fruit and vegetables market. One reason is that while health food stores sell organic foods, they generally do not carry fresh produce. In general, the Swedish food retailing sector is characterized by a relatively high degree of vertical integration between the wholesale and retail trade. Three large groups and one smaller hold about 74 percent of the sales within the retail level: ICA Group 35 percent KF Group 19 percent Axfood 18 percent Bergendahls 2 percent ICA Group The ICA Group, with its parent company ICA Ahold, part-owned by Ahold of Netherlands, is the largest retailer in Scandinavia with several subsidiaries in both Sweden, Norway, Denmark and the Baltic countries. Imports of fresh produce are handled by ICA Frukt & Grönt in Helsingborg (see Chapter 4.3, Main importers). ICA has launched some 200 organic food products, of which half are marketed under ICA's own labels. The market share for organic products is still rather insignificant (below two percent). However, a goal is that in product areas where organic products are available, about ten percent of ICA sales should be organic. KF Group The KF Group, which consists of KF (the Swedish Consumer Cooperative Union) and 80 local retail consumer cooperatives, has about 2.4 million individual members and holds about 19 percent of sales within the food retailing trade. At the end of 2000, KF decided to merge its retailing activities with its sister organizations FDB in Denmark and NKL/Coop in Norway. The new company, named Coop Norden, is expected to start its activities in 2002. The organic product range consists of 650 products, of which 300 products are marketed under KF's own brand for environmental products, Änglamark. During the last couple of years, sales of Änglamark products have risen by 30-50 percent per year. Even though these products are not priced at a higher level than equivalent conventional products, the policy is that they have to be as profitable as other brands. It should be noted that KF only imports ready-packaged goods - all fresh produce is imported by part-owned Saba Trading (see Chapter 4.3). Axfood Axfood is a newly formed joint venture between the wholesaling and retailing group Axel Johnson and independent retailers in Sweden and Finland. The new group, which started operations during 1999, comprises the wholesale company Dagab as well as 1 000 supermarkets and convenience stores. The Axfood chain with the largest assortment of organic products is Hemköp, which comprises 100 large supermarkets all over Sweden. The organic range consists of some 300 articles. About three to four percent of food sales are believed to be organic. The aim is to reach 10 percent within the next three to four years. 2.3.2 Restaurant and catering sector The restaurant and catering sector accounts for 20 percent of the direct food consumption in Sweden. However, the availability of organic produce on the menus is still not so widespread. In the larger cities, there are a few

restaurants specialized in organic and health food. There are also some municipal and regional institutions (such as canteens in schools and day-care centres) that have started to provide organic menus. 2.3.3 Food industry sector There are about 300 domestic manufacturers certified by KRAV for producing organic food products. Organic fruit and vegetables, such as bananas, oranges, lemons, clementines, grapefruit, berries (either natural or chopped or minced), are used as raw materials in the production of for example frozen foods, juices, fruit preserves, baby food, etc. The food processors either buy needed raw materials or ingredients directly themselves or through the specialized importers. However, imports of fresh fruit and vegetables needed in the production of organic products are as a rule carried out through one of the specialized fruit and vegetable wholesalers. It should be noted, that for logistic, food safety and environmental reasons, Swedish manufacturers generally prefer raw materials from either domestic growers or suppliers in nearby countries. 2.4 Market access Since 1995, Sweden is a full member of the EC. This means that there are no trade barriers between the EC and Sweden. In order to be imported as organic products into Sweden or to be traded as such, organic products have to be certified by a control organization. In line with the EC Regulation, the Swedish parliament has legislated official inspectors for organic products. The two organic organizations in Sweden, KRAV (The Swedish Organic Agriculture Association) and The Swedish Demeter Association, have both been named as official inspection bodies. KRAV, which is owned by parties involved in the production and distribution of organic products -i.e. growers, food manufacturers, importers, wholesalers and retailers - is the only organic label recognized by the main supermarket chains. If other labels are used, they must be recognized by KRAV or at least comply with the EC Regulation. However, a few importers also sell products that are certified by other control organizations recognized by IFOAM, such as SKAL, FVO, Ecocert, and EKO-BCS. KRAV also approves foreign companies that produce or package according to their rules. Approval of foreign production is based on the condition that the production is in accordance with KRAV standards All imported ready-packed food items have to have labels that clearly state the country of origin. Sales of unpacked products require the following on the invoices and delivery notes:
country of origin name of control organization approval by KRAV Wrapping and packaging materials may not contain preservatives, fungicides or other chemical agents. All wrapping and packaging materials should be environmentally friendly.

The KRAV logo certifies that production is done according to organic standards, e.g. without any chemical pesticides or fertilisers, that animals are well taken care of and have free outdoor access, and that the entire

production is free from GMOs. To guarantee this, the KRAV inspectors carry out regular inspection visits on location at the farms, shops, processors, restaurants, etc. 2.5 Constraints to market development There are three factors that could be regarded as main constraints to a further positive development of the organic fruit and vegetables market, limited supplies, high price differentials to conventional items and weak consumer knowledge about organic products and production methods. 2.5.1 Supplies Among the leading retailers, limited and irregular supply is seen as the main constraint for further expansion of the fruit and vegetables market. In order to increase the market, not only are more suppliers needed, but also of suppliers that can provide their product during more than one season. In order to increase market shares, sales promotion and other marketing efforts are also essential. However, active marketing of a particular organic product can not be undertaken until the parties involved can be absolutely sure that one has dealt with the above-mentioned problems with availability and reliable supplies. The irregular availability of organic produce was also evident in a price study undertaken in January 2001 in selected supermarkets in Stockholm and Uppsala. At the time of the observations, several of the most popular organic items were not available, e.g. tomatoes, cucumber, lettuce, avocado and grapes (see Table 7). 2.5.2 Price premiums Almost all organic produce receive a premium price. For some agricultural Swedish-grown products, the producer prices are linked to conventional prices, with a premium fixed either in Swedish crowns or as a percentage. For other products, including domestic fruit and vegetables, however, prices fluctuate widely. Within the wholesale and retail levels it is customary to use percentage mark-ups for fruit and vegetables. However, in order to minimize the price differential between organic and conventional items, a few of the leading retailers have decided to use the same mark-up value for organic items as they do for corresponding conventional items. Nevertheless, according to a recent study conducted by the National Board for Consumer Policies, organic products are on average 30-35 percent more expensive than conventional items. Observations in selected supermarkets in Stockholm and Uppsala in January 2001 also indicate that the range of price premiums over conventional products is very wide, from 0 to 300 percent (see Table 7). 2.5.3 Consumer attitudes Consumer research shows that consumers look for products that have a good taste, are wholesome, easily available and convenient, and that are offered at a good price. The environment also ranks high in the average Swedish consumers¶ minds. According to several market studies, two out of three Swedes buy environmentally friendly products, of which about 40 percent do it from time to time and 10-15 percent on a more regular basis. However, the actual knowledge about organic products and the way organics are produced and controlled, does not seem to be widespread. A recent study also showed that even if the majority of consumers believed that organic products were good for the environment, a much larger majority (more than 90 percent) maintained that organic products were expensive. This means that even if the price differential between organic and conventional items is reduced, there is still a lack of awareness in many consumers¶ minds about the benefits of organic products, which limits the potential for further development of the organic fruit and vegetables market.

Table 7: Swedish retail prices of selected organic and conventional fruits and vegetables Prices based on observations in selected supermarkets in Stockholm and Uppsala in January 2001 Organic item Product Fruits Bananas Oranges Blood oranges Grapes* Kiwi Apples Pears** Avocado Vegetables Potatoes Tomatoes Cucumber Iceberg lettuce Onions Carrots Cabbage Parsnip*** 10.95 * * * 13.90 14.90 7.90 19.90 5.90-6.00 25.00-32.90 23.70-27.00 24.90-25.90 4.90-5.90 7.50-8.50 5.90 19.90 54-55 136-184 64-99 34 0 SKr per kg 22.90-24.90 16.90 16.90 39.90-45.00 17.90 20.00-34.90 48.00 * Conventional item SKr per kg 17.90-18.90 12.90-14.90 16.90-19.90 9.90-14.90 9.90-15.90 11.90-20.90 5.90-7.90/piece 20-81 26-252 130-303 Price differential (%) 21-39 13-31 0-14

* Not available as organic at the time of observations ** Sold in units of three pieces *** Only available as organic in one of the observed stores Source: Fox Research. 3.Imports of organic fruit and vegetables Imports account for a substantial share of the fruit and vegetable supplies. The main part consists of items which is not at all produced in Sweden - such as citrus and tropical fruits - and of products which are only produced part of the year, such as most vegetables, deciduous fruits and berries. Imports of these products depend on how much local produce is available or when importing is more favourable. Exports of organic fruit and vegetables are insignificant, since local supplies are still inadequate to meet the domestic demand. The only export items at present are carrots and cabbage, but only when there are temporary extra supplies. 3.1 Imports of fruit and berries Imports account for about 95 percent of the fresh fruit supplies, and about the same share applies for organic fruit. By volume, imports of organic fruit and berries amounted to approximately 3 800-3 850 tonnes in 2000, of which the most important items were bananas (2 000 tonnes), citrus fruit (600 tonnes), apples and pears (850-900 tonnes), and other items (350 tonnes) - see also Table 8.

The largest single import item is bananas, which account for almost half of organic fruit imports. During 2000, about 2 000 tonnes were imported, corresponding to 1.3 percent of banana imports. The main supplier is the Dominican Republic, but smaller volumes are also exported from Colombia, and as of 2001, Ecuador. Imports of organic citrus fruits are still relatively insignificant, well below one percent of citrus fruit imports. The present product range consists of oranges, clementines, satsumas, mandarins, tangerines, grapefruit and lemons. The main supplier is Italy, with supplement shipments from Spain and Israel. Apples and pears are imported throughout the year, even though there is some competition with domestic production during the domestic high season, i.e. between August and January. Main foreign suppliers are Italy and France, but during off-season, there are also shipments from Argentina and Chile. Sweden is also a relatively large importer of kiwi fruit, all of which comes from Italy or New Zealand. Other organic fruits imported into Sweden are peaches and nectarines (Italy), plums (Chile), grapes (Italy, South Africa), mango (Mexico, Dominican Republic, Guinea), pineapple (Brazil), and strawberries (Israel). The following items are also imported, but in limited quantities: papaya, melons, kumquats, limes, cherimoyas, custard apples, guavas, lychees, passion fruit, grenadilla, dates, figs, and cherries. 3.2 Imports of vegetables Imports account for about 60 percent of the market supply for fresh vegetables. The same share also applies for organic vegetables, but only when potatoes are excluded. When potatoes are included, the import share is down to about 35 percent. During 2000, imports of organic vegetables amounted to between 5 000 to 5 200 tonnes, of which potatoes accounted for approximately 900-1 000 tonnes (see Table 8). Table 8: Imports of organic fresh fruit and vegetables - 2000 Approximate figures based on trade estimations for the year 2000 Products Fruit & berries Bananas Apples & pears Citrus fruit Other fruit & berries SubVegetables Potatoes Other vegetables Subsupply (tonnes) Import (tonnes) Share (%) 2 000 1 000 600 400 4 000 8 000 7 000 15 000 19 000 2 000 850-900 600 350 3 800-3 850 900-1 000 4 100-4 200 5 000-5 200 8 800-9 050 100 85-90 100 87-88 95-96 11-12 58-60 33-35 46-48

Source: Fox Research (based on trade sources). The most popular organic vegetables in Sweden are potatoes and carrots, which are supplied almost entirely by domestic growers. The only real potential for exporters is probably during April and June, just before the domestic harvest begins.

For other domestically grown vegetables, such as onions, beetroot, cabbage, swede, peas, turnips, leeks, and horse-radish, imports largely depend on how much local produce is available. The domestic growing season generally starts in June and ends in August or September. During this period it is very hard for foreign suppliers to compete with domestic growers, with the result that imports rarely start until several months after the growing season has ended, i.e. in late autumn or in early winter. Tomatoes are currently the largest import item. Due to climatic conditions, organic tomatoes are difficult to grow economically in Sweden, and are therefore imported all year. The main supplier is the Netherlands, but when Dutch tomatoes are not in season, imports are from the Canary Islands, which calls for air freight. Consignments of tomatoes from the Canaries are flown in practically every day between Christmas and Easter. However, during summer and autumn, there is also competition with domestically grown greenhouse tomatoes. Other products imported are cucumber, lettuce, and paprika, as well as cabbage lettuce, aubergines, mushrooms, avocado, chilli peppers, garlic, ginger, fennel, pimentos, zucchini and pumpkins. Organic vegetables are mainly imported from other EC countries, of which the Netherlands, Italy, France, and Spain are the most important ones. Suppliers from outside the EC include Israel (onions, avocado), Argentina (onions, garlic), Mexico (avocado), the Dominican Republic (ginger), and China (pumpkins). 3.3 Main importers of fruit and vegetables Most imports of fresh organic produce into Sweden are carried out through the specialized fruit and vegetable wholesalers, since retailers, caterers and food manufacturers rarely import fresh produce themselves. There are about 200 fruit and vegetable wholesalers in Sweden, and nearly all of them also function as importers. Most of the wholesalers are located in one of the following four locations:
Helsingborg and Malmö (in the southern part of the country) Göteborg (west coast) Stockholm (east coast) However, two companies, Saba Trading and ICA Frukt & Grönt, both with import headquarters in Helsingborg, have a dominant share with about 75-80 percent of the fruit and vegetable market. Furthermore, both are directly connected to three of the four largest retailing groups in Sweden.

There are at present twelve wholesalers that are authorized by KRAV to import fresh organic fruit and vegetables into Sweden, of which five offer both conventional and organic items, while the other seven deal solely with organic items. Even if there are no exact figures available, it is clear that three wholesalers dominate imports of organic produce into Sweden: Saba Trading, ICA Frukt & Grönt and Biodynamiska Produkter (BP) - see also Table 9. Saba Trading Saba Trading is Scandinavia¶s leading importer of fruit and vegetables and holds about 50 percent of the Swedish market for fresh fruit, vegetables and flowers. The company is owned by the United States fruit and vegetables group Dole Food Company (60 percent), and the two domestic retail groups Axfood/Axel Johnson (25 percent) and KF (15 percent). Sales amount to about SKr4 500 million yearly. Imports are handled by Saba Frukt & Grönt, a subsidiary based in Helsingborg. However, bananas are imported through Banan-Kompaniet, based in Stockholm. Another subsidiary is FTK in the Netherlands, one

of Europe's leading importers of tropical fruits. A relatively large part of Saba¶s European import is channelled through FTK¶s terminal in Rotterdam. Saba Trading has a wide range of organic fruit and vegetables, well over 100 articles. Organics are estimated to account for about 1-1.5 percent of fruit and vegetable sales. Main customers are food stores within Axfood and the KF Group, as well as independent food stores. The catering sector is another important customer group. ICA Frukt & Grönt ICA Frukt & Grönt, part of the ICA Ahold Group, is the second largest importer and wholesaler of fresh fruit and vegetables in Sweden. Sales amount to about SKr2 500 million. The market share is about 30 percent. The main customers are food stores belonging to different ICA chains, as well as independent caterers. Organic items account for about one percent of the volume. The range includes about 80 articles, of which the most important ones are bananas, oranges, apples, pears, potatoes, carrots, tomatoes and broccoli. Direkt Frukt & Grönt and Ewerman/Frukt & Grönsaksspecialisten The three medium-sized wholesalers of fruit and vegetables, Direkt Frukt & Grönt, and Ewerman/Frukt & Grönsaksspecialisten (both are part of the STC Group), that have been authorized by KRAV to import organic items, but volumes are still insignificant (well below one percent share of their respective sales). Biodynamiska Produkter (BP) BP with headquarters in Järna outside Stockholm, markets about 90 organic fruit and vegetable articles, of which more than half the volume is imported. With a turnover of SKr100 million, BP ranks as one of the three largest importers of organic produce in Sweden (in organic bananas, it ranks as number two). In addition to fresh produce, also packaged foods are imported. The range consists of more than 1 000 different organic products. BP imports both from other EC countries and from other countries in Europe, Asia, Africa and Latin America. Besides supplying other wholesalers (including Saba and ICA), BP sells directly to supermarket chains and health food stores, as well as to the catering sector and the food manufacturing sector. Samodlarna Sweden Samodlarna Sweden is a buying and marketing cooperative for about 350 domestic farmers and gardens, but also handles import of some products. The main customers are fruit and vegetable wholesalers and the domestic food processing sector. Others The smaller wholesalers of organic fruit and vegetables are either concentrated on a few specific items or product groups (Mariannes Farm, Natura, Raggårdens Produkter and Råby Biogrönt), or a regional geographical area (Alt-Grönt). There are also a few KRAV-certified fruit and vegetable distributors in other European countries that regularly export organic items to Sweden, of which the most important one is Eosta International BV in the Netherlands. Eosta¶s customers in Sweden include Saba Trading, ICA Frukt & Grönt, Biodynamiska Produkter and Direkt Frukt & Grönt, as well smaller wholesalers.

3.4 Import trends and constraints to import growth As has been pointed out earlier, the market for organic produce has shown a steady increase during the past few years, about 20-30 percent annually. But since domestic producers have not been able to meet the growing demand for either organic fruit or vegetables, imports have grown even more, well over 30 percent per year. A further 30 percent increase is expected for 2001. Table 9: Facts about KRAV-certified fruit and vegetable wholesalers Approx. figures based on trade estimations. The market share applies to the fruit and vegetables wholesale market. Company General fruit & vegetable wholesalers Saba Trading (Dole) ICA Frukt & Grönt (ICA Ahold) Direkt Frukt & Grönt Specialized organic wholesalers Samodlarna Svea Biodynamiska Produkter (BP) Raggårdens Produkter Alt-Grönt Råby Biogrönt Natura 40 25 11 4 2 30 95-100 95-100 95-100 95-100 95-100 95-100 1 40 50 30 4 500 2 500 50 30 4-5 1.5 1 70 70 sales(SKr million)1 market share (%)2 Organic share of sales (%)3 Import share of sales (%)4

1 The company¶s sales of fruit and vegetables, when available 2 The company¶s share of the fruit and vegetables wholesale market 3 Organic items share of the company¶s fruit and vegetables wholesale sales 4 The import share of the company¶s fruit and vegetables wholesale sales Source: The Market for Organic Products/SLU, KRAV, Fox Research. Since the Swedish market for organic fruit and vegetables to a relatively large extent already is supplied by imports, especially regarding fruits, the only real constraints to a further increase of imports would be a substantial increase in domestic production combined with a slowdown in the market development. Neither of these factors are likely to happen in the near future. However, as the market for organic fruit expands, it is probable that there will be an increase in the domestic growing of apples and pears as well as strawberries, which is likely to have a negative effect on imports of these items, at least during the domestic growing season. 4.Conclusions and market opportunities for developing countries

The organic food market in Sweden has seen a tremendous growth during the last couple of years. The development has been enhanced by the large supermarket chains, which have introduced a wide range of organic foodstuffs in their assortment, of which quite a few fall under their own brands. The market for organic fresh fruit and vegetables is estimated to have grown about 20-25 percent annually in recent years. The positive trend is expected to continue also in the near future. In fact, sources within the fruit and vegetable trade foresee a 30 percent increase for 2001. Despite the very positive market development, it must be pointed out that the market penetration is still relatively low. In 2000, organic vegetables had an estimated market share of just 1.8 percent by volume and 2.1 percent by value. For fruit and berries, the corresponding market shares were even lower, 0.8 percent and 1.1 percent, respectively. By volume, the market for organic vegetables amounted to 15 000 tonnes and organic fruit and berries to 4 000 tonnes. By market value, the corresponding figures were SKr200 million and SKr80 million. The low market shares has several origins, of which three can be seen as the most important ones. First of all is the high price difference to conventional items (in general 30-35 percent), which consumers generally cite as the main factor for not choosing organics. Since at least 10-15 percent of the consumers regularly buy environmentally friendly products, there is a strong potential for a much higher market share for organic fruit and vegetables, if the price difference could be somewhat reduced, at least to 15-20 percent. Another market constraint is inadequate and infrequent supplies. The retail trade prefer products that can be marketed throughout the whole year. This means that in order to increase the market, not only are more suppliers needed, but also of suppliers that can provide their product during more than one season. A third hampering factor is that even if environmental concern ranks high in most consumers mind, the actual knowledge about the difference between organic and conventional agriculture is not widespread. More information and promotional activities towards consumers should therefore be undertaken, in order to strengthen the development of the organic market. However, the foundation for a further strong development of the organic market in Sweden is already at hand. Organic farming is an important factor in the Swedish agricultural policy and this is also emphasized by the new national target, which stipulates that 20 percent of the country¶s arable land should be organic farm lands by 2005. If the goal is reached, it would put Sweden in a top position in organic agriculture in Europe. Nevertheless, only a small share of the organic farmlands is currently under certified fruit and vegetable production, just 2 300 ha, which explains why domestic production only accounts for barely half the market supply for organic fruit and vegetables. Imports account for almost all supplies of organic fruits. The main part consists of items which are not produced in Sweden - such as citrus and tropical fruits - and of products which are only produced part of the year - such as deciduous fruits and berries. The leading import items in organic fruit are bananas, citrus fruit, apples and pears. Bananas are by far the most popular organic fruit. Even so, organic bananas have just 1.3 percent of the market for bananas. Considering that Sweden has one of the highest consumption of bananas in the world (outside bananaproducing countries), around 20 kg per person, there is a potential for a much larger export volume to Sweden. The organic market for both citrus fruit and apples and pears is still underdeveloped, which means there should be a potential for much higher import volumes. Since importers generally prefer to buy from sources as near as possible, the best opportunities for suppliers in developing countries are probably during the European offseason. This also applies for other items produced in Europe, such as stone fruit, melons and berries.

Tropical fruit has seen a very positive market trend in recent years, which means that there exist excellent export opportunities for suppliers in developing countries for a number of items, such as mango, papaya, pineapples, cherimoyas, custard apples, guavas, lychees and passion fruit. Imports account for about 50 percent of the supply of organic vegetables. However this figure excludes potatoes, which account for over half the organic vegetable market. If potatoes are included, the import share is substantially lower, about 35 percent. Imports of organic vegetables are oriented towards products that are not produced or not available in sufficient quantity in Sweden. Potatoes and carrots are almost entirely supplied by domestic producers. Furthermore, during the Swedish growing season, it is generally hard for foreign suppliers to compete with domestic producers of vegetables such as onions, beetroot, cabbage, swede, peas, turnips, horse-radish, leeks, and squash. On the other hand, other vegetable products, such as tomatoes, cucumber, iceberg lettuce, cabbage lettuce, cauliflower, mushrooms, paprika, aubergines, and fennel are imported all year round. Even if the main part of vegetable imports come from other EC countries (with the Netherlands and Italy as the main suppliers), there are good prospects for non-European suppliers of a number of organic vegetables, such as onions, chilli peppers, avocado, garlic, ginger, okra, pumpkins, and sweet potatoes. Given the rapid development of the organic market, the current insufficient supply, and the large import share, producers in developing countries of fruit and vegetables, especially tropical fruit and off-season vegetables, should have good opportunities to export organic items to the Swedish market. Annex I List of major importers of organic fruit and vegetables Selected list of KRAV-certified importers of fresh fruit and vegetables. A current list of all KRAV-certified importers as well as other information about imports can be obtained from KRAV, see address in Annex II. Importers of fresh fruit and vegetables AltGrönt AB Products: Fruit and vegetables Contact: Mr Bernt Klingberg Tel: +46 8 511 700 60 begin_of_the_skype_highlighting 60 end_of_the_skype_highlighting Fax: +46 8 511 763 64 Address:Vargmötesvägen 14, S186 30 VALLENTUNA [email protected] www.altgront.se (under construction) Biodynamiska Produkter Products: Fruit and vegetables; packaged foods Contact: Mr Tobias Zeiher Tel: +46 8 554 810 30 begin_of_the_skype_highlighting 30 end_of_the_skype_highlighting Fax: +46 8 554 810 39 Address:PO Box 42, S-153 21 JÄRNA [email protected]

+46 8 511 700

+46 8 554 810

Direkt Frukt och Grönt AB Products: Fruit and vegetables Contact: Mr Torbjörn Karlsson Tel: +46 40 18 09 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +46 40 18 09 01 Address:Flintrännegatan 21, S211 24 MALMÖ [email protected] www.direktlivs.se ICA Frukt & Grönt - part of ICA Ahold AB Products: Fruit and vegetables Contact: Mr Björn Hacklou Tel: +46 42 18 90 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +46 42 18 92 88 Address:PO Box 713, S-251 07 HELSINGBORG [email protected]; [email protected] www.ica.se Marianne's Farm AB Products: Carrots Contact: Ms Marianne HärningNilsson Tel: +46 42 20 71 33 begin_of_the_skype_highlighting 33 end_of_the_skype_highlighting Fax: +46 42 20 70 49 Address:Dalsgård 2393, S-262 92 ÄNGELHOLM [email protected] ww.mariannesfarm.se Natura AB Products: Fruit and vegetables Contact: Mr Bengt Carlsson Tel: +46 415 622 50 begin_of_the_skype_highlighting 50 end_of_the_skype_highlighting Fax: +46 415 620 35 Address:Almarkaröd, S-242 92 HÖRBY [email protected] www.natura.se Raggårdens Produkter AB Products: Potatoes, roots, other fresh vegetables; Preserved vegetables Contact: Mr Owe Johansson Tel: +46 512 134 90 begin_of_the_skype_highlighting

+46 40 18 09

+46 42 18 90

+46 42 20 71

+46 415 622

+46 512 134

90 end_of_the_skype_highlighting Fax: +46 512 130 77 Address:Arentorp, S-534 94 VARA [email protected] www.raggardensprodukter.se Råby Biogrönt AB Products: Fruit and vegetables Contact: Mr Tommy Nordgren Tel: +46 415 31 11 56 begin_of_the_skype_highlighting 56 end_of_the_skype_highlighting Fax: +46 415 31 11 56 Address:Råby 4, PL 250, S-242 92 HÖRBY Saba Trading AB - part of Dole Headquarters, Stockholm Tel: +46 8 602 60 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +46 8 602 60 99 Address:PO Box 9101, S-120 05 ÅRSTA [email protected] www.saba.se Importing subsidiaries: Saba Frukt &Grönt AB Products: Fruit and vegetables; Flowers Contact: Ms Linnea Jönsson Tel: +46 42 24 96 69 begin_of_the_skype_highlighting 69 end_of_the_skype_highlighting, +46 42 24 95 00 Fax: +46 42 29 71 31 Address:PO Box 15 073, S-250 15 HELSINGBORG [email protected]; [email protected] www.saba.se BananKompaniet AB Products: Bananas Contact: Mr Anders Cottrell Tel: +46 8 667 91 60 begin_of_the_skype_highlighting 60 end_of_the_skype_highlighting Fax: +46 8 661 36 07 Address:PO Box 27294, S-102 53 STOCKHOLM [email protected], [email protected]

+46 415 31 11

+46 8 602 60

+46 42 24 96

+46 8 667 91

www.banan-kompaniet.se; www.saba.se Samodlarna Sweden Products: Fruit and vegetables; Dried vegetables; Cereals; Packaged foods Contact: Mr Jan Knutar Tel: +46 8 602 23 38 begin_of_the_skype_highlighting 38 end_of_the_skype_highlighting Fax: +46 8 91 81 20 Address:Grosshandlarvägen 3 S-120 44 ÅRSTA [email protected] www.swegro.se STC Scandinavian Trading Company Importing subsidiaries Ewerman AB Products: Fruit and vegetables Contact: Mr Björn Jansson Tel: +46 42 490 11 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +46 42 490 11 80 Address:Knut Påls väg 9, S-256 69 HELSINGBORG [email protected] www.ewerman.se Frukt & Grönsaksspecialisten Products: Fruit and vegetables Contact:Mr Nils Barnholdt Tel: +46 42 20 11 60 begin_of_the_skype_highlighting 60 end_of_the_skype_highlighting Fax: +46 42 15 37 27 Address:Knut Påls väg 8, S-256 69 HELSINGBORG [email protected] www.fgs.se Retail Groups Axfood AB Retailer and wholesaler in Sweden and Finland. Imports of fresh produce, see Saba Trading. Tel: +46 8 553 998 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +46 8 82 58 59 Address:PO Box 7314, S-103 90

+46 8 602 23

+46 42 490 11

+46 42 20 11

+46 8 553 998

STOCKHOLM [email protected] www.axfood.se ICA Ahold AB Retailer and wholesaler in Sweden, Norway, Denmark and the Baltic countries. Imports of fresh produce, see ICA Frukt & Grönt. Tel: +46 8 585 500 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +46 8 585 500 09 Address:S-171 93 SOLNA [email protected] www.ica.se KF Retailer and wholesaler in Sweden. Imports of fresh produce, see Saba Trading. Tel: +46 8 743 10 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +46 8 743 15 75 Address:PO Box 15200, S-104 65 STOCKHOLM [email protected] www.kf.se BergendahlsGruppen AB Retailer and wholesaler in Sweden Imports fresh produce, see Saba Trading Tel: +46 451 480 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +46 451 482 22 Address:PO Box 22, S-281 21 Häassleholm [email protected] www.bergendahls.se

+46 8 585 500

+46 8 743 10

+46 451 480

Annex II List of organizations and national authorities in the organic sector KRAV - Swedish Organic Agriculture Association Certification organization for organic production, processing, importing, distribution and marketing.

Activities include standards development, inspection, certification, and information. Tel: +46 18 10 02 90 begin_of_the_skype_highlighting 90 end_of_the_skype_highlighting Fax: +46 18 10 03 66 Address:PO Box 1940, S-751 49 Uppsala [email protected] www.krav.se GroLink Consultancy and assistance of certification programmes, projects and training worldwide. Contact: Mr Gunnar Rundgren Tel: +46 563 723 45 begin_of_the_skype_highlighting 45 end_of_the_skype_highlighting Fax: +46 563 720 66 Address:Torfolk, S-684 95 Höje [email protected] www.grolink.se National Food Administration Tel: +46 18 175500 begin_of_the_skype_highlighting 175500 end_of_the_skype_highlighting Fax: +46 18 105848 Address:PO Box 622, S-751 26 Uppsala [email protected] www.slv.se Swedish Demeter Association Certification organization for bio-dynamic production. Tel: +46 8 551 579 88 begin_of_the_skype_highlighting 88 end_of_the_skype_highlighting Fax: +46 8 551 579 76 Address:Skillebyholm, S-153 91 Järna www.demeter.nu

+46 18 10 02

+46 563 723

+46 18

+46 8 551 579

Föreningen för Rättvisemärkt - Swedish Member of Fair Trade Labelling Organization International (FLO) National organization for fair trade labelled items (products marketed in Sweden are usually also KRAV-certified). Tel: +46 8 668 03 50 begin_of_the_skype_highlighting +46 8 668 03 50 end_of_the_skype_highlighting

Fax: +46 8 668 03 14 Address:Drakenbergsgatan 11, S-117 41 Stockholm [email protected] www.raettvist.se Swedish Federation of Trade and Service Tel: +46 8 7627700 begin_of_the_skype_highlighting 7627700 end_of_the_skype_highlighting Fax: +46 8 7627777 Address:S-103 23 Stockholm [email protected] www.svenskhandel.se Swedish University of Agricultural Sciences (SLU) A main actor of research, courses and training within the Swedish organic agricultural sector. Tel: +46 18 67 10 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +46 18 67 20 00 Address:PO Box 7070, S-750 07 Uppsala [email protected] www.slu.se Swedish Board of Agriculture Tel: +46 36 15 50 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +46 36 19 05 46 Address:S-551 82 Jönköping [email protected] www.sjv.se Annex III Currency Conversion Average exchange rate of the Swedish currency SKr Average rate in SKr Currency 1990 1995 1997 1998 1999 2000 2001* 1 US Dollar 5.91 7.13 7.64 7.95 8.27 9.17 9.60 1 Euro 8.65 8.62 8.93 8.61 8.45 8.93

+46 8

+46 18 67 10

+46 36 15 50

* Average rate January-February 2001 Source: Sveriges Riksbank

SWITZERLAND
Introduction For the past ten years, organic agriculture has been developing dynamically in Switzerland. The area of agricultural land being farmed according to organic standards is expanding rapidly. By end 2000, agricultural land used for organic farming reached some 95 000 ha (9.0 percent), including land in conversion to organic. Since 1990, organic farms have increased almost eight-fold. By end 2000, there were 5 850 organic farms, or 9.2 percent of all agricultural holdings in Switzerland. Further growth in farm conversions to organic agriculture is to be expected in the next few years, albeit at a less rapid growth rate. Figure 1: Swiss Organic Agriculture - number of holdings (1990 - 2000)

Source: FiBL, 2001 In line with the increasing supply of organic products, the Swiss organic market is also developing dynamically. The turnover of certified organic products was estimated at SFr770 million in 2000 (or two percent of the entire Swiss food market). 1.Organic farming in Switzerland In terms of area, the most significant organic crops grown in Switzerland are bread cereals, fodder cereals, vegetables and potatoes. The main organic products of animal origin are milk, meat or meat products, eggs and dairy products, the latter being the most important product group. Organic products are grown on private family farms, the average size of which is 16 ha. 1.1 Main products of organic horticulture Organic vegetable production began in 1947 with the founding of a growing and processing cooperative (today known as Bio Gemüse AVG Galmiz). At the beginning of the 1990s, land under organic vegetable production reached 250 ha while in 19991 it grew to approximately 850 ha, which represents some 10 percent of the total area under vegetable production in Switzerland. Approximately 650 organic farms have their own vegetable production. However, only 5 percent of those farms have vegetable areas above 5 ha. About 70 percent of horticultural farms have less than 1 ha under vegetable production.

Total organic vegetable production in 1999 was estimated to be between 20 000-25 000 tonnes. The main products are carrots, cabbage and celery (see Table 1). The share of organic onions in total onion production is low compared to other vegetables; this is mainly due to production problems with the onion cultivation (e.g. weed and mildew). The area set aside for greenhouse organic production is only 26 ha, of which approximately two-thirds is used for tomato production. Another important greenhouse crop is cucumbers. Table 1: Production and relative yield of the main stored vegetable crops Crop Organic area (ha) 1997 1999 20 74 4 0 6 5 16 12 32 17 Share of organic area in Yield of organic products in relation to the total area by relation to integrated crop (%) products (%) 1997 3.8 2.4 0 2.3 1.5 1999 12 11 15 14 5 1997 79 86 125 83 53 1999 83 91 83 52 33

Carrots Celery Beetroots Cabbage Onions

Source: SZG, 1999. In 1999 fruit production accounted for 313 ha and berry production 49 ha. Table 2 provides an indication of the relative size and yields of the most important fruit products. Apples are the most significant organic fruit product, with a total area of 213 ha. Between three and five percent of all apples are produced organically. Table 2: Overview on production and relative yields of the most relevant organic fruit production Category Fruits Apples Apricots Pears Cherries Mixed fruit areas Peaches Plums Berries/Kiwi Blackberries Strawberry Blueberry Raspberry Elderberry Blackcurrants Red currants Number of Farms 366 36 93 41 125 2 31 41 99 25 121 10 15 37 Area(ha) Estimated yield of organic products in relation to integrated products (%) 213 13 34 10 54 0.3 6.5 2.8 11.1 1.8 7.3 1.5 0.4 2.3 70-80 70 70-80 60-70 70.80 70-80 80 70 80 80 80 80 80

Kiwi fruit Gooseberry Mixed berry areas

10 12 70

14.9 0.4 6.4

80 80 -

Source: Hartnagel, 2000. 1.2 Governmental policy on organic farming Since 1993, two forms of direct support are available to farmers in Switzerland: direct payments to all farmers - organic and non-organic - and payments to farmers who produce in an environmentally and animal friendly way. The Federal Office of Agriculture is responsible for managing this system of payments. The Ordinance on direct payments in agriculture (Verordnung über die Direktzahlungen in der Landwirtschaft 910.13) contains provisions relating to payments for organic farming. It forms the basis for the disbursal of ecologically motivated direct payments in Switzerland and is an expression of the Swiss agricultural policy objective to promote organic farming. There is no Federal financial support during conversion; however, five cantons provide support. In recent years, the difference between general farm payments and those available to organic farmers has narrowed significantly. Therefore, based on direct payment structures, there is less of an incentive to convert to organic than in the early to mid-1990s. It is expected that the number of farms converting to organic farming in the future will be smaller due to market conditions. The amount paid per hectare for organic farms will not increase much, but the total of overall expenditure will rise due to the increasing organically cultivated area. It is expected that some cantons will reduce their payments for conversion due to financial pressures. 2.The Swiss market for organic fruit and vegetables In the past few years, the supply of organic vegetables has grown strongly in Switzerland. Increases in domestic production and a high demand for organic fruit and vegetables have positively influenced the development of the organic sector. A survey in the German-speaking part of Switzerland in 1997 revealed that vegetables and fruits are one of the most demanded organic product groups, before eggs, meat and milk. 2.1 Sales of organic fruit and vegetables: main products Prior to the 1990s, organic fruit and vegetables were sold primarily through weekly markets. Typically, production focussed on processed and stored vegetables. Over the last decade, there has been a sharp growth in the supply of fresh organic vegetables. The major turning point was in 1993 when COOP, the second largest retail chain in Switzerland, launched the "Naturaplan" line. There was a three-fold increase in production between 1993 and 1997. Today, ten percent of all vegetables sold in COOP are sold as organic. Organic fruits hold a five percent share of the total fruit market, while organic vegetables represent ten percent of the vegetable market (in 2000). During the late 1990s, strong growth in vegetable and fruit production and sales were observed. Reasons behind this growth include the development of better plant protection products and a broad introduction of fruits and vegetables into supermarkets. Moreover, Government support has contributed to the observed growth. Among organic fruit, apples and pears are important. Experts believe the market potential for organic apples is between 10 and 20 percent. The most important apple variety is the µGolden Delicious¶ followed by µMaigold¶ and µIdared¶. The percentage of organic pears in total pear production was about three percent in the year 2000. The main variety is µGute Luise¶, which accounts for 75 percent of all organic pears.

The most important vegetables are carrots, cabbage and celery, while, due to problems related to weeds and diseases, organic onions hold a significantly low share of sales - only four-five percent. 2.2 Average prices at retail level and range of premiums over conventional products Price premiums on organic products vary according to product group and type of market. They are partly determined by higher production and distribution costs, but also by the willingness of consumers to pay a premium. They tend to be higher in specialized organic food stores/natural food stores and lower in supermarkets and mainstream consumer outlets. In the latter two market types premiums for the following product groups are approximately:
y y y

Vegetables: Potatoes: Fruits and nuts:

40-80 percent 50 percent 50-60 percent

The majority of consumers accept a 10-30 percent premium for organic products, with a somewhat greater willingness to pay the premium for organically grown plant products than for organically produced animal products. However, if the quality of fresh fruits and vegetables is above average, consumers are more likely to pay higher prices. Consumers are also willing to pay a higher premium for speciality products. Table 3: Comparison of producer prices for organic and conventional fruit and vegetable products Conventional 2000 (Fr/kg) Fresh Fruit Apples Pears Fresh Vegetables Aubergine Broccoli Carrot Fennel Courgette Cucumber Peppers Tomatoes Cherry tomatoes Celery Leeks Cress Cauliflower Radish 1.90-2.90 2.00-4.00 0.40-1.40 1.40-2.80 1.00-2.90 0.6-1.10 (per piece) 1.80-3.70 1.50-2.70 4.00-6.00 0.70-1.60 1.00-4.80 8.00-9.00 1.00-3.00 0.70-1.00 2.20-3.10 2.50-4.20 1.00-1.70 1.80-2.80 1.30-3.20 0.80-1.60 (per piece) 2.90-4.80 1.20-2.90 4.40-6.70 1.30-2.20 1.40-4.90 9.00-10.50 1.60-3.50 0.80-1.20 10.4 8.3 50 9.5 15.4 41.2 36.4 -2.3 11 52.2 8.6 14.7 22.5 17.6 0.48-1.06 1.05-1.90 Organic 2000 (Fr/kg) 1.60-2.00 1.90-2.20 % Premium

133.8 39.0

Brussels sprouts Chinese cabbage Carrots Beetroot Celery Red cabbage White cabbage Savoy cabbage Large onions Medium onions Source: LBL/FiBL Preiskatalog 2000.

2.80-2.90 0.70-1.40 0.38 0.47 0.75 0.60 0.60 0.80 0.50 0.50

2.80-3.10 1.00-1.80 0.70 0.55 1.20 0.85 0.75 1.10 0.80 0.80

3.5 33.3 84.2 17.0 60 41.7 25 37.5 60 60

2.3 Distribution channels (wholesalers, supermarkets, specialized stores, on-farm) Supermarkets account for 70 percent of all fresh and stored organic vegetable sales in Switzerland. COOP¶s launching of its ecological/organic programme "Naturaplan" stimulated a three-fold increase in the area of organic vegetable production since 1993. Fresh fruits are available through retail chains. However, the range is not complete, due mainly to quality problems. Popular fruit juices and nectars (orange, apple and pear) tend to be sold through supermarket chains, while syrups, blends and juices from other fruits tend to be available only though speciality stores. Table 4 shows the sales channels for organic vegetables and fruit in Switzerland. Retail chains are the most important channel for the sale of organic vegetables and fruit. Direct marketing accounts for between 15 and 20 percent of sales in both product groups. Table 4: Main sales channels for organic vegetables, fruit and potatoes in Switzerland, 2000 Sales Channels Retail Chains Direct Marketing Other Total Source: *NOTE: No source provided* COOP and Migros, two supermarket chains, are likely to increasingly dominate sales. Since the entry of these two supermarket chains, in the early and mid 1990s, respectively, sales of organic products have strongly increased. Currently, around 60 percent of all organic products are sold through these supermarket chains. Since 1995, Migros has been selling organic fruit and vegetables under its own label and standards programme µMigros-Bio¶. In 1999/2000 they had a turnover of SFr8.2 million. In the same year, it had a turnover of SFr31.8 million. Migros has 40 suppliers of organic fruit and 70 suppliers of organic vegetables. COOP has been selling organic vegetables since 1993 and fruit since 1997 under its COOP µNaturaplan¶. They sold around 15 000 tonnes of organic vegetables in the year 2000. Although there are no detailed data, convenience products (e.g. prepacked salads), herbs and sprouts generate the highest turnover. COOP and Migros each offered approximately 30 products in organic fruit and 80 in organic vegetables. Contact details of these Organic Fruit 50 20 30 100 Organic Vegetables 70 15 15 100

supermarkets and wholesale firms, importers and agents who have specialized in the import of organic products are given in Annex I. 2.4 Trends (growth rate of sales, leading products, consumer and retailer attitudes) The product group fruit and vegetables will be discussed in terms of the following sub-groups: fresh and stored vegetables, processed vegetables, fresh fruits, fruit juices and dried fruits. Fresh and stored vegetables Depending on the type of outlet and the region, over 25 percent of vegetables sold are organically grown. This is true for both specialist retail trade and supermarkets, which now account for approximately 70 percent of organic vegetable sales. In the last few years, the annual growth in turnover reached 10 percent. This growth rate should climb to 20 percent in the next few years. However, there is currently a balance between supply and demand of fresh vegetables. In fact, some Swiss operators are looking to export organic vegetables to the UK and Germany. Experts rate the future market situation for fresh vegetables as good, and expect that the outlook for stored vegetables will also remain good. Carrots, different types of cabbages, broccoli and onions will continue to be the major products. Processed vegetables The trend in favour of convenience food and ready-to-serve meals has increased the demand for processed vegetables and is expected to continue to rise. The greatest demand is for organic products of Knospe (BIO SUISSE's "bud" label) quality. Some firms have already specialized in this area. The newer firms are also interested in exporting processed vegetables. As with fresh vegetables, over half of these products are sold in the COOP and Migros supermarket chains. Demand from the restaurant sector is expected to grow. The market situation for processed vegetables, such as spinach, is one of undersupply. Experts rate the market situation as good to very good, now and in the foreseeable future. Fresh fruit Organic cultivation of pome and stone fruits underwent a radical improvement in quality during the 1990s, thanks to newly developed production methods and new disease-resistant varieties. However, the cultivation of organic cherries has not progressed beyond an early stage because of persistent technical cultivation problems (disease problems, cherry fly). Mass market retail chains are nonetheless extremely keen to complete their organic ranges. Thus, the potential for development is quite attractive, promising good future sales opportunities for pome fruit (mainly apples and pears) and stone fruit (mainly cherries, apricots and peaches). This is particularly true of fruits which are still under-represented on the market. At present, there is a good potential for apple and cherry importers as there is an undersupply. The market volume for citrus fruits is currently rising by 20-30 percent per year. Fruit juices Apple, pear and grape juice have been produced in Switzerland for many years, along with juices and syrups from various other fruits (blackcurrants, strawberries, etc.). Towards the end of the 1990s, sales of these fruit juices were increasing by 80 percent per year. They have become well established, not only in natural food stores but also in supermarket chain outlets. Citrus and tropical fruit juices, on the other hand, can only be obtained in specialist stores and rarely at supermarkets, although there is considerable interest in these juices. Demand is set to rise sharply in the next few years, for organic orange juice in particular. Manufacturers of children¶s foods feature prominently among the buyers of tropical fruit juices. Experts take a positive view of future development: they expect annual growth in sales of organic juices to reach 40 percent, and even more in the short term for orange and grapefruit juices.

Dried fruits and nuts Dried fruits and nuts from organic production are relatively straightforward from the logistical management point of view and play a key role in composite products like "Muesli" and baked goods. Rising demand can be expected, particularly from bakers. Nuts are the most important product and offer the greatest potential for growth. Dried fruits are already well established and available both in natural food stores and in supermarkets. The future market prospects are good. In the medium term, an annual growth rate of five-ten percent can be expected. Table 5: Market and growth prospects for fruit and vegetable product sub-groups Product sub-group Fresh Vegetables Stored Vegetables Processed Vegetables Fresh Fruit Fruit Juice Dried Fruit Scale: Very good, good, average, poor. Source: SIPPO-Study, 2001. 2.5 Consumer attitudes Organic foods are by no means novel products on the Swiss market. However, the growing demand has only come to the attention of the food industry and trade in the last 10-15 years. The increased demand for organic foods is predicated on a variety of key factors, including:
y y y y y y y

2000 Good Average Good Good Good Good

2003 Good Average Good Good Very Good Good

Food safety concerns Environmental awareness Animal welfare concerns Media attention Credibility of organic agriculture Availability of supply Level of consumer education

A BIO SUISSE survey indicates that 27 percent of those interviewed purchase organic products at least once a week, 40 percent purchase them less than once a week and 25 percent never purchase them (Figure 2). Whereas in the past organic products consumers were mainly those who linked an organic diet with a holistic, ecological lifestyle, today a growing number of average consumers have a positive attitude towards organic products. However, this is only transformed into real demand by attractive offers. Thus, the entrepreneurial efforts of retail chains in Switzerland are primarily directed towards better fulfilment of consumers' aspirations towards healthy, natural and enjoyable foods, but also towards trendy organic products. Figure 2: Frequency of purchase of organic products in Switzerland

Source: BIO SUISSE, 2001

2.6 Main constraints to market development In general terms, Swiss import restrictions are the major constraining factor to market development: domestic production is protected by trade duties during phases of good domestic provision. However, by law phases of high duties must be interspersed with phases of low duties. These periods of low trade duties mostly coincide with periods of insufficient domestic supply (between November and April) and represent the best opportunity for entering the market. There is a parallel range of consumer related factors restricting the growth of the market for organic foods:
y y

y

y

Price: A high price difference between organic products and conventionally produced foods is the most powerful limiting factor on demand. Trade and processing structures: One reason for high prices for organic produce is that distribution is often rather inefficient and involves many intermediaries (separate collection of organic produce in minimal quantities). With increasing availability, larger quantities and more efficient distribution, the price difference over conventional produce would fall. Availability: Many branches of the mass market retail chains still lack a full selection of organic products (e.g. of fruits). This is coupled with the fact that the organic range does not keep pace with every general trend in consumption (e.g. in deep-frozen foods or convenience products). There are also products in which the potential demand far exceeds the available supply (e.g. pork, poultry meat). Quality: In some product groups (for example fruit) the organic products do not always come up to the same visual quality standard as conventional products. Organic products are more prone to show signs of ageing due to their slower turnover rate.

3.Imports of certified organic fruit and vegetables into Switzerland 3.1 Market access regulations Around two thirds of organic products sold in Switzerland are produced domestically. The remainder largely consists of products which cannot be grown in Switzerland, such as coffee or citrus fruits. Swiss traders and retailers prefer domestically produced goods whenever possible. Nevertheless, imports take up an important place to supplement out of season domestic supplies and to bridge bottlenecks in supply. This calls for quick reactions to the market situation on the part of exporters and importers. Import quotas are determined weekly and can therefore change quite rapidly.

Typically, fruits and vegetables are imported to compensate for seasonal fluctuations in supply. Therefore, the main issue for importers is to understand that import quotas for fruits and vegetables are set in coordination with the seasonal availability of Swiss products. Imports of products from countries outside the EC which are imported into Switzerland (and also into the EC) are regulated by means of equivalent requirements: production, inspection and certification, and labelling of organic products in emerging markets and markets in transition must conform to conditions that are equivalent to those contained in the Swiss Organic Farming Ordinance. The "Knospe" (Bud label), the label of BIO SUISSE, is additional, but desirable, as it has high consumer recognition and is often a requirement of retailers or processors. In order for an imported product to be marketed as organic the producers, processors and exporters of the country of origin and the Swiss importers must be certified by an accredited inspection body at least once a year. Inspection and certification bodies must conform to EN-45011 or ISO-65 standards and obtain accreditation from the Swiss Federal Office of Metrology (Eidgenössisches Amt für Messwesen). 3.2 Imports from countries on the Country List Countries in which the government imposes conditions on organic products equivalent to those applied in Switzerland, and in which adherence to these conditions is guaranteed, may be included on a Country List by the Federal Department of Economic Affairs (Eidgenössische Volkswirtschaftsdepartement, EVD) (Annex IV of the Organic Farming Ordinance). Countries wishing to be included on this list must submit an application to the Swiss Federal Office for Agriculture (FOAG; Bundesamt für Landwirtschaft, BLW), giving details showing that their production regulations and inspection systems are equivalent. At the present time, all EC countries as well as the Czech Republic, Hungary, Israel, Argentina and Australia are included on the Swiss Country List. Organic imports from these countries are subject to simpler procedures for approval. For such imports, the exporter must obtain an import certificate (Einfuhrbescheinigung) from the certification body in the country of origin. This certificate is presented to the importer in Switzerland. It is required by the certification body when the annual inspection of the business is carried out. Moreover, this document confirms that the imported product is an organic product. Until the end of 2000, the Swiss Country List relates only to organic products of plant origin. From 1 January 2001, it also includes organic products of animal origin. 3.3 Imports from non-approved countries outside the EC Analogously to the EC, Switzerland operates a system of "individual authorization". For direct imports from countries that are not included on the list of third countries, the importer in Switzerland must submit an application for individual authorization to the Federal Office for Agriculture (FOAG) together with an attestation of equivalence for the relevant product and its producer. Individual authorizations are listed annually in the Swiss official trade gazette (Schweizerische Handelsamtsblatt). Only when the individual authorization has been granted may the product be imported into Switzerland as an organic product. Every shipment must be accompanied by an import certificate. 3.4 Customs regulations and value-added tax For organic products, the general customs tariffs and regulations apply. High customs duties are levied on a range of agricultural products such as sugar, cereals, vegetable oils and dairy products. For some products, special import licences are also necessary; however, they are only granted to Swiss importers. Higher customs duties are levied on processed products than on raw materials. Further details are contained in the Swiss Ordinance on agricultural imports (Schweizerische Agrareinfuhrverordnung).

As in the EC, preferential customs duties may be applied to imports of certain agricultural products from emerging markets and markets in transition, in accordance with the Swiss tariff preferences system (Generalized System of Preferences), and these are lower than the tariffs that are usually applied. Imports from Least Developed Countries are exempted from customs duties for the majority of headings in the customs tariffs. A complete and updated list of customs tariffs may be obtained upon request from the Swiss Federal Customs Administration (Eidgenössische Zollverwaltung). Importers pay a value-added tax of 2.4 percent (from 2001) on foodstuffs that they bring into Switzerland. The VAT rate is the same for both imported goods and those produced in Switzerland. 3.5 Requirements laid down in the legislation on food Both organically and conventionally-produced foods, irrespective of whether or not they are imported, are subject to Swiss laws and ordinances relating to foodstuffs. The key pieces of legislation or regulation are given in Annex IV. These ordinances relate mainly to foodstuffs packaged for the consumer and are not directly relevant to bulk imports. Foreign exporters to the Swiss market should nevertheless take these requirements into consideration since the final products processed from imported raw materials must comply with them. 3.6 Total imports of organic foods (volume) Estimated import shares of organic products are given in Figure 3. The figure illustrate that roughly 15 percent of organic fruit and vegetable products are imported into Switzerland. Figure 3: Estimated import shares of organic products in Switzerland

Source: FiBL (estimates), 2000. NB: Both categories related to fruit and vegetables include import levels for fruit and vegetables together. However imports of fruit are actually higher than those of vegetables. Therefore these figures will not equate with any calculations made using data in Tables 6 or 7.

Table 6 shows estimated domestic production and imports by major product groups. Table 6: Domestic organic supply and imports in Switzerland, 2000 Product group Domestic produce (t) Imports (t)

Vegetables Fresh fruits Dried fruits and nuts Fruit juices * No data available

30 000 6 490 * *

2 500 3 000 485 260

Source: FiBL based on figures from FiBL, BIO SUISSE, bio.inspecta, Swiss Federal Statistical Office, 20003.8 3.7 Breakdown of organic fruit and vegetable imports by product (volume) Table 7 shows the volume of imports of vegetables and fruits. Based on the figures for products imported under BIO SUISSE Knospe (Bud label),the imports from other sources and total imports were calculated. The table illustrates that most of the imports are of products that cannot be grown in Switzerland or that are in undersupply in certain periods, such as winter. Table 7: Imports into Switzerland of organic fruit and vegetables, 2000 Product Imports Imports Total BIO (other Organic SUISSE programmes)* Imports* Knospe Fruits Citrus fruits Figs Banana 1294 211 137 760 124 80 2054 335 217 Cauliflower Potatoes Tomatoes (and products) Onions Product Imports Imports Total BIO (other Organic SUISSE programmes)* Imports* Knospe Vegetables 311 183 287 238 169 140 494 456 378

Strawberries (incl. Frozen) Peaches (incl. Frozen) Grapes Apricots Apples Plums Nectarines Dried apricots Total

86

51

137

166

98

264

79

46

125

Beetroot

105

62

167

63 62 58 45 43 25 2103

37 36 34 26 25 15 1234

100 98 92 71 68 40 3337

Fennel Cucumber Broccoli Diverse vegetables Carrots

81 55 72 117 34

48 32 42 69 19

129 87 114 186 53

Total

1466

862

2328

*Estimates based on BIO SUISSE figures for imports under its Knospe (Bud) label.

3.8 Trend for each product group Fresh and stored vegetables Imports of fresh vegetables are constantly increasing. The primary countries of origin for imported organic vegetables are Italy and France. Smaller quantities are imported from Spain, Germany, the Netherlands, Austria, Israel and Canada. In future, it is expected that more vegetables will be purchased from the Mediterranean countries, especially in winter, and from Israel and Egypt in particular. Germany and Austria can also be expected to supply more organic vegetables. Processed vegetables Most processed vegetables are produced domestically, while Italy is the main supplier of imports (e.g. tomatoes, artichokes). Smaller quantities are bought from France, Hungary, Germany and the Netherlands. There is some limited scope on the Swiss market for processed vegetables from overseas, provided that they are transported by ship. Given a similar product range, neighbouring countries have better market prospects since transporting goods long-distance from overseas is opposed on ecological grounds. Fresh fruits Due to climatic factors, apricots and peaches are not widely grown in Switzerland and are thus mainly imported from Mediterranean countries. Citrus fruits and exotic fruits are exclusively imported. Lemons and oranges originate from Italy and Spain. Bananas come primarily from the Dominican Republic and in smaller quantities from Mexico and Uganda. Mangoes and grapefruit come from Ghana, pineapples and passion fruit from Uganda. Other fruits come from Israel, Germany, Austria, Argentina and Chile. The market for tropical fruits is still very new and has a strong potential in both the delicatessen sector and normal mainstream retail outlets. As with fresh vegetables, high duties are imposed on local fruit varieties in times of good domestic provision. During periods when there are shortfalls in the Swiss supply, lower duties and high import quotas are set for these same fruit species. Table 8 presents the trend prognosis by individual products for imports of fruits and vegetables into Switzerland. Table 8: Growth trend in imports until the year 2002 Product Trend in import development until 2002 Fruit Oranges Lemons Figs Bananas Plums Grapes Apricots Apples Artichokes Asparagus Aubergine Beet root Broccoli Brussels sprouts Carrots Cauliflower Product Trend in import development until 2002 Vegetables

Nectarines Pears Kiwi fruit Dates Pineapple Grapefruit Avocados Peaches

Chicory Cucumber Fennel Leek Onions Peppers Potatoes Salad Spinach Tomatoes Zucchini

Source: Expert estimations, 2001. Key: Imports reducing by more than 10 percent per year Imports reducing up to 10 percent per year Imports stable Imports increasing by up to 10 percent per year Imports increasing by more than 10 percent per year Fruit juices Apple, pear and grape juice originate mainly from Switzerland. Orange juice is mainly imported from Italy, Israel and Brazil. Other countries of provenance are Mexico, Uruguay and Honduras. The supply of citrus juices from tropical and sub-tropical countries (Latin America) increases yearly. The well-established market for traditional Swiss juices (apple, pear, etc.) is supplemented by organic citrus juices and exotic fruit juices, a market which was not so well catered for in the past. Dried fruits and nuts Products in this group are easy to import into Switzerland: domestic production is far from sufficient to meet existing demand, and the BIO SUISSE ban on imports of organic products by air is not a barrier since the products ship easily and keep well. Nuts are bought primarily from Turkey, almonds from California and Turkey, figs from Turkey and dates from Tunisia. Other dried fruits and nuts come from Morocco, Tunisia, Costa Rica and Italy. 3.9 Main importers and their principal products (contact details in annex) A complete list of main importers and their products is given in Annex I. 3.10 Product specification (packaging, quality, quantities,)

Fresh and stored vegetables
y

y y

y

Most Swiss buyers prefer domestic vegetables or vegetables from neighbouring countries. Vegetables from overseas have little prospect of market access, since the BIO SUISSE label prohibits import by air. Swiss importers want producers to offer more dependable delivery, less logistical workload and very high quality. Importers want less administrative workload imposed by the Swiss Federal Office for Agriculture and more transparency in relation to import quotas. For example, they should have the option of submitting the accumulated documentation for a complete month rather than for each individual consignment. Foreign producers want BIO SUISSE to harmonize its agricultural standards with the EC Regulation.

Processed vegetables
y

Swiss importers want more suppliers of processed vegetables, specifically mushrooms. Otherwise the problems and expectations coincide with those applying to fresh vegetables.

Fresh fruits
y

y y

Producers of tropical fruits repeatedly complain of problems in adhering to the strict BIO SUISSE standards. Particular obstacles are the requirement for whole-farm organic management (for example, affecting citrus holdings) and the ban on imports by air (increasing the need for postharvest treatment). Many consumers make no distinction between organic and fair trade bananas. Furthermore, the use of ethylene to accelerate the ripening process of bananas is a matter of controversy. Swiss importers want greater concentration of supply, a general increase in supply and an improvement in quality.

Fruit juices
y y

Scarce supply and high prices for orange juice are the main problems faced by traders. Swiss importers want the quantity of supply to increase. Foreign producers, for their part, hope for more efficient distribution of juices within Switzerland. Large manufacturers and distributors should get involved in the market.

Dried fruits and nuts
y y y

Swiss importers expect dried fruits to be of better quality (the quality of nuts has improved dramatically in recent years). Foreign producers are critical of Swiss import quotas and want market access to be more liberal. The BIO SUISSE standards also pose problems to foreign producers because they are stricter than the EC Regulation on some points. Producers are hoping for international harmonization of these standards.

3.11 Re-exports Some firms, such as BIOTTA, have been exporting vegetable and fruit juices to Germany for many years. It is expected that the export of this kind of processed products will grow in the future. 3.12 Constraints to import growth In the past, the range of imported organic products was fairly wide. However, organic products were restricted in terms of the quantities available, to the occasional frustration of producers, import/exporters and retailers. This can be explained by the following main factors:

y

y y y y

BIO SUISSE dominates the Swiss organic market. In 1999, 75 percent of all Swiss organic products were certified according to standards set by BIO SUISSE. BIO SUISSE sets tough requirements for imported products (for example, insisting on whole farm organic management, refusing to award the label to competing products and prohibiting air transport). High quality requirements imposed by traders for organic produce. Logistic problems affecting imported produce (too small quantities, inadequate distribution network). Many consumers of organic foods associate organic farming with regional and seasonal production. With the entry of supermarket chains to the market, the significance of this aspect is now declining. Import quotas of the Swiss Government restrict the amount of products that can be imported into Switzerland. This quota does not distinguish between organic or conventionally produced food.

Despite these constraining factors, imports of organically produced foods and beverages into Switzerland are constantly rising, especially for durum wheat, bread and fodder cereals, soya, rice, citrus fruits and dried fruits. 4.Conclusions: market opportunities for developing countries Retail sales of BIO SUISSE labelled Knospe (Bud label) products have increased by around SWF80 million from 1998 to 1999, representing a 14 percent growth. Experts expect that the Swiss market for organic foods to grow by 20 percent per year in the next five years. In this development, the most important factors are:
y y y y

Consumers have a positive attitude to healthy, ecological and ethical food production. Government support for conversion to organic agriculture and market demand will boost the organic sector. The major retail chains need to profile themselves as socially and ecologically aware in the eyes of critical Swiss consumers. The availability and choice of organic products is increasing across all channels, but especially in the supermarket chains.

4.1 Summary of key characteristics of the market The Swiss market for organic fruit and vegetables is growing dynamically. Imports are presently used to fill seasonal domestic supply gaps and to supply products which simply cannot be grown in Switzerland. However, demand is increasing at a rate that exceeds the domestic capacity to supply. This may be the case even with products that Switzerland can easily produce all year round. Demand is driven primarily by supermarket chains. The two major chains, Migros and COOP, have both vigorously pushed organic products and wish to expand their range of organic fruit and vegetables. Whilst small traditional organic food stores still represent an important sales channel, the supermarkets are clearly expanding their market share. Ideally, the supermarkets wish to provide a full range of organic goods that mirrors the conventional supply. This strategy is designed to attract occasional organic consumers, who wish to have the same organic assortment that exists in conventional food. Given that the bulk of consumers are occasional, converting these consumers to frequent organic consumers is the key to capturing this market share. 4.2 Products with best commercial prospects and for which developing countries have a comparative advantage The main opportunities for imports come from those products that are easily shipped. Given that the BIO SUISSE label prohibits transport by air, fresh and processed fruits and vegetables may be difficult to import under the BIO SUISSE label, unless the country is nearby. However, other labels (e.g. Migros Bio) do not prohibit air transport. Opportunities that are suited to countries that are not geographically close to Switzerland

are mainly in tropical fruit juices and dried fruits and nuts. Both products store well and therefore can be transported by ship or land. Where this issue of transport can be overcome, opportunities exist in those fresh fruits that are not grown in Switzerland. These are typically tropical and other fruits e.g. apricots, pears, mangoes, grapefruit, pineapple and passion fruit. Processed mushrooms are particularly in demand at the moment. The best opportunities for organic vegetables are in supplying the market during winter months, when domestic supply is absent and import quotas are higher. 4.3 Main opportunities and constraints Import into Switzerland is limited by quotas set by the Government. Therefore, exporters and importers need to understand how these quotas work and identify seasonal opportunities to supply specific markets where shortages in domestic supply may exist. It is clear that domestic demand for organic fruit and vegetables will continue to grow. It is less clear whether domestic demand will be met by an increase in domestic supply. Hence, there is a possibility that quotas could be increased over time. This is particularly so as supermarket chains become more involved in building demand, in trying to complete their organic fruit and vegetable range and reduce seasonal shortages. The constraint will be that Swiss consumers currently have a preference for domestically produced products. Access to the Swiss market for products from developing countries and countries in transition is set by regulations on equivalence. The production, processing, inspection, certification and labelling of organic products in these countries must take place according to requirements which are equivalent to those of the Swiss Organic Farming Ordinance. This is not to say that identical procedures are imposed. In fact, it is desirable to adapt organic farming standards to local conditions and make use of certification bodies in these countries. The Research Institute of Organic Agriculture (FiBL) in Frick can be of assistance with feasibility studies and detailed market research: http://www.fibl.ch. The Swiss Import Promotion Programme (SIPPO) promotes imports from developing countries and countries in transition: http://sippo.ch. 4.4 Entry strategy and recommendations for export development Regardless of the product, importers must bear in mind the following aspects:
y y y y y y y

The quality of products (prior agreement should be reached with the buyer). Avoiding dramatic fluctuations in supply. Efficient collection and distribution of the products. Thorough documentation of raw-material flows, production land and premises (this reduces the workload and associated costs of inspection). Small farmers' cooperatives: ensuring the quality of internal control procedures. Coordination of inspections by foreign inspection bodies. Competent advice on production, processing and commerce helps to avoid problems with certification.

In general, it is recommendable to use the services of an importer to introduce organic products into Switzerland, rather than selling them directly to the food industry or trade. Importers can provide the exporter with information on market conditions, quality standards, market access restrictions and import formalities. Just as importantly, they can provide the logistical services needed in order to reach the customer quickly. In addition, many industrial buyers prefer to obtain goods from familiar intermediary organizations which take on the upfront workload and costs of importing on their behalf.

Annex I List of contact details for major fruit and vegetable importers Andros Ch. de la Crétaux C.P. 413, CH-1196 Gland Tel: 41 22 995 08 00 begin_of_the_skype_highlighting 00 end_of_the_skype_highlighting Fax: +41 22 995 09 46 Orange juices Agrexco Ltd. Jungholzstr. 6, CH-8050, Zürich Tel: 1-315 76 20 Fax: 1-315 76 70 Fruits/vegetables Bargosa S.A.-Genève 25. rue Biavignao, CH-1227 Carouge-Genève Tel: 22-343 71 60 Fax: 22-342 80 72 Fruits/vegetables Biofamilia AG Brünigstrasse 141, CH-6072 Sachseln Tel: 41 666 25 55 Fax: 41 666 25 50 Processed nuts, sugar, dried fruit into Muesli Biofarm-Genossenschaft Postfach 18, CH-4936 Kleindietwil Tel: 62 957 80 50 Dried fruit and nuts, sugar Bioforce AG Abt. Heilpflanzenanbau, CH9325 Roggwil Tel: 71 - 454 61 61 Fax: 71 - 454 61 62 Processed vegetables Biogemüse Galmiz Zährli 9, CH-3285 Galmiz Tel: 26 - 670 42 42 Fax: 26 - 670 27 72 Fresh vegetables Biotta AG Pflanzbergstr. 8, CH-8274

41 22 995 08

Tägerwilen Tel: 71 - 666 80 80 Fax: 71 - 666 80 81 Juices, fresh vegetables Bonatura AG Industriestrasse 7, CH-3210 Kerzers Tel: 31 750 14 26 Fax: 31 750 14 24 Fresh fruits (raspberries) Eichberg Bio AG Seetalstrasse 60, CH-5705 Hallwil Tel: 62 767 61 61 Fax: 62 767 61 67 Fresh fruits, juices, vegetables, dried fruit and nuts First Catering Produktion AG Grindelstr. 9, CH-8303 Bassersdorf Tel: 01-8369688 Fax: 01-836 98 55 Vegetables/fruits Frigemo AG Production Cressier Rte de Neuchâtel 49, CH-2088 Cressier Tel: 32 758 53 69 Fax: 32 757 17 38 Fresh vegetables Fruit of Integrity GmbH Eichberg 32, CH-5707 Seengen Tel: 62 767 61 74 (MM) Fax: 62-767 61 60 Dried fruits Fructo Ltd. Schlosstrasse 1, CH-4654 Lostorf Tel: 62-298 30 35 Fax: 62-298 30 36 Banana puree, mango pulp, etc. [email protected] Gugger-Guillod SA Rte de l'Industrie 5, CH-1786 Sugiez Tel: 26 - 673 23 73 Fax: 26 - 673 19 04 Fresh vegetables

Georges Helfer SA Chemin De Fontenailles, CH1196 Gland Tel: 22 99999 99 Fax: 22-99999 88\ Avocados Aux mille saveurs SA Importation et distribution de fruits et légumes biologiques Chemin de Sus Vellaz, CH-1137 Yens Tel: 21-8005201 Fax: 21-8005289 [email protected] Hess Import Haldenstr. 38, CH-8142 Uitikon Tel: 1-400 42 41 Fax: 1-400 42 42 Dried fruits Hilcona AG FL-09494 Schaan Tel: 75 235 95 95 Fax: 75 232 02 85 Vegetables Horizonti Kräuterhandel GmbH Mittelholzerstr. 9, CH-9015 St. Gallen Tel: 79-220 18 67/71-3112096 Tax: 71-311 46 17/2096 Spices/herbs HPW Marketing GmbH Laurenzenvorstadt 79, CH-5000 Aarau Tel: 62-82215 15 Fax: 62-82226 64 Pineapples Lavia Diretta Barigiotta Strasse, CH-6597 Agarone Tel: 91 859 03 68 Fax: 91 859 03 68 Fresh vegetables, stored vegetables, potatoes, stone fruit, berries and cabbage Lendi Erboristi

CH-6981, Bedigliora Tel: 91 606 71 70 Fax: 91 -606 34 91 Tomatoes in oil, mushrooms in oil Mavena AG Birkenweg 1-8, CH-3123 Belp Tel: 31 819 11 11 Fax: 31 819 15 30 Protein plants, pumpkin seeds for baby food Erich Meier Früchte + Gemüse Amriswilerstrasse, CH-8589 Sitterdorf Fax: 71-42249 76 Vegetables/fruits Obipektin AG Industriestr. 8, CH-9220 Bischofszell Tel: 71-424 73 16 Fax: 71-424 73 90 Fruit extracts Rimuss-Kellerei Rahm & Co. Schulgasse 165, CH-8215 Hallau (SH) Tel: 52-681 31 44 Fax: 52-681 40 14 Wine/juice Schläppi & Co. Stationsstr. 1, CH-3076 Worb 2 Tel: 31-839 22 05 Fax: 31-839 90 45 Dried fruits Alex Schönenberger & Co. Fürstenlandstr. 23, CH-9500 Wil Tel. 71-911 41 33 Fax: 71-911 41 35 Concentrates Stettler Gewürzspezialitäten Hauptstr. 13, CH-9562 Märwil Tel: 71-655 15 34 Fax: 71-655 15 55 Spices/herbs Unipektin AG Bahnhofstr. 9, CH-8264 Eschenz Tel: 52-742 31 31

Fax: 52-742 31 32 Concentrates Varistor AG Weststrasse 5, CH-5426 Lengnau Tel: 56 266 50 60 Fax: 56 266 50 70 Processed vegetables, dried fruit and nuts, culinary and medicinal herbs Via Verde Brunnmatt, CH-6264 Pfaffnau Tel: 62 747 07 47 Fax: 62 747 07 37 Fresh fruit, juices, vegetables, dried fruit and nuts, culinary and medicinal herbs Annex II List of organizations in the organic sector Agricultural Associations Demeter Schweiz (Association for bio-dynamic agriculture) Grabenackerstr. 15, Postfach CH-4142 Münchenstein Tel: 61 416 06 43 Fax: 61 41 606 44 [email protected] BIO SUISSE (Association of Swiss Organic Agriculture Organizations) Missionsstrasse 60, CH-4055 Basel Tel: 61 385 96 10 Fax: 61 385 96 11 [email protected] www.bio-suisse.ch Bioterra (Swiss association for organic agriculture) Dubstrasse 33, CH-8003 Zürich Tel: 1 463 5514 Fax: 1 463 4849 [email protected] www.bioterra.ch

Advisory Bodies FiBL - Forschungsinstitut für Biologischen Landbau (Research Institute of Organic Agriculture) Ackerstrasse, Postfach, CH-5070 Frick Tel: 62 865 72 72 Fax: 62 865 72 73 [email protected] www.fibl.ch SIPPO - Swiss Import Promotion Programme OSEC Stampfenbachstr. 85, PO BOX 492 CH-8035 Zürich Tel: 1 365 51 51 Fax: 1 365 52 21 [email protected] www.sippo.ch Government Bodies Bundesamt für Landwirtschaft (Swiss Federal Office for Agriculture) Mattenhofstrasse 5, CH-3003 Bern Tel: 31 322 25 11 Fax: 31 322 26 34 www.blw.admin.ch Bundesamt für Gesundheit (Swiss Federal Office for Public Health) CH-3003 Bern Tel: 31 322 21 11 Fax: 31 322 95 07 www.admin.ch/bag/ Eidgenössische Zollverwaltung (Swiss Federal Customs Administration) Oberzolldirektion, CH-3003 Bern Tel: 31 322 65 11 Fax: 31 322 78 72 www.zoll.admin.ch Bundesamt für Statistik (Swiss Federal Statistical Office) Espace de l'Europe 10, CH-2010 Neuchâtel Tel: 32 713 60 11 Fax: 32 713 60 12 www.statistik.admin.ch

Supermarket Chains Migros Genossenschafts-Bund Limmatstrasse 152, CH-8005 Zürich Tel: 1 277 21 11 Fax: 1-277 23 33/1 277 25 25 www.migros.ch Coop Schweiz Thiersteinerallée 12, CH-4002 Basel Tel: 61 336 66 66 Fax: 61 336 74 91 www.coop.ch USEGO AG Industriestrasse 25, CH-8604 Volketswil Tel: 1 - 947 14 14 Fax: 1 945 05 60 www.usego.ch Manor AG Reggasse 34, CH-4058 Basel Tel: 61 686 11 11 Fax: 61 681 11 92 www.manor.ch Catering Gate Gourmet - Zürich AG CH-8058 Zürich-Flughafen 1 812 12 12 1 812 91 92 www.swissair.com/ourservices/air/gourmet.htm Annex III Other sources of information on the Swiss organic market (Web sites, magazines, directories...) Web information corner for the food and organic market in Switzerland http://naturaplan.coop.ch/index.htm Information on the 'NATURAplan' range by COOP and Webcams at various organic production sites (German site). http://www.migros.ch/ Overview of the Migros supermarket chain (German & French).

http://www.bionetz.ch Directories of organic food stores, restaurants, wholesalers, food processing in Switzerland, recipes and free small ads (German). http://www.biofood.net Business-to-business sector information and news platform for international and local trade in organic products (English & Dutch). http://www.bio-suisse.ch/html/g_handel_1.html Firms licensed by BIO SUISSE to manufacture products of Knospe (Bud label) quality. Searchable database of firms supplying organic products, including addresses (English; for French replace e_handel with f_handel; for German with g_handel). http://www.bio-suisse.ch/html/g_konsumenten_2.html Restaurants in Switzerland offering organic products (English; for French replace e_konsumenten with f_konsumenten; for German with g_konsumenten). Web information corner on requirements and conditions relating to access for organic imports into Switzerland http://www.blw.admin.ch/ The Web site of the Swiss Federal Office for Agriculture provides detailed information on:
y y y y

The Swiss Organic Farming Ordinance Forms for attestation of equivalence and individual authorization to import Direct payments for organic farms Cultivation of organic products.

http://www.blw.admin.ch/nuetzlich/links/d/zertifstellen.htm A list of European certification bodies can be downloaded from this page maintained by the Swiss Federal Office for Agriculture (Bundesamt für Landwirtschaft). http://www.admin.ch/ Original texts of:
y y

Swiss legislation The Swiss Ordinance on agricultural imports.

http://www.zoll.admin.ch Customs tariffs of the Federal Customs Administration. http://www.iso.ch/ The home page of the International Organization for Standardization (ISO) in Geneva provides a link to ISO65, the standard pertaining to certification bodies. http://www.cenorm.be/ The home page of the European Committee for Standardization (CEN) provides a link to the text of the EN45011 standard. http://www.bio-inspecta.ch/ Services provided by the inspection and certification company bio.inspecta. http://www.imo.ch Services provided by the inspection and certification company 'Institut für Marktökologie' (IMO).

http://www.sgs.ch Services provided by the inspection and certification company SGS (Société Générale de Surveillance). http://www.sqs.ch Services provided by the inspection and certification company Swiss Association for Quality and Management Systems (SQS). http://www.sas.admin.ch The Swiss Federal Office of Metrology is the accreditation body for inspection and certification bodies in Switzerland. http://www.bio-suisse.ch The Web site of BIO SUISSE (Association of Swiss Organic Agriculture Organizations, Vereinigung Schweizer Biolandbau-Organisationen) provides detailed information on:
y y y

Standards relating to farming and processing Approval procedures for the Knospe ('bud') label Markets and prices.

http://www.maxhavelaar.ch/ The Web site of Max Havelaar Switzerland, one of the most important Fair Trade organizations. http://sippo.ch The home page of the Swiss Import Promotion Programme (SIPPO) contains information on Swiss activities to promote imports from emerging markets and markets in transition. Web information corner relating to services for organic agriculture http://www.fibl.ch/ The FiBL Web site provides:
y y y y y y y

Information on FiBL's research programme A facility for ordering information and documents An overview of courses and training opportunities in organic farming Exchange for traineeships at organic enterprises Downloadable texts and data on organic agriculture Information on events Contacts and links to both Swiss and international institutions and organizations involved in organic agriculture.

http://www.fiv.ch/ Information on the research programme of the Forschungsinstitut für Vitalqualität (FIV) in Frick. http://www.goetheanum.ch Information on the research programme of the Goetheanum in Dornach. http://www.admin.ch/sar/en/research/index.htm Overview of agricultural research projects in Switzerland. http://www.abtvii.ethz.ch Information on degree courses in Agroecology at the Department of Agriculture and Food Sciences (Departement Agrar- und Lebensmittelwissenschaften) at the Swiss Federal Institute of Technology (ETH) in Zürich.

http://www.fh-agro.ch Information on degree courses in Agroecology and Regional Planning (Agrarökologie und Raumplanung) at the Swiss College of Agriculture (SHL) in Zollikofen. Annex IV Legislation on food items Food Act (Lebensmittelgesetz 817.0) Ordinance on food (Lebensmittelverordnung 817.02) Ordinance on foreign substances and constituents in foods (Verordnung überFremd- und Inhaltstoffe in Lebensmitteln,817.021.23) Ordinance on additives permissible in foodstuffs (Verordnung über die in Lebensmitteln zulässigen Zusatzstoffe, 817.021.22) Ordinance on hygiene and microbiological requirements relating to foodstuffs, objects in contact with foodstuffs, workrooms and staff (Verordnung über die hygienisch-mikrobiologischen Anfordernungen an Lebensmittel, Gebrauchsgegenstände, Räume und Personal 817.051) Ordinance on nutritional value (Nährwertverordnung 817.021.55) Ordinance on indication of country of origin of foodstuffs, ingredients and raw materials used in foodstuffs (Verordnung über die Angabe des Produktionslandes von Lebensmitteln, Lebensmittelzutaten und Rohstoffen 817.021.51) Ordinance on the measurement and declaration of quantities relating to goods for trade and transportation purposes (Verordnung über das Abmessen und die Mengendeklaration von Waren in Handel und Verkehr 941.281)
1

All data on vegetable areas are accumulated figures; different crops for the same area of production of vegetables during one year is taken into account.

UNITED KINGDOM
Introduction The size of the United Kingdom organic food market (at retail level) over the last few years has increased substantially from about UK£275 million in 1997 to UK£350-385 million in 1999. It was estimated to have been between UK£600 million and UK£700 million in 20001. Although the market has experienced rapid growth, it is important to place the market size within the context of the total food and drink market. In the United Kingdom, the organic market accounts, on average, for about 1 percent of the total food market, although this share varies across sectors (tending to be highest for baby food, then fruit and vegetables and lowest in livestock/meat products). For organic fruit and vegetables specifically, the United Kingdom market was worth about UK£165 million2 in 1999 (at retail level) which amounted to about 40 percent of the total organic food and drink market.

The production of organic products in the United Kingdom has followed a similar pattern to the growth in the size of the market. By the end of 2000, there were 472 500 ha of land, either in organic production or in conversion to organic3 (equal to about 2.5 percent of the total agricultural area). This compared with an area of only 50 000 ha in 1996. This rapid expansion in production has not kept pace with demand however, with sales of organic products increasing at a substantially faster rate than domestic supply. As a result the majority (about 75 percent) of organic products consumed in the United Kingdom is imported. 1.Organic farming in the United Kingdom 1.1 Organic farming Given that the rapid expansion in the area devoted to organic production has continued throughout 2000, it is reasonable to estimate that the total United Kingdom area (in production and in conversion) is now probably well in excess of half a million ha. Up-to-date information on the breakdown of this total area is, however, limited and is only available for 1999/early 2000. In April 2000, the total area registered as organic was about 416 000 ha or 2.3 percent of the total agricultural land in the United Kingdom. Of this about 35 percent (146 000 ha) is fully converted organic land with the remainder in conversion4. About 80 percent of the organic land (87 percent of the fully converted land in April 2000) was classified as grassland and hence used for extensive, organic livestock production. Only about a quarter of organic land (83 000 ha) was classified as cropped land and although the organic area devoted to crops has increased rapidly, its rate of increase has been less than the rate of increase for the area of organic grassland. Of the 83 000 ha of registered organic land for cropping in April 2000, only about 19 000 ha were in actual production with the balance in conversion. This in-production area was broken down (in 1999 when the total fully converted land was 13 000 ha) into about 10 000 ha of combinable crops (cereals, oilseeds, pulses, sugar beet) and 3 000 ha of land for organic fruit and vegetables. Of these 3 000 ha, 2 605 ha (87 percent) were used for growing vegetables and only 13 percent for organic fruit production. In December 2000, there were 3 182 registered organic producers, up from 1 568 a year earlier. A breakdown of the United Kingdom¶s organic fruit and vegetable production in 1998/99 is shown in Table 1. This highlights the following key points:
y y y y

y

The production of organic vegetables dominates, accounting for about 90 percent of the total farm gate value of organic fruit and vegetables in the United Kingdom. The main vegetables produced are potatoes, protected crops (e.g. tomatoes, cucumber) and cabbages. The main fruits produced are apples and pears. Production of both organic fruit and vegetables has grown at slower rates than other organic sectors. This has meant increased reliance on imported fruit and vegetables. However, the Soil Association indicates that significantly increased areas of United Kingdom organic fruit and vegetables are likely to come into production in 2000 and 2001, as areas in conversion gain full organic status. All of the United Kingdom¶s organic fruit and vegetables produced are sold on domestic markets.

Table 1: UK organic fruit and vegetable production 1998/99 Crop Potatoes Carrots Onions Swedes Production (tonnes) Value (£ million) atfarm gate level 17 500 5.25 1 650 1 100 4 000 0.56 0.37 1.0

Beetroot Parsnips Leeks Cauliflower Cabbages Broccoli Fresh peas Fresh beans Protected crops Salads Total vegetables Dessert apples Cider/processing apples Plums Pears Cherries Strawberries Raspberries Rhubarb Total fruit Total fruit and vegetables

550 650 400 90 000 (1) 6 000 600 200 500 10 000 1 000 44 150(2) 1 000 1 200 100 400 25 100 26 100 2 951 47 101(2)

0.15 0.35 0.36 0.36 2.0 0.9 0.5 0.75 5.0 0.6 18.15 0.99 0.2 0.1 0.4 0.05 0.2 0.06 0.07 2.07 20.22

Source: Soil Association Organic Food and Farming Report 1999 Note: (1) Numbers of cauliflower, not tonnage. (2) Excluding cauliflower 1.2 Support to organic farming The provision of support for organic food production in the United Kingdom is founded on the EC¶s agrienvironmental regulation (Regulation 2078/92). The United Kingdom has given highest priority and funding for policies targeted at areas designated as environmentally sensitive. Payments are UK£450/ha for land eligible for the area payment scheme, UK£350/ha for other improved land and UK£50 for unimproved land, each spread over five years. Consequently, although it does operate an µOrganic Aid¶ scheme (since 1994), the resources devoted to it are limited. The United Kingdom Government¶s instrument of support is currently the Organic Farming Scheme, which was introduced in 1999. This superseded the Organic Aid Scheme that had operated between 1994 and 1999. The United Kingdom support mechanism is an area-based payment scheme, open to any farmer who registers for organic conversion, submits and has approved an organic conversion plan and complies with an inspection system governed by the UK Register of Organic Food Standards (UKROFS). Any agricultural land not already in organic production is eligible to enter the scheme with a minimum size of one hectare. There is no maximum area; however, aid is only payable up to a ceiling of 300 ha. The aid payments aim to offset the costs of conversion and some of the income forgone for losses associated with no longer applying conventional agricultural practices. The United Kingdom scheme does not provide any annual maintenance payments to organic producers once they have finished receiving the conversion grants (that are paid for five years).

Within the United Kingdom organic trade and amongst organic interest groups there is a widespread perception that the Government has, to date, only shown a low level of commitment to the organic sector. The limited provision of funding for the schemes, which have been heavily oversubscribed and the focus only on conversion subsidies are both cited as examples of this low commitment relative to most other EC member states. Moreover, the rates paid to United Kingdom farmers during conversion are roughly half the levels provided in some other EC countries. The Government counters these arguments by arguing that those entering the organic sector should not do so purely because of the subsidies and should enter because of market driven factors (i.e. the attraction of an expanding market which has price premiums relative to conventionally produced foods). Another main constraint in the short to medium term (one-three years) is the time needed for completion of the in-conversion phase, which means that the majority of the registered organic production area in the United Kingdom is currently in-conversion rather than in-production. Finally, uncertainties about the future level of price premiums for organic produce relative to conventionally produced food may affect further growth in the United Kingdom production base. Whilst farm level price premiums for most produce have been significant (5-50 percent, depending on the product) over the last few years, there is a strong belief that these higher levels of premiums will fall as the supply of organic produce begins to µcatch up with¶ demand. Also, announcements by some United Kingdom supermarkets that they wish to sell organic produce at the same or similar prices to conventionally grown foods is perceived by many in the United Kingdom trade to be sending a negative message to United Kingdom producers possibly thinking of converting to organic systems. All in all, it explains the high level of dependency of the United Kingdom organic market on imported produce. 2. The market for organic fruit and vegetables 2.1 Total organic market The United Kingdom market for organic fruit and vegetables was valued at about UK£165 million (at retail level) in 1999 (source: Datamonitor) although it is likely that it was significantly higher than this at the end of 2000. Regardless of market size, fruit and vegetables are the largest sub-group within the total organic food sector, presently accounting for about 40 percent of the total United Kingdom organic food and drink market. 2.2 Organic market relative to total fresh fruit and vegetable consumed At the total food and drink level, organic products account for about 1 percent of the total value of expenditure on food and drink in the United Kingdom. Information at a disaggregated level is, however, very limited. Trade sources estimate that, for fruit and vegetables, organic products probably account for 5-10 percent of total fruit and vegetable consumption. Table 2 provides some estimates of the retail size of key elements5 of the United Kingdom fresh fruit and vegetable market and the relative importance of organics. Key points to note are as follows:
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The range and availability of fruits and vegetables has widened considerably in the last few years and most supermarket chains sell a broad range of µcore¶ line µtraditional¶ products supplemented by an ever increasing range of more µexotic¶ products. Trade sources suggest that retailers are reluctant to provide shelf space for both an organic and non organic version of a product for which there is limited turnover. Drawing on a National Opinion Pool (NOP) consumer survey (late 2000) of consumer organic purchasing habits, the most popular choices of organic fruit and vegetables were: i) fruits: apples,

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bananas, pears, strawberries/raspberries and oranges; ii) vegetables: potatoes, carrots, tomatoes, broccoli/cabbage/cauliflower, lettuce and onions. For vegetables, the highest levels of penetration for organic produce are for temperate crops traditionally grown domestically (carrots, potatoes, onions, brassicas and tomatoes). Organic penetration levels are also highest for temperate fruits, such as apples, pears and soft fruits, although penetration levels are also reasonably high for µtraditionally¶ consumed warmer climate fruits such as citrus fruits (oranges) and bananas. Trade sources suggest that, whilst the rate of growth in demand for organic fruit and vegetables has been high over the last few years, there are signs that it has slowed during the latter half of 2000. Some of the new exotic products in supermarkets are struggling to generate sufficient turnover to justify their continued stocking (conventionally produced and organic). Also, some organic produce are considered to be in oversupply, e.g. some vegetables like carrots, and some milk has been reported, in 2001, to have been sold into conventional (non-organic) supply channels.This is resulting in downward pressure on prices and the erosion of organic premiums relative to conventional fruit and vegetables for some products.

Table 2: The UK fruit and vegetable retail market value by some key sectors, 1999 (and 2000) Product category Total value (µmillion pounds sterling) 4 308 1 969 140 (162 in 2000) 11.5 2.6 25.8 13.2 (16 in 2000) 338 (326 in 2000) 496 (506 in 2000) 2 340 Organic share/comments %

Total fresh produce market Total fresh fruit market Tropical fruit - mangoes - paw - kiwi - pineapple Citrus fruit Soft fruit Total vegetable/salad market Legumes

5-10 5-10 2-3 5 0 2 3 2-3 2-4 5-15% (organic market mainsub-sectors are carrots 15%, tomatoes 12%, onions 11% and mushrooms 10%) 6

98

Sources: total market size column derived from Taylor Nelson Sofres SuperPanel data (as presented in various editions of Checkout) and organic share/comments column derived from research amongst the United Kingdom trade 2.3 Processed products containing fruit and vegetables The market for processed, organic products has also increased rapidly over the last year, and trade sources suggest that this part of the overall market is where the most rapid growth in the next two years is likely to come. The involvement of some of the major food processors, such as Heinz and Crosse & Blackwell in production of canned organic foods is an indication of this.

As with the fresh organic fruit and vegetable market, a major part of this market is serviced by imports and specialized importers. None of the processors import their organic ingredients direct. This market is mainly serviced by imported frozen [mostly soft] fruit, organic dried fruit [e.g. sultanas, apricots, dates, prunes], soups, ready-meals [e.g. pizzas], jams, cordials, baby food [booming market], yoghurt, other dairy and fruit juices. 2.4 United Kingdom organic sales by outlet In terms of distribution, the United Kingdom fruit and vegetable trade is quite different from some countries in Europe because it has its major outlets in supermarkets and box schemes rather than health food stores. The supermarkets are supplied with pre packed produce with their own labels, by specialist organic pack-houses with national distribution networks - many of which have their own chilled transport vehicles. As a result, specifications are rigorous and the range available has favoured those products where price premiums are least, e.g. potatoes, carrots, swede, and cabbage. The mainstream supermarket chains dominate retail sales of organic produce, accounting for about 70 percent of total sales in April 2000. This share of supermarkets has been increasing over the last few years, having been, for example 63 percent in April 1998. The other main outlets are sales, direct from independent retailers and health food shops which accounted for 16 percent of sales farm/box schemes in April 2001 and market stalls (including farmers markets) which accounted for about 14 percent of retail sales. Whilst the level of sales via these latter two categories of outlet have increased rapidly (about UK£78 million in 2000 from UK£25 million in 1998) in line with the rapid expansion of the overall market, the share of the total market accounted for by these categories of outlet has fallen relative to supermarkets. Amongst supermarket retailers, Tesco and Sainburys are the leading organic produce retailers, each with about 30 percent share of the market. Other supermarkets with significant shares of the organic market include Waitrose, Safeway, ASDA and Marks and Spencer which together have an estimated 20 percent. This leaves another 20 percent for Iceland, various specialized stores, farm gate sales, etc. In terms of the relative importance of organics within store the highest is Waitrose where organics account for about 12 percent of total fruit and vegetable sales. Across the multiples as a whole, organic fruit and vegetables account for anywhere between 3 and 12 percent of total fruit and vegetable sales. 2.5 Features of the main retail segments 2.5.1 Retail sales As indicated above, the main supermarket chains dominate the United Kingdom organic market, handling up to three-quarters of all retail sales. These businesses have evolved into extremely powerful forces, controlling the range and quality of supply and the level of availability of products to United Kingdom consumers. Over the last twenty years they have extended their influence all the way through to original producers, regardless of where they are located, and are today not only dictating product specifications and quality but also the planting, harvesting, packaging, transportation and delivery of products. The high degree of competition between them has resulted in increasing stringency and rigour in their expectations of the products they handle and their purchasing power has enabled them to direct their suppliers towards increasingly mechanistic and almost industrial methods of producing food. During the last decade there has been a pattern among the supermarket of venturing into, testing, dropping out of and, after a number of years, re-entering the organic fresh produce market. Most of them clearly saw and continue to see organics as a potential growth area but one with a number of complications to overcome related, in particular, to reliability and continuity of supply, quality requirements and pricing. This has been a

particular issue in the supply of fresh fruit and vegetables. The approaches taken to tackling these supply and pricing issues have varied across supermarket chains. In terms of actual exposure to customers, the way in which organic fruit and vegetables are presented by multiple stores falls into three distinct categories:
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Some retailers, mostly the smaller, µsecond tier¶ grocery retailers stock a limited range of core fruit and vegetables with an organic alternative alongside (e.g. bananas, apples, oranges, carrots, potatoes, onions). A number of retailers offer a growing range of organic alternatives to conventional products that includes the main µcore¶ purchased items plus some of the more exotic products. Organic produce is now increasingly being presented in a separate section within the store area devoted to fruit and vegetables and clearly differentiated by bright shelf signs and labels. A small number of retailers, notably Waitrose, operate distinct organic and conventional product sections (as referred to above) but also, for some products, stock only organic produce. For example, a store visit in January 2001 identified that only organic mange tout, baby corn and beans were on sale (no conventional produce was available). The extreme version of this policy is the stance taken by Iceland, which decided to sell only organic, own-label fruit and vegetables in its stores (from the autumn of 2000) although branded, conventionally grown fruit and vegetables remain available. It should, however, be recognized that Iceland sells only a limited range of µcore¶ fruit and vegetables. Iceland later changed this policy to de-emphasize organics.

2.5.2 Health and organic stores Another contributory factor to the unique United Kingdom distribution structure is that, in contrast to some other countries where health food shops have been very important, the British health food trade has never competed with the supremacy of the supermarket as a supplier of fresh organic produce and groceries. In some European countries, health food stores have carried organic produce, especially fresh foods, which has allowed the development of a network of local produce growers and suppliers. In the United Kingdom, by contrast, organic farmers and growers have had to sell direct to the public (in farm shops and the now rapidly developing and popular farmers markets), or have developed links with a relatively small number of wholesalers and the small number of supermarket chains. Health food shops have rarely had the physical capacity to handle fresh produce, although some now do stock it. The "independent" organic retail category is more important, including butchers, farm shops, greengrocers, independent retailers and specifically dedicated organic shops. An organic supermarket, Planet Organic in London, specifically aims to overcome this historical obstacle by providing space and facilities for the provision of an organic alternative for most products, fresh and processed. It stocks over 9 000 products of which about 3 500 are organic (it also sells herbal products). It did have plans (in 1999) to set up similar stores across the south of England but this has not yet occurred. Another specialist retailer is Fresh & Wild, which has six stores in London and sells 500 organic products (and 3 000 natural remedy, herbal products). Organic fruit and vegetables account for 20-30 percent of its total sales, although most of these sales are of temperate products grown domestically. Most British cities have health food stores (chains such as Holland and Barrett) on their high streets and they do carry a small, though increasing, range of organic processed foods. Very few sell fresh produce. These outlets (independent retailers and health food shops) accounted for about 13-14 percent of total organic food sales in 2000. 2.5.3 Internet sales A recent development has also been the emergence of e-retailers of organic produce. This includes both specialists, such as Simply Organic, and the Internet supplying divisions of the main supermarket chains (e.g.

Waitrose Organics Direct). Companies such as Simply Organic do not operate any retail outlets and sell only via the Internet, with consumers selecting produce from their catalogue which encompasses a very wide range of products, such as food, drink, clothes, flowers, health and personal care and home care products. The Waitrose Internet shopping scheme offers customers a choice of four boxes of vegetables, salad crops, fruit or a mixed box which are delivered direct to customers. 2.5.4 Box schemes and farmers markets Another significant market outlet and one in which there was a dramatic rise in the mid 1990s is that of µbox schemes¶ where members of the scheme pay a fixed price for a box of in-season organic fruit and vegetables, accepting the mixed range, quality and quantities that are provided. It is an attempt to strengthen ties between producers and consumers and promoting acceptance of the less uniform nature of organic produce. Such boxes can be bought at the shop/farm, central delivery point, delivered to the home or through mail order. Although accurate figures are difficult to obtain, the Soil Association (Annual Report 2000) estimated that there were 200 such schemes in operation in 2000. Although there was good growth in this market segment between 1994 and 1997, it appears that there is now some evidence of a degree of disenchantment with this. Consumers are more aware of the wastage of unwanted produce, a lack of identification of some of the produce and its unattractive appearance. All this is seen as increasing the real price differential. Other outlets for organic produce in the United Kingdom are farm shops, mainly for fruit, vegetables, meat and dairy products. These arose at a time when health food shops could not handle fresh produce and supermarkets were either reluctant to stock the range or were demanding specifications which were impossible to meet. Also farmers markets, of which there were 200 in mid 2000 (and a further 50 were planned for the end of 2000) have become a rapidly developing outlet for organic produce. These markets, however, mostly sell locally grown produce. Overall, box schemes, farmers markets and farm stalls probably accounted for 12-13 percent of total United Kingdom organic food sales in 2000. 2.6 Possible constraints to future market development There is a fairly broad consensus that the market for organics will continue to grow in the next few years. Forecasts of growth vary according to assumptions made, but the United Kingdom organic fruit and vegetable market is predicted to range from 5 to 15 percent of the total retail fruit and vegetable market by 2005. Looking at future market developments, it is important to consider a number of factors that will influence the nature and development of organic trade. Currently the market is essentially a small, niche market that mainly serves the higher than average income groups6, many of whom have strong views towards issues, such as the environment and food health/safety. For the market to continue to grow at the rates of growth experienced in the last two-three years, it is likely that organics will have to join the mainstream market in which much of the additional purchasing is from lower income groups and from those consumers with less intense views on the environment, health and food safety. For this to occur, the price premia at which organic produce has generally traded will have to fall. In turn, this will make the market less attractive to producers, both domestically and in other countries. During 2000 there were some signs that these factors were beginning to come into play. For example, some traders perceived that the rate of growth in the market for organic fresh fruit and vegetables had slowed significantly in recent months with the high level of prices for organic produce relative to conventional alternatives being cited as a major contributory factor. Also some of the leading supermarkets (e.g. Tescos and ASDA) indicated that organic premia were (on average) too high and needed to fall to 15-20 percent maximum if the market were to continue to sustain its rate of growth.

Whilst the market for organic produce has experienced rapid growth, and this is forecast to continue in the next few years, there are nevertheless a number of constraints that could threaten this market development, including the following:
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Product authenticity: buying organic is largely a function of trust and faith in the regulatory approval system and the monitoring activities performed by certification bodies. Also, currently the majority of organic produce sold comes from imports. This latter point means that tracking and tracing the origin of organic produce is inherently more difficult than if supplies come from a local base. Inevitably this, together with the level of price premia in the market, provides an economic incentive for some unscrupulous traders to cheat on the supply side of the market, passing off (cheaper) conventionally produced food as organic in order to capture the premia. Also, there are several bodies providing certification services. As some of these differ in approach, it may contribute to consumer confusion and diminished trust and faith in organics. High dependency on consumer benefit perceptions. These are crucial to the future development of the market. However, there is little hard evidence that organic products are healthier than conventional alternatives. The perception that organic produce might be µsafer¶ than conventional alternatives is not only challengeable but may rapidly subside if there were an organic µfood scare¶. Also, whilst organic production systems are perceived to be better for the environment than conventional agriculture, few consumers are aware that some currently allowable pest control products (e.g. use of sulphur based products) in organics are actually more residual and damaging to the environment than some of the more commonly used conventional chemical treatments. It is also debatable as to how much of the recent increase in demand for organic produce has been driven by anti-GM (genetic modification) sentiment. If so, a legitimate question to pose is how intense and for how long will this sentiment remain, especially when GM quality traits begin to come to the marketplace.

As indicated above, to become a mainstream market segment, the organic market will inevitably be faced with a reduction in the levels of prices and price premia relative to conventionally produced foodstuffs. The drive for reduced margins has already begun to occur in the United Kingdom and given that most organic produce is on average more expensive to produce than conventional food, this points to a cost and price squeeze being pushed back down the supply chain from the retail end. Whilst the burden of any such squeeze will affect all parts of the upstream supply chain relative to retailers, it is likely that most of this will end up residing at the production end. In such circumstances, those producing organic produce will be faced with tighter margins than they may currently enjoy and as in conventional agriculture only the most efficient and competitive will survive. 3. Imports of organic fruit and vegetables 3.1 Total imports Imports are estimated to account for about 75-80 percent of all organic fruit and vegetable currently consumed in the United Kingdom. This can be further disaggregated into: vegetables, where about three-quarters of the market is served by imports, and fruit, where imports account for about 90 percent of consumption. 3.2 Product level There is very little data available about the level of organic imports at the product level. This mainly reflects the lack of differentiation of trade statistics between organic and non-organic produce, leaving trader perceptions as the only source of information. It is, however important to recognize that the level of organic imports is closely related to the general level of import dependency at the product level. Table 3 presents estimates of the volume of imports of fresh organic fruit and vegetables.

Table 3: UK (selected) organic fresh fruit and vegetable imports 2000 (tonnes) Product Potatoes Carrots Onions Legumes Beans Asparagus Courgettes Cassava Sweet potatoes Bananas Pineapple (inc dried) Guavas & mangoes Oranges Clementines Satsumas Mandarins Tangerines Lemons Limes Paw paw/papayas Strawberries Raspberries, blackberries, blueberries Source: based on trade estimates. Note: Table includes imports of products of relevance to this study. It does not include imports of temperate fruits and vegetables such as apples, pears, etc. These tables highlight the following:
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Volume (tonnes) 30 000-40 000 5 000-6 000 6 000-7 000 1 800-2 000 1 400-1 500 80-100 920-1 000 40-45 300-320 20 000 1 000-1 200 800-1 000 13 000-13 500 3 500-3 800 1 500-2 000 500-550 100-120 2 800-2 900 450-470 150-200 860-900 50-60

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EC sources of supply dominate the markets for tomatoes (including cherry tomatoes, for which about 60 percent of the total United Kingdom market are sourced from Spain/Canary Islands) and courgettes (main supplier being Italy), with non-EC countries having a small market share (e.g. some organic tomatoes from Morocco). Opportunities for the supply of developing country, organic produce are probably also low mainly because of a limited track record of servicing the conventional market. There is no information available about the size of the organic tomato market relative to the total market although, within the organic segment, the majority is supplied from other EC countries (Spain, Netherlands), plus some imports from Morocco and Israel. Non-EC countries account for fairly high shares of the markets for pulses, beans7 and asparagus and dominate the supply of cassava and sweet potatoes (main supplier is Israel). It is therefore reasonable to assume that non-EC countries thus account for the bulk of organic supplies of these products, where such a market segment exists. Based on trade comments, organics probably account for about 5-6 percent of the market for pulses and beans and lower shares for the other products.

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Non-EC countries also account for all or most of the markets for bananas (notably the Windward Islands), pineapples (Côte d¶Ivoire, Papua New Guinea), mangoes, oranges, mandarins, satsumas, tangerines (Morocco) and papaya (South Africa, Central America, Caribbean). There is no data available relating to the share of organic produce in any of these markets, although it is likely that the share is less than 5 percent. Non-EC countries account for the bulk of organic supplies of these products, where such a market segment exists. EC sources of supply dominate the markets for soft fruit, lemons (e.g. Greece), limes and clementines (notably Spain), with non-EC countries having limited market share: Israel, Turkey, Egypt, South Africa. Opportunities for the supply of developing countries, organic produce here are, therefore, probably more limited than in the markets where third countries have a more prominent market share. There is no information available about the size of the organic markets relative to the total markets for these products although, within the organic segment it is likely that the majority is supplied from other EC countries. Trends in the volume of organic imports for each product group follow the underlying trends in the size of each respective market (Table 2). In general, demand for the more specialized and exotic products has tended to increase at a faster rate than other, more traditional products, with some traditionally consumed products also experiencing a decline in consumption levels (e.g. oranges, apples and bananas). The volume of organic imports is, in general, fairly small at a product level, with the notable exceptions of bananas and some citrus fruits.

3.3 Importers, traders and wholesalers The major suppliers of organic foods to the United Kingdom retail trade still are the specialists in various product ranges. Many supermarkets and other outlets deal with a handful of well-established wholesalers who operate with overseas as well as domestic suppliers of fresh organic produce. Some wholesalers also sell on to other wholesalers with whom smaller retailers deal (and from whom they receive deliveries). These traditional specialists have often come from the domestic, organic sector and usually supply domestic organic produce. However, a number (mainly the larger traders) also import to ensure continuity of supply for their customers. In addition, there are some specialist organic traders. Details of these companies are presented in Annex I. These larger traders import the bulk organic fruit and vegetables such as potatoes, carrots, brassicas, onions, apples and pears from the rest of the EC, the United States, Israel, Egypt, Turkey, etc. For more exotic produce they buy within the United Kingdom from specialized importers who are established traders of traditional exotics but who now also source organic produce. These latter include Wealmoor and Exotic Farm Produce. It is to these latter specialists that prospective exporters from developing countries should direct their attention. They trade in traditional consignment style but are ever open to offers and enquiries. Traditional, mainstream organic importers, such as Organic Farm Foods of Wales and The Organic Marketing Company for fresh, and Community Foods and Suma Wholefoods for processed, supply supermarkets, box schemes, health food shops, specialist organic supermarkets, processors and even customers in other European countries with fresh and processed organic fruit and vegetables. Wholesalers may deal in pre-packed produce and/or operate as a pack house. Although other suppliers proliferate in the United Kingdom, they are either mainly small and specialize by product sector or they are suppliers of conventional produce who are increasing their participation in organics in response to supermarket demand. Some supermarkets are seeking imported organic supplies from their traditional suppliers. The rationale for the supermarkets using traditional suppliers, especially for imports, has been that such suppliers are familiar with the nature of the supermarket business and have the requisite standards of efficiency. Thus, traditional supermarket produce suppliers, such as Mack Multiples, are seeking to become prominent suppliers of both organic and conventional fresh produce. In this way there has been an attempt to reconcile the rigorous expectations of normal supermarket supply logistics with the more "natural" characteristics of organic supply.

For the time being, however, it is the specialized organic importers that should remain the targets for potential exporters to the United Kingdom. 3.4 Prices At the producer and importer levels the premia paid for organic produce have followed a similar pattern to those at the retail level (see below). In 1997/98, premia were reported to range from 20-100 percent for vegetables and 5-40 percent for fruits. Since then, premia at these levels in the supply chain have reflected the forces of supply and demand. For some products, such as carrots, there have been periods of oversupply in which the premium has virtually disappeared, whilst for others premia have been within a range of 5-50 percent. The issue of prices is one that changes rapidly and practice varies not only between the main supermarkets but also within the stores of a supermarket chain in different parts of the country. In 1997/98, retail premia for organic fruit and vegetables were reported to be between 30 and 100 percent8 in the United Kingdom. Since then the level of premia has varied and, in some cases, fallen for some products due to oversupply (e.g. carrots) and because of active retailer policies to push prices down in an attempt to encourage more consumers to try organic produce. Hence, in some supermarket chains, organic produce trades at premia, which are now 10 to 40 percent relative to conventional produce (this mainly applies to core, temperate and Mediterranean fruits and vegetables, such as apples, carrots, potatoes, brassicas and oranges). In contrast, the premia charged for the more exotic organic fruit and vegetables, both those that are µmainstream¶ products like bananas and mangoes and products that sell in much lower volumes, usually are higher (50-100 percent: see Table 4). Table 4: UK retailer price examples of organic fruit and vegetables (£/kg equivalent wherepossible): January 2001 Product Mange tout & sugar snap peas Green beans Courgettes Sweet potatoes Vine tomatoes Tomatoes Cherry tomatoes Baby corn Oranges Clementines Raspberries Lemons (organic promotion) Limes Bananas (Fair Trade, organic) Pineapple Mango Processed products Soups Organic price 9.27/kg 9.27/kg 2.49/kg 3.78/kg 1.89 for 8 1.39 for 6 6.76/kg 11.12/kg 1.99/kg 1.99/kg 2.89/125grams 0.27 each 0.59 each 1.4/kg 1.99 each 1.69 each Conventional price 6.45/kg 6.95/kg 1.69/kg 1.89/kg 1.49 for 8 0.99 for 6 3.42/kg 7.92/kg 1.44/kg 1.69/kg 1.99/125grams 0.25 each 0.19 each 0.99/kg 0.99 each 0.99 each Organic premia (%) 44 33 47 100 27 40 98 40 38 18 45 16 155 41 100 71 85

Pizzas Dried fruit Jams Cordials Fruit juices Source: taken from Internet shopping sites of major supermarkets.

12 20 15 10 35-60

Overall, for the products of relevance to this study the average organic premia is about 70-80 percent. Premia for organic processed products, relative to conventional alternatives tend to be lower than the premia in the fresh produce sector9. Drawing on table 4 the organic premia applicable for products such as pizzas, jams, cordials and fruit juices is currently between about 10 and 60 percent. 3.5 Key requirements In general, the specifications and requirements of the main supermarket chains set the target µnorm¶ for the market. These focus on consistent quality (essentially based on cosmetic appearance criteria, such as size, shape, colour, absence of blemishes) and consistent supply, at competitive prices. Whilst for conventional fresh produce this has demanded the supply of class-one produce, the difficulties of providing organic class-one produce has resulted in the acceptance of class-two organic fresh produce as being the norm. Supermarkets also prefer to purchase from established importers and traders who know their requirements and operating procedures. This does not necessarily mean their traditional suppliers of mainstream produce. Many of these have "come late" to organics and are now having great difficulty in finding acceptable sources of supply. This means that exporters in developing countries looking to service the mainstream parts of the United Kingdom fresh produce market, need to identify and contact some of the main importers listed in Annex I. Only when a supply relationship with one such organization has been established can an exporter hope to supply the United Kingdom market on a consistent basis. Such relationships may also involve contact with representatives (usually technical specialists with responsibility for produce quality) of the main supermarket chains, although contractual arrangements will be with an importer. Obtaining organic certification that is acceptable to buyers in the United Kingdom is vital. This ultimately means that imports of organic produce from countries outside the EC must be approved by the United Kingdom¶s Ministry of Agriculture10. For some countries, such as Argentina and Australia, their respective national standards have been approved µas equivalent¶ for accreditation of imports into the EC from these countries. However, for supplies from most other third countries, certification of organic status effectively usually means seeking certification from a body that is recognized by the International Federation of Organic Agricultural Movement (IFOAM) and accreditation by a United Kingdom-based accreditation body, such as the Soil Association (United Kingdom supermarkets expect their importing suppliers to fulfil all checks on their behalf and some are now insisting on IFOAM accreditation for all imports). IFOAM has developed its own independent accreditation system whereby over 15 major international certifiers (including, for example, the Soil Association in the United Kingdom) are accredited to the IFOAM Basic Standard. It may also be worthwhile exploring opportunities to get involved in µpartnership developments¶ that some of the larger United Kingdom retailers, notably Sainsbury, are developing. For example, in 1999 Sainsbury set up a long-term partnership with Geest Bananas in the Windward Islands to supply a range of crops including exotic fruit and organic bananas (all to be organic by 2002). It also has a µBlue Skies Organic Project¶ partnership in Ghana, set up in 1999 (certification provided by the Soil Association) which is producing prepared, organic pineapples from 40 farms. 4. Conclusions: market opportunities for developing countries

4.1 Key features of the market The United Kingdom organic food market has experienced rapid growth over the last few years and was estimated to have a retail value of around US$1 billion in 2000. The main supermarket chains dominate the market accounting for about 75 percent of retail sales. Within this, the fresh fruit and vegetable sector is the largest element accounting for about 40 percent of the total market value. The market for organic, processed products containing fruit and vegetables has also expanded rapidly in the last 2-3 years and is forecast to grow at a faster rate than the fresh produce sector in 2001 and beyond. Imports account for in excess of three-quarters of all supplies to the United Kingdom fresh organic produce market, with suppliers from both EC member states and non-EC countries prominent, depending on product. This high level of import dependence also mirrors the position that exists in the conventional fresh fruit and vegetable product markets (whilst accounting for a majority of the market, the share of imports is lower than in organics). Within the United Kingdom market the range and availability of fruits and vegetables has widened considerably in the last few years and most supermarket chains sell a broad range of µcore¶ line µtraditional¶ products supplemented by an ever increasing range of more µexotic¶ products. At the product level, the organic share is lowest for some of the more exotic products mainly because retailers tend to be reluctant to provide shelf space for both an organic and non-organic version of a product for which there is limited turnover. Higher levels of (organic) penetration occur for temperate crops traditionally grown domestically (e.g. carrots, potatoes, tomatoes, apples and pears), although penetration levels are also reasonably high for µtraditionally¶ consumed warmer climate fruits such as citrus fruits and bananas. There are signs that the growth in demand for organic fresh fruit and vegetables may be slowing down and some of the new exotic products put on supermarket shelves are struggling to generate sufficient turnover to justify their continued stocking. Additionally, there has been downward pressure on prices and the erosion of organic premia relative to conventional fruit and vegetables. 4.2 Products with the best commercial opportunities for developing countries The products with the best commercial prospects probably fall into two main categories:
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y

Products that the United Kingdom (and other EC member states) either does not produce or produces in very small quantities. Such products are mostly µexotic¶ and/or tropical fruits, such as papaya, banana, pineapple and mango, plus cassava, yams and sweet potato. These products are (mostly) subject to zero or relatively low levels of import duty and do not face local competition11. In addition, there is a group of µexotic¶ products, such as fine green beans, baby courgettes and corn, sweet potatoes, pomegranates and star fruit, some of which may be grown in the EC but are more suited to warmer, sub-tropical and tropical climates. The off-season provision of some fruits and vegetables that are widely grown and available in the EC during the June-December period of each year. Of particular relevance here are citrus fruit, soft fruit, green beans and tomatoes during the January-May period of each year.

The prospects for supplying these products relate to both the organic and conventional produce markets for fresh/processed fruit and vegetables. 4.3 Possible constraints to entering the market Possible constraints are of two main types. a) General market development constraints

The United Kingdom market for organics is currently a small, niche market that mainly serves the higher than average income groups. For it to continue to grow at the rates of growth experienced in the last two-three years, organics will have to become a mainstream market in which much of the additional purchasing is from lower income groups. For this to occur, price premia for organic produce will have to fall. In turn, this will make the market less attractive to producers, both domestically and from other countries. During 2000 there were some signs that these factors were beginning to come into play with a reported slowdown in the growth of sales for organic fresh fruit and vegetables and the first pronouncements by some of the big United Kingdom retailers that organic premia were too high and needed to fall. Given that most organic products are on average more expensive to produce than conventional food, this points to a cost and price squeeze being pushed back down the supply chain from the retail end with an inevitable consequence that the price paid to producers will fall. This means that in the long run only the most efficient and competitive will survive. Those producers in developing countries, perhaps currently thinking of entering organic production, supplying the United Kingdom organic market and attracted by margins in excess of 50 percent should probably reassess their potential investment on the basis of reduced margins (e.g. 5-20 percent) prevailing in the market, particularly in the longer run. b) Meeting current market specifications These include three main aspects:
y

y

y

Meeting United Kingdom supermarket chain specifications. These set the µnorm¶ for the market and therefore dictate market entry criteria. These focus on consistent quality (criteria, such as size, shape, colour, absence of blemishes) and consistent supply volumes, at competitive prices. In terms of institutional standards, the minimum requirement is EC quality class two. Developing a relationship with an established United Kingdom importer of fresh fruit and vegetables which has a track record of serving the main supermarket chains. Only when a supply relationship with one such organization has been established can an exporter hope to supply the United Kingdom market on a consistent basis. Obtaining organic certification that is acceptable to buyers in the United Kingdom. This is vital and generally means seeking certification from a body that is accredited by the EC and preferably also by the IFOAM.

4.4 Entry strategy: key points for export development Some recommendations for activities to undertake to target the United Kingdom organic fruit and vegetable market include:
y y

y

y

y

Initiating action to obtain accredited certification of organic status. Precise action to take will vary by country, but this is a vital first step. Researching the specific product level market as much as possible. This is a rapidly changing market and having good, up to date intelligence is vital. A good way to monitor the market is to track some of the useful Web sites referred to at the end of Annex I. Examining whether there are existing suppliers from your country to the EC or United Kingdom markets. It may be possible to join a group of suppliers and hence improve the chances of offering consistency of quality and quantity of supplies. Researching, identifying and contacting a relevant United Kingdom importer of your produce. This should preferably be one with a track record of supplying the United Kingdom organic market and, in particular, the main supermarket chains with the type of produce that you can supply. Developing a clear business plan for supplying the United Kingdom market (including aspects such as products to supply, for what period, volume of supply, likely prices and budgeted returns). Critically

examine returns based on lower organic premia (e.g. 5-20 percent) that exist at present (50 percent plus) to see whether the market is likely to remain viable for your business in the medium term. Annex I List of contacts and addresses Retailers Waitrose Doncastle Rd. Southern Industrial Area Bracknell, Berkshire RT12 4YA Tel: 00 44 1344 424680 begin_of_the_skype_highlighting 424680 end_of_the_skype_highlighting Fax: 00 44 1344 825072 Major multiple chain store retailing organic products Sainsburys Ltd Stamford House London SE1 9LL Tel: 00 44 207 695 0024 begin_of_the_skype_highlighting 0024 end_of_the_skype_highlighting Fax: 00 44 207 695 7507 Multiple with long involvement in retailing organic products Tesco Tesco House Delamare Rd., Cheshunt Hertfordshire EN8 9SL Tel: 00 44 1992 646372 begin_of_the_skype_highlighting 646372 end_of_the_skype_highlighting Fax: 00 44 1992 644075 Major multiple chain store with increasing involvement in retailing organic products ASDA Asda House Great Wilson St. Leeds LS11 5AD Tel: 00 44 1132 435435 begin_of_the_skype_highlighting 435435 end_of_the_skype_highlighting Fax: 00 44 1132 418304 Major multiple chain increasing its involvement in organic products. Safeway Argyll House Millington Rd. Hayes Middlesex UB3 4AY

00 44 1344

00 44 207 695

00 44 1992

00 44 1132

Tel: 00 44 208 695 6000 begin_of_the_skype_highlighting 6000 end_of_the_skype_highlighting Fax: 00 44 208 695 7610 Major multiple retailer of organic products Cooperative Wholesale Society Hanover Building Hanover St Manchester M60 4WS Tel: 00 44 161 827 5592 begin_of_the_skype_highlighting 5592 end_of_the_skype_highlighting Fax: 00 44 161 827 5495 Major UK cooperative with increasing involvement in organic retailing Planet Organic 42 Westbourne Grove London W2 5SH Tel: 00 44 207 221 7171 begin_of_the_skype_highlighting 7171 end_of_the_skype_highlighting Fax: 00 44 207 221 1923 Totally organic supermarket in London Whole Earth Foods 292 Portobello Rd. London W11 1LR Tel: 00 44 207 229 7545 begin_of_the_skype_highlighting 7545 end_of_the_skype_highlighting Fax: 00 44 207 221 6416 Producers and wholesalers of organic foods throughout Europe under their own labels Simply Organic Food Company Ltd E-retailer of organic produce Tel: 0845 1000 444 (UK only) Fax: 00 44 20 7622 4447 [email protected] www.simplyorganic.net Fresh & Wild 210 Westbourne Grove London W11 2RH Tel: 00 44 20 7792 9020 begin_of_the_skype_highlighting 9020 end_of_the_skype_highlighting Fax: 00 44 20 7792 1341 www.freshandwild.com Specialist organic food and herbal products retailer with six stores in London

00 44 208 695

00 44 161 827

00 44 207 221

00 44 207 229

00 44 20 7792

Iceland Frozen Foods 2nd Avenue Deeside Industrial Estate Flint Deeside CH5 2NW Tel: 00 44 1244 830100 begin_of_the_skype_highlighting 830100 end_of_the_skype_highlighting Fax: 00 44 1244 814531 www.iceland.co.uk Marks and Spencer p.l.c. Michael House, Baker St. London W1A 1DN Tel: 44-20-7935-4422 begin_of_the_skype_highlighting 4422 end_of_the_skype_highlighting Fax: 44-20-7487-2679 http://www.marks-and-spencer.com Importers/processors/distributors Organic Farm Foods Llambed Estate Lampeter Carmarthenshire SA48 8LT Tel: 00 44 1570 423099 begin_of_the_skype_highlighting 423099 end_of_the_skype_highlighting Fax: 00 44 1570 423280 Major importers and distributors of all types of organic produce, notably fruit, vegetables, dairy products and meats. Major supplier to Waitrose Organics Direct Wealmoor Ltd Jetha House Springfield Rd. Hayes, Middx EB4 OJT Tel: 00 44 208 867 3770 begin_of_the_skype_highlighting 3770 end_of_the_skype_highlighting Fax: 00 44 208 867 3700 [email protected] Leading UK producer, importer, packer and distributor of conventional and organic, exotic fruit, vegetables and legumes Hider Food Imports Wiltshire Rd Kingston upon Hull HU4 6PA Tel: 00 44 1482 561137 begin_of_the_skype_highlighting 561137 end_of_the_skype_highlighting Fax: 00 44 1482 565668

00 44 1244

44-20-7935-

00 44 1570

00 44 208 867

00 44 1482

Importer, wholesaler, processor, packer - nuts, dried fruits, beans, pulses, herbs, spices Harley Foods Blindcrake Hall Blindcrake Cockermouth GA13 0QP Tel: 00 44 1900 823037 begin_of_the_skype_highlighting 823037 end_of_the_skype_highlighting Fax: 00 44 1900 828276 Importer, wholesaler- dried fruit, pulses, grains, herbs, rice Juniper Fine foods Unit 2 Downs Way Industrial Estate Tinwalds downs Rd., Heathall, Dumfries DG1 3RS Tel: 00 44 1387 249333 begin_of_the_skype_highlighting 249333 end_of_the_skype_highlighting Fax: 00 44 1387 249900 Wholesaler of fresh, ambient, chilled and frozen foods and beverages Yeo Valley Organic Company Ltd Cannington Cremery Bridgetown, Somerset, TA5 2nd Tel: 00 44 1278 652243 begin_of_the_skype_highlighting 652243 end_of_the_skype_highlighting Fax: 00 44 1278 653267 Major supplier of organic dairy products and purchaser of fruit ingredients for products such as yoghurts Traidcraft plc Kingsway North Gateshead Tyne & Wear NE11 0NE Tel: 00 44 1914 910591 begin_of_the_skype_highlighting 910591 end_of_the_skype_highlighting Fax: 00 44 1914 822690 Fair trade food organisation with some organic products English Village Salads Camblesforth Grange Brigg Lane Selby, Yorkshire YO8 8ND Tel: 00 44 1757 617161 begin_of_the_skype_highlighting 617161 end_of_the_skype_highlighting

00 44 1900

00 44 1387

00 44 1278

00 44 1914

00 44 1757

Fax: 00 44 1757 614109 Importers of fresh salad products and suppliers to major multiples part of Geest Plc. Oasis Food & Drink Sunset House Ennis Close, Wythenshawe Manchester M23 9LE Tel: 00 44 161 283 8888 begin_of_the_skype_highlighting 8888 end_of_the_skype_highlighting Fax: 00 44 161 283 8899 Wholesale distributors of chilled, frozen and ambient health food products Infinity Foods 67 Norway St. Portslade, East Sussex Tel: 00 44 1273 424060 begin_of_the_skype_highlighting 424060 end_of_the_skype_highlighting Fax: 00 44 1273 417739 Importers and wholesalers of wide range of organic produce Suma Wholefoods Dean Clough Halifax HX3 5AN Tel: 00 44 1422 345513 begin_of_the_skype_highlighting 345513 end_of_the_skype_highlighting Fax: 00 44 1422 349429 Wholesaler and manufacturer of organic vegetarian and vegan products Congelow Produce Den Farm Lane Collier St Tonbridge, Kent TN12 9PX Tel: 00 44 1892 730 447 begin_of_the_skype_highlighting 447 end_of_the_skype_highlighting Fax: 00 44 1892 730 566 [email protected] Importer, retailer of organic fruit and vegetables Organic Marketing Company Unit 1 Leighton Court Lower Eggleton, Ledbury Herefordshire HR8 2UN Tel: 00 44 1531 640819 begin_of_the_skype_highlighting 640819 end_of_the_skype_highlighting

00 44 161 283

00 44 1273

00 44 1422

00 44 1892 730

00 44 1531

Fax: 00 44 1531 640818 Packing and pre-packing importers of fruit and vegetables Hipp Nutrition UK 169 Greenham Park Newbury, Berkshire RG15 8JH Tel: 00 44 1635 528250 begin_of_the_skype_highlighting 528250 end_of_the_skype_highlighting Fax: 00 44 1635 528271 Baby food manufacturers/importers Baby Organix Organix Brands plc No.4 Fairfields Close Christchurch Dorset BH23 1QZ Tel: 00 44 1202 479701 begin_of_the_skype_highlighting 479701 end_of_the_skype_highlighting Fax: 00 44 1202 479712 Fast growing processor/importer/distributor of baby foods The Quiet Revolution The Coach House 6 Duncan St. London N1 8BW Tel: 00 44 207 278 2121 begin_of_the_skype_highlighting 2121 end_of_the_skype_highlighting Fax: 00 44 207 278 1958 Processors of fresh organic soups The Food Resource Base Fife Food Centre Faraday Rd. Southfield Industrial Estate Glenrothes KY6 2RU Tel: 00 44 1592 775884 begin_of_the_skype_highlighting 775884 end_of_the_skype_highlighting Fax: 00 44 1592 775955 Manufacturers of fresh organic soups and sauces Just Wholefoods Unit 2 Cirencester Business Estate Long Lane Cirencester GL7 1YG Tel: 00 44 1258 651910 begin_of_the_skype_highlighting 651910 end_of_the_skype_highlighting Fax: 00 44 1258 651910

00 44 1635

00 44 1202

00 44 207 278

00 44 1592

00 44 1258

Food manufacturer e.g. organic instant soup mixes Windmill Organic Foods 66 Meadow Close London SW20 9JD Tel: 00 44 208 395 9749 begin_of_the_skype_highlighting 9749 end_of_the_skype_highlighting Fax: 00 44 208 395 95749 Importers of bulk ingredients for on-sale to food manufacturers, some soup manufacture Griffin & Brand European Ltd Trophy House, Leacon RD Ashford, Kent TN23 4TU Tel: 00 44 1233 645 941 begin_of_the_skype_highlighting 941 end_of_the_skype_highlighting Fax: 00 44 1233 639 340 [email protected] Wholesaler of fruit and vegetables Mack Multiples Tranfesa Rd Paddock Wood Kent, TN12 6UT Tel: 00 44 1892 835 577 begin_of_the_skype_highlighting 577 end_of_the_skype_highlighting Fax: 00 44 1892 834 890 Imports of fruit and vegetables Tropical Wholefoods Unit 9 Industrial Estate Hamilton Rd London SE27 9SF Tel: 00 44 208 670 114 Fax: 00 44 208 670 1117 Specialist in trade in tropical products from Africa - mainly dried fruit and vegetables Certification Bodies Soil Association 40-56 Victoria St. Bristol BS1 6BY Tel: 00 44 117 914 2400 begin_of_the_skype_highlighting 2400 end_of_the_skype_highlighting Fax: 00 44 117 925 2504 Organic Farmers and Growers 50 High St.

00 44 208 395

00 44 1233 645

00 44 1892 835

00 44 117 914

Soham Ely, Cambridgeshire CB7 5HF Tel: 00 44 1353 722 398 begin_of_the_skype_highlighting 398 end_of_the_skype_highlighting Fax: 00 44 1353 721 571 Organic Food Federation Official The Tithe House Peaseland Green Elsing, East Dereham Norfolk NR20 3DY Tel: 00 44 1362 637314 begin_of_the_skype_highlighting 637314 end_of_the_skype_highlighting Fax: 00 44 1362 637398 Scottish Organic Producers Association Milton of Cambus Farm Doune Perthshire FK16 6HG Tel: 00 44 1786 841657 begin_of_the_skype_highlighting 841657 end_of_the_skype_highlighting Fax: 00 44 1786 841657 [email protected] Bio-Dynamic Agricultural Association Painswick Inn Project Gloucester St Stroud GL5 1QG Tel: 00 44 1453 759 501 begin_of_the_skype_highlighting 501 end_of_the_skype_highlighting Official Ministry of Agriculture, Fisheries and Food Nobel House 17 Smith Square London SW1P 3JR Tel: 00 44 207 238 5803 begin_of_the_skype_highlighting 5803 end_of_the_skype_highlighting Fax: 00 44 207 238 6148

00 44 1353 722

00 44 1362

00 44 1786

00 44 1453 759

00 44 207 238

United Kingdom Register of Organic Food Standards (UKROFS) Nobel House 17 Smith Square London SW1P 3JR Tel: 00 44 207 238 5915 begin_of_the_skype_highlighting 00 44 207 238 5915 end_of_the_skype_highlighting Fax: 00 44 207 238 6148 Web sites www.simplyorganic.net www.soilassociation.org www.linksorganic.com

www.westcountryorganics.co.uk www.organicsdirect.co.uk
1 2 3

Source: based onITC, Economist, USDA. Source: based on Soil Association forecasts.

Source: MAFF evidence to the House of Commons Agriculture Committee report on Organic Farming (January 2001).
4

The Soil Association estimated in its 1999 Food and Farming Report that by the beginning of 2001, the area with full organic status (i.e., in production) would be 240 000 hectares.
5 6

Products of relevance to this study.

Higher income groups form the hard core of organic purchasers. Lower income groups tend to either not buy organic produce at all or occasionally buy (an NOP survey in November 2000 suggested that 43 percent of its sample indicated having purchased organic produce in the previous three weeks compared to 33 percent the previous year - this sample included those who purchased infrequently).
7 8

The main suppliers of beans and pulses are Egypt, Zambia, the Gambia, Zimbabwe.

Source: The European market for organic products: growth and development (1999), University of Hohenheim.
9

This largely reflects a combination of the less wastage and processed products having a higher added value element in their final product than occurs with fresh produce.
10 11

The relevant department is UKROFS.

The EC does produce limited quantities of bananas and pineapples, mostly from its Overseas Dependent Territories

UNITED STATES
Introduction The United States is both a major exporter and importer of agricultural products. The fresh produce industry mirrors this trend as both a major exporter and importer of a broad range of fruits and vegetables. The total organic sector of agriculture has recorded over 44 percent growth in certified acreage from 1992 to 1997, and cropland grew by 111 percent. Additional reports since 1997 indicate a continuing pattern of growth in organic acreage. California Certified Organic Farms (CCOF) estimates 1999 acreage up 38 percent since 1997, while Idaho and Farm Verified Organic (FVO) report gains in 1999 up 55 percent since 1997. The Washington Department of Agriculture reports a growth of 150 percent from 1997 to 1999. The United States Government completed the US National Organic Standards in December 2000. With the full implementation of these standards by October 2002, the United States industry is preparing for increased interest in organic products. The conventional retail supermarkets have already begun to stock organic fresh

produce and now represent over 42 percent of organic fresh produce sales. Major United States food companies are expanding into the organic market segment, and a consolidation within the existing organic and natural foods product companies will lead to increased advertising and promotion of organics in general which will further increase United States consumer interest in organic products, including fresh produce. The United States market has over 12 000 retail stores specializing in organic and natural foods. In addition, conventional retail stores are adding organic fresh produce and products to their shelves, representing over 120 000 retail outlets. With the establishment of the US National Organic Standards, importers of organic fresh produce will be held to the same standard as the United States and may eventually be able to label their product as USDA ORGANIC when marketed in the United States market. While the value of imported organic fresh produce is not known, the United States imports over US$6 billion of various fruits and vegetables. If the organic segment achieves the same level of imports as current United States retail sales volume (2 percent), the short-term import potential exceeds US$125 million. 1. Organic farming in the United States 1.1 Introduction During the 1990s, organic farming was one of the fastest growing United States agricultural sectors. By 1997, state and private certifiers had reported over 1 345 558 acres under organic certification1. From 1992 to 1997 the total certified organic farmland grew 44 percent. A similar growth rate has occurred in the number of certified growers, increasing 40 percent to 5 021. While this represents a fast growing sector of United States agriculture, the 1997 levels represent just 0.2 percent of all crop land. The absence of national certification standards has impacted the conversion to organic production, both from the farmer's concern about lack of standards and the limited number of processors. The organic processing industry in the United States has been limited to small and pioneering food processors until now, with the major United States food processors hesitant to enter into this market. With the anticipation and announcement of the US National Organic Standards in December 2000, major United States manufacturers have begun to enter this market through investments in existing companies, purchasing of existing branded organic companies and through the direct introduction of branded organic products. These trends indicate that the rate of growth in organic acreage will continue in upcoming years. 1.2 United States organic acreage The growth in organic acreage is focused on cropland, with the majority of production in grains and oilseeds. Pasture and rangeland have decreased during this period. This decrease is attributed to the delays in the establishment of United States standards for organic meats and the prohibition of labelling meat products as "organic" until February 1999. Direct comparisons of average farm sizes would be misleading due to inclusion of pasture and rangeland with cropland. Certified rangeland can include national forest land under lease to a rancher, which allows a ranch to certify 100 000 acres or more, eliminating any "average farm" accuracy. Table 1: Total US certified farmland in acres Total Pasture and rangeland 1992 1993 1994 1995 1996 1997 Change (%) 935 450 955 650 991 453 917 894 - 1 346 558 44 532 050 490 850 434 703 279 394 496 385 (7)

Cropland

403 400 464 800 556 750 638 500 3 536 4 060 4 856

-

850 173 5 021

111 40

Total cert. Growers (no. of farms) 3 587

Source: USDA ERS report onUS Organic Agriculture, updated April 2000. Certified pasture and growing certified organic animal feed dominate United States organic agricultural production acreage. The second largest segment is organic grain production followed by oilseeds (predominately soybean). Herbs are the third largest acreage, attributed to the certification of over 83 000 acres of "wild-harvested" acres, or non-cultivated acreage where herbs are harvested as they grow in a wild or natural ecosystem. Table 2: US Organic acreage (1997) Pasture and animal feed Grains Oilseeds Edible beans Herbs/nursery Vegetables Fruits Total Acres Percent of total 623 182 46.28 291 012 113 577 14 040 90 775 52 561 49 413 1 346 558 21.61 8.43 1.04 6.74 3.90 3.67 8.32 100.00

Other cropland and unclassified 111 998

Source: USDA ERS report on US Organic Agriculture updated April 2000. Vegetable production utilizes just over 52 560 acres dominated by lettuce, potatoes, tomatoes and carrots, accounting for 33 percent of total vegetable acreage. Fruit production has 3.7 percent of all acreage, led by grapes, apples and then citrus. 1.3 Organic vegetable and fruit production Table 3: US organic fruit and vegetable acreage Vegetables (1997) Acreage Fruits (1997) Acreage Mixed vegetables 16 830 Grapes 19 299 Lettuce Potatoes Tomatoes Carrots Unclassified Total 5 743 4 335 3 780 3 323 18 550 52 561 Total 49 413 Apples Citrus Tree nuts Unclassified 8 846 6 099 4 908 10 261

Fruit production is led by certified organic grape production and apples. All citrus and all tree fruits (unclassified by product) represent the other major definable segments.

1.4 Top organic vegetable and fruit production states Table 4: Top US organic vegetable acreage (1997) State California Colorado Wisconsin Washington Arizona Oregon Minnesota New York Illinois Florida Total vegetable acreage As percent of totalvegetable acres 23 977 2.1 4 621 4 532 3 785 3 081 2 413 1 811 1 615 1 199 1 017 8.7 0.2 1.5 2.8 1.5 0.8 1.0 1.8 0.4

Source: USDA ERS report on US Organic Agriculture, updated April 2000. Ten states have acreage over 1 000 acres in vegetable production. Of these states, five are capable of year round production; the remaining states are limited to summer vegetable production due to winter weather conditions. While the total United States organic average is 1.3 percent of all vegetable acreage, some of the top ten production states exceed the national average, with Colorado leading with 8.7 percent of all vegetable acreage in organic production. Other states, such as Wisconsin, with similar organic vegetable acreage, report this acreage as only 0.2 percent of the state's total vegetable acreage. Of the top ten states with organic fruit acreage, only seven states have over 1 000 acres in organic fruit production. Again, California is the leading state by a large margin, followed by Arizona, Washington and Florida. Grapes represent the largest acreage of organic fruit production, with 19 299 acres, or 39 percent, of total organic fruit acreage. Organic grape production is primarily in California, with over 95 percent of the national acreage. Apples represent the second largest segment with 8 846 acres followed by 6 099 acres in citrus and 4 908 acres in tree nuts. Table 5: Top US organic fruit production states (1997) State California Arizona Washington Florida Colorado Texas Oregon Minnesota Michigan New York Acres 32 582 4 361 2 978 2 625 1 816 1 344 1 231 360 337 326

Source: USDA ERS report on US Organic Agriculture, updated April 2000. 1.5 Government policy on organic production There is no United States Government programme to encourage farmers to switch to organic production. In fact, the existing farm support programmes and crop insurance programmes provided by the United States Government base their support on historical production and yields of affected fields and crops, which would be a disincentive to switching to organic production. There is a pilot programme to offer organic crop insurance, which would provide some crop insurance coverage for the first time for organic fresh produce. This insurance could cover hail and other climatic impacts which up to now have not been covered for organic fresh produce through conventional Government programmes. Some individual states are providing assistance in conversion to organic production. Iowa has approved organic production as an approved state conservation practice. Minnesota has implemented a cost share programme that pays for two-thirds of the cost for organic inspection and certification. The consensus at the state level is that these programmes only assist those farmers who are already interested in organic production and do not encourage most large fresh produce producers to consider conversion. Production assistance is delivered through the United States "land grant" university system, which designates a university within each state as the Land Grant or agricultural university. Through the university, county extension agents are located in most production regions, and the development of assistance for organic conversion is determined and directed on a state by state basis. 2. United States market for organic fresh produce 2.1 Introduction The United States market for organic fresh produce consists of several key markets or market segments. The natural food store sector and the conventional markets both sell organic fresh produce at differing levels. The natural food store sector focuses on organic fresh produce, often complementing the organic products with conventional fresh produce to provide full fruit and vegetable coverage, while the conventional market features selected organic fresh produce to complement their conventional fresh produce offered. The food service sector in the United States now equals or exceeds the United States household food expenditures at retail stores. There are no records or market research to indicate the food service sales of organic fresh produce to the food service sector. Interviews with United States organic fresh produce distributors indicate that the same distributors that service the natural food and conventional food service sectors are distributing organic fresh produce to the food service sector. 2.2 United States food retailers The United States retail food store market for organic fresh produce is segmented into two primary sectors. The natural food store segment accounts for US$833 million in organic fresh fruits and vegetables, accounting for 69 percent of all fresh produce sold. The conventional supermarkets account for US$618 million in organic fresh fruits and vegetables sales, which represents just 2 percent of their total fresh produce sales. Combined, these two sectors represent US$1.45 billion in organic fresh produce sales in 1999. In 1999, organic fresh produce sales represented over 22 percent of the total US$6.5 billion in United States organic food sales. 2.3 Top United States retail store locations In addition to differentiating the United States retail fresh produce market by store types, the United States market should be considered as separate markets by state or region. A review of the concentration of retail stores by state reveals that some markets should be considered separately. Very few companies launch

products in the total United States. Most companies focus initially on a few key markets and then roll out a product nationally at a later stage. Table 6: Top ten state locations of natural food stores State California Florida Texas New York Illinois Pennsylvania Ohio Washington New Jersey Michigan Source: National Business Lists. The natural foods markets represent 12 256 retail stores. The two leading national chains, i.e. Whole Foods Market and Wild Oats have approximately 220 retail stores combined, indicating that this market is still predominately independent retail stores. The top ten states have over 50 percent of total retail outlets with 6 786 stores. Conventional retail stores represent over 120 000 individual stores. Within the conventional market, there have been mergers resulting in a concentration of retail chains. The top 4 food retailers now have a market share of 28.8 percent of total sales in 1998, up from 15.9 percent in 1992. The top 20 retail chains now command 48.2 percent of the total retail food sales in 1998 up from 37 percent in 1992. This concentration is greater in the largest markets, with the top 8 retail chains controlling 85 percent of retail food sales in these markets. 2.4 Natural product retail store sales analysis A natural food store is defined by the fact that at least 40 percent of sales are in natural foods (including organics). The natural product store segment provides the most detailed information about the organic food trends. In the Natural Foods Merchandiser annual report on the Natural Product Market (June 2000), a detailed analysis of the product segments in the natural products retailer segment provides growth trends by category. Food sales represent 56 percent of the total retail sales in this market. Organic food represents 52 percent of total food sales or 29 percent of total retail sales for the store. Organic fresh produce sales represent the largest segment of organic product sales at US$833 million. In addition to representing the largest organic sales, fresh produce has the largest percentage of organic products in the total sales, with 69.4 percent of all fresh produce sold classified as organic product. Table 7: Natural product store sales by category (in million US$) Product Frozen/refrigerated 1999 total sales 795 Category as % of total sales 5.8 Organic sales 323 % of categoryorganic 40.60 No. of stores 1 937 853 785 715 518 465 414 390 356 353

Dairy Non-dairy beverages (soy, rice, oat) Bulk/packaged bulk Fresh produce (fruit and vegetable) Bakery Packaged grocery Fresh meat/seafood Home meal replacement (HMR) Beer/wine Coffee/tea Other beverages Food service (deli, restaurant, juice bar) Snack foods Total food sales Total non food sales 1999 total sales 1998 total sales

440 272 836 1 201 303 1 956 349 196 106 209 224 487 297 7 671 5 999 13 670 12 342

3.20 2.00 6.10 8.80 2.20 14.30 2.60 1.40 0.80 1.50 1.60 3.60 2.20

171 157 437 833 98 692 35 58 6 78 68 127 89 3 172

38.70 57.80 52.20 69.40 32.50 35.40 10.10 29.40 5.30 37.50 30.50 26.10 30.10 58.65 29.30 26.60

100.00 100.00

4 002 4 280

Source: Natural Foods Merchandiser, June 2000. Packaged organic groceries were the second largest product sold at US$692 million. Packaged organic grocery sales only represented 35.4 percent of total sales, ranked seventh in percentage of category as organic products. Bulk and packaged bulk foods represented the third largest segment at US$437 million, of which 52.2 percent was organic. Other leading categories include frozen/refrigerated foods, dairy, non-dairy beverages such as soy, rice and oat based drinks, other beverages (juices and energy drinks), bakery, snack foods and coffee/teas. 2.5 Organic fresh produce sales in natural and mainstream supermarkets In the natural foods market, organic fresh produce represents over 69 percent of all fresh produce sales. Store observations at the leading natural foods retail chain Whole Foods indicates that conventional fresh produce is stocked to provide fresh produce where organic products are not available. On the other hand, in the conventional supermarkets fresh produce is offered as both organic and conventional. In the Fresh Trends 2001 report on fresh produce by The Packer, retailers indicated that organic fresh produce represents just 2 percent of their retail sales. A store check of two leading conventional supermarkets during this same time period indicated organic options were offered in addition to conventional fresh produce. 2.6 The organic premium The premium for organic versus conventional fresh produce ranged from 11 percent to 121 percent in the conventional stores and from 50 to 167 percent in the natural food market. The limited number of similar conventional and organic products in the natural foods market makes any comparison less pertinent.

As for conventional supermarkets, one store's average premium for organic fresh produce was 36.8 percent, with a range from 11 percent to 67 percent, while at the competitor, the average was 47.9 percent ranging from zero percent to a 121 percent premium for an organic alternative to conventional fresh produce prices. No specific information is available on import and wholesale price premiums. But trade sources indicate that they usually correspond to those at retail level. 2.7 Conventional versus natural food store operations The natural product store industry reported average gross profit margins of 31.2 percent in 1999. This is actually lower than the average gross margin within the conventional supermarket group, which reports an average of 35.5 percent gross margin. Conventional supermarkets report fresh produce as 9.7 percent of their total retail sales while the natural products retail group reports fresh produce contributing 8.8 percent of sales. 2.8 Retail price review Table 8: Organic and conventional fresh produce availability and pricing Whole Foods Safeway Value in USdollars FRUIT Banana D'anjou pear Fuji apples Gala apple Granny Smith Golden Delicious Kiwi (each) Lemons Navel orange Red Delicious Grapefruit VEGETABLES Broccoli Brocoflower Cauliflower Celery Cucumber Garnet yams Green beans Green bell pepper Avocado - each 3.99 1.79 2.99 1.49 1.99 3.99 1.29 2.49 2.49 1.49 60.24 2.99 1.49 167.79 2.49 0.89 1.49 0.99 1.99 2.49 .50 20 3.49 1.99 67 2.69 1.99 50.25 2.49 1.99 0.99 1.49 0.99 2.99 2.99 .99 17 101 81 25 0.99 1.49 1.99 2.49 1.99 1.99 1.29 0.39 0.39 3/1.00 1.99 0.99 1.49 1.29 1.99 1.49 34 1.79 1.69 1.49

King Soopers

Organic Organic Organic Organic Conven. Premium Organic Conven. Premium Organic Conven. Premium (%) (%) (%) 0.39 1.49 0.59 0.99 1.49 1.49 1.29 1.29 0.25 1.79 0.89 0.99 11 11 51 1.69 1.29 2.49 20 31 16 1.69 0.69 1.99 0.39 1.39 0.79 1.49 22 63 67 1.99 51 1.69 0.59 1.49 1.39 1.39 1.39 1.39 22 43 13

Iceberg lettuce each Red cabbage Red onion Red potato Red radishes (bunch) Russet potato Spinach Sweet potato White onion Yellow onion 0.99 0.79 1.29 1.99 0.99 6.99 1.29

.99 0.79

.99

.99

1.19 0.79 0.99 0.79 1.49 1.49 0.89 0.49 0.99 0.99 1.29 0.59 51 61 51

1.49

1.49 0.69

0

1.99

0.9 0.59

121

1.99 0.99 1.49 0.69

Source: Authors observations, February 2001. 2.9 United States per capita consumption of fruits and vegetables Public consumption levels of organic fruits and vegetables are not known in the United States, but are thought to track the conventional fresh produce sales. United States consumers have been encouraged to eat more fruits and vegetables for general health. A national programme to encourage increased fruit and vegetable consumption was initiated by the health care industry and agencies in the United States under the name and slogan "5 A DAY". This programme encourages United States consumers to eat at least five servings of fruits or vegetables each day for better health. Table 9: US per capita consumption of fruit and vegetables (conventional and organic) 1989 Total fruits Fresh fruits Canned fruit Dried fruit Frozen fruit Tree nuts Total vegetables Fresh Canned Frozen Dehydrated Pulses 278.0 122.9 21.2 13.2 4.1 2.2 378.0 172.2 102.4 67.4 29.8 6.3 1998 281.4 131.8 17.3 12.8 4.2 2.3 418.1 186.5 108.0 82.3 32.9 8.4 1989-98 change (%) 1.2 7.2 -18.4 -3.0 2.4 4.5 10.6 8.3 5.5 22.1 10.4 33.3

Source: USDA Agricultural Outlook, September 2000 United States per capita consumption of fruits and vegetables increased 6.6 percent from 1989 to 1998. Fruit consumption was up just 1.2 percent while vegetables increased 10.6 percent during the same time period.

While overall fruit consumption (fresh and processed) experienced very little growth, United States consumers increased their fresh fruit consumption by 7.2 percent from 1989 to 1998. United States consumption of canned and dried fruits declined during this period, 18.4 percent and 3.0 percent respectively. United States vegetable consumption was up 10.6 percent during the same period, led by the increased consumption of frozen vegetables, up 22.1 percent during this period. Fresh vegetables represented 44.6 percent of all vegetables consumed and increased 8.3 percent from 1989. Frozen vegetables grew 22.1 percent during this time. Canned vegetables continue to be the second largest variety of vegetable consumption even though this segment grew slower than any other vegetable sector. 2.10 United States consumer attitudes on fresh produce Fresh produce represents 8.8 percent of the sales at natural food stores and 9.7 percent at conventional supermarkets. The Fresh Trends, 2001 Profile of the Fresh Produce Consumer addressed the conventional fresh produce purchase, and highlighted emerging organic issues and opportunities. Table 10: Primary factors impacting fresh produce purchases 87 percent Expectations of taste 83 percent General appearance 74 percent Cleanliness 70 percent Degree of ripeness 57 percent Nutritional value 47 percent Price 41 percent Item in season 39 percent Knowledge of how to prepare 33 percent Appearance of display 27 percent Complements main entrée 14 percent Where it is grown 12 percent Grown organically Source:Fresh Trends, 2001 Profile of Fresh produce Consumer The United States consumer has a variety of concerns that affect their fresh produce purchases. The primary factor in purchasing the product is the anticipated taste of the product. This would indicate that the introduction of new fresh produce should include provisions to provide consumer sampling at the retail level if possible. Equally important are the general appearance and the perception of cleanliness. Ripeness and nutritional value are also factors in the decision. The United States consumer is increasingly focused on personal fitness and better nutrition and fresh produce is an important factor in a healthy lifestyle. Twenty-four percent of the consumers have indicated that they have started or increased their consumption of fresh produce as a diet or health requirement. The location or origin of the fresh produce is a lesser factor to the general consumer. The awareness and desire for organic fresh produce, while not the primary factor in the purchasing decision, can contribute to the purchases. The Fresh Trends survey revealed consumers have targeted specific fruits and vegetables as part of a healthy diet. Consumers reported that they have started eating or increased consumption of bananas, apples, oranges, broccoli, lettuce, carrots and tomatoes as the top fruit and vegetables to address their diet or health focus.

Table 11: Increased fruit and vegetable consumption attributed to diet or health requirement Fruits Vegetables 21 percent 17 percent 14 percent 8 percent 6 percent 6 percent 5 percent Bananas Apples Oranges Strawberries Grapes Peaches Cantaloupe 19 percent 15 percent 14 percent 9 percent 8 percent 6 percent 6 percent 6 percent Source: Fresh Trends, 2001. Consumers were also surveyed about the use of biotechnology/GMO in the growth of their fresh produce, and 55 percent of those surveyed indicated that they were "very likely" or "somewhat likely" to purchase a fresh produce item that has been genetically modified. At the same time, 38 percent indicated that they were "not at all likely" or "not very likely" to purchase fresh produce that has been genetically modified. 2.11 Vegetarianism growth in the United States Younger Americans are following vegetarian diets. As many as 20 percent of United States college students are reported to follow vegetarian diets with increasing numbers of students turning to the vegan programme of a strict vegetarian diet with no animal products. The vegetarian focus is not limited to the campus. Indeed, a report by the Vegetarian Research Group indicates that more than 55 percent of Americans will occasionally order a vegetarian meal at a restaurant. The Fresh Trends 2001 report informed that twelve percent of the respondents indicated that a primary factor in their purchase decision was whether an item was organic or not. The Fresh Trends 2000 reports that 82 percent of the consumers had purchased organic vegetables in the past six months and 35 percent reported that they had bought organic fruits during the same time period. Food safety is a factor impacting fresh produce purchases. Thirty-two percent of respondents indicated that they felt certain fresh produce items are more prone than other products for food safety concerns. Another study, by the Food Marketing Institute, indicates that 79 percent of the consumers report that they are completely or mostly confident that the food in their supermarket is safe. In the survey on safety, 65 percent of the respondents expressed concern about chemical residue on fresh produce. Only 34 percent felt confident that the Government agencies do a good job at ensuring the safety of fresh product. Only 20 percent felt confident that fresh produce grown outside the United States was as safe as that grown in the United States. A core group of 16 percent indicated that they would buy organic fresh produce when discussing the safety of their fresh produce purchases. 3. Imports of fruits and vegetables into the United States 3.1 Introduction Imported food (regardless of organic production systems) is regulated by several federal agencies. These include: Broccoli Lettuce Carrots Tomatoes Spinach Cauliflower Beans Cabbage

y y y y y y

The Food and Drug Administration (FDA), which is part of the Department of Health and Human Services and the Public Health Service - www.fda.gov Centers for Disease Control and Prevention (CDC) - www.cdc.gov The US Department of Agriculture (USDA) - www.usda.gov Environmental Protection Agency (EPA) - www.epa.gov US Customs Service, US Department of Treasury - www.customs.ustreas.gov Federal Trade Commission (FTC) - www.ftc.gov

A detailed review of each agency's role in regulating all food (imported and domestic) is available from the relevant Web sites. 3.2 United States regulations impacting organic and conventional fruits and vegetables 3.2.1 Organic certification Effective October 2002, any fruit and vegetable labelled or shipped as organic will require certification by an approved certifier based on the US National Organic Standards. Until this time, there is no United States Government regulation or oversight on organic declarations of fruits and vegetables, which means that imports of organic products are usually done by a United States importer in cooperation with a United States certification body. For United States organic fresh producers and for exporters targeting the United States market, there are several key factors in the implementation of these standards. All certifiers who apply for USDA certification within the first six months (by August 2001) will have their application reviewed and on compliance, approved by the April 2002 effective date. An application is available at the Web site for the US National Organic Programme. http://www.ams.usda.gov/nop/. Beginning in October 2002, the USDA Organic Seal will be allowed on organic products marketed in the United States. In addition to the Organic Standards, any fresh produce shipped to the United States must also comply with all existing USDA regulations for conventional fresh produce. These regulations and guidelines are constantly changing. In preparation for exporting any produce to the US, it is advisable to contact the USDA office within the United States Embassy in the producing country to determine the current regulations for shipping fresh produce to the United States. Complying with the United States National Organic Programme (NOP) For certification of organic products to be exported to the United States, the exporter has three certification options.
y

Certifying agents operating in foreign countries may apply for USDA accreditation. Foreign applicants will be evaluated based on the same criteria as domestic certifying agents.

In lieu of USDA accreditation, a foreign certifying agent may:
y

y

Receive recognition when USDA has determined, upon the request of a foreign government, that the foreign certifying agent's government authority is able to assess and accredit certifying agents as meeting the requirements of the NOP; or Receive recognition as meeting requirements equivalent to the requirements of the NOP under an equivalency agreement negotiated between the United States and the foreign government.

In practical terms, any group considering exporting organic products to the United States should identify a certifying group that has or will receive United States certification approval. The United States based

organizations with overseas offices will be able to certify all locations when they are approved by the USDA for organic certification. Greater details on the NOP, as well as the full regulations and an application form for accreditation, are available at the USDA NOP Web site: http://www.ams.usda.gov/nop/. 3.2.2 Import requirements for all fresh produce (including organic) Phytosanitary certification Import requirements depend on both the product and the country of origin. A phytosanitary certificate issued by an official of the exporting country must accompany all fruit and vegetables shipments to the United States. This official will be able to determine if the particular fruit or vegetable can be exported to the United States and what phytosanitary requirements must be met for export to the United States. The control of this process is with the USDA Animal and Plant Health Inspection Service (APHIS). Pesticide and other contaminants The Environmental Protection Agency (EPA) establishes standards for tolerances for pesticides, herbicide and fungicides used in the fumigation of agricultural products. Regulations on tolerance levels are applied to all chemically treated products intended for human and animal consumption in the United States. Fresh producers must only use chemicals which are registered for use on a specific commodity or group of specifically indicated commodities and in accordance with the direction on the package. The United States FDA will test products entering the United States for compliance with EPA regulations on pesticide, fungicide and herbicide residues. Grade and quality standards Certain agricultural commodities exported to the United States must meet import requirements relating to size, grade, quality and maturity. A certificate based on an inspection must be issued by the USDA¶s Agricultural Marketing Services (AMS) to indicate import compliance. Imported goods (including organic fresh produce) must meet the same standards applied to United States products. Products include: Fresh tomatoes Avocados, mangoes Limes Oranges Grapefruit Green peppers Irish potatoes Cucumbers Eggplants Dry onions Walnuts and filberts Processed dates Prunes Raisins Olives in tins Import clearance The United States Customs Service (Customs), a division of the United States Treasury Department, is responsible for the final approval and authorization for importation of all products. United States Customs reviews all documentation for the shipment against requirements and will not release goods from the port of entry until all United States Government requirements are met. They are also responsible for the collection of any import duties due to the United States Government. Overview of import procedure For goods to legally enter the United States, they must first arrive at the port of entry (precluding pre-shipment import authorization). Customs entry papers may be presented to the United States Customs Service before the merchandise arrives to expedite the clearance.

All importers have the right to process the paperwork and complete the documentation for import. In addition, there are United States Customs Service licensed commercial brokers (referred to as customs brokers) who typically act as the importers agent for the preparation and filing of the paperwork for entry of the goods with Customs. The goods are processed for entry into the United States at the first port of arrival unless prior arrangements have been made for in-bond shipment to another port or a bonded warehouse. Customs does not notify the importer of the arrival of any shipment. The carrier of the shipment typically notifies the importer. The importer makes their own arrangements to insure notification of arrival and timely filing of import documentation. The importer (or agent) has 30 days to submit import documentation. After 30 days, the goods are sent to a general order warehouse to be held as unclaimed. The importer is then responsible for storage charges, and the goods will be sold after one year if unclaimed. Documentation for merchandise entry The documents required by United States Customs for releasing imports are:
y y y y y y y

Customs entry form 3461 Evidence of right to make entry, e.g. bill of lading. (Merchandise may be entered only by the owner, purchaser or a licensed customs house broker) A commercial invoice or pro-forma invoice if a commercial invoice cannot be produced Packing list if appropriate Other necessary documents to determine merchandise admissibility Phytosanitary certificate A bond which is normally posted with Customs to cover any potential duties, taxes, and penalties that may accrue after release of the cargo

Ten steps to faster Customs clearance United States Customs service has developed the following steps to assist shippers and importers in facilitating the release of legitimate imported merchandise to the United States: 1. Make sure that your invoices contain the information that would be shown on a well-prepared packing list. 2. Mark and number each package so that it can be identified with the corresponding marks and numbers appearing on your invoice. 3. Show on your invoice a detailed description of each item of goods contained in each individual package. 4. Mark your goods legibly and conspicuously with the name of the country of origin, unless they are specifically exempted from the country of origin marking requirements, and with such other marking as required by the marking laws of the United States. Exemptions and general marking requirements are detailed in Chapters 24 and 25 of Importing into the United States. 5. Comply with the provisions of any special laws of the United States which may apply to your goods, such as the laws relating to food, drugs, cosmetics, alcoholic beverages, and radioactive materials. 6. Observe closely the instructions with respect to invoicing, packaging, marking, labelling, etc. sent to you by your customer in the United States. The customer has probably made a careful check of the requirements which will have to be met when you arrive. 7. Work with United States Customs in developing packing standards for your commodities.

8. Establish sound security procedures at your facility and while transporting your goods for shipment. Do not allow narcotics smugglers the opportunity to introduce narcotics into your shipment. 9. Consider shipping on a carrier participating in the Automated Manifest System. 10. If you use a licensed customs broker to handle the transaction, consider using a firm that participates in the Automated Broker Interface (ABI). United States fresh produce import duty rates United States import duty rates vary by product as well as by country of origin. The same rates apply whether a product is organic or conventional. To determine the applicable import duty rate, the HS product classification code has to be identified. With this code, access the United States Treasury Web site at: http://dataweb.usitc.gov. At this site enter the HS code of the commodity in question and determine the United States import duty rate. In addition to providing information on the import duty by region, this provides additional information by commodity including the two-year trends and current year to date changes:
y y y

Analysis by commodity imports by source country Analysis by commodity of imports by tariff programme Analysis of imports by United States Customs district of entry (port of entry)

3.3 United States fruit and vegetable imports and the organic potential The United States imports over US$6 billion in fruits and vegetables each year. There is no record of what percentage of these imports represent organic fresh produce. While United States imports increased 6.3 percent overall in 2000 versus 1999 for the reported fresh produce, the commodity by commodity reports indicate a strong annual change, from up to 49 percent increases (avocados) to 40 percent decreases (garlic). While the actual value of organic fresh produce imported to the United States is unknown, the Fresh Trends 2001 report indicates that overall United States retail fresh produce sales include two percent organic fresh produce. While this does not account for food service fresh produce sales, using the two percent factor represents a minimum potential market for organic fresh produce, though it will be higher for some products and lower for others. For bananas, for example, market research for this report did receive industry estimates on organic bananas of about 23 500 metric tonnes in 2000, i.e., less than 1 percent of total banana imports. Further analysis is encouraged for any group targeting the United States market. Those suppliers who can ship fresh produce to the United States during the winter months will find a greater reception at the market. The US retailer responds to the consumer, who wants a consistent year-round supply of their fruits and vegetables, which will carry over to the organic market. Table 12: US total fruit and vegetable imports and the theoretical organic potential CY 1999 (US$1 000) Nuts and preps Tomatoes Grapes - fresh Cashew nuts Peppers 759 609 689 322 538 926 447 775 328 342 CY 2000 (US$1 000) 771 398 640 281 552 054 456 764 455 687 Change in 2000% 1.60 -7.10 2.40 2.00 38.80 Organic Potential (US$1 000) 15 428 12 806 11 041 9 135 9 114

Potatoes, fresh or frozen Other vegs - fr or froz Melons Citrus, fresh Cucumbers Cauliflower and broccoli, fr/fz Mangoes Onions Pineapples, fresh or frozen Berries, excl strawberries Other fruits, fresh or froz Asparagus, fresh or frozen Squash Avocados Apples, fresh Strawberries, fresh or froz Pears Pecans Other nuts Beans, fresh or frozen Peaches Peas, incl. chickpeas Macadamia nuts Kiwi fruit, fresh Brazil nuts Garlic Eggplant Plums Carrots, fresh or frozen Lettuce Water chestnuts Filberts Mustard Radishes, fresh Okra, fresh or frozen Cabbage Celery, fresh Chestnuts Endive, fresh

382 105 275 272 291 626 250 248 141 873 169 619 150 977 144 311 125 263 114 015 104 774 114 271 99 827 72 428 111 746 100 433 78 183 72 949 74 802 39 703 42 943 47 935 32 447 39 396 21 269 45 840 21 983 26 097 26 925 14 107 21 809 25 261 18 767 11 653 11 374 9 470 9 348 10 972 5 678

435 865 305 762 260 989 224 151 177 200 161 683 144 927 137 464 133 993 133 265 121 647 119 979 112 392 107 913 92 310 83 893 80 652 78 714 72 749 42 998 39 716 37 318 36 327 36 134 27 499 27 447 24 084 23 530 23 127 20 247 20 218 18 891 16 198 14 923 12 263 10 504 10 466 9 957 4 146

14.10 11.10 -10.50 -10.40 24.90 -4.70 -4.00 -4.70 7.00 16.90 16.10 5.00 12.60 49.00 -17.40 -16.50 3.20 7.90 -2.70 8.30 -7.50 -22.10 12.00 -8.30 29.30 -40.10 9.60 -9.80 -14.10 43.50 -7.30 -25.20 -13.70 28.10 7.80 10.90 12.00 -9.20 -27.00

8 717 6 115 5 220 4 483 3 544 3 234 2 899 2 749 2 680 2 665 2 433 2 400 2 248 2 158 1 846 1 678 1 613 1 574 1 455 860 794 746 727 723 550 549 482 471 463 405 404 378 324 298 245 210 209 199 83

Pistachio nuts Total

2 356 6 124 025

2 060 6 319 783

-12.60 6.3

41 126 396

Source: USDA Economic Research Service Organic Projection by author. 3.4 Organic fresh produce importers The key to accessing the United States market is the fresh produce importer. Retailers, whether the natural food retailer sector or the conventional retailer, utilize fresh produce distributors for obtaining their organic fresh produce. Most of the importer/distributors focus on regional markets. With five states containing over 500 natural food stores (and over 5 000 conventional retail stores) each, the market within just one of the top five states makes a significant market. Fresh produce importers/distributors are responsible for the importation, warehousing and distribution of the product. Some importers will function as the importer and distributor within a region and sell the fresh produce to other wholesalers for servicing other markets. While no sales volume figures are available for individual importers/distributors of organic fresh produce, Annex I contains the name and contact information for key importers/distributors of organic fresh produce. A sample of the products and prices offered by one organic distributor is available in Annex II. 3.5 Constraints to import growth The increases in retail sales of organic fresh produce will develop market by market. It is important to visualize the United States market by region rather than single markets. The greatest potential for imported organic fresh produce is to fill the market void during the winter. Distributor interviews for this report indicated that organic produce offer great potential, provided the products offered match the quality, taste and price expected by the market. One distributor commented that his customers (the retailers) would not fill their shelves with inferior organics, they would rather only present conventional produce if a quality organic product was not available. It should be noted that 29 percent of the total natural foods retail stores exist in California, Texas and Florida, which also have the longest growing season. There is some market resistance to imported fresh produce since 41 percent of consumers seek "in season" fresh produce and 14 percent are concerned about where the fresh produce is grown. With the establishment of US National Organic Standards, all fresh produce imported as organic will be required to comply with the standards. During the transition, it will be critical for exporters to insure that their current organic certifying group is obtaining United States certification approval and after April 2002, only certifiers recognized by the USDA will be allowed to classify fresh produce as organic for the United States market. The United States is a major exporter of fresh produce and is developing an export market for organic fresh produce. This will represent a world competitor to other exporters who produce and compete within the same harvest period. Careful analysis to identify competing harvest periods with the United States organic industry will identify conflicts that will constrict sales opportunities to the United States market. A growing issue with United States retailers is requiring fresh produce arrive at the store with the Price Look Up (PLU) stickers affixed to the fresh produce. PLU stickers provide a standardized set of numbers identifying random weight items at a retail checkout. Numbers are assigned by the Product Electronic Identification Board to provide a four-digit number to identify each type, size and grade of fresh produce available for automated pricing based on weight at the checkout stand. Fresh Produce Marketing Associations' [PMA] Fresh produce Electronic Identification Board Guide to Coding Fresh Produce provides a comprehensive guide to the latest

UPC and PLU numbers for fresh fruits and vegetables. See industry contacts in Annex I for PMA contact information. The importer/distributor can coordinate this programme for exporters. 4.Conclusions and market opportunities for developing countries The United States is a major importer of fruits and vegetables from around the world. These imports are typically counter-seasonal to the United States harvest and represent a guide for targeting organic fresh produce for export to the United States. The overall United States per capita consumption of fruits and vegetables is rising. Fresh fruit consumption is up 7.2 percent and fresh vegetable consumption is up 8.3 percent from 1989 to 1998. The establishment of National Organic Standards and their promotion in the period leading to full implementation in October of 2002 will greatly increase the United States consumer awareness of organic products. Since 1999, there has been an increased focus on organic foods by the major United States consumer food product brands. Major companies have purchased existing organic food companies and introduced product line extensions of existing national brands with an organic focus. Mergers within the industry have also consolidated organic and natural food brands to create stronger market forces. Industry interviews have indicated that additional major United States consumer food product companies are preparing organic products for introduction into the United States market. As these products enter the United States market with their accompanying advertising budgets, the consumer will receive a new level of promotion for organic products is expected to increase, resulting in enhanced consumer awareness of all organic products. The United States retail sector will respond to this public demand by providing a broader range of organic fresh produce. This will also increase organic fresh produce imports to provide year-round availability. Recent trade announcements illustrate this trend. Pavich, the largest United States organic grape fresh producer has announced a marketing arrangement to bring organic table grapes to the United States from South Africa to supplement their marketing programme when local production is not available. One distributor interviewed indicated that he was interested in tropical produce. Another indicated "I could buy organic coloured bell peppers nine months a year if I could find a source." 4.1 How to proceed Organic fresh produce exporters targeting the United States market should focus on shipping their products to the United States during the winter season in the United States. In reviewing individual fresh produce options, it would be useful to analyze the United States imports of similar products to determine the months of the year that the United States is importing specific products. The trade publication group for the US industry, The Packer, publishes an annual "Fresh Produce Availability & Merchandising Guide" which provides market availability reports on over 70 different fruits and vegetables, which highlight United States state production averages as well as primary import sources and months of shipment to the United States. With very few exceptions, the United States market imports most varieties of fresh produce sold in the United States during certain seasons. Importers interviewed for this report indicate that import programmes offer great potential, if they include a well organized transportation programme to deliver quality products. The programme must pack products according to specifications, or find a key importer in three-four areas who can repack to the United States market specifications. The United States offers market opportunities for common and exotic fruits and vegetables. Nuts, tomatoes, grapes, peppers and potatoes each represent over US$400 million in imports each year. Nine different vegetables and six fruits each represent an import market for over US$100 million each. Growing public

awareness and desire for year round organic fresh produce makes the United States a significant market opportunity. Retailers including organic products will be seeking year round availability for organic fresh produce as the market demand increases. 4.2 Top organic vegetable prospects include: Asparagus, fresh or frozen Avocados Beans, fresh or frozen Carrots, fresh or frozen Cauliflower and broccoli, fr/fz Celery, fresh Cucumbers Eggplant Endive, fresh Lettuce Mustard Okra, fresh or frozen Onions Peppers Potatoes, fresh or frozen Radishes, fresh Squash Tomatoes Cabbage Garlic Peas, incl. chickpeas 4.3 Top organic fruit and nut prospects include: Nuts and preps Grapes, fresh Cashew nuts Melons Citrus, fresh Mangoes Pineapples, fresh or frozen Berries, excl strawberries Apples, fresh Strawberries, fresh or frozen Pears Pecans Other nuts Peaches Macadamia nuts Kiwi fruit, fresh Brazil nuts Plums Water chestnuts Filberts Chestnuts Pistachio nuts In addition to the conventional products the United States consumer is experimenting with a wide range of specialty crops.

4.4 Suggestions for entering the United States market
y y y y y y y y

Conduct analysis of target items to determine current conventional United States import volume and optimal months for importing to the United States, which are also relevant for organic fresh produce. Contact the United States Embassy or Government offices to determine the regulations and phytosanitary requirements for shipping your target fresh produce to the United States. Locate and confirm your organic certification will be recognized and accepted within the US National Organic Standards. Research the United States market and select several markets to initiate marketing. Identify several potential importers to initiate discussions on importing your product though you should probably stick to one or two, at least initially until you have large quantities to export. Determine shipping and handling requirements to deliver a quality product to the United States. Determine that shipping capacity exists to bring your product to the United States in a timely fashion during target shipping seasons. Identify grading requirements and optimal packaging format for US market for your particular products in cooperation with your importer. References

American Business Lists, American Business Information, Inc., 5711 S. 86th. Circle, Omaha, Nebraska, 68127, Tel: 402-592-9000 begin_of_the_skype_highlighting 402-592-9000 end_of_the_skype_highlighting, Fax: 402-331-1505 Briefing report on Organic farming and marketing, December 2000, USDA, Economic Research Service, Web: www.usda.gov Consolidation in Food Retailing, Prospects for Consumers & Grocery Suppliers, USDA/Economic Research Service, Web: www.usda.gov Food and Beverage Market Place, Grey House Publishing, Pocket Knife Square, Lakeville, CT 06039, www:greyhouse.com, Tel: 860-435-0868 begin_of_the_skype_highlighting 860-4350868 end_of_the_skype_highlighting, Fax: 860-435-3004 Foreign Agricultural Trade of the US Database, USDA, Economic Research Service, Web: www.usda.gov Fresh Trends, 2001 Profile of the Fresh Produce Consumer, The Packer, Vance Publishing Corp., 10901 W. 84th. Terr., Lenexa, KS 66214-1631, Tel: 913-438-8700 begin_of_the_skype_highlighting 913-4388700 end_of_the_skype_highlighting International Convention & Exposition Directory, October, 2000, Fresh produce Marketing Association (PMA), PO Box 6036, Newark, Delaware, 17414-6036, Tel: 302-738-7100 begin_of_the_skype_highlighting 302-738-7100 end_of_the_skype_highlighting, Fax: 302-7312409, Web: www.pma.com Natural Foods Merchandiser, June 2000, New Hope Natural Media, 1401 Pearl Street, Boulder, Colorado 80302, Tel: 303-998-9126 begin_of_the_skype_highlighting 303-9989126 end_of_the_skype_highlighting, [email protected], Web: www.newhope.com National Organic Directory, 2000, Community Alliance with Family Farmers, PO Box 363, Davis, CA 956170363, Tel: 530-756-8518 begin_of_the_skype_highlighting 530-7568518 end_of_the_skype_highlighting, Fax: 530-756-7857, Email: [email protected]; Web: www.caff.org

2000 Fresh produce Availability and Merchandising Guide, The Packer, Vance Publishing Corp., 10901 W. 84th. Terr., Lenexa, KS 66214-1631, Tel: 913-438-8700 begin_of_the_skype_highlighting 913-4388700 end_of_the_skype_highlighting Understanding the Dynamics of Fresh produce Markets, August 2000, USDA, Economic Research Service, Web: www.usda.gov Annex I Selected addresses Organic fresh produce importer/distributors Albert¶s Organics 1330 East, 6th. Street Los Angeles, CA 90021 Tel: 213-891-1310 begin_of_the_skype_highlighting Fax: 213-891-9291 www.albertsorganics.com Leading wholesale distributor of organic fresh produce with warehouses in Los Angeles, New Jersey, Colorado and Florida Beta Pure Foods 335 Spreckels Drive Ste. D Aptos, CA 95003 Tel: 831-685-6565 begin_of_the_skype_highlighting Fax: 831-685-6569 [email protected] www.betapure.com Supplies ingredients to natural foods industry Bocchi Americas, Inc. 1113 Admiral Peary Way, Navy Yard, Philadelphia, PA 19112 Tel: 215-462-7540 begin_of_the_skype_highlighting Fax: 215-462-7542 [email protected] Boulder Fruit Express, Inc. 340 South Taylor Ave. Louisville, CO 80027 Tel: 303-666-4242 begin_of_the_skype_highlighting Fax: 303-666-0323 www.boulderfruit.com Promotes and distributes organic perishables through the Rocky Mountains and Midwest. Frank Capurra & Son 2250 Salinas Road, PO Box 410 Moss Landing, CA 92039

213-891-1310

end_of_the_skype_highlighting

831-685-6565

end_of_the_skype_highlighting

215-462-7540

end_of_the_skype_highlighting

303-666-4242

end_of_the_skype_highlighting

Tel: 931-728-1767 begin_of_the_skype_highlighting Fax: 831-728-4807 CF Fresh/Rootabaga Enterprises PO Box 665 Sedro-Woolley, WA 98284 Tel: 530-676-9147 begin_of_the_skype_highlighting Fax: 530-676-9148 [email protected] Represents organic fruit and vegetables growers world-wide Charlie¶s Fresh produce PO Box 24606 Seattle, CA 98124 Tel: 206-625-1412 begin_of_the_skype_highlighting Fax: 206-682-4331 Importer, warehouse of specialty organic fresh produce C.H. Robinson Company 8100 Mitchell Rd, Ste 9000 Eden Prairier, MN 55344 Tel: 952-937-8500 begin_of_the_skype_highlighting Fax: 952-937-7703 [email protected] www.chrobinson.com Cris-P Fresh produce Co., Inc. 2811-2 North Palenque Ave. PO Box 7348 Nogales, AZ 85628 Tel: 520-281-9233 begin_of_the_skype_highlighting Fax: 520-281-4699 Crown Pacific International, LLC PO BOX 11360 Hilo, HI 96721 Tel: 808-966-4348 begin_of_the_skype_highlighting Fax: 808-966-4167 [email protected] Demel Enterprises, Inc. 10980 Northpoint Drive Athens, OH 45701 Tel: 740-592-5800 begin_of_the_skype_highlighting Fax: 740-593-5900 Importing organic herbs, spices, medicinal roots and teas Dunn Natural Products L.C. 4734 Sergeant Rd. Waterloo, IA 50701

931-728-1767

end_of_the_skype_highlighting

530-676-9147

end_of_the_skype_highlighting

206-625-1412

end_of_the_skype_highlighting

952-937-8500

end_of_the_skype_highlighting

520-281-9233

end_of_the_skype_highlighting

808-966-4348

end_of_the_skype_highlighting

740-592-5800

end_of_the_skype_highlighting

Tel: 319-233-5504 begin_of_the_skype_highlighting Fax: 319-233-9452 Imports and distributes organic fresh produce Farmers Fruit Express PO Box 73, Leggett, CA 95585 Tel: 707-925-6453 begin_of_the_skype_highlighting Fax: 707-925-6454 [email protected] Specializes in organic fresh produce ForesTrade, Inc. 36 Park Place, Ste. 200 Brattleboro, VT 05301 Tel: 802-257-9157 begin_of_the_skype_highlighting Fax: 802-257-7619 [email protected] Importer of organic spices and essential oils Frieda's Inc. 4465 Corporate Center Drive Los Alamitos, CA 90720-2561 Tel: 714-826-6100 begin_of_the_skype_highlighting Fax: 714-816-0273 [email protected] www.friedas.com Garden State Farms 3655 South Lawrence Street Philadelphia, PA 191148-5610 Tel: 215-463-8000 begin_of_the_skype_highlighting Fax: 215-467-1144 www.procaccibrossalescorp.com Global Berry Farms 2241 Trade Center Way, Ste A Naples, FL 34109 Tel: 941-591-1664 begin_of_the_skype_highlighting Fax: 941-591-8133 [email protected] Jonathans Organics 170 Middleboro Road East Freetwon, MA 02717 Tel: 508-763-5505 begin_of_the_skype_highlighting Fax: 508-763-2334 [email protected] Importer and distributor of full line of organic fruits and vegetables

319-233-5504

end_of_the_skype_highlighting

707-925-6453

end_of_the_skype_highlighting

802-257-9157

end_of_the_skype_highlighting

714-826-6100

end_of_the_skype_highlighting

215-463-8000

end_of_the_skype_highlighting

941-591-1664

end_of_the_skype_highlighting

508-763-5505

end_of_the_skype_highlighting

J & J Distributing 653 Rice Street Saint Paul, MN 55103 Tel: 651-221-0560 begin_of_the_skype_highlighting Fax: 651-221-0570 [email protected] www.jjdst.com Importer and wholesaler JBJ Distributing PO Box 1287 Fullerton, CA 92831 Tel: 714-992-4920 begin_of_the_skype_highlighting Fax: 714-992-0433 Broker/distributor of organic and conventional fruit and vegetables Maui Fresh International 391 Taylor Blvd Ste 105 Pleasant Hill, CA 4523 Tel: 925-676-6284 begin_of_the_skype_highlighting Fax: 925-676-6339 [email protected] Melissa's 5325 S. Soto St. Los Angeles, CA 90021 Tel: 800-468-7111 begin_of_the_skype_highlighting Fax: 323-588-2242 [email protected] www.melissas.com New World Marketing dba: Made in Nature Fresh 2902 East La Palma Ave. Anaheim, CA 92806 Tel: 714-632-0300 begin_of_the_skype_highlighting Fax: 714-632-0345 [email protected] Importer/distributor of organic fresh produce Northbest Natural Products PO Box 1976 Vashon, WA 98070 Tel: 206-463-4000 begin_of_the_skype_highlighting Fax: 206-463-4001 [email protected] Importer and warehouse of organic products Oneonta One Oneonta Way

651-221-0560

end_of_the_skype_highlighting

714-992-4920

end_of_the_skype_highlighting

925-676-6284

end_of_the_skype_highlighting

800-468-7111

end_of_the_skype_highlighting

714-632-0300

end_of_the_skype_highlighting

206-463-4000

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Wenatchee, WA 98807 Tel: 509-663-2631 begin_of_the_skype_highlighting Fax: 509-663-6333 [email protected] www.oneonta.com Oregon Organic Marketing, Inc. 358 West 8th. Avenue Eugene, OR 97401 Tel: 541-687-9535 begin_of_the_skype_highlighting Fax: 541-687-9536 [email protected] www.oregonorganic.com Specializes in organic fruits and vegetables Pacific Organic Fresh Produce 1311 Sutter Street Ste. 203 San Francisco, CA 94109 Tel: 415-673-5555 begin_of_the_skype_highlighting Fax: 415-673-5585 [email protected] www.pacorg.com Importer and representative of organic growers and packers in US and South America Procacci Brothers Sales Corp. 3655 S. Lawrence Street Philadelphia, PA 19148-5610 Tel: 215-463-8000 begin_of_the_skype_highlighting Fax: 215-467-1144 www.procaccibrossalescorp.com RLB Food Distributors 2 Dedrick Place, CN 2285 West Caldwell, NJ 07007 Tel: 973-575-9526 begin_of_the_skype_highlighting Fax: 973-575-4811 [email protected] www.rlbfood.com Supplies full line of conventional and organic fruits and vegetables Sutherland Fresh Produce Sales, Inc. 11651 Shadow Glen Road Al Cajon, CA 92020 Tel: 619-588-9911 begin_of_the_skype_highlighting Fax: 619-588-9595 Broker of organic fresh produce from grower to distributor

509-663-2631

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541-687-9535

end_of_the_skype_highlighting

415-673-5555

end_of_the_skype_highlighting

215-463-8000

end_of_the_skype_highlighting

973-575-9526

end_of_the_skype_highlighting

619-588-9911

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United Apple Sales, Inc. 12 S. Putt Corners Road New Paltz, NY 12561-1602 Tel: 845-256-1500 begin_of_the_skype_highlighting Fax: 845-256-9550 www.unitedapplesales.com Valley Center Packing Co. Inc. 28425 South Cole Grade Road Mail: PO Box 1920 Valley Center, CA 92082 Tel: 460-749-5464 Fax: 760-749-2898 [email protected] Importer and packer of organic citrus, avocados and seasonal exotics Veritable Vegetables 1100 Cesar Chavez Street San Francisco, CA 94124 Tel: 415-641-3500 begin_of_the_skype_highlighting Fax: 415-641-3505 [email protected] Importer wholesaler of organic fresh produce Best Fresh produce Inc. 220 Food Centre Drive Bronx, NY 10474 Tel: 718-617 8300 begin_of_the_skype_highlighting ext. 243&227 Fax: 718-991 9748 markhill@orderfresh produce.com www.orderfresh produce.com Del Cabo 2450 Stage Road Pescadero, CA 94060 Tel: 415-879-0580 begin_of_the_skype_highlighting Fax: 415-879-0930 Importer/wholesaler/distributor Industry Associations Fresh Produce Marketing Association (PMA) 1500 Casho Mill Road Newark, Delaware, 19711 Tel: 302-738-7100 begin_of_the_skype_highlighting Fax: 302-731-2409 [email protected] www.pma.com

845-256-1500

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415-641-3500

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718-617 8300

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415-879-0580

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302-738-7100

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Trade association for fresh produce industry Organic Trade Association (OTA) PO Box 547 Greenfield, MA 01302 Tel: 413-774-7511 begin_of_the_skype_highlighting Fax: 413-774-6432 [email protected] www.ota.com Trade Publications The Packer Vance Publishing Corporation PO Box 2939 Overland Park, Kansas 66202 Tel:913-451-2200 begin_of_the_skype_highlighting Fax: 913-451-5821 Weekly newspaper on fresh produce industry Natural Foods Merchandiser New Hope Natural Media 1401 Pearl St. Boulder, Colorado 80302 303-939-8440 begin_of_the_skype_highlighting [email protected] www.newhope.com Monthly magazine for the natural and organic products industry and organizer of Expo East and Expo West, major trade shows for natural products industry Produce Business News Phoenix Media Network, Inc. PO Box 810425 Boca Raton, FL 334821-0425 Tel: 561-447-0810 begin_of_the_skype_highlighting Fax: 561-368-9125 Monthly magazine servicing fruit, vegetable and floral industry. Natural Business Communications PO Box 7370 Boulder, Colorado 80306 Tel: 303-442-8983 begin_of_the_skype_highlighting Fax: 303-440-7741 [email protected] www.naturalbusiness.com www.lohasjournal.com Monthly magazine on business,

413-774-7511

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913-451-2200

end_of_the_skype_highlighting

303-939-8440

end_of_the_skype_highlighting

561-447-0810

end_of_the_skype_highlighting

303-442-8983

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financial and investment news on natural and organic products industry Selected certification bodies California Certified Organic Farmers (CCOF) Contact Sue Teneyck 1115 Mission Street Santa Cruz, CA 95060 Tel: 831-423-2263 begin_of_the_skype_highlighting Fax: 831-423-4528 www.ccof.org Farm Verified Organic Contact: Annie Kirschenmann 5449 45th Street SE Medina, ND 58467 Tel: 701-486-3578 begin_of_the_skype_highlighting Fax: 701-486-3580 [email protected] Florida Certified Organic Growers & Consumers, Inc. Contact: Marty Mesh PO Box 12311 Gainesville, Florida 32604 Tel: 352- 377- 6345 begin_of_the_skype_highlighting 6345 end_of_the_skype_highlighting Fax: 352- 377-8363 [email protected] www.foginfo.org Global Organic Alliance, Inc. Contact: Betty Kananen 3185 TWP Road 179 PO Box 530 Bellefontaine, Ohio 43311 Tel: 937- 593-1232 begin_of_the_skype_highlighting 1232 end_of_the_skype_highlighting Fax: 937- 593-9507 [email protected] Organic Crop Improvement Association (OCIA) Contact: Diane Bowen 1001 Y Street, Suite B Lincoln, Nebraska 68508-1172 Tel: 402-477-2323 begin_of_the_skype_highlighting Fax: 402-477-4325 [email protected] www.ocia.org Organic Growers and Buyers Association (OGBA) Contact: Sue Cristan

831-423-2263

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701-486-3578

end_of_the_skype_highlighting

352- 377-

937- 593-

402-477-2323

end_of_the_skype_highlighting

8525 Edinbrook Crossing, Ste 3 Brooklyn Park, MN 55443 Tel: 763-424-2450 begin_of_the_skype_highlighting or 800-677-6422 begin_of_the_skype_highlighting Fax: 763-315-2733 [email protected] www.ogba.org Oregon Tilth Certified Organic Contact: Pete Gonzalves 1800 Hawthorn NE - Suite 200 Salem, Oregon 97303 Tel: 503- 378-0690 begin_of_the_skype_highlighting 0690 end_of_the_skype_highlighting Fax: 503- 378-0809 http://www.tilth.org [email protected] Quality Assurance International (QAI) Contact: Marian Casazza 12526 High Bluff Dr, Suite 300 San Diego, CA 92130 Tel: 858-792-3531 begin_of_the_skype_highlighting Fax: 858-792-8665 [email protected] www.qai-inc.com Washington State Department of Agriculture Contact: Miles McEvoy PO Box 42560 Olympia, Washington 98504-2560 Tel: 360-902-1877 begin_of_the_skype_highlighting 360-902-2087 begin_of_the_skype_highlighting [email protected]

763-424-2450 end_of_the_skype_highlighting 800-677-6422 end_of_the_skype_highlighting

503- 378-

858-792-3531

end_of_the_skype_highlighting

360-902-1877 end_of_the_skype_highlighting 360-902-2087 end_of_the_skype_highlighting

Annex II Sample importer/wholesaler prices on organic fresh produce for March 2001 from a US fresh produce importer/broker (in US dollars) Commodity Country of origin New Jersey Bananas Ecuador Dominican Peruvian 40lb 40lb 40lb Premium Premium Premium 18.50 18.50 Choice Navel oranges Fancy 18.50 California Size Pack size Price at each coast

Location: California

48 56 California 72 88 Bag

Carton Carton Carton Carton 10/4lb

18.00 18.00 18.00 16.00 14.00 Choice

20.00 25.00 25.00 18.00 16.50 Fancy 17.00 18.00 16.00 14.00 12.00 14.00 #2 15.50 20.00 20.00 25.00 25.00 20.00 20.00

Location: California Lemons 75 95 California 115 140 165 18x2lb Carton Carton Carton Carton Carton Bag 14.00 15.00 13.00 11.00 10.00 11.00 #1 Avocado California 84 ct. 32 ct. 36 ct. Hass 40 ct. 48 ct. 60 ct. 70 ct. Pineapple Mexico 5 ct. 6 ct. 7 ct. Mango Mexico Tommy Bartlett pears 90 ct Argentina 100 ct. 110 ct. 120 ct. 30.40 30.40 32.40 32.40 34.40 34.40 36.40 36.40 8-14 ct. 11.00 New Jersey California 14.50 14.50 14.50 30.00 40.00 40.00 45.00 45.00 40.00 40.00

Location: California

Location: California

Location: California

1

This is the latest figure available and was updated by USDA ERS in April 2000. No other figure could be found when this report was prepared.