Organic supply chain

Chapter 4

Retailers and wholesalers

A

response of 58 surveys was received from organic retail and wholesale traders, with 35 identifying as retailers, 37 as wholesalers and 14 as both. The breakdown of organic traders by State is shown in Table 62. Most traders were located in the mainland eastern States and their distribution largely reflects wider population trends. The two major retailers in Australia, Coles and Woolworths were unable to complete the survey due to commercially sensitive information, however the researchers wish to thank both retailers for providing inconfidence commercial information which has enabled cross checking and verification of final industry value claims. Total sales of organic products reported by survey respondent retailers and wholesalers were $39.7 million, with about 90% being domestic sales and 10% for exports. Table 63 shows that fresh fruit and vegetables top the

list in terms of most domestically sold produce. This is due to the fact that they are the most common entry point products for new organic consumers and fresh food is perceived to be most vulnerable to chemical residues. Further information on consumer buying patterns can be found in Chapter 5. Retail sales were estimated using two steps, (1) Farm gate value – exports = domestic wholesale, and (2) domestic wholesale + mark-up + imports = Table 62. Number of organic retail and wholesale trader respondents (n = 58) categorised by State. State NSW VIC QLD SA WA TAS Unknown Total 15 12 12 8 7 3 1 % 26 21 21 14 12 5 2
Australian Organic Market Report 2008 65

Chapter 4

Organic supply chain

Table 63. Sales of organic products reported by retailers and wholesalers. Product Fruit & vegetables, fresh Meat Bread and baked goods Sauces, condiments Milling, cereals Wine Snack food, confectionery Other products Honey Ready-meals, chilled foods Fruit & vegetables, processed Beverage, non-alcoholic Health & beauty products Pasta, noodles Essential oils Milk Wholefoods Yoghurt Eggs Textiles, wool, cotton Other dairy products Baby foods Beverage, alcoholic (not wine) Fish
66 Australian Organic Market Report 2008

Traders 11 10 6 9 8 7 6 9 9 3 9 6 5 4 2 4 5 3 1 2 2 1 0 0

Domestic sales ($) 13,254,895 3,435,600 3,539,000 2,971,027 1,993,428 1,312,368 1,303,427 1,055,895 970,629 726,000 629,338 408,203 489,640 512,495 503,000 473,041 485,211 266,041 250,000 127,201 103,000 12,000

Export sales ($) 579,421 3,000,000 2,512 182,367 36,985 211,055 26,392 3,212

Total sales ($) 13,834,316 6,435,600 3,977,262 3,153,394 2,030,413 1,523,423 1,303,427 1,077,287 973,841 726,000 629,338 607,903

% of all sales 35 16 10 8 5 4 3 3 2 2 2 2 2 1 1 1 1 1 1

113,876 8,500 20,865 20,865

603,516 512,495 511,500 493,906 485,211 286,906 250,000 127,201 103,000

3,000

15,000

<1

PHOTO SUPPLIED BY THE ORGANIK STORE, GLENELG SA

it is probable that farm-gate sales and possibly exports are under-estimated.7 million and imports considerably more at $231 million.9 was used (Wynen 2003). and were calculated at 15% of farm gate sales. retail sales. Exports in 2007 were estimated to be $34.5 million in 2001 (Wynen 2003). A mark-up of 1. although a higher value may be more realistic where higher premiums are available or with greater value-adding to raw products. Given the higher number of smaller respondents. Australian Organic Market Report 2008 67 . Imports were estimated to be 40% of organic retail sales based on information provided by several industry sources. Preferred retail outlets of Australian organic consumers (Nourish Foods 2005). although it is acknowledged that actual levels of imported products can vary from almost zero for fresh food. Organic retail sales were estimated to be worth $80 million in 1995 (Hudson 1996) and $106. Exports were assumed to be higher than the 10% indicated. With these assumptions it is conservatively estimated that retail sales of organic produce in Australia are about $623 million. up to about 80% for some processed groceries.Organic supply chain Chapter 4 20% 10% 7% 6% 42% ORGANIC FOOD STORE SUPERMARKET FARMERS MARKET HEALTH FOOD STORE ONLINE RETAILER Figure 11.

NSW. sales and business development manager. 68 Australian Organic Market Report 2008 . They note key challenges to future growth will be consistency of supply.Organic wholesale profile Eco Farms Strengthening markets through better supply E co-Farms began as a small business selling organic fruit and vegetables to a niche market in Sydney in 1986 and has risen to become Australia’s largest wholesale buyer and supplier of fresh produce to key domestic metropolitan markets. packaging and product range. and the development of their own value-added retail grocery brand Absolute Organic. They have been a dominant figure in providing a more stable and consistent platform for long term grower market access. facilitating entry into all major national retail grocery chains as well as grocery independents. But in the packaged section of overseas supermarkets there is an alternative organic product for nearly every conventional item. The company has realised particular success recently with their new range of Absolute Organic beetroot. VIC and SA and attributes much of its success to strong supplier relationships and a committed sales team. The business has realised strong and consistent annual growth with increased turnover in volumes. “Compared to overseas organic markets. and health food stores. Eco-Farms has representatives in QLD. “We’ve been working with growers for more than two decades. The company has diversified operations significantly in recent years. groceries. They see key opportunities in producing organic alternatives for processed goods in Australian supermarkets. supply affected by variability in growing conditions and subsequent scarcity in specific product lines and supply chain co-ordination. as well as the development of exceptional inter-supply chain relationships. Australia is actually often ahead in terms of fresh produce quality. Business efforts are now split between wholesaling and repacking. That is not something we currently see in Australia and offers significant expansion potential” says Tenay. particularly for fresh produce. Our continued expansion and diversification can benefit both organic producers and consumers” says Tenay Barker. sweet potato and flavoured potato chips. catering to growing consumer demand for blended health and convenience items. .

Increasing amounts of these No. of manufacturers/processors 800 700 600 500 400 300 200 100 0 2002 2003 2004 Year Figure 12. manufacturers and importers T he organic manufacturing/ processing market is growing at a steady rate. canned and jarred items. Australian Organic Market Report 2008 69 2005 2006 2007 . Number of certified manufacturers/processors from 2002 to 2007 (AQIS 2008). ready meals and other convenience foods. cereal products. dried and frozen food.Organic supply chain Chapter 4 PHOTO SUPPLIED BY GREEN GROvE ORGANIcS Processors. including baby food. fruit juices. preserves. Australian organic food manufacturers are already producing a wide range of products. yoghurts. AQIS data in Figure 12 shows that the amount of organically certified manufacturers has grown significantly over the past few years. cheeses. while Figure 13 shows that manufacturers of organic food make up a considerable proportion (21%) of the overall industry.

State VIC NSW QLD SA WA TAS Unknown Total 40 31 19 9 9 6 1 % 35 27 17 8 8 5 1 consisting of unspecified organically produced ingredients. Organic processors. in order of importance: • insufficient supply of raw ingredients such as milk. Commodity Grains Vegetables Condiment. manufacturer and importer survey respondents (n = 115) categorised by State. were the most common commodities. low prices • limited access to abattoirs and other processing facilities • the drought • skilled labour is difficult to find and keep Most respondents in this sector were positive about the future for Table 65. Proportion of organic processors. followed by health and beauty products containing or Table 64. other Fruit Health & beauty Dairy Meat Farm input Fertiliser Nuts Snack food Responses 70 Australian Organic Market Report 2008 Total NSW 76 59 37 33 18 8 8 6 6 6 3 260 68 4 4 38 16 13 10 7 4 1 VIC 23 32 5 21 5 4 5 Proportion (%) QLD WA TAS 46 29 10 4 4 2 2 2 25 23 8 8 15 15 15 15 8 33 8 8 8 8 ACT 9 73 SA 60 20 10 10 NT 50 Export 9 3 51 14 17 9 50 3 4 2 57 2 9 52 13 12 11 10 2 3 35 . Percentages are calculated separately for each State. Europe and the US. manufacturers and importers (n = 260) categorised by States and commodities. Due to insufficient information it was not possible to report in detail on the value or volume of products sold by the processors. in some cases. The proportion of organic processors. Number of organic processor. meat and grains • inconsistent supply and quality of raw ingredients during the year • limited market outlets and. manufacturers and importers by sector. Attitudes Issues that were commented upon by organic processors. manufacturers and importers using various commodities is shown in Table 65.Chapter 4 Organic supply chain products are exported to places such as Asia. manufacturers and importers included. manufacturers and importers tended to be located in VIC and NSW (Table 64). Grains and horticultural produce. including herbs and spices and other condiments.

(1. Five abattoirs reported processing organically produced livestock. 14% expecting conditions to remain similar and only 7% expecting sales to decrease (Table 66). Expected change in sales Significant increase Marginal increase Remain similar Marginal decrease Significant decrease Not reported Total (n = 115) 51 22 16 6 2 18 % 44 19 14 5 2 16 Abattoirs A battoirs are an important part of the organic supply chain. While the volume of organic meat production doubled between 2001 and 2005 (Wynen 2006). while abattoirs in NSW and VIC processed poultry and pigs respectively. manufacturers and importers.Organic supply chain Chapter 4 organic produce with about two-thirds expecting a marginal or significant increase in sales. Expected change in sales of organic products over the following year reported by organic processors. Australian Organic Market Report 2008 71 . A number of abattoirs located in QLD and TAS processed organically certified or in-conversion beef. 3% 3% Table 66. according to respondents this growth has often been constrained by the lack of organic abattoirs in close proximity leading to uneconomical transport costs. The development of the processing sector has in turn been constrained by the relatively low volumes and seasonality of organic livestock production.734) 73% 21% (505) PRODUCER MANUFACTURER WHOLESALER OTHER (67) (74) Figure 13. linking primary producers with their down-stream markets in the wholesale and retail sectors. Percentages of value-adding certified operators in 2007 categorised by supply chain sector (AQIS 2008).

Gary Leeson. without detracting from necessary crop quality and yield parameters. and bio-inoculants (live microbial isolates) to major home and garden retailers.Allowed inputs profile Organic Crop Protectants Input in the industrys’ best interests interest in the use of emulsifiable vegetable oils as pesticides. In Australia they currently sell twenty registered organic products including soil fertility and plant bio-stimulant products. spraying oils. India and China for sales growth. natural insecticide/ fungicide alternatives. Managing Director says OCP was created from the desire to develop products with a minimal impact on humans and their environmental surrounds. “This is a major achievement for a relatively small company considering the necessary expertise and research costs required to satisfy the APVMA and Department of Health in the safety and effectiveness of a product” says Gary. eight of which have been approved for registration by the Australian Pesticide and Veterinary Medicine Authority (APVMA). Business is focused primarily on plant protection domestically and they export proprietary products to Japan. Gary says increased scarcity of crude oil resources and rising costs of petro-based products means small input companies will take a leading role in crop protection and nutrition product development. allowed inputs are rapidly gaining momentum in both organic and conventional markets. The company recognises its wider role in growing the organic industry and emphasises the importance of rigorously researched and tested input products in sustained and ethical industry growth. OCP founder. developed natural formulas in his youth . and in the market opportunity inherent in the environmentally sustainable farming industry when he worked as a researcher in the early eighties. . Used by farmers and home gardeners to replenish soil health biologically. The company sees key opportunities ahead for small and innovative biologically based input suppliers in both organic farming and conventional agriculture. Organic Crop Protectants (OCP) have manufactured and distributed certified crop nutrition and protection products in Australia since 1990. high value segment of the organic industry. Managing Director Gary Leeson in front of OCP popular products Eco-Oil Organic Miticide/ Insecticide and Eco-carb Organic Fungicide. as large multinationals look towards GM technology and countries like South America. Leyland Minter. and direct to farm operations. S oil inputs allowed for use in certified organic production systems (known as allowed inputs) are a rapidly growing.“I began with a home-made insect spray made from a mix of tea tree oil. Korea and New Zealand. A strong team of around six key employees have developed 25 products over the past 17 years. He says obstacles to future profitable growth include regulatory barriers in product development and the high cost of product registration. soap flakes and peanut oil” – gaining 72 Australian Organic Market Report 2008 .

consisting of 8. with a smaller number using the Japanese Agriculture Standard T (JAS) and several respondents using more than one overseas certifier (Table 67). the level of exports has been averaging about 8. there has been a move towards more processed and higher value commodities such Table 67. Australian commodities such as grain and beef produced and marketed as organic have a good reputation in the overseas market. which suggests significant export business opportunities for certified operators in Australia. Certification scheme NOP (USA) IFOAM (Europe. Earlier industry estimates of organic exports range from $30 million in 1997.6 million units (kg or litres).Organic supply chain Chapter 4 Exports he International Federation of Organic Agriculture Movements (IFOAM) estimates the global organic market to be growing at a rate of 20 – 30% per annum. Australian Organic Market Report 2008 73 . to $50 million in 2000 (cited in Halpin 2004). international) JAS (Japan) Skal (Netherlands) Un-named Not reported Respondents 50 28 13 1 6 548 % 8 4 2 0. As with the conventional market. Total quantity of organic produce exported by AQIS-registered organic clients (AQIS 2008). Survey respondents using overseas certification schemes commonly used National Organic Program (NOP) for the USA or IFOAM. Number of respondents using overseas organic certification schemes.2 1 85 Quantity exported (millions kg & litre) 40 35 30 25 20 15 10 5 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year Figure 14. there were 26. In 2007.9 million units annually over the past five years (Figure 14).550 reports of commodities exported (AQIS 2008). Despite the decline in total volume over the past decade. Despite some very high export volumes earlier in the decade.

Figure 15 shows the variation in exports over time. cereal and legume grains (17%). beef (15%) and oil seeds (11%). unspecified meats and chicken meat. We are exporting more of our produce as value-added. and the categories are not precise enough to allow reliable pricing. beauty products. This is due to the EU and AQIS having an . dairy products and fibres. flowers. juices (2%) and dairy (1%). in decreasing order. lamb meat.Chapter 4 Organic supply chain as prepared food. Unlike the US and Japan. flour rather than wheat.g. although dairy and grain legumes are increasing and cereal grains have been decreasing slightly. eggs. animal feed. dairy. beverages. not in dollars. the EU is a relatively simple market for Australian organic businesses to export into. Other important commodities for Australian organic exporters included wine (5%). processed fruit. However. honey (4%). medicinal herbs. AQIS figures are collected as volumes. e. Many 74 Australian Organic Market Report 2008 commodities have remained steady. fibres (mostly wool) (2%).000 kilograms or litres were essential oils. culinary herbs. Commodities exported in lesser quantities included. The bulk of the exports in 2007 consisted of prepared food (33%). health products. fruit and vegetables (5%). fibre. nuts and all below 100.

000.000 1.000 Quantity exported (million kg & litres) JAPAN FRANCE NETHERLANDS MALAYSIA UK NEW ZEALAND SINGAPORE CHINA SWITZERLAND USA GERMANY ITALY KOREA SWEDEN 10. respectively have NOP (National Organic Programme) and JAS (Japanese Agricultural Standard).Organic supply chain Chapter 4 100. Australian Organic Market Report 2008 75 .000 1. CEREAL WINE DAIRY 2002 2003 2004 2005 2006 2007 Figure 15.000. Note log scale to display small and large values. further adding to the time and cost involved in doing business in these countries. through their whole supply chain.000 100.000 1000 100 10 1 1999 2000 2001 PREPARED FOOD BEEF OILSEED GRAINS. Quantity of organic produce exported by AQISregistered organic clients by year and commodity (AQIS 2008). The US and Japan on the other hand.000.000 10. Note log scale to display small and large values. equivalence agreement on organic standards. Quantity of organic produce exported by AQIS-registered organic clients by year and target country (AQIS 2008). VEG JUICE GRAINS. Korea and Sweden have increased in importance and most other export markets have remained fairly constant over time (Figure 16). Only countries with export values greater than $1 million are shown.000. While Italy and Switzerland have declined considerably as export target destinations. These markets involve additional regulatory work and compliance requirements for exporters.000 10.000.000 1000 100 10 1 1999 2000 2001 2002 2003 2004 2005 2006 2007 Figure 16. LEGUME HONEY FIBRES FRUIT. 2008).000 100. 100. presumably due to high levels of organic production within those countries (Willer et al.000 Quantity exported (million kg & litres) 10.000.

and that wholesale activities ensure the integrity of certified organic product stocked in his own stores.Organic retail profile Organic Elements. “Retailers influence everyone in the supply chain. Operating under a unique business structure. “My business is run by a young and energetic team who receive extensive training. Uwe says wholesale customers who value the service are those who lack the time. Uwe says Organic Elements will differentiate itself on highest quality customer service while keeping the price the consumer pays as low as possible. 76 Australian Organic Market Report 2008 . Organic consumers put food first and it’s amazing the amount of questions people will ask” . “This is a vital point of trust from the view of the consumer. Director of Organic Elements retail outlet in Victoria. Major business obstacles in the future are expected to include rising petrol prices and increased wholesale competition. My vision is to make organics accessible to everyone by providing a reasonable price for consumers and a fair return to growers. To do that I have increased my buying power” he says. says the sector is essential in driving the organic industry forward. “I think it is important to keep these contacts active and we are interested in export for the future given the strong ethical reputation of fresh certified Australian organic produce overseas” says Uwe. resources or skills to negotiate high quality orders from agents. It’s crucial that you have the knowledge to sell organic products. I know what I retail is 99% certified organic of the best quality because I buy it myself” . He says one of his key advantages is a dynamic and educated staff base. and has gained traction in local markets by simultaneously managing two organic retail outlets at the same time as wholesaling to shops. Organic Elements has grown to become one of the largest buyers of fresh produce in Victoria. restaurants and T food clubs in the Melbourne district. Uwe Wullfen Selling the organic concept he organic retail sector is the first point of contact for first-time organic consumers and Uwe Wullfen. Uwe says his status as a retailer gives him an advantage when purchasing direct from agents. Organic Elements also exports small orders to Asia and the Pacific on a seasonal basis. “I believe supplying high nutrition organic food at a lower price is a realistic business model” he says. he says. at Prahran and Queen Victoria markets.

The amounts of organic food that consumers buy vary from category to category. However. Interestingly. Lockie et al. goods are purchased less frequently. In other organic categories. it is organic fruit and vegetables that are the most commonly purchased of all organic products T and are often the entry point for new organic consumers.The organic consumer Chapter 5 Who is the Australian organic food consumer? he consumption of organic food is no longer the domain of a marginal few. With nearly 70% of organic consumers buying them at least once a week (Nourish Foods 2005). 2004). The only certain factor across most studies is that women are the primary purchasers of organic foods but this stems from the fact that they are still primarily responsible for the food sourcing and preparation in Australian households (Lockie et al. 2004). There has been some link found to higher education but this too is not consistent across all studies. although not exclusively (Pearson 2003. While 60% of consumers buy only conventional food the remaining 40% buy organic. Category % Fresh fruit and vegetables Dairy products Bakery / bread Eggs Meat / poultry Non dairy beverages / drinks Snacks / confectionary Grain / pulses Baby food Frozen food 69 44 30 29 24 14 13 10 2 <1 Australian Organic Market Report 2008 77 General grocery / packaged goods34 . this demand is largely driven by the perceived health benefits and chemical free nature of organic fruits and vegetables. Organic food purchased by organic food consumers at least once a week (Nourish Foods 2005). consumers are more likely to want to avoid chemical residues in their fresh produce than in their processed food. such as frozen foods and meat. it is only around 1% of consumers who are regular or almost exclusive buyers of organic products. Organic consumers come from all walks of life and all socio–demographic groups. Research has failed to consistently identify them as coming from a particular income or age group (Lockie and Donaghy 2004). However. Table68. with the remaining 39% purchasing organic food to varying degrees and in varying amounts.

Retail channel Supermarkets (including independent supermarkets) Respondents Experiential Emerging Converted Organic food shops Experiential Emerging Converted Health-food shops Experiential Emerging Converted Green grocers. Supermarkets are increasingly providing consumers with a larger range of fresh and processed organic food allowing shoppers who prefer one-stop-shopping the opportunity to trial organic products without going to the effort to seek them out. These have experienced significant Table 69. fruit and vegetable shops Experiential Emerging Converted Home delivery. direct from grower. Experiential consumers were those that spent the lowest dollar amount of the three groups on organic products.g. The more committed the organic consumer. The majority of new organic consumers start their organic journey at the supermarket and as they become more committed to organic food. Internet Experiential Emerging Converted Farmers’ markets Experiential Emerging Converted Other (e. Source of organic products by various organic consumer segments (Nourish Foods 2005). The other growth area in terms of retail channels is farmers’ markets. Nourish Foods (2005) segmented organic consumers into three groups: ‘Experiential’. organic grocery stores or other specialty outlets.Chapter 5 The organic consumer Shopping W here consumers shop for organic food depends upon their level of commitment to purchasing organic. Emerging and Converted consumers were roughly the same size market segments (38% and 39% respectively) but the latter spent a higher amount on organic products. the greater their likelihood of shopping in specialty food stores and farmers’ markets for organic food. other general market) Experiential Emerging Converted 78 Australian Organic Market Report 2008 Percent of segment 51 19 6 18 47 51 7 9 5 7 4 3 6 1 10 4 12 12 6 8 10 . This convenience is critical for new users in particular. move their way to specialist shops such as health food shops. Supermarkets play a key role in introducing consumers to organic food. ‘Emerging’ and ‘Converted’.

Percent of average weekly shopping spent on organic products (Nourish Foods 2005). while around 22% of organic consumers spent only 10% or less of their weekly budget on organic products (Figure 17). 2004). One study found that almost 21% of those surveyed consumed at least half of their diet as organic (Lockie et al. Nourish (2005) found that almost 40 % of organic consumers spent at least 50% of their average weekly shopping budget on organic products. 2006). these markets are a growing key source of organic food and also a vehicle for educating consumers about the farming practices involved. 38% 22% 39% 1% OVER 50% 11 – 50% UP TO 10% NOT SURE/DON’T KNOW Figure 17. how it is grown and the seasonal influences on fresh produce. They provide a unique opportunity for people to talk to growers and learn about where food comes from. What proportion of the diet is organic? The proportion of the diet which is organic is something that has yet to be measured definitively in Australia. This is a substantial consumer segment and further research needs to be done in order to understand this aspect of organic consumer behaviour.The organic consumer Chapter 5 growth in the past decade and have been estimated to generate around $40 million in annual turnover in Australia (Guthrie et al. Whilst a large amount of produce sold at these markets is not certified organic. Australian Organic Market Report 2008 79 .

In a study comparing a wide range of peer-reviewed research findings.) The study also revealed that organic kiwi fruit had higher levels of vitamin C 2. 2007 2 Organic kiwis win out. Yanez. The three main reasons. The Organic Center. consumers who are motivated by this factor feel they are contributing to the solution rather than the problem. State of Science Review. Yun-Jeong Hong.. issues of land degradation. published online June 23. Health as a motivator stems from the fact that organic food is perceived to be chemical free as well as free from genetic modification. 3 Benbrook. and a belief that organic food tastes better. Food that is free from chemicals and GM is perceived to be more ‘natural’ and thus healthier. 2008. J. 1 Source: “Ten-Year Comparison of the Influences of Organic and Conventional Crop Management Practices on the Content of Flavonoids in Tomatoes” Authors: Alyson E. the nutritional premium of organic food was estimated to be an average of 25% above conventionally produced food 3. (Polyphenols help to reduce cholesterol and improve blood circulation.php?action=view&report_id=126 . By buying organic food. Recent studies by researchers from the University of California-Davis have found that organically grown tomatoes contain more flavonoids than their conventional counterparts 1. Ford Denison. C. or a combination of. while another study found that organic kiwi fruit had much higher levels of polyphenols and antioxidant activity. 2007): p8(1). N. Barrett.E. The experience of superior taste of 80 Australian Organic Market Report 2008 organic food is a major driver for some organic consumers. For example. while antioxidants help to neutralize free radicals that can damage cells. New Evidence Confirms the Nutritional Superiority of Plant-Based Organic Foods. There are also reasons which are not cited as often but equally influence some consumers. the motivations described above. Lisa Richards. Diane M. Both factors are seen to impact negatively on health. concern for the environment. and Andrews. Journal of Food and Agricultural Chemistry.(Polyphenols/antioxidants) (benefits of organically grown fruits). Organic consumers may hold one. a political and ecological perspective is what drives them to purchase organic food. Animal welfare for some consumers has led them to seek out certified organic meat where animal husbandry standards are superior to their conventional counterparts (Lockie et al. soil salinity and drought. For some consumers. someone may be both motivated by taste and believe that organic food is healthier but not be overly concerned with the environmental benefits of organic food production. R. and Stephen Kaffka. Zhao. trace element and vitamin content of organic food. Davies.. D. 2006). Eggs are another category where consumers actively source not only organic. but free range produce in order to avoid buying products that support the perceived cruel practice of caging birds. latest. Chemistry and Industry 6 (March 26. There is also considerable debate about the higher mineral. P. Bryant.. Eunmi Koh. Mitchell.Chapter 5 The organic consumer Consumer motivations for purchasing organic products There are many reasons why consumers choose to buy organic food. are: health. in no particular order. With mounting public concern over climate change. one way for consumers to take action is via their food purchases. Consumers driven to purchase organic food based on an experience of its superior taste are quick to describe the taste difference between organic and conventional food. the challenge for the industry remains how to utilise these motivations in communicating with potential and actual organic consumers. www.org/science. X.organic-center. With so many competing motivations.

In the past. The premium price of organic food is often given as a major reason for non purchase. Organic food is perceived by many to be more expensive and consequently it is up to the industry to communicate the reasons for the price premium on organic food. they were able to provide greater financial support to farmers by buying directly from them. Two reasons were given: Firstly they felt this gave them some control over their food source and secondly. these factors are no longer mentioned to the same degree as in previous studies. In the UK convenience food is one of the two fastest growing segments of the organic industry. For example. there has also been a significant movement towards more farmers’ markets and direct marketing. soft drinks and junk food (ABS 2006). The other trend is the increasing consumer interest in natural foods. Seemingly contrasting trends are occurring: the increasing rise of convenience foods and the return of consumer interest in natural and whole foods. Consumer trends Australia mirrors the UK in that there is evidence of a polarisation of food trends. Farmers’ Cooperative representatives reported that consumers were keen to buy direct from farmers. Clearly this is not about affordability but about consumer choice and values. Both of these need to be considered carefully. However. The above trends bode well for an industry oriented toward bringing the urban consumer closer to the Australian farming environment and in turn closer to organic farmers. Major cities throughout Australia now have farmers’ markets where similar sentiments are being expressed. Australian Organic Market Report 2008 81 . This is partly due to the improved quality of organic fresh fruit and vegetables in specialist food shops and markets. the poor appearance of organic food was often cited as a reason for not buying organic food. along with inconsistent availability. Similarly while there has been a major rise in retail marketing of organic products. Australians clearly value certain foods over others with the average household spending just $16 per week on fresh fruit and vegetables and $43 on fast food. The strong consumer interest in organic convenience food reflects the UK experience and shows no signs of lessening. At the 2007 Organic Expo in Melbourne. along with a significant improvement in consistency of supply and availability of produce. the other being baby food (Soil Association 2007). confectionary.The organic consumer Chapter 5 Barriers to organic purchase The two main reasons that consumers give for not buying organic food are price and availability.

• Technical advice and publicity materials.bfa.com. For over 20 years the group has led by example on matters relating to education. events. • And more. Visit: www. This includes promoting an understanding about organics and organic market premiums to consumers and retailers alike.com. consumers and all with an interest in organics. Fax: 07 3350 5996 Email: info@bfa. products and services. • Invitations to workshops. Own the influence Own one share in the co-operative and have your say as part of the largest voice for Australian organics. promotion and advocacy. Australian Organic Market Report 2008 B Missing a link in your organic business? BFA membership could be one of the best decisions you make this year. • Australian Organic Producer Magazine (quarterly). trade. events and networking meetings. Some benefits include: • Australian Certified Organic Magazine (quarterly). Membership is for producers. distributors. The democratic structure of the group allows members to have ownership of the future direction of the industry including involvement in standards setting and market development via sectoral advisory groups. Keep networked and informed as part of Australia’s largest organic network. retailers. resources. Contact the BFA Group on: Phone: 07 3350 5716. • Australian Organic Market Report (bi-annual).au.au 82 Australian Organic Market Report 2008 . processors. • More than its dollar value in discounts on advertising.Organic profile Biological Farmers of Australia The Voice of Australian Organics iological Farmers of Australia Co-op Ltd (BFA) represents over 3000 certified organic businesses and members.

Survey Research Methods. and Cameron. 2004. A farm-level view of the Australian organic industry. 1-29. S. A Profile. pp. D. S. Department of Agriculture. 2006. Geelong.. F. 2008. Certifiers Stats. Introduction to Data Collection and Analysis. Sage Publications. Canberra. Collingwood.) The Australian Organic Industry. • Lockie. 2006. 94-105. Melbourne.001). 1991.55. Rural Industries Research and Development Corporation. 2006. R. 2007. P. 17: 225-249. Newbury Park.M. P. British Food Journal. Barton. B. 108(7): 560-573. Sustainable Weed Management in Organic Herb & Vegetable Production. Annual Review of Sociology. • Lockie. D. Farmers’ markets: The small business counter-revolution in food production and retailing. • Kristiansen. A Profile. D. A. pp. • AQIS. Canberra. Australian Quarantine and Inspection Service. and Pearson. The Domestic Market for Australian Organic Produce . (eds. J.References PHOTO SUPPLIED BY THE ORGANIK STORE. • Halpin. Rural Industries Research and Development Corporation. Taji. 2004. The design and administration of mail surveys. CSIRO Publishing. • Fowler. Halpin. J. • Goodman. D. R. Deakin University Press. Department of Agriculture. 1996. A.. In: Kristiansen. • Hudson.0. • Guthrie. In: Halpin. A. 2003. D. • Dillman. Understanding the market for organic food.) Organic Agriculture: a Global Perspective.. R. Lawson. (ed.) The Australian Organic Industry. Who consumes organic food in Australia? In: Halpin. Guthrie. 245-258. A.A. Australian Organic Market Report 2008 83 . and Reganold.. Australian Bureau of Statistics. pp.An Update. Fisheries and Forestry.J. and Jessop. and Donaghy.. (ed. D.S.B. Barton. P. Canberra. Household Expenditure Survey. SA References • ABS. Sindel. Australia: Detailed Expenditure Items 2003-04 (Reissue) (Catalogue Number 6535. GLENELG. Fisheries and Forestry. 2002.

Organic Works. Rural Industries Research and Development Corporation. Lux. Forschungsinstitut für biologischen Landbau (Research Institute of Organic Agriculture). Providing More Jobs Through Organic Farming and Local Food Supply. Soil Association. South Melbourne. 2004. M.. European Information System for Organic Markets. 2008. R. 2006. Bonn. Barton. and Grice.Wynen. Journal of Organic Systems.) 2008. Barton.. Willer. Lyons. and Recke.. G. In: Willer. • Rippin. Brussels. M.Improving the Scope and Quality of Statistical Data. Organic farming in Australia. Nourish Foods Pty Ltd. • Wynen. Organic Industry Research and Development Plan 2006-2011. S. Victorian Organic Food Products Directory 2007. 2006. A. Bonn and Frick. S. (eds. 2007. The World of Organic Agriculture. • Nourish Foods. Proceedings of the Second EISfOM European Seminar. N. 84 Australian Organic Market Report 2008 . N. 2005. Lampkin..Levies and Expenditure. (eds. Organic beef production and marketing in Australia.. E. 118-125. N. • Soil Association. Germany. and Vaughan. 2003. 43: 135-146. Organic Agriculture in Australia . Lawrence. Proceedings of the 1st EISfOM European Seminar. Frick. Development of a European Information System for Organic Markets . Synthesis and Final Recommendations on the Development of a European Information System for Organic Markets. and Vaughan. (eds.) 2004. Bonn and Frick.. Organic Certifiers – AQIS Charges Review. (eds. • Wolfert. 2005. Bristol. G. S. • Recke. M. • Regional Development Victoria. Fresh fruits and vegetables: Why do so many of them remain unbranded? Australian Agribusiness Review. Choosing organics: A path analysis of factors underlying the selection of organic food among Australian food consumers. • Pearson. and Lampkin. Melbourne. G. Lampkin. E. and Sorenson. International Federation of Organic Agriculture Movements and Research Institute of Organic Agriculture. and Sorenson. H. 2006. Frick. Soil Association. Willer. European Information System for Organic Markets (EISfOM). Kramer. N. • MAQIR.. Regional Development Victoria. Bonn. Brisbane. (eds. Zanoli. Profiling the Attitudes and Behaviour of Organic Consumers. • Rippin. 2007. K. T.. Organic Market Report 2007. Vitulano. Hempfling. Towards a European Framework for Organic Market Information. • Wynen. 1(1): online.) 2006b.. 2004.) The World of Organic Agriculture... M. The Australian Organic Consumer Report. • Soil Association. A. 11(6): 1-9. • RIRDC. 26-27 April. Statistics & Emerging Trends 2008. 1999. pp. Statistics & Emerging Trends 2008. H. Rural Industries Research and Development Corporation. Final Report. H. Review of Data Collection and Processing Systems for Organic and Conventional Markets. Bristol. • Willer. K. November 10 & 11. G.. Yussefi-Menzler. Appetite. 2004.References • Lockie. N.. E.. International Federation of Organic Agriculture Movements and Research Institute of Organic Agriculture. 2003. H. Richter. Forschungsinstitut für Biologischen Landbau (Research Institute of Organic Agriculture). Macarthur Agribusiness Quarantine and Inspection Resources Pty Ltd. Yussefi-Menzler. held in Berlin.) 2006a... S.J. J. D.

Within that framework. a new cover letter and a reply paid envelope. a followup was conducted by resending the questionnaire. An initial draft questionnaire was sent out as a pilot study to at least ten organic industry representatives and a similar number of researchers with experience in survey design and use. In addition. In order to collect the most data. The survey was distributed in the week beginning 15 September 2007 by the following methods. ACO. with a focus on characterising the various production sectors existing in Australia.Appendix 1 Methodology Mail survey The survey was designed to collect data on the level of organic production and sales in Australia in terms of volumes produced and financial value. OGA and NASAA provided electronic mailing lists of the certified (and in-conversion or pre-certification) organic clients and these lists were used to generate mailing labels. the survey sought to capture a range of socio-demographic factors associated with organic operators. TOP organic clients were surveyed in the week beginning 11 September 2007 by sending the mail-out kits to the certifier who then applied their Australian Organic Market Report 2008 85 . a stratified sampling approach was used in which the total population of organic operators was stratified by certification agency. Feedback received from the initial assessment was then incorporated into the final version of the questionnaire sent out to the target population. On the week beginning 14 October 2007. a cover letter from their certifier and a large reply paid envelope were sent directly to each client by standard post from the UNE. This approach required close cooperation with the certifiers in terms of access to client lists and addresses. all certified operators associated with each participating certifier were considered part of the target population (Goodman 2003). Fowler 2002). A mail-out kit consisting of a copy of the questionnaire. The questionnaire was designed based on previous surveys carried out over a number of years by the Soil Association in the UK and incorporated the principles of survey design elaborated in social survey texts (Dillman 1991.

This process was repeated for a follow up in the week beginning 15 October 2007.Appendix 1 700 600 500 Responses 400 300 200 100 0 07 07 07 07 07 RESPONSES FOLLOW UP 07 08 7 7 8 8 8 /0 /2 06 /0 /0 /0 /0 9/ 0/ 1/ 1/ 2/ 2/ 2/ 10 11 /1 /1 /0 /1 /1 /1 /1 /1 7/ 10 24 20 18 15 29 13 Date received Figure 18. Percentages were commonly used to indicate relative proportions and frequency distribution plots were used to display data relating to a certain variable such as farming experience and farm size in order to characterise the sampled population across the variable. with the steepest section of the curve occurring in the first two weeks and then becoming less steep in the following fortnight. This data was then normalised to standardise the response types (e. 2007). the data was simply summed. The returned questionnaires were 86 Australian Organic Market Report 2008 entered into several spreadsheets and an initial check for accuracy was made by randomly selecting 50 questionnaires and double-checking all data entry. The date of the follow-up mail-out is indicated by the triangle. Other data sets AQIS collects data from the certifiers on the number of organic operators in the supply chain. own labels and posted the kits to their clients. averaged or. Past experience with national surveys of Australian organic growers indicates that repeated follow-ups are unlikely to yield further responses (Kristiansen et al. regardless of the follow-up mail-out. after which a few very late returns were received and included in the survey. Figure 18 shows the rate of returns over time. The responses reached a plateau by about five weeks after the initial mail-out. acres to hectares. the median was calculated. in the case of skewed (non-normal) data. A small number of BDRI members listed on the organization’s website and via other available databases were also targeted in the survey. text removed from numeric fields) and to ensure volume and price data was internally consistent. In almost all cases.g. Number of responses received over time from initial survey mail-out. the area used for organic 27 21 4/ 1/ /0 3/ 08 . A survey mailout kit was sent to all members with publicly listed addresses.

the proportions and frequency distributions of this data set are used as a benchmark for determining its representativeness. usually where significant under-reporting was apparent.Appendix 1 agriculture and the volume and value of exported organic produce. It is cited throughout the report as AQIS 2008. Certifier data was largely unavailable due to confidentiality requirements within some agencies. Given the more stringent and legally binding reporting requirements of AQIS. In general. This data is available at a cost from AQIS. it is assumed that the data is the most comprehensive and reliable source on the organic industry. the categories used to classify operators and commodities were inconsistent. and there were nontrivial amounts of missing data. Where necessary. It was therefore decided that this data would not be used in this report. A summary of the survey results for each commodity sector was presented to a number of relevant industry experts in each sector for verification and comment. Where appropriate. Australian Organic Market Report 2008 87 . consistent with the approach of Halpin (2004). The data in this report is presented with acknowledgement to AQIS for the raw data. the number of claimed certified operators did not match the data from AQIS (2008) exactly. the multiplier for calculating total national sales was adjusted on the basis of this feedback.

avoiding duplication of activities. • conduct sampling on a regular basis (at least on a biennial basis) in order to develop a solid timeline of comparative data. improving the quality of data collected and minimising the burden on organic operators. 88 Australian Organic Market Report 2008 . Rippin et al. Halpin made the suggestion that “In future. • review the range of models used for organic data collection and processing systems globally and to evaluate their suitability for the organic industry in Australia. consumption data and international trade and supply chain data. harmonising data collection categories and processes. the only real solution to the lack of detail … would be to conduct an ABS Farm Survey-style census where interviewers attend farms and take down detailed data in predetermined and detailed categories (which is very expensive) or for the industry to agree that adoption and implementation of a national data collection system would benefit the industry. It is suggested that a more complete analysis be carried out to review the range of models used for organic DCPS globally and to evaluate their suitability for the organic industry in Australia. While this may improve the quality of on-farm data. • investigate avenues for centralising and unifying organic data collection and processing including: . it is recommended that action is taken to: • foster support from certifiers to encourage maximum participation by their membership. In order to improve the efficiency and quality of organic data collection and processing. 2004. other activities will be needed to properly survey and describe other sectors such as input manufacturers and retailers. 2006b). . Most recommendations relate to ensuring high response rates. • use separate data collection tools and processes for the various parts of the supply chain. Rippin et al. The following recommendations are based on ideas that have been raised by respondents and contributors to the project. . there has been considerable effort in Europe to develop EU-wide data collection and processing systems (DCPS). Fortunately. EISfOM symposia in recent years have highlighted the general nature of problems national organic industry bodies face in acquiring useful and reliable market information (Recke et al. 2006a). farm-level financial data. particularly under the auspices of the European Information System for Organic Markets (EISfOM) (Wolfert et al. these compilations of reports and case studies make several recommendations for collecting farm-level production data.Appendix 2 Recommendations for future national organic surveys T he organic industry in Australia is not alone with its challenges of data collection. and observed by the researchers throughout the project. price data. 2004.formalising and harmonising the role of the certifiers in this process. certifiers and others in the industry.” The option of including specific questions about organic farming in the standard ABS Farm Survey was raised by a number of respondents. discussed in the literature in Australia and overseas.making survey completion obligatory as part of the certification process. Despite the continental focus.incorporating a number of organicspecific questions in ABS’s farm and other surveys.

Industry and Regional Development PO Box 769 WARRAGUL VIC 3820 Phone: +61 3 5622 1612. TASMANIA.gov. Bathurst NSW 2795 Phone: +61 2 6330 1200 Web: www. Fax: +61 7 3404 6900 Email: callweb@dpi.gov.sa.gov. 60/62 Mcnamara St Orange NSW 2800 Email: bruddy@westpac.com. Fax: 07 4630 8926 Email:katrina@organicstockfeed.com Web: www.ecofarms.seoc.westpac.safoodcentre.ocp.com.vic. Fax: 02 9746 6174 Email:ecofarms@ecofarms.au Organic Crop Protectants Phone: 02 9810 4566.au Queensland Department of Primary Industries Primary Industries Building GPO Box 46 Brisbane.gov. Fax: + 61 8 9367 7389 Web: www.com.au Victoria Department of Innovation.dpiw.gov.com.au Web: www.qld.au Web: www.au Phone: 0408 899 194 Web: www.organicstockfeed. Fax: 02 4322 4530 Email: nswsales@organicmeat.mcgivern@seoc.gov.au.au Organic Elements Phone: 03 9827 7779.au Web: www.com.wa.au Web: www.com Industry sponsors Cleavers The Organic Meat Company Phone: 02 4322 4528.gov.Sponsers Primary sponsor Westpac Barry Ruddy National Manager Agribusiness Level 2.vic. Fax: 07 4652 2830 Email: info@inglewoodfarms.ecoorganicgarden.au Sydney Essential Oil Co Pty Ltd Phone: 02 9565 2828.com.au Country Heritage Feeds Phone: 07 4630 8571.com.com. 7008 Phone: +61 3 6233 2404 Web: www.au Inglewood Organics Phone: 07 4652 2890.organicelements.au Web: www.Box 1386.au Department of Primary Industries and Resources of South Australia (PIRSA) Level 9 Grenfell Centre 101 Grenfell St Adelaide SA 5000 Phone: +61 8 8226 0585 Email: pirsa. NSW. Newtown.natureshaven.gov.com Web: www.organicmeat.com.au Web: www.com. Fax: +61 3 5622 1602 Email: diane.com.O. www.tas. P.carson@rdv.nsw.au Australian Organic Market Report 2008 89 .qld.au Government sponsors Western Australia Department of Agriculture and Food Locked Bag 4 Bentley Delivery Centre WA 6983 Phone: + 61 8 9368 3960. 4001 Phone: 13 25 23.inglewoodfarms.au Web: www.au Web: www.com. Fax: 03 9923 6057 Email: info@organicelements.com Eco-farms Phone: 02 9764 2833.au Tasmanian Department of Primary Industries and Water Organic Industry Development Regional and Business Development Department of Primary Industries and Water 13 St Johns Avenue.rdv.agric. Fax: 02 9519 8009 Email: eliza.dpi.safood@saugov. Fax: 02 9810 4674 Email: info@ocp.com.com. Fax: 02 6954 1295 Email: enquiries@natureshaven.au Web: www. Queensland.au NSW Department of Primary Industries Centre for Organic Farming Bathurst Agricultural Research and Advisory Station Research Station Drive Bathurst.com.com Natures Haven Phone: 02 6954 1295.dpi.

Processing.Afterword The definition of organic (Codex Alimentarius. Food Standard CAC/GL 32. plants. . Labelling and Marketing of Organically Produced Foods) “Organic” is a labelling term that denotes products that have been produced in accordance with organic production standards and certified by a duly constituted certification body or authority. soil and water. Food and Agriculture Organization of the United Nations. The primary goal of organic agriculture is to optimize the health and productivity of interdependent communities of soil life. methods are used to minimize pollution of air. Guidelines for the Production. Organic agriculture practices cannot ensure that products are completely free of residues. due to 90 Australian Organic Market Report 2008 general environmental pollution. avoiding the use of synthetic fertilizers and pesticides. 1999. animals and people. Organic food handlers. However. Organic agriculture is based on minimizing the use of external inputs. processors and retailers adhere to standards to maintain the integrity of organic agriculture products.

. All rights reserved. 08/01 © 2008 Biological Farmers of Australia Co-op Ltd.Australian Organic Market Report 2008 BFA Publication No.

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