Understanding the market for organic food - Organic Agriculture: A Global Perspective - page 245

Chapter 11
Understanding the market for organic food
Stewart Lockie*, Central Queensland University, Australia, Darren Halpin, Robert Gordon
University, Scotland and David Pearson, University of New England, Australia
*Assoc Prof Stewart Lockie, Centre for Social Science Research, Central Queensland University, Rockhampton, Queensland
4702, Australia. Tel: [phone], Fax: [phone], Email: [e-mail]
Introduction
By 2002, the international market in organic foods and beverages was estimated to be worth
US$23 billion (Sahota 2004). This brought the market share of certified organic food in the
developed countries where it is predominantly consumed to somewhere between 1% and 2%
of total food sales (Sligh and Christman 2003). According to critics, this small percentage
proves organics to be little more than an overhyped Western food fad (see Lockie 2006). Yet
with ongoing sales growth in developed countries of between 8% and 20%, organic foods have
attracted the interest of a growing number of farmers, food processing firms, retailers and gov-
ernments (Burch et al . 2001). Along with fair trade goods, organics has become one of the
fastest growing sectors of a global food market characterised more generally by oversupply and
falling terms of trade (McCoy and Parlevliet 2000, Raynolds 2000, Sligh and Christman 2003).
Indeed, it has been estimated that the international market in organic foods could reach
US$100 billion as early as 2006 (McCoy and Parlevliet 2000) with the organic sector in the
United States of America (USA) alone worth over US$30 billion by 2007 (Haumann 2004).
From an insignificant niche market as recently as the mid-1990s (Sahota 2004), organics has
leapt into the mainstream.
This is not to say that this growth will continue indefinitely. The expansion of larger
European markets appears to be slowing as they approach what some commentators refer to as
'maturity' (Sahota 2004). And as expansion slows, price premiums come under pressure, as
ref lected in a dramatic fall in the farm gate prices paid to organic dairy farmers in the United
Kingdom (UK) in 2001 as a result of apparent oversupply (Franks 2003). In other markets, the
issue appears to be less one of demand slowing than of producers failing to supply produce of
sufficient consistency in quantity and quality to secure a sound distribution and retail base
(Hassall and Associates 1990, Conacher and Conacher 1991, Hudson 1996, Dumaresq and
Greene 1997, Baecke et al . 2002). This limits opportunities to sell certified organic produce as
much as it reduces opportunities to purchase it! In fact, despite conditions of apparent under-
supply, around 35% of certified organic produce grown in Australia is sold as conventional
(Halpin 2004a) while 40% of organic beef and 25% of organic milk in Belgium is sold as con-
ventional (Baecke et al . 2002). Compounding these demand and supply-side constraints on the
continued expansion of the organic market is the simple issue that the organic industry knows
little about who purchases its products or why they purchase them (Hassall and Associates
1990, Conacher and Conacher 1991, Hutchins and Greenhalgh 1995, Hudson 1996, Dumaresq
and Greene 1997).
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