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G.K. Nair

Production not keeping pace with growing demand, says study

Kochi , Nov. 22

The growing demand for organic food and drink in the world market is expected to push up sales to $40 billion in 2006.

However, the current severe short supply situation is reportedly to affect the sustainability of the demand growth, according to a report by Organic Monitor.

The demand for organic foods and drink has shown substantial growth in developed markets such as Switzerland, the US and Singapore. Around 80 per cent of the market share is in the G7 countries, while they have only 12 per cent of the organic farmland in the world, it said.

The European sales of organic products were estimated to have expanded by about five per cent in 2003 to reach approximately 10.5-11.0 billion, according to a 2004 survey, with an annual demand growth of 8 per cent.

Widening gap

The gap between the demand and supply is widening, as the production has not grown in tandem with the demand growth even though it was projected earlier that there would be tangible increase in area under organic farming in Latin America, Asia and Africa from 2000.

According to the report, "organic ingredients like nuts, beans, and seeds are increasingly being imported from Turkey, China, and Brazil, herbs and spices are coming from Paraguay, India, and Ethiopia, and organic fresh fruit and vegetables are increasingly coming in from African and Asian countries".

Short supply is severely felt in many European countries as the consumer demand has soared of late, it said adding that "divisions and differences amongst the three major trading blocks Europe, North America and Asia are impeding the global organic food and drink industry".

Meanwhile, according to USDA GAIN report, trade in organic products in France is now valued at almost $2 billion and imports from non-EU countries continued to increase.

The strongest demand is for fresh fruits and vegetables, dairy products, soya-based products, processed vegetable products, muesli, beverages and food complements, it said.

Govt thrust

Organic products from non-EU countries are not allowed entry to France without authorisation from the French Ministry of Agriculture, and the number of requests from non-EU countries has doubled in six years. Having realised that organic agriculture will offer opportunities for poverty alleviation as well as export earnings, the Union Commerce Ministry in 2000 has taken the lead in developing the National Programme for Organic Production (NPOP), framing national standards and certification guidelines.

Besides, the Union Ministry of Agriculture has also come up with plans for a National Project for Organic Farming, and considerable funds have been allocated to it under the 10th plan.

However, the Indian organic sector is still scattered and its development lags far behind its actual potential. Cultivation of exportable products organically has yet to take place on a large scale in India, official sources here pointed out.

While India could have a growing share in supplying export markets, the Indian domestic market for organic food appears as a `sleeping giant' that is about to wake up, they said.

More Stories on : Foods & Food Processing | Marketing Research

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