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EU adopts organic action plan

14-Jun-2004

Europe's organic food and farming sector got a major boost this week with the adoption by the European Commission of a new action plan to promote the sector. The challenge will be to ensure, and maintain, consumer trust in premium-priced organics, but farmers in the new Member States in particular are set to benefit if the plan is a success.

The EU organic market was worth around €10 billion in 2002, according to data from Organic Monitor , but growth has slowed in recent years: an increase of 8 per cent between 2001 and 2002 shrunk to an estimated 5 per cent between 2002 and 2003, Organic Monitor said, making the publication of the action plan extremely timely.

The 21-point plan covers all areas of the organic trade - from rural development and improving farming standards to improving consumer information and the introduction of an EU-wide organic food label - and is said to be a reaction to increasing consumer demand for organic food, often considered 'safer' and 'healthier' than more mainstream food production methods, especially in the wake of various food scares.

Organic production has grown steadily over the last 20 years. In 1985, just 100,000 hectares of EU farm land was certified organic - less than 0.1 per cent of total farm land. By the end of 2002, this figure had risen to 4.4 million ha or 3.3 per cent of total farm land.

But there are still great disparities between the various EU nations. In Austria, Germany, Denmark, Finland, Italy, Sweden and the UK, organic farm land exceeds the EU-15 average, but in all the other nations, the levels are still well below average - indeed, with less than 1 per cent of farm land set aside for organic production, Greece and Ireland have barely progressed beyond the EU average of 1985.

The situation is even more extreme in the new Member States: the Czech Republic is the only one of the 10 new countries with organic farm land exceeding the EU average (just over 5 per cent of total farm land is organic), while Malta has no organic farming at all, according to official EU data.

But persuading more farmers throughout the 25-nation bloc to convert to organic production - seen by the EU as a core means of sustaining growth in the agricultural sector over the years to come - will depend on persuading them that consumers actually want to buy organic foods.

"Promoting environmentally friendly quality products is one major objective of the new, reformed Common Agricultural Policy," said Franz Fischler, Commissioner for Agriculture, Rural Development and Fisheries. "This is why we want to boost organic farming by stepping up information for consumers, strengthening the control system and improving research."

EU consumers are not well informed about the principles and the benefits of organic farming, according to the Commissioner, which is why one of the core elements of the new action plan will be to provide objective and reliable information to consumers through EU-wide information campaigns co-funded by the EU and the various Member States.

These campaigns will target consumers as well as the food trade and foodservice industry and will "explain the merits of organic farming, promote the use of the EU logo, provide more transparency on different quality standards, and improve the availability of organic produce to EU consumers", according to the Commission.

With the premium prices charged for organic food - necessary, is argued, to cover the higher production costs - consumers will only be persuaded to buy organic if they are assured that standards are being rigorously met, and this is another important part of the EU plan.

"By its very nature as a well-defined production system resulting in products with a higher price, organic farming cannot exist without basic agreed production standards and reliable controls throughout the production chain. Consumer confidence in organic food products is built on these two elements," the Commission said.

The action plant therefore includes action to define the basic principles of organic agriculture, thus making its public service explicit, as well as increasing transparency and consumer confidence. There will also be an independent panel offering technical advice, as well as a further harmonisation and reinforcement of the standards making use of international organisations. Standards for areas not yet covered, such as aquaculture, or environment-related standards such as fossil energy use, will also be completed.

Another key element in ensuring consumer trust, and therefore stimulating demand, will be clarifying the standards laid down for the prohibition of the use of GMOs, especially in the light of recent EU approval for certain GM products which has been seen by many European consumers as a loosening of standards.

Marketing organic products will also get a boost, with organic farmers themselves urged to do more to promote their products to consumers and to improve distribution.

Expansion both a challenge and an opportunity

The expansion of the EU could also have a major impact on stimulating demand, with organic farmers in the new Member States in central and eastern Europe able to produce their crops to the high standards but at far lower costs. If these cost savings (even taking into account the additional transport costs) can be passed onto consumers, there is a real likelihood of kickstarting growth.

In light of these opportunities, it is no surprise that organic farmland in the three largest accession countries - Poland, Hungary and the Czech Republic - increased by 150 per cent between 1999 and 2003, according to Organic Monitor. Substantial volumes of organic cereals, grains, herbs, spices, and vegetables were already being exported to western European countries prior to enlargement, and this trend is likely to continue now that these nations have become full-fledged EU members and part of the single market.

However, the majority of organic foods produced in the accession countries are primary products and there is a lack of organic food processing activity there, according to Organic Monitor, which means that most of the traffic at the processed food end of the market will be from west to east - indeed, a number of German firms have already made inroads into the Czech and Hungarian markets and they are expected to expand their market presence now that trade barriers have been removed.

Hipp, for example, has already set up organic processing plants in a number of Central European countries, and the company is now the largest organic baby food producer in the world, competing strongly with conventional baby food giants like Heinz, Nestlé and Numeco in Europe, according to Organic Monitor.

But the EU action plan also needs to do more to ensure that farmers in the new Member States benefit from the potential the organic sector has to offer. Faced with increased competition from more modern, large-scale farms in the west, many farmers in CEE countries are expected to quit farming altogether, but organic farming could offer them an ideal means of maintaining their small holdings and continuing to produce agricultural crops on a small scale, Organic Monitor suggests.

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