A. Introduction

Top 

  Ladies and Gentlemen, it is a great pleasure for me to talk to you today about the trade in exotic food and beverages, in particular in their organic form. By way of introduction, I would just like to mention that I am working for ITC in its Division of Product and Market Development. We are involved in market research and development, and I am dealing specifically with certain agro-based products, e.g. processed fruit and vegetables. One of our main tasks is to identify markets and to find products that can be exported by developing countries.

I have visited South Africa several times over the last five years to carry out market research and to participate in several buyers/sellers meetings on various food products. Based on this experience, I am convinced South Africa offers very promising market possibilities for exporters in developing countries, including those in the region. I am sure that Mr. Duncan Bonnett of Whitehouse and Associates will confirm this during his presentation later on.

Some of you may know that ITC recently published a market survey, entitled Organic Food and Beverages: World Supply and Major European Markets. One of the major conclusions of the study was that demand is growing rapidly in most markets, and that insufficient supply of organic products is the main problem rather than lack of demand. It is on this background that I would like to discuss international and regional trade in exotic (and organic) food and beverages.

B. What is organic agriculture and trade?

Top

"Organic agriculture is holistic production management systems which promotes and enhances agroecosystem health, including biodiversity, biological cycles, and soil biological activity... Organic production systems are based on specific and precise standards of production which aim at achieving optimal agro-ecosystems which are socially, ecologically and economically sustainable. Terms such as "biological" and "ecological" are also used in an effort to describe the organic system more clearly. Requirements for organically produced foods differ from those for other agricultural products in that production procedures are an intrinsic part of the identification and labelling of, and claim for, such products." (FAO/WHO Codex Alimentarius Commission).

There is no recourse to synthetic fertilisers, insecticides and pesticides in organic farming, and genetic modification of organisms is not allowed. Organic is a labelling term that denotes products produced according to organic standard. Certification is needed to assure organic origin, which is absolutely necessary in order to meet the requirements of export markets.

C. World demand situation

Top

Since there are no official foreign trade statistics, it is impossible to give a complete picture of world trade in organic products. However, it is clear that the European Union, the United States and Japan, are, by far, the largest markets, though there are smaller but interesting markets in many other countries, including some developing countries. Our research indicates retail sales of organic food and beverages in 1998 of more than US$13 billion in Western Europe, the United States of America and Japan (with a forecast of about $20 billion in 2000). Trade in organic foodstuff has indeed become a very important and global agribusiness.

The organic trade is of particular interest in a development context because of the spectacular growth that has taken place in recent years, with growth rates of 10% and 40% expected over the medium term, depending on the market in question. It should be noted that the continuous growth in the organic sector is all the more remarkable since overall food sales is experiencing either slow growth or stagnation. Furthermore, it should be noted that organic products are usually, though not always, sold at premium prices.

Now, which products are we talking about? The main organically produced products, which are traded internationally, are:

Fresh fruit and vegetables	Dried fruits and nuts	Processed fruit and vegetables
Coffee, tea and cacao	Spices and herbs	Oil crops & derived products
Sweeteners	Cereals and Grains	Dried leguminous vegetables (pulses)
Meat, dairy products, eggs	Alcoholic beverages	Processed food and food preparations

As you can see, the list includes most internationally traded exotic food products. In addition, I would like to mention the following non-food organic products: animal feeds (necessary to produce organic meat, dairy products, eggs, etc.), grain seeds, natural pesticides and insecticides, cut flowers and pot plants, cosmetics, textiles, e.g. cotton, cleaning and washing articles, wood and wood products.

D. Producers/exporters

Top

Let us have a brief look at the supply situation. World-wide, about 130 countries produce certified organic products in commercial quantities, including 30 countries in Africa; 30 countries in Asia; 20 countries in Central America and the Caribbean; 10 countries in South America; 5 countries in Australasia and the Pacific; most countries in Europe; as well as the United States and Canada. These figures include at least 90 developing countries of which about 15 LDCs.

It is interesting to note that most countries represented here at this buyers/sellers meeting actually already produce a range of organic products:

Comoros (vanilla); Madagascar is one of the most important African producers and exporters (e.g. cocoa, coffee, essential oils, fresh, dried and processed tropical fruit, honey, oil crop, spices, sugar cane and vegetables); Malawi produces and exports a range of herbs and spices, e.g. lemon grass; Mauritius (fruit, spices and sugar); Mozambique is in a start-up phase, but already produces some nuts (cashew); UR of Tanzania produces organic fruit and vegetables, nuts, oil and oil seeds, coffee, honey, herbs and spices. Exports of certified organic products include black tea, hibiscus tea, essential oils and spices. Zambia has a considerable production of organic fresh produce, most of which is exported to the United Kingdom. Zimbabwe produces a wide range of products, including fresh fruit and vegetables, dried mushrooms, nuts and cotton.

Now let us look at South Africa, which, like many other countries, is in a build-up phase as far as organic agriculture and trade are concerned. When I visited the country last year, there were an estimated 20 organic farmers. Yesterday I was informed that there are now more than 100 certified organic farmers in South Africa, and that roughly another 200 farmers are in the process of becoming organic. Production includes cereals, fruit and vegetables, herbs, teas and wines. Some companies already export to the European Union, and several others are starting to export.

Certification remains a major obstacle for many farmers and exporters, though the organic trade is fully aware of the problems and working towards a solution. For example, the National Department of Agriculture (NDA) has recently drawn up draft regulations for organically produced products, which are expected to come into effect within a year. They are in line with EU regulations and the International Federation of Organic Agriculture Movements (IFOAM) standards.

South Africa does not yet have much of a home market for organic products, which will be needed to build up a sustainable business. However, the domestic market has started to develop, and major supermarket chains, like Hyperama, Pick´n Pay, Shoprite Checkers and Woolworths, have begun to sell organic foodstuff or are planning to do so. As the domestic market expands, it will not only provide outlets for South African farmers, but it will also help them produce larger quantities and of the right quality necessary to meet the requirements of export markets.

In the longer run South Africa will also offer interesting opportunities for organic producers in developing countries, including SADC-members and others in the region. Primarily, such products will include those that are not produced in South Africa, or are produced in insufficient quantities. However, most of the products that you may export to South Africa in conventional (non-organic) form, may also eventually find an outlet in organic form. What is even more important is that a given product may find a market in organic form, where there is no import market for the conventional product.

E.  Conclusions

Top

There are good reasons to conclude that the market for organic food and beverages is growing rapidly in most developed countries, and even in a few developing countries. Expectations of growth are underscored not only by a strong and increasing consumer awareness of health and environmental issues, but also by aggressive marketing and promotion by the major retail groups. Product development and innovations in packaging by major companies, as well as supportive government policy in many countries will also help increase world demand. It seems also clear - at least in the short to medium term - that insufficient supply of organic products will be the main problem rather than lack of demand.

As we have seen above, many countries in the region produce a range of organic products and several are already exporting. However, most countries are still very often faced with a number of constraints, like lack of technical know-how, e.g. on organic farming and production methods and certification, and lack of market information, which products to grow, which markets and distribution channels to choose, competition, market access, lack of financing, etc.

A considerable amount of work is certainly needed in building up the organic export trade, both on the growing and processing side and on the marketing side. Exporters will find that a careful selection of target markets and distribution channels is of the utmost importance. A strong and reliable relationship with an importer/distributor in the target markets is an absolute must in building up a profitable business. Finally, supportive government policies as well as support from the international community are other necessary elements, not least as far as certification is concerned.

F.  What can you do, if you want to explore the organic market potential?

Top

- Join a national organic agriculture/trade association or other relevant organisation in your own country to find out where the organic industry stands. You may be pleasantly surprised. Discuss with and learn from those already in the business. In most cases some form of co-operation at the national level will prove useful. The annex provides names of relevant organisations.

- Look at South Africa not only as a potential future market for organic products but consider it also a possible partner in various forms of co-operation within farming, processing, certification and marketing of organic products.

- Your country may participate in various forms of regional co-operation, for example through the Africa Council of Organic Associations (ACOA), Lusaka.

- Keep yourself informed of developments in organic farming and trade through information sharing, reading of trade journals, the Internet, etc. Visit organic trade fairs, e.g. South African Organic Trade Fair and Exhibition, South Africa and BIO FACH in Nuremberg, Germany. Make good use of the ITC study on organic food and beverages that I mentioned earlier.

Ladies and Gentlemen, I hope that I have been able to give you some idea of what is going on in the area of organic trade and, in particularly, of business opportunities that exist. I would be pleased to discuss further with you during the next two days. 

Thank you!

---