First of all, I would like to thank FAO and its
co-organizers for inviting ITC to participate in this very important
conference. It is a great pleasure for me to be here today to talk
about the US market together with my colleague, Mr. Tim Larsen.
By way of introduction, I would just like to
mention that the International Trade Centre UNCTAD/WTO or simply ITC,
as we call ourselves, is the focal point in the United Nations system
for technical co-operation with developing countries in trade
promotion. I shall be pleased to provide you with more information on
our various activities during a presentation tomorrow.
At this stage, I would just like to give you a
short overview of the US market for organic food and beverages, which
I hope will serve as a useful background to Tim’s more detailed
presentation on organic fruit and vegetables.
With retail sales of organic food and beverages
amounting to about US$ 8 billion in 2000 (probably reaching US$ 9-10
billion in 2001), the United States is the world’s largest market
for this product group. Industry sources expect recent years’ strong
growth to continue over the short to medium term. According to the Organic
Consumer Trends 2001, published by the National Marketing
Institute, in cooperation with the Organic Trade Association, retail
sales might reach US$ 20 billion in 2005.
One of the main factors behind these very positive
growth expectations is a strong and increasing consumer awareness of
health and environmental issues, including a growing resistance
amongst consumers towards GMO farming and genetically modified food
products. Another important factor is the increasingly aggressive and
targeted marketing and promotion by the retail sector, which is likely
to intensify as mainstream retailers are moving into the organic
trade. A similar effect is likely to result from the fact that the
country’s major food manufacturers are also taking an interest in
developing organic product lines.
The recently introduced national standards on
organic agricultural production and handling, are likely to have a
significant positive impact on the further development of the organic
industry throughout the value chain, from farmers to the final
consumer, as there will be increased focus on organic products both
within the industry itself and amongst consumers.
Although the overall picture looks very positive, a
number of potential risk factors or threats should be borne in mind.
For example, occasional oversupply of a given product may not only
have immediate but also more long-term negative effects. Reduced price
premiums for organic produce and insufficient profitability amongst
producers and traders are important factors. Furthermore, other forms
of environmentally friendly and sustainable agriculture are likely to
result in increased competition in the future. Finally, unfavourable
press (e.g. fraud, of which we have seen several examples recently)
and scare stories are also factors that have to be reckoned with.
Even in the likely event that the above market
forecast turns out to be realistic, growth rates are bound to slow
down at some stage similar to what has happened in certain European
growth markets, e.g. Denmark and Switzerland, after years of rapid
growth.
On balance, however, there is little doubt that the
United States market will offer farmers and producers of organic
products interesting business opportunities in the future, whether for
domestic players or foreign traders who are looking for new markets.
As far as developing countries are concerned, the following product
categories are expected to be the most important:
- products, mostly tropical
, that
are not produced in the United States (or only in very small
quantities): examples include coffee, cocoa and tea, most tropical
fruit and vegetables (both in fresh and processed form, e.g. fruit
juices, concentrates and pulp), certain spices and herbs, some dried
fruit and nuts; in the foreseeable future demand is likely to be
mainly for bulk-packed products to be used as raw material or
ingredients for further processing and packaging or re-packing;
- off-season products
,
including fresh fruit and vegetables, that are produced in the
United States, but where there is an unmet demand during certain
periods of the year; potential suppliers will be producers in the
southern hemisphere;
- in-season products
,
e.g. fruit and vegetables, for which there is a temporary or more
permanent shortage because of strong and increasing demand.
- novelty
or
specialty products, like
high quality organic wines, certain ethnic food products or
retail-packed food products; this segment is currently of increasing
interest to European food exporters (e.g. Danish and French
cheeses), though some developing countries might also profit from
such opportunities, e.g. wine exporters in Argentina, Chile and
South Africa;
This conference deals with the first three product
groups, and more specifically with organic fresh produce. I am pleased
to let Tim Larsen, who has researched the US market in detail,
continue this presentation. Thank you very much!
Good morning and thank you for the opportunity to
talk about the U.S. organic market. Today I will talk about the
overall market trends for organic fruits and vegetables as well as
market opportunities and entry strategies to develop this market. I
will also briefly talk about the Canadian market.
And even more important than the statistics, I
would like to share comments I received talking to the U.S. industry.
A major natural foods market vice president of produce said:
"We're interested in any new fruit or vegetable", while an
importer/distributor said there are products he cannot find today that
he would buy as soon as an organic producer can provide the product.
What started this organic movement anyway? Why do
consumers care and how did this industry evolve?
All farming was "Organic" before the
1840s when the first chemical fertilizer was patented in Germany. The
late 1940s ushered in petrochemical use in agriculture, when synthetic
fertilizers, herbicides and pesticides became the mainstay.
The USDA was researching organic production in the
early 1900s when Mr. King researched and published a book
"Farmers for Forty Centuries, or Permanent Agriculture in China,
Korea and Japan". This was an early study on composting, crop
rotation, mulching and cover cropping practices. The research was
largely ignored in the U.S. when it was released.
In the 1940s, some groups began to experiment with
"Organic" production. One early proponent was J.I. Rodale, a
successful publisher who established an experimental organic farm.
This led to the creation of "Organic Gardening", which is
the highest circulation gardening magazine in the world today.
Another pioneer was Paul Keene, who established
"Walnut Acres" in 1946. His organic apple orchard was the
source of the first processed foods sold as "Organic".
The Environmental movement of the 1960s brought in
a new group of environmentally conscious consumers. This included the
"back to nature" movement and the establishment of natural
food stores which featured organic foods.
In 1989 a report in the U.S. identified
"Alar", which is a growth regulator in apple production, as
a carcinogen. This lead to a large food scare in the U.S. and further
increased interest in organic foods.
This new round of food safety concerns ultimately
lead to the 1990 U.S. Farm Bill and initiated the establishment of
National Organic Standards.
Much has changed since the 1960s and 70s. Our
organic market has grown from "hippies" to mainstream
consumers.
Celestial Seasonings
started near my home when the founder began to collect local herbs and
selling the herbs as tea in hand sewn muslin bags. Today, they have
sales of over 400 million dollars.
