Excerpts from this article in an oz financial paper - followed by full article:

“Internationally, the growth of organics is phenomenal... In Britain, the large supermarket chains have embraced organics and the Blair Government is now paying farmers to convert to the new industry, estimated to be worth more than $1.5 billion annually.”

“The growth in organics is being driven by a comprehensive rethink of agriculture by farmers and consumers.  People are increasingly rejecting chemical use, fertilisers based on fossil fuels and more recently genetic engineering”

[Are some parts of government around the world slowly getting the message?]

“The Queensland Department of Primary Industry is happy to pin its flag to the organic mast - as one way of producing food,” says Peter White, who runs the department’s Rural Industry Business Services with 400 staff.  “It’s not a philosophical commitment, it’s an appreciation of the market’s potential ... The sky is the limit.”

[Are the contrarians getting the message?  We doubt it!]

“The industry’s credibility came under attack recently when Channel Nine’s “A Current Affair”  ran a segment claiming some organically grown food carried health risks. But as with a similar high-profile television story broadcast in the United States, the episode backfired badly on the program. Just one month later the Nine segment was pulled apart in a devastating critique on the [Australian Broadcasting Corporation]’s “Media Watch”.
***

ORGANICS A GO-GO
by Ray Moynihan
Australian Financial Review, 1 November 2000 http://afr.com.au/features/20001031/A19202-2000Oct31.html

The organic mangos from Humpty Doo in the Northern Territory start walking out the door at 6am. As the sun comes up the online grocer drives away with a van full of choice organic asparagus. By seven o’clock the freshly delivered organic lettuces are being specially re-packaged in the cold room on their way to Coles supermarkets.

The busy warehouse in Sydney’s west is the home of Eco Farms - Australia’s biggest certified organic wholesaler, buying and selling fresh produce from across the country. The shelves are stacked with everything from macadamia nuts to pasta, from salad dressing to a new line in organic honey.

In the year to September 2000, the company’s turnover soared by 44 per cent. “We’ve  just cracked the $10 million mark,” managing director Philip Rougon says.

Rougon’s burgeoning business is part of Australia’s $250 million organic food industry, estimated to be growing by around 25 per cent a year. As if to underline the point, Eco-Farms is about to double the size of its distribution centre, expanding across the road into another 1,000sqm warehouse.

According to a recent briefing paper from the United States Department of Agriculture, “the organic food industry in Australia is riding the crest of a wave”. Prepared by the US embassy, the paper carried this strong encouragement for US producers to export their organic produce to Australia: “Demand ... far exceeds local supply with imports filling the vacuum.”

Internationally, the growth of organics is phenomenal, most dramatically in European countries rocked by safety scares and a fierce public reaction to genetically modified foods.

In Britain, the large supermarket chains have embraced organics and the Blair Government is now paying farmers to convert to the new industry, estimated to be worth more than $1.5 billion annually.

In Denmark, government policy has mandated that 10 per cent of farming be organic by 2005. Already one-fifth of Danish milk is organic.  Industry estimates suggest a third of Europe’s farm land may be organic by the end of the decade.

Closer to home, New Zealand export earnings from organic foods such as fresh fruits are skyrocketing, jumping 77 per cent to $60 million in the past 12 months. With a fall in the NZ currency of around 12 per cent during that time, real growth would have been lower, but still enormous.  To remove obstacles to even more growth, an all-party parliamentary committee is conducting an inquiry, holding hearings across the country.

The inquiry was pushed by the Greens who now have seven elected members in NZ, including two organic farmers. Official green policy is to make half of NZ farming organic by 2020. While that may sound like a fantasy, a recent survey, funded publicly, suggested  37 per cent of NZ farmers intend to use organic methods, compared to only 21 per cent planning to take up genetic engineering.

“The growth in organics is being driven by a comprehensive rethink of agriculture by farmers and consumers.  People are increasingly rejecting chemical use, fertilisers based on fossil fuels and more recently genetic engineering,” says Organic Federation of Australia  chair Scott Kinnear, who also runs two organic produce stores in inner-city Melbourne.

While Kinnear can’t help but be up-beat about future growth, he is realistic about the challenges facing what is still a fragmented industry with no coherent direction. In fact, with help from a federal government grant, the OFA is organising meetings across Australia, to belatedly develop a strategic plan for the industry. 
 
One of the biggest immediate problems to be tackled is the lack of information and support for those farmers thinking about converting from conventional methods. 
 
Put simply “organic” or “bio-dynamic” means farming without the use of synthetic chemicals, artificial fertilisers or pesticides.  It is a way of growing food and fibre which focuses on the health of the soil and is designed  to be environmentally sustainable. Organic farming also puts an emphasises on animal welfare, and includes a prohibition on cages and feedlots.

The principles have to be applied on a farm for at least three years before its produce can be certified as organic. So deciding to take the leap away from conventional farming is not easy for producers; the biggest price premiums that organics can attract do not start to flow during the years of conversion.

“We faced a huge risk through conversion,” says Scott Lawson, whose 110ha family farm on the east coast of New Zealand’s North Island went organic in 1994. “It’s a challenge to step outside the square. You have to plan very carefully because it’s a hard step to take.”

Lawson says he took the step because of scepticism about the effects of chemicals, and an awareness of the growing demand for food derived from natural methods of production.

Six years later there are no regrets.  Lawson’s potatoes sell for almost three times what conventional farmers get, his sweet corn is bought on long-term contract to a large agribusiness, and he regularly sells his carrots and onions through Australia’s Eco-Farms.

So would he ever go back to conventional farming with chemicals? “We’d get out rather than go back. We have no interest in producing conventional crops on an unsustainable basis,” Lawson says.

Despite the premium prices, success is by no means assured for organic farmers in New Zealand and Australia, who, unlike some European farmers, receive no special government subsidies. Converting is risky, and farming organic can be more costly. For example, organic onions can have lower yields than conventional onions, and organic carrots can prove more labour intensive.

“Our challenge is to be environmentally and economically sustainable under a certified organic regime,” says Lawson, who has been selling vegetables to Heinz Wattie’s for its highly successful organic baby food line, for five years now.

Following that success, Heinz Wattie’s has  launched a range of organic frozen vegetables, which will be promoted through November across Australia. “We’re looking to take organics mainstream,” says marketing manager for its frozen food, Sonya Mandeno.

The company tried a similar expansion four years ago but, Mandeno says, it didn’t work because prices were too high, and quality was not consistent.

This time round, supply is much more secure. Now Heinz plans to keep the prices down to around 5 to 10 per cent higher than conventional products, and to get organics into regular supermarkets, not just specialty shops.

Heinz is one of those companies making long-term commitments to organics, having made a significant investment in a joint research venture with Lincoln University in New Zealand.

The move away from chemical use in food production is winning some surprising backers. Along with corporate food giants like Heinz Wattie’s, almost all State agriculture departments are getting behind the transformation, albeit tentatively.

“The Queensland Department of Primary Industry is happy to pin its flag to the organic mast - as one way of producing food,” says Peter White, who runs the department’s Rural Industry Business Services with 400 staff.

“It’s not a philosophical commitment, it’s an appreciation of the market’s potential ... The sky is the limit.”

A former hobby farmer who  dabbled in organic herbs, White has been with the DPI for 30 years. He was the foundation chair of the Organic Federation of Australia - the industry peak body now run by Scott Kinnear. According to both Kinnear and White, one of the biggest problems the industry faces from a policy point of view is the need for a national standard.

Organic food for export is governed by a legally backed certification system, overseen by the Australian Quarantine Inspection Service . Yet for the domestic market there is no such system.

“Australian consumers deserve the same protection as consumers offshore,” argues White, who says the Federal Government must move to correct  the situation. For its part the Government doesn’t see any need to regulate to support a particular method of production, and believes the industry can sort out the issue.

A system of certification to guarantee the authenticity of Australia’s organic exports was set up in the early 1990s. At a grass roots level seven organisations across the country hire inspectors who certify farmers, processes and wholesalers like Eco Farms, often making unannounced inspections. If people are not sticking to organic methods, the certifying agencies can publicly de-certify - and on a number of occasions they have.

“There are a number of cases of fraud that have been uncovered which have spurred the industry to tighten its certification processes.” Kinnear says.

At a national level, the certifying organisations are overseen and accredited by AQIS, which also performs unannounced audits. While insiders say the certification system could  be improved, there is evidence suggesting it works reasonably well most of the time. After a recent examination by a team from the European Union, Australia’s export certification scheme was given the tick of approval until 2003.

Standing inside a cool room full of organic yoghurt, Eco Farms’ Philip Rougon adds his voice to the call for a legally backed domestic standard. While many companies like Eco Farms adopt the export certification processes for their domestic foodstuffs, they do so pretty much on a voluntary basis.

There are no special rules or regulations to stop someone calling produce organic, even if they use chemicals. Those who do opt to go through the burdensome process of certification argue unscrupulous players get an unfair advantage.

Showing The Australian Financial Review a box of tomatoes packaged for the “Coles Organic” line, Rougon explains how the special certification details on the label give a clear audit trail which runs directly from the consumer back to the producer. He argues legal backing for a national standard will strengthen consumer confidence in organics and “give the industry the credibility it needs”.

The industry’s credibility came under attack recently when Channel Nine’s A Current Affair  ran a segment claiming some organically grown food carried health risks. But as with a similar high-profile television story broadcast in the United States, the episode backfired badly on the program. Just one month later the Nine segment was pulled apart in a devastating critique on the ABC’s Media Watch.

More damaging than clumsy media beat-ups are the occasional revelations that food grown conventionally with chemicals has been falsely labelled organic - a strong reason, according to the industry, to get a national standard.

“The danger is a domestic scandal could hurt us internationally,” says Don Lazzaro, managing director of Pureharvest. One of Australia’s biggest distributors of organic packaged food, the Melbourne-based company sells fruit juice, soy milk, flour, cakes and biscuits - now, like Eco Farms,  turning over more than $10 million annually.

Involved with the industry for more than two decades, Lazzaro has watched and welcomed big changes, including the entry of corporates such as Heinz Wattie’s and the giant retail chains. Lazzaro  has been going to international organic trade shows for 15 years. These days he doesn’t recognise anyone among the money men, and he gets mistaken for an investment banker himself.

“Culturally, the industry has changed enormously - and it will become a lot more impersonal. Size does that,” says Lazzaro.

For many in the industry there are mixed feelings about the rapid growth, and the entry of big business. Already tensions are emerging between small retailers and the big supermarkets as they compete for often limited supplies of organic produce. If demand continues to outstrip supply, those tensions could well increase. And there are concerns, too, that the small farmers who have been the backbone of the movement will get squeezed out as agribusiness embraces organic production.

Kinnear says: “The challenge is to educate consumers to value the role that small farmers play - which may sometimes mean higher prices.” 
 
While the growth graphs suggest a bright future, the industry faces big challenges. Prices continue to be prohibitively high in many cases, supply for some produce remains inconsistent, and government backing with R&D, while growing, is still tiny compared to other countries. But according to all estimates, demand for organics is booming, and a recent survey of 1,000 Australians by Taylor Nelson Sofres suggests just over half are prepared to pay more for organic products.

An example is free range eggs which, despite their higher costs, now account for around 10 per cent of the $120 million  Australian market.  While the sale of regular eggs fell by about 2 per cent last year, free range grew by more than 20 per cent.