Wednesday, December 28, 2011


Compared to main stream food industry the organic food sector is considered puny with its share in the market touching not even 2% but its continued growth, much faster than that achieved by the general food industry conveys a loud message that this sector is here to stay in spite of many impediments before it. It is unfortunate that organic foods are considered to be the prerogative of rich consumers because of the higher price tags they carry though such premium pricing is justified because of the high input costs required to get the necessary certification. That Australia remains the biggest producer of organic foods in the world tells its own story and the rich man's tag is further reinforced because of this factor. Certification process for organically produced foods is very complicated and costly and many developing countries find it non-affordable and non-feasible to get into this business. Here is a take on this emerging market and its dynamics.

"Australia has the largest area of organic farmland in the world at 12 million hectares, with the vast majority of this land comprising large rangelands for organic cattle production. However, the industry is comprised mainly of small operators, which has contributed to difficulties in providing consistency in the quantity and quality of produce. Other dampeners to growth have been intermittent drought conditions over the past five years. Despite this, over the five years through 2011-12, revenue in the industry has remained resilient. The industry will continue to grow strongly over the next five years, favoured by strong demand in domestic and export markets. Over the five years through 2016-17, industry revenue is anticipated to increase an annualised 12.1% to reach $892.3 million in 2016-17. Over this period, there will be increasing participation by supermarket chains in the organic market, downwards pressure on prices from growing economies of scale in production, and benefits from improvements in the certification of organic produce".

A larger question that confronts the world is whether this planet can support a total shift from conventional cultivation to organic version and there is no consensus that this can be achieved. In stead of going too far to produce organic foods every where it may be more realistic to evolve an intermediate mode of production where fertilizers only are allowed while growth hormones, pesticides and other harmful chemicals are avoided. Some times one gets a feeling that organic food certification is too fetish and academic in nature with doubtful impact. Of course most organic food admirers may scoff at this because of their abiding faith in the safety, nutrition and health promoting features. Still it is worth considering whether a new category of foods can be promoted that will be much more safer than conventionally raised foods.


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