Since organic foods have seen a steady growth that shows no signs of slowing down, is the supply enough to satisfy the demand?
By Kavita Sabharwal
Organics have grown in popularity over the past decade, with more consumers and producers joining the movement every year. According to the International Federation of Organic Agriculture Movements, the global market for organic products in 2011 reached nearly US$63 billion across all channels, including mainstream retailers, health food stores and drugstores. In 2012, the total Canadian organic market was valued at nearly $3.7 billion across all categories, including alcohol, supplements, clothing fibres, personal care products, pet food, household products, flowers and exports out of Canada.
Canada imports 62 per cent of its organic foods.
In 2008, about $187 million (approximately 74 per cent of the $252 million total) came from the U.S., while the remaining 26 per cent originate from Chile, Mexico, China, Italy and Germany.
Organic growth
The governing body Agriculture and Agri-Food Canada states that the organic sector has been expanding into new markets as its production and retail sales have grown by double digits over the past 10 years, with consumption outpacing production. Organic food is expected to continue its upward trajectory as the category in Canada experiences increased consumer confidence due to frequent certifications ensuring standards are being met.
“Responding to unprecedented consumer demand, the organic market in Canada is growing rapidly,” says Marie-Eve Levert, strategy and research manager for the Canada Organic Trade Association (COTA). “It tripled between 2006 and 2012, and is now valued at $3.7 billion per year.”
- According to Nielsen’s grocery label scan in 2009 for Agriculture and Agri-Food Canada, the country’s top organic sales in 2008 include prepared foods (86 million units), refrigerated food and beverages (76 million units), dairy (70 million units), non-refrigerated beverages (45 million units) and condiments (29 million units).
Canadian Organic Growers states that by 2009, there were over 3,900 certified organic operators in Canada, accounting for about 1.7 per cent of the total number of farms in Canada, as well as approximately 1,200 certified organic processors and handlers to produce ingredients and consumer-ready products.
- Canada’s organic dairy industry has 206 milk producers and a minimum of 18,000 dairy cattle, and the industry continues to grow. Between 2006 and 2008, the organic dairy industry grew by 25 per cent, while from 2008 to 2010 it grew by 8.5 per cent.
According to Stephanie Wells, senior regulatory affairs advisor at COTA, the number of Canadian organic markets has more than tripled over the past seven years. “Other agri-food sectors are not growing at this wonderful rate. That indicates a lot of consumer demand that is growing,” she says.
- The COTA study National Organic Market: Growth, Trends and Opportunities, 2013 states that 58 per cent (20.3 million) of Canadians buy some organic products every week, though which products in particular are not mentioned.
Aaron Skelton, vice president of brands and business development at Greenspace Brands, says that supply is falling short. “We’re at a bit of a crossroads. We’ve had such growth and such an interest in it by the public that the greater market is opening its eyes and seeing the potential of natural and organic,” he says. “The supply that’s out there is not readily available. We’re at a stage where large companies are cornering the market on critical supply elements.”
In addition, Wells indicates that demand for organic is rising as consumers become more diverse. “Different age groups, income brackets, types of households, whether it’s student roommates or families, and also diverse ethnicities are now making that organic choice,” she says. “Now the challenge is to keep meeting that consumer demand.”
Wells says there are some issues with that task, including the rising cost of land. COTA is working with other organic organizations such as Canadian Organic Growers and local businesses to help farmers acquire land at reasonable rates. Wells believes that organic farms are good for communities and the economy since they use about twice as many labourers as a conventional farm.
“I think farming is still growing and I think that’s because of the premium for it,” says Skelton. “The price they can demand at market increases, but also the operating costs of that business can change.”
“It’s very labour-intensive. If you can’t spray poisons to handle weeds, you have to use machinery or do it by hand, which is one of the reasons why it is more costly,” she says. “On the plus side, organic farms use up to half the amount of energy consumption of conventional farming.”
Levert hopes producers will respond to the opportunity presented by increased demand. “From 2001 to 2011, the Census of Agriculture showed a 66 per cent growth in organic farms,” she says. “This said, demand continues to outstrip domestic supply, and 49 per cent of the Canadian organic market is served by imported goods (COTA study, 2013). The more organic growers we have in Canada, the more the supply gap will be fulfilled with Canadian products, especially for fresh vegetables, fruits, dairy products and bakery.”
However, a larger number of young farmers are cropping up. While eight per cent of farmers in Canada are under 35, that number grows to 12 per cent of organic farmers, according to the 2011 Agricultural Census from Statistics Canada. These young farmers are often educated in agricultural studies so they commit to organic farming for the environment or their own personal reasons.
COTA is currently encouraging the Canadian government to help farms make the transition to organic. This process takes three years in order to build up the nutrients in the soil to feed the crops without resorting to chemicals. In the U.S. and European Union, the governments help support their farmers in this transition.
“They help cover their costs. We would love to see the government help. In the U.S., the government allocated $57 million to organic transitions under the Farm Bill,” says Wells.
“A recent meta-analysis from UC Berkeley research shows that when organic farms employ agro-ecological practices, the organic-conventional yield gap disappears,” says Levert, implying that organic farms may be able to meet production rates of regular farms with the right practices in place, allowing for higher yields.
While the supply of organic foods is currently close to meeting the demand, it appears as though years down the road; a plan of action will be required to keep up. As organics continue to gain and hold popularity, it is clear that if more producers do not start joining the cause, many Canadian consumers will be left disappointed.
What do consumers buy organic?
- “I usually buy my groceries every couple of weeks, and the only items I really buy that are organic are vegetables (carrots, mushrooms, etc.) I like my vegetables as natural as possible.” – Sarmela Dharmarajah
- “I normally purchase certain fruits, vegetables, eggs and meat organic. They are the most heavily sprayed and I am eating them directly, and I want to minimize the amount of chemicals I am exposed to. Some fruits come with a protective layer, though berries, apples and leafy greens do not. I also wash and soak them when I get home. You can’t eliminate all toxins on your food (unless you grow your own!), but you can reduce them.” – Shelby Stover
Other organics
According to the Canada Organic Trade Association, the total Canadian organic market was worth nearly $3.7 billion in annual sales in 2012. While food and beverages account for over 95 per cent of this amount, there are other categories that see regular sales.
Organic supplements accounted for $34.4 million, or 1.25 per cent of the total market share.
Organic personal care products accounted for $41.1 million, or 0.45 per cent of the total market share.
