« Previous | Contents | Next »
Listen
Organic Action Plan
Marketing organic food
4.1 Demand for organic produce has surged in recent years, and there is further scope for Scottish producers to take advantage of this growth. Demand is currently reckoned at around 2% of all food sales in the UK. Demand for organic produce increased by an estimated 55% in 1999-2000, a further 30% in 2000-01, and, according to the Soil Association, a further 15% in the year to April 2002. Around 65% of organic produce is reckoned to be imported, compared to around one-third of all food bought in the UK. This is partly explained by the fact that a substantial amount of organic produce is of a type which can more easily and cheaply be produced in other countries (e.g. citrus fruit, top fruit and salad vegetables), but there is undoubted scope for increased penetration of Scottish produce into markets where our producers are not at a climatic disadvantage. For instance, there is scope e.g. to displace the estimated 30% of processed dairy products such as butter, cheese and yoghurt which are imported and to take advantage of emerging markets in organic fodder and seed.
4.2 To help strengthen the position of Scotland's organic food processors and, in turn, its organic farmers, the Executive's Processing and Marketing Grant Schemes give priority to projects which strengthen the organic food chain. Since March 2001 over 3.4m has been awarded to Scotland's organic food processors who use locally sourced organic primary produce. In addition, the Executive has funded the development and publication of 'A Guide to the Marketing of Organic Food' which was produced by the Scottish Agricultural College to assist producers and processors to understand supply chain issues and to provide advice on how to exploit market opportunities.
4.3 A key message of that guide is that people considering organic production need to take account of changing market circumstances and to make sure they are anticipating and meeting the needs of their immediate customers at the next stage in the food chain. While there is still a strong premium for certain organic products (e.g. organic farmed fish, and good quality horticultural produce) there is evidence of weakening prices in certain sectors as supply rises to, or beyond, the levels of demand. According to 'A Guide to the Marketing of Organic Food', over-supply of the organic milk market has led to only 46% of the organic milk produced being actually sold as organic, with the surplus being sold as conventional milk without any price premium for the costs of its organic production. High rates of conversion of organic livestock grazing in recent years are likely to reduce the premium for organic products, and lamb, as well as milk, has seen a surge in supply during 2001 and 2002, leading to a reduction in the price differential with conventional lamb. Other sectors are showing very strong demand - for instance organic baby food is now reckoned to command around half the total market.
4.4 The Organics Stakeholder Group identified a number of constraints and opportunities for the successful market penetration of Scottish organic products.
4.5 Constraints include:
Problems with availability of Scottish organic produce and the lack of suitable processing facilities, market information for producers, processors and retailers, reducing their ability to make rational market-based decisions about supply and demand.
Difficulties with clear identification of Scottish organic produce.
Climatic or technical constraints on the ability of Scottish producers to guarantee reliable supplies of certain premium products, e.g. fruit, to meet the demands of major retailers.
Domination of the retail sector by large UK/international multiple retailers, pressure on price premiums from the large retailers and difficulty for small local producers in penetrating that market.
Low uptake by primary producers and small businesses of available training provision in marketing and business development.
Opportunities include:
The expanding market for processed organic foods ('ready-meals', etc.).
Potential for greater penetration of the expanding 'food service' sector.
Local retailing, e.g. through box schemes and farmers' markets.
Initiatives by the major retailers to source more local/regional food and signpost this clearly to consumers.
Greater collaboration among organic producers to provide continuity of supply and negotiating power in relation to processors and retailers, and collaboration between enterprises in different parts of the supply chain.
The promotion of organic food as one of a range of healthy eating choices.
Increasing demand for organic seed and organic fodder, as current EC derogations on the use of conventional seed and fodder come to an end.
Producers and processors taking advantage of Scottish Enterprise's 'Food Facts' market information service and 'Market Advantage' programme for the development of marketing skills.
Scottish Executive Action
4.6 It is of course up to individual enterprises to decide how best to take advantage of market opportunities, but the Scottish Executive and the network of Enterprise bodies can help. In doing so, we want to see Scottish organic produce succeed in the marketplace, bringing to an end the situation where imported produce meets a disproportionate amount of demand for organic produce. For products where Scotland's climate supports organic production, we want Scottish organic products to secure a market share at least the same as that attained by Scottish non-organic produce.
4.7 Specific action to support this includes the following:
Through Scottish Enterprise, the Scottish Executive is promoting a wide range of initiatives to help agri-food businesses understand and exploit market opportunities, relevant to the organic sector. This includes promotion of organic food at trade shows, work with producers to help them understand and access new markets, and the development of a database of companies actively involved in the organic food chain, to help purchasers and suppliers to make connections.
The Scottish Executive supports work being done through Scottish Enterprise, in conjunction with organic sector bodies, to develop and promote clear Scottish branding of organic produce. Complementary with organic sector bodies' own quality-assured labelling, this should help consumers to make a clear and informed choice to buy Scottish organic products.
Through assistance under the Executive's Marketing and Development Scheme (MDS) work is currently underway to address the lack of processing facilities and markets in Scotland for locally produced organic milk (a problem identified in para 4.3 above).
Another project assisted by the Marketing and Development Scheme is looking at the availability of markets for locally produced vegetables in the Highlands and Islands.
The engagement of the retail sector is crucial. The Scottish Executive will ensure that the Scottish organic sector is able to take advantage of work being done by the Food Chain Centre to promote the identification and exploitation of market opportunities.
The Scottish Executive's Processing and Marketing Grant Schemes will give priority to projects which address identified weaknesses in the organic food chain or which help Scottish producers and processors to exploit market opportunities which would otherwise be difficult to take advantage of. Particular priorities identified by the Organics Stakeholder Group include:
The development of local processing facilities for meat products (too much Scottish organic livestock is slaughtered and processed in England).
Promotion of collaborative ventures involving producers, processors and/or retailers, including support for the development of co-operative marketing ventures.
Promotion of local retailing initiatives (e.g. farmers markets, box schemes) where these can add substantial value.
Initiatives to establish effective availability of market information for producers, processors and retailers.
Changes have already been made to the Organic Aid Scheme to help ensure that it does not indiscriminately increase production for which there is no market outlet, and the extent to which the application is likely to meet market demands will be taken into account in assessing applications.
Timing
4.8 The action set out above is being taken forward
now. The Organics Stakeholder Group is also doing further work between now and March on specific actions to help the organic sector take advantage of market opportunities, including organic food's place in the promotion of healthy eating, and public procurement issues.
« Previous | Contents | Next »