The global organic market, access requirements and organic guarantee

Transcription

1 The global organic market, access requirements and organic guarantee Thai Organic Symposium 2014 Bangkok, Gerald A. Herrmann, Director Organic Services GmbH 1

2 Content of presentation 1. Understanding organic markets 2. Understanding market access requirements 3. Establishing Organic Guarantee Systems in emerging markets 2

3 Understanding organic markets 3

4 Global Organic Market & Trends Organic markets are growing around the world Production acreage shows correspondent growth additional producing countries outside of established markets are getting involved New buying markets are emerging Organic distribution structure is developing Strong organic brands are establishing New markets segments: aquaculture, textiles, cosmetics, supplements and natural remedies Mergers & acquisitions in the global organic industry are increasing 4

5 20+ years of organic regulations Organic becomes more transparent, increased consumer trust and demand Organic Action Plans and financial support for conversion Market entry of conventional retail Organic becomes mainstream 5

6 20+ years of organic regulations Organic regulations and logos + Private standards and logos 42 years of global organic definition ASEAN countries: Some with regulation fully implemented Some with regulation not fully implemented A number of private Standards Asian Regional Organic Standard (AROS) not yet agreed 6

7 The global organic market today Organic market sales 2013: ~ 49 billion (statistics and estimation) ~ 23 billion ~ 21 billion ~ 2,5 billion ~ 0,5 billion ~ 0,5 billion?? ~ 0,8 billion Source: Organic Monitor, World of Organic Agriculture 2014 (IFOAM, FiBL) and own compilation 7

8 The global fair trade market Fair trade sales 2011: 4.3 billion Euros (statistics and estimation) Ireland: 159 million UK: 1.5 billion Finland: 100 million The Netherlands: 147 million Sweden: 134 million This is below 20% of organic market turnover! USA/Canada: 950 million France: 315 million CH: 265 million Germany: 400 million Austria: 100 million Asia:?? million Note: 70% of certified fair food is certified organic as well! Latin America:?? million Africa:?? million Figures: Fairtrade Labelling Organizations International Other fair trade schemes not accounted for! Oceania:?? million 8

9 Global facts and figures organic and natural cosmetics Market volume 2010: 6.7 billion Euros (organic and natural) (green/natural/organic: 21 billion Euros) Strong growth rates! USA: 300 Mio (5 billion ) Europe: 1.5 billion (2-3 billion ) UK: 55 Mio France: 300 Mio Italy: 250 Mio Germany: 800 Mio Middle East: 250 Mio Germany: 920 Mio in 2013 Asia: 300 Mio?? 6 billion ) Brazil 100 Mio?? (5 billion ) Oceania: 20 Mio Source: Organic Services own compilation (Organic Monitor, Elfriede Dambacher, Vivaness, Kline) 9

10 The global organic cotton market Market size in billion US$ (estimation) 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,

11 The global organic aquaculture market 11

12 Organic food, global data 12

13 Trade fairs on organic products The global leading organic trade fair, Nuremberg, Germany 13

14 20+ years EU organic regulation Organic sales in Europe Average growth 11% 21 billion Euro 4.5 billion Euro

15 20+ years EU organic regulation Organic agricultural area in Europe million ha 11.2 (2012) 2.3% % 0.1% % 1.9% Organic land in million ha Proportion of organic land of total agricultural area 15

16 Sales channels of organic products in Europe 2010: UK, CH, A, I, F Others 2008/2009 Source: own compilation 16

17 Size and growth of the US market 2013: > 32 billion US$ Source: 17

18 The US market

19 Importance of local and regional marketing 19

20 Distribution US Food system overview Distribution Channels: The route a product follows as it moves from the original grower, producer or importer to the ultimate consumer. Each channel has specialized requirements, unique partners and peculiar margin structure Farmer's Market & Other 10% Wal-Mart Costco Foodservice 3% Mass & Club 10% Large Natural 24% Whole Foods Wild Oats Trader Joe s Safeway Kroger Publix Grocery 31% Independent Natural 22% Co-ops Locals Source: Weinberg & Associates,

21 China 2013 Organic market volume: about 2 billion Organic market growth: +?% Market share:?% Per capita consumption: 0.? 21

22 China to be among the 5 biggest organic food markets Export: Mainly to Europe, North America and Japan More attention given to domestic market Domestic: No reliable statistical data available Food scandals as a driving factor Risk factors: 1. Development of Chinese economy 2. Organic = luxury product 3. Failing investments into organic 4. Import requirements 22

23 Consumer awareness Benefits of organic food need to be explained. Low confidence in Chinese organic food. High confidence in foreign (organic) food. However, a growing number of consumers is interested in real organic food. But a much larger group of consumers is concerned about food safety and healthy food in general. 23

24 National Organic Database Each package of an organic product must carry a traceable label with a 17 digital number. One number is only for one package. It can be verified on the internet from the database of national authority-cnca: producer, certifier, quantity, name of the product, certification number, valid period, etc. 24

25 Japan Organic market volume 2010: ~ 1.2 billion Per capita consumption: 9 Market share: 1% Market size of safe and environmentallyfriendly foods including organic and foods of reduced agricultural chemicals : 5.4 billion 25

26 Popular retail channels for organic products Supermarkets e.g. Kinokuniya stores: more than 200 domestic and imported organic products Few small natural food chains, e.g. Natural House with 30 locations and online shop Cooperatives Seikatsu Club Consumers Cooperative Union: founded in 1965 with now over members, 3000 organic products, 30 regional cooperatives Online Shops Oisix, Radish Boy, Choosee 26

27 India 2013 Organic market volume: about 0.6 billion Organic market growth: 30% Market share:?% Per capita consumption: 0.? 27

28 Status Quo domestic market The domestic market is estimated at 450 million : Modern High End outlets, Estimated Business Value million ; Annual Growth - 500% General outlets, Estimated Business Value million ; Annual Growth - 400% Institutional 300 Units Estimated Business Value million ; Annual Growth - 300% 28

29 Status Quo domestic market Claimed Organic 2000 Estimated Business Value million ; Annual Growth - 500% Rural/Farmer/NGO 2000 Estimated Business Value - 20 million ; Annual Growth - 300% About 1000 processed products (modern facilities often ISO, BRC, HACCP or else certified) 29

30 Specialised organic stores Organic store in Hyderabad Sresta, 24 Letter Mantra Organic store in Mumbai, Morarka Organic 30

31 Status Quo export market Exports as certified organic Million ; annual growth 33 (to 100%) Exports as pesticides free 130 Million ; annual growth - 100% 44 % of export goes to Europe 22 % to Canada 19 % to the USA 13 % to Asia About 300 products from 19 different product groups (commodities, value added, processed) 31

32 Organic shops and supermarkets in Asia Three Sixty, HongKong Singapore South Korea Mothers, Japan Lemon Farm, Bangkok Country Farm Organics, Kuala Lumpur Santa Cruz, Taiwan 32

33 Australia Organic market volume: 856 million Organic market growth: % Per capita consumption: 41 Market share: ~ 1 % private logos 33

34 Status Quo domestic market Farmers markets, home deliveries, box schemes 8% Conventional retail (Coles, Woolworth, Aldi etc.) 60% Other retail stores 32% First supermarket retailer in Australia to introduce own brand of certified organic products in 2006 Product range: more than 170 organic products 34

35 Organic Supply Chain Management Understanding market access requirements 35

36 Organic Supply Chain Management Hot issues in global organic product sourcing: organic integrity (plus social criteria) traceability along supply chains impact on domestic organic agriculture food mileage (carbon footprint) climate change and natural hazards (diversification of sourcing) limited/ declining agricultural resources competition food/ non-food (e.g. biofuel) competition between sourcing companies better possibilities for investments in agriculture and direct relation with farmers 36

37 Organic Supply Chain Management Quality management in supply chains Quality management is more than just fulfilling legal market access requirements It is the fundament for planning and better positioning in the market Basic elements include: Complete agro-documentation (farms, farmers, farming activities such as used inputs etc.) as a planning tool Internal Control System (ICS) for certification Traceability along supply chain Risk based monitoring plans (as part of HACCP systems) Learning approach, permanent improvements and training Use of software solutions (ERP, traceability systems for agro-food industry etc.) 37

38 Organic Supply Chain Management Legal and private standards (besides organic standards/ regulations) Legal requirements: EU-178/2002 (traceability) EU-852/2004 and EU-853/2004 (Hygiene) Private standards: GlobalG.A.P. (European Retail Association) IFS (International Food Standard) BRC (British Retail Consortium) ISO

39 Documentation of agricultural production Documentation of agricultural practices Quality improvements Transparency 39

40 Identifying all links of the supply chain tracing and tracking Web-based systems can help to integrate all links and levels of the supply chain Transparency is established Product Risk % 40

41 Supply chain mapping Traders supply chains can be visualized Status is indicated 41

42 Certificate Holder/Certification Bodies: result = certified products supply chain mapping Certification Body Certification Body Certification Body certification data of participating operator Product 1 volume monitoring 50 t production data of participating operator Certified amounts of product per each Participating Operator batch tracking 42

43 Check Organic the global organic integrity platform 43

44 Organic Guarantee Systems Establishing Organic Guarantee Systems in emerging markets 44

45 Organic guarantee systems Import requirements of major (organic) economies There is a small number of bilateral trade agreements only To negotiate an equivalence agreement is resource demanding and time consuming Bilateral equivalence agreements are a political instrument Equivalency negotiations depend on a big enough business interest (on both sides) The main way to get access to markets is through certification bodies accepted in the respective markets (compliance) without an organic guarantee system there will be no acceptance! 45

46 Goals Why an Organic Guarantee System? Building Trust! Protecting consumers from misleading claims Protecting producers from unfair competition 46

47 Goals Why an Organic Guarantee System? Facilitate trade! Give organic more credibility Facilitate the development of domestic markets Provide access to export markets 47

48 Organic guarantee system components and strategies Components of an organic guarantee system (1)Production standards and other requirements the operator has to fulfil (2)Conformity assessment system (3)Use of organic statement in the market place (can be a label, however it is not conditional) (4)Stakeholder involvement (5)Accompanying measures 48

49 Organic guarantee system components and strategies (1) Standards development. Questions to answer: Private or regulatory standard? Objective and Scope? For domestic market or export only? Should it make reference to other standards? Should it be adapted to local conditions? Should it be voluntary or mandatory or is it necessary at all? Stakeholder involvement 49

50 Organic guarantee system components and strategies (1) Standard development strategies For global market access: Strategy 1: Follow the standard of the targeted market for export. Strategy 2: Certify against the IFOAM Standard Strategy 3: Develop a national organic standard it may reference Codex it should be equivalent with IFOAM Standard Requirements (COROS) It should be part of IFOAM s family of standards Strategy 4: Join forces with neighbouring countries to develop regional organic standards (e.g. Asian Regional Organic Standard, AROS) 50

51 Organic guarantee system components and strategies (2) Conformity assessment. Questions to answer: Third party certification as single option? Private or governmental certification service? Should international certification bodies be involved? Accreditation services? Costs? 51

52 Organic guarantee system components and strategies (2) Conformity assessment strategies For global market access: Strategy 5: Apply third party certification however allow for group certification based on ICS and for PGS for local markets Strategy 6: Keep the system open and allow locally as well as internationally working certifiers (let the operator choose) international accreditation services (IOAS conducting IFOAM and ISO 65 accreditation) Strategy 7: Invest in partnerships between local certifiers and certifiers operating internationally 52

53 Group certification based on ICS and on PGS Vitoon Panyakul, Earth Net Foundation Green Net: In the agriculture sector, to build competitiveness and sustainability, it is essential to organize farmers in groups so that the small farmers can effectively produce and market safe food at competitive prices. In addition, enhancing quality and productivity, while restoring and safeguarding the natural ecosystems that underpin safe agricultural products especially for small-holder farmers is a high priority. To meet these challenges, innovative agribusiness models need to be explored for climate friendly agri-business development in the region. 53

54 Organic guarantee system components and strategies (2) Conformity assessment strategies For import: Imported products will help to develop a national market that is interesting for the consumer Strategy 8: Keep the system open and accept import based on equivalence (IFOAM Family of standards, certification by accredited certifiers) accept import from all countries with a regulatory system. 54

55 Organic guarantee system components and strategies (3) Organic logo A common organic logo actively promoted has much grater market impact than a common standard or a regulation. Strategy 9: Introduce a common logo for organic products and Support its public acceptance with promotional activities Defend the logo in the market place 55

56 Organic guarantee system components and strategies (4) Stakeholder involvement In order to ensure that Organic Guarantee Systems are accepted and actively implemented full participation of the organic sector is needed Strategy 10: Establish a national association and/ or a working group of stakeholders (as a permanent body) 56

57 Organic guarantee system components and strategies (5) Complementing activities The ability of farmers to comply with standards and certification requirements is often limited Strategy 11: Develop simple instructions, what are the does and don ts Invest in education and training as many of the standard violations result from misunderstandings 57

58 Organic guarantee system components and strategies (5) Additional activities An Organic Guarantee System is a tool to regulate the market. However there are also other aspects critical for the development of the sector. Strategy 12: Consider all the development aspects: production, marketing, training, research, consumer awareness etc. Develop and implement an organic action plan 58

59 Conclusions (5) Conclusions Design a system to foster domestic markets Facilitate access to certification services by supporting the development of local service providers Facilitate access for smallholders Rely on services provided by certifiers working internationally Prefer equivalence over compliance Use international references for designing your guarantee system. 59

60 Conclusions (5) Conclusions. Expand activities beyond developing the organic guarantee system Establish a stakeholder body with influential/ decision taking power Before establishing a regulation clarify the objective 60

61 Organic Services GmbH, Germany/USA/India 61