Organic markets for fruit and vegetables in Europe Paul Pilkauskas Senior Commodity Specialist FAO, Bangkok, November 2003 1
Outline of presentation organic sales & markets shares growth rates Organic Fruit & Vegetables sales prices distribution channels organic production & Government support imports (quantities and prices) opportunities for developing countries to export to Europe 2
Organic sales & Markets shares Organic sales (total) 2003 Germany United Kingdom Italy France Switzerland Netherlands Sweden US$ 2,800-3,100 million US$ 1,550-1,750 million US$ 1,250-1,400 million US$ 1,200-1,300 million US$ 725-775 million US$ 425-475 million US$ 350-400 million 3
Organic Sales 2003 Cont. Denmark US$ 325-375 Million Austria US$ 325-375 Million Belgium US$ 200-250 Million Ireland US$ 40-50 Million Other Europe* US$ 750-850 Millioin Total Europe US$ 1.0-1.1 Billion * Finland, Greece, Portugal, Spain, Norway, Poland, Hungary, Czech Rep., Estonia, Latvia, Lithuania 4
Organic sales & Markets shares Market shares organic sales (% total food sales) Denmark 2.5-3 Switzerland 3 Austria 1.8 Germany 2.3 Lower : Belgium, Netherlands, Sweden. 5
Organic sales & Markets shares Market shares organic F&V Difficult to get data for all countries Italy Fresh F&V 30%, Processed 13% Germany 236, 000, 000 in fruit in 2003 Market share organic F&V sales is higher than market share total organic sales UK (4.2% of veg. sales), Switzerland (11.3 of veg.) and Denmark (12.8% of veg.) 6
Annual growth rates Generally: 20-30 percent Growth rates of sales Highest growths in UK and especially Italy Italy 85 percent (1998-2000; annual) & 34% in 2001 & 20%in 2002; 20% up in first 8 months of 2003; imports up 40% first half of 2003 France Fresh product growth in 2001 of 17% Switzerland 15% growth in 2002 High growth rates but from small base 7
Prices Prices (1) General lack of reliable, verifiable data Prices vary strongly among place, time and product Observed price premia range between 20 and 40 percent Cautious interpretation of data 8
Prices Prices (2) Most consumers responding to surveys appear to be willing to pay price premium up to 20 % However, are statements converted into action in the F&V counter? Many consumers feel uninformed about organics Likely that price differences with conventional products decrease over time 9
Distribution channels Distribution channels (1) Strong differences between different countries In all countries role of supermarket is increasing in practically all European markets Also important are specialized (organic) shops Relative high number of farm sales and subscription schemes in F & V 10
Distribution channels Distribution channels (2) High supermarket sales (about 70 %) in UK, Switzerland and Denmark But low (20-30 percent) in Germany, Netherlands, Austria and France Institutional (school) and catering markets beginning to grow NOT one European organic market 11
Distribution channels Distribution channels (3) Other channels: farm sales subscription bags 12
Organic production and government support Organic production (1) Organic production is increasing Top 5 certified organic area: Italy 1 182 000 ha. (down 5.6% since 2002) Germany 546 000 ha. UK 741 000 ha. France 500 000 ha. Spain 665 000 ha. 13
Organic production and government support Organic production (2) Conversion is stimulated through government support in most European countries (e.g. Finland pays organic farmers 147 per ha. for first 5 years and 102 thereafter) Some countries have specific targets, e.g. 10 percent organic area in 2010 14
Organic production and government support Organic production (3) Despite increase in production, demand continues to outpace supply therefore, imports continue to be needed to meet demand this is where opportunity lies 15
Trends Trends Organic supermarkets Biodegradable packaging Organic convenience food Internet Sales Public canteens Organic catering 16
Imports (quantities and prices) Imports (1) Imports are faced with certain problems: distrust by many consumers of reliability of certification abroad nearby countries are favoured as supply source main Swiss organic logo prohibits air transport Italian case shows bureaucratic difficulties consumers are more comfortable with domestic organic products 17
Imports (quantities and prices) Imports (2) Exceptions to these problems: UK and Belgium, where consumers distrust is relatively minor. In the UK 70% of organic veg. sales were imported in 2002 18
Opportunities & strategies Opportunities for dev g countries Demand continues to outgrow domestic supply Counter-seasonal fresh products Non-temperate zone products 19
Opportunities & strategies Strategies to follow National organic legislation Know-how on organic farming Post-harvest handling, infrastructure and logistics Partnership with importer abroad 20
Thank You Paul P. Pilkauskas Senior Commodity Specialist Horticultural Group Commodities and Trade Division Paul.Pilkauskas@fao.org 21