UK and European Organic Markets and Policies Nic Lampkin, Executive Director Susanne Padel, Senior Researcher Organic Research Centre, Elm Farm
In the media spotlight 2008/9... Shoppers lose their taste for organic food - The Guardian Organic sales set to slip Mintel Hard-up shoppers abandon organic and fair trade goods The Times
... and now Is it all over for organic food? The Guardian, Sep 2011 Conventional farmers are shunning organic Farmers Guardian, Aug 2011 Premiums vanish for organic meat/ organic land area falls South East Farmer, Sep 2011 Has anything changed?... well, yes Is it is as bad as the headlines suggest? (lies, damned lies and statistics!)
UK organic market development Total Organic Grocery Products including Baby - 4 weekly m 100 80 60 40 20 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Kantar Worldpanel
Total Organic Market (inc. Baby) Rolling 52 week periods Y-on-Y Change % 12- Jul- 09-11 09- Aug- 09-12 06- Sep- 09 04- Oct- 09-12 -12-13 Decline is slowing down 01- Nov- 09 29- Nov- 09-12 27- Dec- 09-12 24- Jan- 10 21- Feb- 10-11 -11 21- Mar- 10-10 18- Apr- 10-9 16- May- 10-9 13- Jun- 10 11- Jul- 10-8 -8 08- Aug- 10-8 05- Sep- 10-7 03- Oct- 10-6 31- Oct- 10-6 28- Nov- 10-6 26- Dec- 10 23- Jan- 11-5 -5 Source: Kantar Worldpanel
Organic Growth - m - 52 w/e Dec 26 2010 v. year ago -11.0-5.1-5.1-5.8-6.3-1.3-1.4-1.4-1.5-1.6-1.6-1.6-1.7-2.0-2.1-2.9-3.0-3.0-3.1-3.3-3.4 5.0 3.8 2.6 2.3 1.4 1.2 1.1 1.0 0.7 0.7 0.5 0.4 14.3 Baby Food Yoghurt Fresh Beef Butter Cider Wine Herbal Tea Herbs+Spices Beer+Lager Peanut Butter Meat Extract Packet Soup Prepared Peas&Beans Fresh Sausages Total Ice Cream Fresh Pork Instant Coffee Childrens Biscuits Ambient Cooking Sauces Chilled Prepared Chilled Fruit Juice+Drink Vegetables Chilled Vegetarian Fresh Poultry Chocolate Confectionery Breakfast Cereals Total Bread Fresh Lamb Total Cheese Seasonal Biscuits Hens Eggs Total Milk Chilled Ready Meals Fruit Source: Kantar Worldpanel
Year-on-Year Expenditure Trends - % Change Organic Waitrose Total Grocers Morrisons Sainsbury's Tesco Asda -15-10 -8-8 -6 52 w/e 23 Jan 11 6 Source: Kantar Worldpanel
Year-on-Year Expenditure Trends - % Change Organic Own Label Waitrose Sainsbury's Total Grocers Tesco Asda -13-5 -3-2 12 w/e 23 Jan 11 16 Morrisons -28 Source: Kantar Worldpanel
Total Organics- Spend by Frequency Group 62% of Organic buyers account for only 12% of spend 8% of Organic buyers represent 54% of money spent on Organics 8 13 18 45 17 54 22 13 11 1 % Homes Buying % Spend 27+ 13-26 Occasions 7-12 Occasions 2-6 Occasions 1 Occasion 52 w/e Jan 23 2011 Source: Kantar Worldpanel
Two broad segments of organic consumers Regular/committed >80 % of sales Well educated Health aware Middle income levels Believe in organic product quality Seek other attributes Environment Animal welfare Social Missionary zeal Occasional < 2% of sales More price & convenience sensitive Cooking skills? More sceptical about some claims Little knowledge
Penetration % Organic Top Markets by Household Penetration Vegetables 61 Fruit 35 Yoghurt 29 25 Total Milk Chocolate Confectionery 15 Total Cheese Chilled Prepared Frt+Veg Total Organic Market Household Penetration = 86% 13 12 12 11 9 9 9 8 Baby Food Hens Eggs Total Bread Dry Pasta Fresh Beef Home Baking 52 w/e 24 Jan 10 52 w/e 23 Jan 11 Source: Kantar Worldpanel
UK organic sector development 1995-2010 2500 2000 1500 1000 500 Land area (thousand ha) Retail value ( million) No of holdings 6000 5000 4000 3000 2000 1000 0 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06 '07 08 09 10 0 Source: Defra, 2011
800 700 600 500 400 300 200 100 0 Different trends in UK nations - kha fully organic... 2002 2003 2004 2005 2006 2007 2008 2009 2010 N Ireland Scotland Wales England
250 200 150 100 50 0... and in conversion N Ireland Scotland Wales England 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Defra, 2011
Sheep numbers increased by 11% to ca. 1 million in 2010 Source: Defra, 2011
Sector trends Arable: Good yields and quality this year, wheat/barley prices ca. 230/t post harvest, a reduction on prices earlier in the year while conventional prices are up Horticulture: Remains challenging following recession and a serious reduction in sales Dairy: UK production and sales fell slightly, but increasing exports, with June price 29ppl (27.5ppl 12 months previously) Poultry and pigs: Tough times, sales -20% For most sectors, profitability still comparable with non-organic
A closer look at beef...
...and lamb
What s the real situation? For beef, supply shortages are now a real threat, potentially leading to retail unavailability For lamb, high conventional prices have created a floor to organic prices, with many lambs sold as conventional, but Supermarkets still charging significant premiums for organic lamb, and Spring shortages an issue
European organic area 1985-2009
European organic land area density in different countries, 2009
UK market trends compared to other countries
Why is the UK different? Perception of elitism and political disengagement (new CAP opportunities?) Lack of recognition of environmental and other public good benefits Competition from other initiatives (natural, local, fair-trade, low carbon), but Only organic has clearly defined standards and a European regulation Organic is often used in combination with the above, but consumers appear unaware
Need better communication Mintel: Consumers may review spending on premium organic foods if they do not fully understand the benefits, but a growing trend of people seeking ways to make a difference What is needed is a unified voice from the organic industry, extolling the virtues of their products. Justin King, chief executive of Sainsbury's: customers were increasingly concerned with animal welfare and husbandry standards but organic food producers had not done a good job in communicating what it stood for. EU-funded promotion campaign response
The Organic Research Centre
The Organic Research Centre Key Messages There are lots of reasons to love organic, discover yours Organic is better for nature Organic is better for animal welfare Organic costs more and it s worth it Organic contains less pesticides and nasties = natural & great tasting food Maybe next time I go shopping, I ll chose organic
The Organic Research Centre http://www.whyiloveorganic.co.uk/
The Organic Research Centre UK policy support Conversion and maintenance payments restored in Scotland, rescued in Wales, but low level of payment compared with EU Rural development funding used for marketing initiatives and vocational training Some research funding (but more from EU) No UK government match-funding for promotion campaign Action plans now only in Scotland (new)
The Organic Research Centre Organic farming scheme payments ( /ha) Arable Grass Veg Fruit England C M 285 73 285 73 285 73 800 73 Wales C M 182 73 182 44 182 242 242 242 Scotland C M 266 73 128 61 363 73 -- N Ireland C M 260 36 224 36 345 36 -- Austria C M 285 285 110-240 110-240 450-600 450-600 750 750 Germany C 150-252 M 116-210 150-252 116-210 300-576 230-550 452-1080 420-864 France C M 100 80-151 350-900 150-600 100-900 590-900 200 100-151
The Organic Research Centre CAP reform from 2014 an opportunity for renewal? additional payment (30% of annual national ceiling) for farmers following agricultural practices beneficial for climate/environment: crop diversification, maintenance of permanent pastures and ecological focus areas (7%). organic farming will automatically benefit from this additional payment new specific rural development measure for organic farming (Article 43) max. payment rates as for other agri-environment ( /ha:600 annual, 900 perennial, 450 other)
The Organic Research Centre Conclusion Recession and political environment have created challenging market conditions and low farmer interest in conversion in UK. UK situation is in marked contrast to other EU countries Some evidence that UK organic market may be stabilising, possibly even recovering (but current economic prospects poor) CAP reform proposal could herald renewal of interest in organic farming, especially if market also recovering
The Organic Research Centre Further information on markets, financial performance and policy support
The Organic Research Centre Thank you for listening!