Organic
Food & Lifestyle
Growth in the supply of organic produce
Background

For many years organic growing was almost entirely associated with small scale production of fruits and vegetables. Many producers were very small, operating from back yards or small hobby farms on the urban fringe. In fact the impression that all organic producers were small, non commercial units was wrong from the start. There were some larger organic producers, in a variety of agricultural enterprises, but they lacked processing and distribution systems to market their produce. The dairy industry is an example of an industry which has always had some organic producers, and dairy producers featured prominently in the development of many small organic growing groups around the country.

However it is true that the greatest number of organic production units were, and still are horticultural, and that these tend to be small. Vegetable producers are most numerous but fruit and herbs are also produced on a large number of small organic farms.

In the last twenty years the number and diversity of organic producers has greatly increased. At the end of the century, the organic industry is represented by certified producers in almost every industry and every type of geographical location, except for the tobacco industry. Apart from the problem of pesticide residues which are often associated with historical areas of tobacco growing, the organic industry may well choose not to certify this product due to the negative health affects of tobacco on users.

Market supply

Seasonal variation and local or widespread temporary changes in the weather will affect production from year to year or place to place. The following comments are therefore broad generalisations.

Vegetables:

Most large urban centres in southern and eastern Australia are reasonably well supplied with a range of organic vegetables for part of the year. As the market expands, there is more pressure on seasonal supply. Supply is generally good for lettuce and pumpkin. There is a less reliable supply of brassicas (especially broccoli), potatoes and salad veg other than lettuce. There are large gaps in supply of carrots, onions, tomatoes and some high-value vegetables such as snow peas. Generally smaller communities and the tropical north are less well supplied with organic vegetables. Also the industry is still subject to major fluctuation in supply in some areas.

Extended seasonal production of the main vegetable crops is an obvious opportunity for growers. Interstate trade in seasonal vegetable fruits, such as tomato, cucumber, capsicum, eggplant etc, are limited by lack of acceptable controls for fruit fly. Glasshouse production is gradually increasing but organic glasshouse maintenance requires a skilled operator and well developed rotation and cultural systems, because of the small range of organically acceptable fungicides and soil sterilisation techniques available to organic producers.

Fruit:

Citrus production is well represented in organic production, especially in the Sunraysia district, also in the Riverland and to a lesser extent Queensland, and Western Australia.

Apples and bananas are increasingly represented, with recent advances in biological controls and pheromone release systems making a significant contribution to these industries. Both fruits have some major cosmetic problems to overcome but the better producers are proving that this is possible across the range of production areas. Apples are produced in south west WA, Southern Qld and northern NSW, the Bathurst area and along the River Murray irrigation areas, Southern Victoria, Adelaide region and Tasmania. Bananas are produced in Broome, North Queensland, SE Queensland, NE NSW and to a lesser extent in the NT.

Other fruit is also organically produced, especially berries, kiwifruit, mangoes and other tropical and subtropical fruit. The biggest opportunity is for pineapples, which are seldom produced organically.

Other horticultural produce:

Nuts are available from organic sources, but larger production units would permit more utilisation of almonds, walnuts, chestnuts and others by processing industries.

Herbs are often organically produced. Previously these were supplied to the fresh market only, but recent interest in medicinal herbs, naturopathy and aromatherapy have resulted in certification of some processors. Significant export markets are available for some of these products, including herbs such as echinacea and ginseng as well as essential oils from peppermint, lavender, tea tree and other crops.

Mushrooms are not well represented and the industry would appear to provide a significant opportunity for organic producers.

Wine:

Wine grapes and wine are a significant opportunity for Australian producers. Many areas of Australia, especially the Riverland and Clare districts of South Australia are well placed to produce organic grapes due to ideal climatic conditions. The export market for organic wine is healthy and opportunities exist in America, Europe and Asia.

A major threat to wine production is the removal of phosphorous acid from the list of allowable inputs by the International Federation of Organic Agriculture Movements. Australian wine producers who wish to access this market should still pursue this case to the IFOAM Standards Committee.

Many wine producers have been content to sell wine "made from certified grapes" rather than certifying the processing operation.

The Organic Vignernons Association of Australia has 25 certified members. NASAA is also reasonably well represented in grape growing and wine making.

Broadacre crops

Cereals, legumes and oilseeds have all been produced organically in the winter rainfall and summer rainfall areas of Australia, for many years. Flour milling was one of the first organic processing industries to develop, followed by bread baking. Australia may have the largest certified grain farm in the world, Gordon Downs in the Emerald region of Queensland. The Lowbidgee Irrigation area (Balranald) almost certainly has the largest area of contiguous certified organic farms.

Cereals:

Wheat is well represented by organic producers, with large amounts of organic grain still being sold into the conventional distribution system. During the late 1980's a number of bakers and some breakfast food producers became certified, increasing the market for organic cereals greatly. A significant number of bakers also use organic grain in uncertified production, especially for bread manufacture. Continued expansion of certified organic wheat production is now inhibited by lack of markets and especially the high price of landing Australian grain in northern hemisphere markets. Some Asian markets exist and these will expand as Asian countries begin to use more wheat.

Some expansion of sales of certified cereals will be possible if producers are more attentive to the requirements of the market. Rye, triticale, processing oats and durum wheat are currently in short supply.

Spelt, buckwheat and other less common grains are also under-supplied.

Because organic growers use natural vigor, disease resistance and cultural techniques such as modifications to sowing rates, depth and time of planting, they may be restricted to certain varieties. The entry of one really large processor, such as Uncle Tobys, can make a noticeable difference to the market for grains.

Oilseeds:

There are significant domestic and export markets for oilseed and cold pressed oils. Seedex was the first company to export large quantities of oil to Asian, European and North American buyers, but a number of other traders are now certified for this purpose. Oils were originally used for domestic retail sales but are now finding their way into processed foods such as chocolate, baked goods and chips. Although this area of production has been successful for organic farmers, significant opportunity for expansion would seem to exist in this area.

Sesame is a crop which is poorly represented in organic production, with small proven markets and some potential for increased production.

Processed products such as margarine, mayonnaise and chocolate will use more organic oils in the near future.

Legumes:

Organic farmers are always being encouraged by their certification organisations to experiment with more legume production. It would seem that grain legume production has been a difficult area for many producers and both domestic and export markets are under-exploited. Human consumption chic peas, lentils, processing beans and snap peas would all find ready markets.

This area of production would be greatly assisted by the certification of large processors, with potential for canned, frozen and freeze dried products. Lack of processing markets is a significant inhibiting area for increasing production of pulses but farmer inexperience and pest problems are also important restrictions.

Alfalfa seeds (for sprouting) are another opportunity.

Cotton and other fibres

Organic cotton is attracting attention with consumers and most major design houses now have experimental organic lines. Organic cotton production is still limited in production but successful systems are being developed, including the involvement of some of the largest producers in the country. Lack of certified processors in Australia is still a problem although export markets do exist, especially in North America.

Potential markets for hemp and flax are currently not supplied by Australian producers. A small silk producer has started operation in Australia on an experimental basis.

Animal industries

Animal husbandry represents one of the largest dilemmas facing the organic industry at this time. There are number of inhibiting factors and opportunities which interact in a complex way to affect the development of a profitable organic meat and animal fibre industry in Australia.

On the one hand producers are strongly encouraged by their certification organisations to convert the whole of their property to organic production. On the other hand many organic producers of broadacre crops are not certified for animal industries due to lack of management systems for control of parasites and lack of established markets.

Animals are seen by many organic producers as essential components of an agroecosystem. They provide diversity of enterprise, weed control, fertility inputs and conversion of crop waste or residue to usable protein.

On the other hand there is a strong inclination toward vegetarianism amongst the most dedicated consumers of organic produce. There is also a very strong move away from intensive housing for animals, especially poultry and swine.

Sheep and cattle lice remain a major impediment for many organic producers, with only one commercial product currently permitted by the certifiers. This product is not sold in every state and there are still doubts about its efficacy, residual effects and toxicity. While a number of home remedies are reported anecdotally by Australian farmers, their success is unproven. Many organic producers still remain unaware of these products or lack the conviction to try the remedies without proven results to encourage them.

The production rules for organic meat is also a major restriction for organic animal industries. All animals must be born from organic stock (except poultry which may be purchased as day olds), there is a serious lack of acceptable protein supplements (especially for poultry and particularly egg birds) and there is a need for more certified hay and meal. Severe restrictions on drought feeding will also hold up development of the organic meat industry in Australia.

In the last two years some certified abattoir, processors and distribution systems for organic meat have developed, especially in response to certification of beef producer OBE and larger pastoral properties on the Cooper and elsewhere. More small butchers are now selling organic lines but without the control and supervision of certification this market is open to question with respect to authenticity and standards.

The rules for milk, hide and fibre production are less restrictive and wool is emerging as a small but promising market for organic producers.

Milk:

Milk production is a much less significant problem than distribution of the end product. This is due to the dispersal of producers over a wide geographical area. The result is a number of almost organic producers who are unwilling to suffer the potential production loss associated with moving to fully certified production.

Certified milk is available in Victoria, with some export to other state.

If more milk was available, dried milk powder, ice cream, cheese, confectionery and other products would be produced and find ready markets.

Until then many organic dairies are severely restricted by health department restrictions on distribution of unpasteurised milk and cheese manufacture. One processor of organic and biodynamic milk has been certified for four or five years and another has recently come into certification.

Most successful organic dairies convert most production into yoghurt or cheese on the farm.

Honey:

There are significant restrictions on production of organic honey, including restrictions on use of fungicides, heat for extraction and construction materials for hives. Notwithstanding these restrictions, there would seem to be significant potential for honey production, especially from large areas of native forest, remote areas such as Kangaroo Island and much of the pastoral areas of Western Australia.

Future opportunities

There is poor coordination in the fresh organic produce market and the market requires better information, especially back to the supply side. Better information will provide significant opportunities for increased profitability through cost savings from less unsold, downgraded or 'sold as conventional' produce and greater returns from increased produce sales to fill current unmet demand. Seasonal extension is required for almost all vegetable crops. Onions and carrots are particularly required.

Apples are required for export and domestic markets. Several large juice manufacturers have ceased production in recent years due to inadequate supply.

More processing opportunities are required for most categories of produce. Retailers and consumers particularly cite greater choice in breakfast cereals, dairy foods, wine and processed vegetables.

Coffee, tea, herbs and essential oils are required to replace imports and to meet export demand. Particular problems with certification procedures for tea tree oil have limited the development of this industry in Australia even though suppliers and markets exist.

Rice has some potential for increased production but organic growers in Australia do not grow varieties which have a market in Japan (although the first Australian rice to be sold in Japan, after the easing of import restrictions, was organic).

Organic meat markets are very poorly developed but large numbers of animals are kept as 'uncertified', on organically certified land. Therefore market development is required for transportation, slaughter and distribution to retail outlets.

These products are required to fill demand from the organic market, which consists of a broad cross section of the community, who select organic produce for a variety of reasons, including personal health and wellbeing, allergy or commitment to lower resource use or to sustainable agriculture. The domestic market requires increased choice to allow dedicated organic consumers to construct a 'whole diet', breakfast, lunch, tea and snacks, from organic food.

Export markets exist for fresh fruit and vegetables, fruit juice, wine, oilseeds and vegetable oils, grains and grain legumes, nuts, meat, wool, cotton, hemp, sugar, rice, processed foods, herbs and essential oils.

Because some of the goals of the organic agriculture sector include increased sustainability, there has always been an emphasis on local production. This has resulted in local markets including subscription farming and other non-conventional methods of distribution. These systems require further development.

Conclusion

Seasonal vegetables, common fruits such as citrus and apples, wheat and oilseeds are reasonably well supplied in organic production in Australia, with some seasonal limitations. There is potential for seasonal extension in vegetable production, especially carrots, onion and broccoli, and vegetable processing (eg, fruit and vegetable juice, canning, freezing).

Opportunities for increased production in fibres, wine grapes, herbs, essential oils and meat products are obvious areas for organic producers to look for new markets. Aquaculture is almost completely unrepresented amongst organic producers. Increased sugar would be well received by organic processors and if available would result in large increases in processed breakfast cereals, pastries, confectionery and other products. There is a significant potential for export of organic sugar. The same could be said for milk powder, which is used in margarine manufacture, chocolate, icecream and various other products (such as muesli bars).

Significant growth in the future is likely to be closely allied to increased export to Asia. The industry needs to refocus some of its export efforts to Asia rather than traditional northern hemisphere markets.

Increased entry of processors is more likely to yield a big increase in production than an increase in fresh produce supply. That is, there is more potential to increase the penetration of organic food into the 'whole of meal' range for consumers who currently buy some organic food, than there is for widening significantly the base of consumers who sometimes buy organic. This is evidenced by recent increases in certification of processors in Australia and is well supported by recent growth in the organic processing sector in the USA market.

Significant producers such as Uncle Tobys, Penfolds and numerous milling and baking interests have been evident in the last seven or eight years. More activity by canerys, frozen food manufacturers, winemakers, fibre processors and other manufacturers will greatly assist the future expansion of the organic industry.

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