The Australian Organic Industry—A Summary A The Australian Organic Industry A Summary DEPARTMENT OF AGRICULTURE, FISHERIES AND FORESTRY BRS/All Organic Book.FA 24/11/04 10:12 AM Page A The Australian Organic Industry A Summary BRS/All Organic Book.FA 24/11/04 10:12 AM Page B Foreword There is no doubt that consumers—here and overseas—are increasingly interested in knowing more about where and how the food they buy is produced. This has helped boost the appeal of organic food—so much so that there is now a significant and growing number of certified organic and biodynamic operators in Australia, representing rural industries as diverse as grains, horticulture, viticulture, meat, dairy, wool and coffee. So far there has been very little data published on the organic industry. The Australian Bureau of Statistics and the Australian Bureau of Resource Economics collect regular and detailed data on Australian agriculture. However, this data does not distinguish between conventional and organically grown produce. This study represents a pioneering effort towards achieving reliable data for the organic industry. Not surprisingly, the study highlighted the inherent problems associated with collecting data on organic agriculture—largely because of the extensive range of products produced, the variable size of the farms involved and the different levels of information collected by the various certifying organisations. This report can play an important role by helping to lay the foundation for a uniform data collection system for the organic industry in this country. Collecting reliable data—data that spans several years—will help the industry develop the strategic plans and marketing strategies that it needs to promote industry growth. As the Parliamentary Secretary for Agriculture, Fisheries and Forestry I look forward to working closely with Australia’s organic industry in the coming years. Senator the Hon. Richard Colbeck Parliamentary Secretary to the Minister for Agriculture, Fisheries amd Forestry The Australian Organic Industry—A Summary © Commonwealth of Australia 2004 This work is copyright. The Copyright Act 1968 permits fair dealing for study, research, news reporting, criticism or review. Selected passages, tables or diagrams may be reproduced for such purposes provided acknowledgement of the source is included. Major extracts or the entire document may not be reproduced by any process without the written permission of the Executive Manager, Food and Agriculture Business, Australian Government Department of Agriculture, Fisheries and Forestry, GPO Box 858, Canberra ACT 2601. ISBN 0 642 53955 3 A copy of this summary and the full industry profile are available from the Department’s website at http://www.daff.gov.au/foodinfo For further information, please contact: Food Policy and Communications Section Australian Government Department of Agriculture, Fisheries and Forestry Email: foodinfo@daff.gov.au Phone: 02 6272 4161 Fax: 02 6272 4367 Disclaimer The views expressed in this publication are not necessarily the views of the Australian Government. This publication is made available on the understanding that the Australian Government is not thereby engaged in rendering professional advice. Before relying on material in this publication, users should independently verify the accuracy, currency, completeness and relevance of the information for their purposes and obtain any appropriate professional advice. References to information, organisations and products mentioned in this publication or associated with those mentioned do not constitute endorsement by the Australian Government of those organisations or any associated product or service. Readers should note that the Australian Government Department of Agriculture, Fisheries and Forestry has not investigated the nutritional qualities, health effects or environmental impacts of organic processes or products, or the financial performance of organic businesses. The Australian Government Department of Agriculture, Fisheries and Forestry seeks to publish its work to the highest professional standards. However, it cannot accept responsibility for any consequences arising from the use of the information herein. Readers should rely on their own skill and judgment in applying any information for analysis to particular issues or circumstances. The Australian Organic Industry—A Summary ii The Australian Organic Industry—A Summary iii BRS/All Organic Book.FA 24/11/04 10:13 AM Page ii Contents About this publication This publication summarises the key findings of a study conducted in 2003 and 2004 that provides a snapshot of the organic industry at this time. It is designed to provide general information to current and prospective producers, processors, distributors, exporters, retailers, consumers, certifying organisations, industry associations and others interested in the organic industry. The Australian Government Department of Agriculture, Fisheries and Forestry commissioned the study to help remedy the lack of data available on the organic industry. Acknowledgements Staff in the Department of Agriculture, Fisheries and Forestry’s Food Policy and Communications Section managed the project and compiled this summary. The Department would like to thank, for their contributions to this work: • Dr Darren Halpin, Central Queensland University • Jackie Parkinson, Central Queensland University • Dr Martin Brueckner, Curtin University of Technology • Amarjit Sahota, Organic Monitor • Assoc. Prof. Stewart Lockie, Central Queensland University • Peter Donaghy, Central Queensland University • Gary Hullin, Austrade • Australian Quarantine and Inspection Service The Department would also like to thank the organic certifying organisations that provided data, the Organic Federation of Australia for instigating and assisting the project. Front and back cover photographs were provided by the Biological Farmers of Australia, the National Association for Sustainable Agriculture Australia and Tim Marshall. All organic producers included in case studies have received grants from the Australian Government’s New Industries Development Program. The Department thanks those producers included in case studies. Other publications from the Food Policy and Communications Section include: Australian Government Department of Agriculture, Fisheries and Forestry 2004, Australian Food Statistics 2004, report prepared by ABARE, Canberra. Smith, L and Dawson, P 2004, Food Exporters’ Guide to Indonesia, Australian Government Department of Agriculture, Fisheries and Forestry, Canberra. Spencer, S 2004, Price Determination in the Australian Food Industry: A Report, Australian Government Department of Agriculture, Fisheries and Forestry, Canberra. BRI Australia Ltd 2003, The Australian Baking Industry: A Profile, Australian Government Department of Agriculture, Fisheries and Forestry, Canberra. Food News Bulletin (published quarterly), produced by the Australian Government Department of Agriculture, Fisheries and Forestry, Canberra. The Australian Organic Industry—A Summary iv The Australian Organic Industry—A Summary v Introduction 1 What is organic farming? 2 On the farm 6 On the road 13 In the factory 17 In the shop 20 In the home 26 Over the sea 30 Further information 38 BRS/All Organic Book.FA 24/11/04 10:13 AM Page iv 1. Farm-gate sales volumes from certified organic farms in Australia, 2003 9 2. Three-year projected changes in certified organic production, % of farmers, by product, 2003 9 3. Estimated national farm-gate receipts from sale of certified organic production, by state, 2003 10 4. Estimated national farm-gate receipts from sale of certified organic products, by product category, 2003 11 5. Average organic price premiums, by product 21 6. Average price premiums for selected organic product groups, by state 22 7. Average price premiums for sales channels, by state 22 8. Prevalence of certifying organisation logos, by state 23 The Australian Organic Industry—A Summary vii The Australian Organic Industry—A Summary vi 1. Distribution of certified organic farms by state, 2003 7 2. Estimated proportions of certified organic farms producing different products, 2003 8 3. Nature of information exchange with supply chain partners 14 4. Cooperative or collaborative arrangements among organic farmers 15 5. Primary source of organic food purchases 26 6. Organic consumption by education level 27 7. Organic consumption by income 27 8. Motivating factors behind food choice 28 9. Volume of certified organic exports, 1999–2003 30 10. Volume of certified organic exports by product group, 2003 31 11. Total certified organic export volume by destination, 2003 32 Figures Tables BRS/All Organic Book.FA 24/11/04 10:13 AM Page vi The Australian Organic Industry—A Summary viii Introduction The modern organic movement began in Europe around the 1920s, when a group of farmers and consumers sought an alternative to the industrialisation of agriculture. Of key importance to these farmers and consumers was caring for the soil and natural processes upon which agriculture depends, including not using inputs such as artificial fertilisers and synthetic chemicals. A leading figure at the time was the Austrian thinker, Rudolf Steiner, whose ideas led to a system of cultivation known as biodynamic. In the middle of the 20th century enthusiasts brought organic techniques from Europe to Australia, a place with very different climate, soils and density of settlement. With growing consumer interest in how and where food is produced, organic food has become more popular. Products offered only through health food stores or food cooperatives in the 1970s and 1980s spread to the corners of supermarkets in the 1990s. Organic products now occupy prime shelf space in the big chain supermarkets and present export opportunities for Australian producers. Organic farms extend from market gardens clustered near Australia’s big cities, to dairy farms scattered along the East Coast to vast cattle stations in the outback. But the organic industry in Australia is more than the sum of its farms. It is composed of processing facilities, logistics operations, wholesalers, retailers, exporters, certification organisations and a range of other individuals and organisations. Organic products are a small but diverse range of products—including fruit, nuts and vegetables, meat from various animals, dairy products, cereals, oilseeds, plant and animal fibres, and health and body care products. The products may look like their conventional equivalents, but differ in the way they have been produced. The Australian Organic Industry—A Summary 1 BRS/All Organic Book.FA 24/11/04 10:13 AM Page viii produce and to protect consumers and organic producers from others misrepresenting their produce as being organic. It also provides a guide to farmers contemplating converting from conventional to organic production. The standard sets out specific requirements for organic production, conversion and natural resource management. The standard includes lists for the allowable inputs for soil management, pest and disease control, and animal health. It also specifies the conditions for processing organic products, such as keeping certified produce separate from conventional produce. Producers must be capable of satisfying the requirements of the standard for at least one year before products can be labelled as organic in-conversion. Producers must then continue to meet the specified requirements for a further two years before being permitted to use the term organic. In 2003, there were about 2340 certified organic operators in Australia—including farmers, processors, exporters and retailers. Certifying organisations Certifying organisations inspect operators annually to ensure they comply with the National Standard. They are also authorised to issue organic produce certificates on behalf of the Australian Government. An AQIS-approved organic certifying organisation must undergo an annual audit of its documented system. AQIS also audits the inspection system of certifying organisations at various organic farms, processors, wholesalers and exporters. AQIS and industry has established Administrative Arrangements outlining the administrative policies and operational procedures for certifying organisations. These arrangements cover requirements including objectivity and integrity, structure and training, sanctions and penalties, inspection and certification and export requirements. Currently, there are seven AQIS-approved organic certifying organisations in Australia: • Australian Certified Organic (Biological Farmers of Australia) Phone: 07 3350 5706 http://www.australianorganic.com.au The Australian Organic Industry—A Summary 2 The Australian Organic Industry—A Summary 3 What is organic farming? The basic principle of organic farming is achieving high yields of produce and food of high nutritional quality without the use of artificial fertilisers or synthetic chemicals. Organic farming emphasises the use of renewable resources, the need for conservation of energy, soil and water resources and the maintenance of environmental quality. Animal welfare is also an important consideration. Products or by-products that are derived from genetic modification technology, treated with ionising radiation or that interfere with the natural metabolism of livestock and plants are not compatible with the principles of organic agriculture. Biodynamic agriculture is similar, with some additional requirements for preparing the soil and growing conditions. Certification The study that this publication is based on considered only those producers and products that were certified organic or biodynamic. Within Australia, the Australian Quarantine and Inspection Service (AQIS) is responsible for the organic inspection and certification system, in collaboration with seven approved certifying organisations. This co-regulatory system was set up in the early 1990s to ensure buyers of organic products could be confident that certified produce was grown and processed according to organic or biodynamic principles. The system is underpinned by Commonwealth legislation and the National Standard for Organic and Biodynamic Produce (National Standard). The Export Control (Organic Produce Certification) Orders 1997, made under the Export Control Act 1982, require every person who produces or manufactures organic produce for export to be certified. For the domestic market, certification is optional. However, the Trade Practices Act 1974 and the various state and territories’ fair trading laws provide legal protection against misleading and deceptive practices. The National Standard provides the relevant guidelines for labelling organic and biodynamic products. The National Standard was first published in 1992. The third edition was published in 2002. The standard aims to harmonise requirements for the production and labelling of organic BRS/All Organic Book.FA 24/11/04 10:13 AM Page 2 CASE STUDY Barambah Organics Ian and Jane Campbell of Barambah Organics near Murgon in Queensland produce, process and market certified organic milk. Their movement into organic production was born from a long family interest in sustainable agriculture and the need to create a point of difference for their products. “Customers are often surprised by the unique taste of our milk. It comes from a balanced and healthy diet for the cows on our chemical-free broadacre pastures,” said Ian. Soil health and weed control are important considerations and are carefully managed with compost manures and lime. Being organic also means that cows are treated only with natural remedies such as homeopathy and minerals to boost their strength and vitality. Ian and Jane also became involved in processing and marketing their own products about five years ago. They found that there is a lot to learn about running a paddock- to-plate supply chain, including hiring staff and building strategic partnerships. Employment problems, particularly recruiting and training the right people, proved to be a significant issue for the business. Barambah Organics’ much larger involvement across the supply chain meant the business required a new range of skills and people with expertise in milk processing and financial management, as well as traditional farm management. Ian and Jane also found that finding the time to actively market their products was a significant challenge. “We formed a strategic alliance with a coffee chain and it has proven a winner,” said Ian. “Half our business stems from that alliance. They’re buying it for its quality because it enhances the taste of their coffee.” Adapted in part from the Department of Agriculture, Fisheries and Forestry 2004, Made in Australia: Taking Stock, Number 3, Series 3, pp.10–12. • Bio-Dynamic Research Institute (Demeter) Phone: 03 5966 7333 • National Association for Sustainable Agriculture Australia Phone: 08 8370 8455 http://www.nasaa.com.au • Organic Food Chain Phone: 07 4637 2600 http://www.organicfoodchain.com.au • Organic Growers of Australia Phone: 02 6622 0100 http://www.organicgrowers.org.au • Safe Food Production Queensland Phone: 07 3253 9800 http://www.safefood.qld.gov.au • Tasmanian Organic-Dynamic Producers Phone: 0408 171 473 http://www.top.org.au Regulatory mark Following the agreement of certifying organisations, AQIS has recently developed an ‘Australian Government Certified’ regulatory mark. The mark does not replace the logos of certifying organisations but will help provide greater assurance for consumers wishing to purchase certified organic and biodynamic produce. While the mark is voluntary, its use is governed by formal conditions enforced by AQIS. The Australian Organic Industry—A Summary 4 The Australian Organic Industry—A Summary 5 BRS/All Organic Book.FA 24/11/04 10:13 AM Page 4 How many organic farmers are there? There were an estimated 1511 certified organic farms in Australia in 2003, not including in-conversion, pre-certified or deferred farms. It is estimated there will be a 20 to 30 per cent increase in the number of certified farms within one to three years as in-conversion producers come on stream. Where are the farms? About three-quarters of certified organic farms were estimated to be in New South Wales, Queensland and Victoria. Figure 1 shows the distribution by state in more detail. Figure 1 DISTRIBUTION OF CERTIFIED ORGANIC FARMS BY STATE, 2003 Source: certifier data, n = 1095 (including in-conversion). What area do the farms cover? Based on the survey data, the estimated area of certified organic farmland in Australia in 2003 was 7.9 million hectares. This is about 1.7 per cent of Australia’s agricultural area. Approximately three-quarters of the area under organic production was estimated to be in Queensland, mainly in extensive beef grazing lands. It is worth noting that some organic farmers did not have all their land certified organic. A further 600,000 hectares of non-certified land was estimated to belong to organic farmers. What do organic farmers produce? Organic farms produce a wide variety of products. The survey indicated that the most common product categories were fruit and nuts, vegetables, beef and cereals. The survey only collected data on the product types shown in Figure 2. On the farm 1 About the data Data on organic production was obtained from two sources. As a first step data was gathered from organic certifying organisations. The National Association for Sustainable Agriculture Australia, Biological Farmers of Australia/Australian Certified Organic, Tasmanian Organic- Dynamic Producers and Safe Food Production Queensland provided data. The data gathered from certifiers has a number of limitations. Firstly, only the certifying organisations that charge a levy based on sales were able to supply data on farm production. The data that was provided is not consistent and often incomplete. In addition, the data does not take into account any products not sold under a certifying organisation’s label. Any producers who were customers of more than one certifying organisation may have had their products double-counted. In order to fill some of the gaps in the data, a telephone survey of 397 organic farmers was conducted in June 2004. The survey excluded those farmers in the process of converting to organic production or preparing for certification. The survey data has weaknesses as some survey respondents had difficulty supplying production and financial information on the telephone. Moreover, the data is based only on a sample of organic farmers. Therefore it relies on the assumption that those surveyed are representative of the broader organic population. Regardless of limitations, the data presented here will help bring a better understanding of the structure and performance of the organic industry. The researchers believe that, to improve communication and planning, the industry needs to collect and analyse data in a consistent manner over several years. The researchers compiled the following estimates on the organic industry in Australia in 2003 by extrapolating from the data gathered from organic certifying organisations and the survey of 397 organic farmers. 1 This section is a summary of ‘Chapter 1 A farm-level view of the Australian organic industry’ by Darren Halpin in The Australian Organic Industry—A Profile, 2004. Please refer to this chapter for detailed discussion of the sampling method, survey methodology and basis for extrapolation. The Australian Organic Industry—A Summary 6 The Australian Organic Industry—A Summary 7 NSW 28% QLD 26% VIC 20% SA 10% WA 9% TAS 5% NT 2% BRS/All Organic Book.FA 24/11/04 10:13 AM Page 6 Table 1 Farm-gate sales volumes from certified organic farms in Australia, 2003 Product Estimated Australian total Organic sold as organic Organic sold as conventional Est. % volume sold as organic Beef (kg live weight) 11 544 824 4 676 113 71.2 Sheep and goats 1 733 697 3 239 156 34.9 Pork (kg live weight) 106 780 5 320 95.2 Poultry (kg live weight) 57 545 6 650 89.6 Eggs (dozen) 384 960 0 100.0 Milk (litres) 15 048 000 9 235 454 62.0 Cereals (grains, pulses, 41 848 15 713 72.7 oilseeds) (tonnes) Vegetables (tonnes) 109 141 299 99.7 Fruit and nuts (tonnes) 19 508 6 361 75.4 Source: farm survey data, n=397. Table 2 shows how the organic growers surveyed expected to change their production over the next three years. Except for the producers of eggs, poultry and cereals, most survey respondents expected to increase their production. The low level of increase reported for cereal production may be significant given that feed availability is a continuing limitation to expansion in poultry, egg, milk and other livestock production. Table 2 Three-year projected changes in certified organic production, % of farmers, by product, 2003 Product Increase % Decrease % Stay the same % Don’t know % Total % Pork 80 0 20 0 100 Fruit and nuts 72 7 17 4 100 Vegetables 69 9 16 6 100 Milk 58 0 33 8 100 Beef 53 15 23 8 100 Sheep and goats 52 16 26 6 100 Cereals 45 18 29 9 100 Poultry 43 57 0 0 100 Eggs 39 17 44 0 100 Source: farm survey data, n=397. Figure 2 ESTIMATED PROPORTIONS OF CERTIFIED ORGANIC FARMS PRODUCING DIFFERENT PRODUCTS, 2003 Source: farm survey data, n = 397. Each farm may produce multiple commodities. Cereals include grains, pulses and oilseeds. It is very common for one organic farm to produce a number of different commodities. Some common patterns are identifiable from the survey, including livestock production of various kinds and cereals and/or wool production. Fruit and vegetable production is also a very common combination. Conversely, milk, sugar, coffee and tea producers tend not to produce multiple products on their farms. Data from the certifying organisations indicated that a significantly higher proportion of farms than shown in Figure 2 were certified to produce fruit and nuts, vegetables, cereals and sheep in 2003. This suggests that some producers limited production in some areas during 2003, most likely because of the drought. Table 1 shows the estimated volumes of selected organic products sold by certified organic farms. Because of the volatility of supply and demand, some organic produce is sold as conventional produce. The Australian Organic Industry—A Summary 8 The Australian Organic Industry—A Summary 9 0 5 10 15 20 25 30 35 40 45 Fruit and nuts Vegetables Beef Coffee beans Tea Cereals Sheep and goats Wool Eggs Milk Poultry Pigs Sugar Percentage of organic farms BRS/All Organic Book.FA 24/11/04 10:13 AM Page 8 [...]... is a summary of ‘Chapter 6 Australian organic food exports and imports’ by Darren Halpin and Amarjit Sahota in The Australian Organic Industry A Profile, 2004 The Australian Organic Industry A Summary The Australian Organic Industry A Summary Indicative products 40000 31 BRS/All Organic Book.FA 24/11/04 10:13 AM Page 32 Figure 11 illustrates the destination of organic export volumes from Australia in... pp.2–4 The Australian Organic Industry A Summary The Australian Organic Industry A Summary The national organic survey also indicated that the people most likely to eat substantial quantities of organic foods are motivated by the desire to eat what they believe is natural, that is, produced without artificial chemicals and unnecessary processing They want to eat food that makes them feel good, physically... The Australian Organic Industry A Summary The Australian Organic Industry A Summary Why are organic products more expensive? WA % NASAA Source: Retail survey data SA % 23 BRS/All Organic Book.FA 24/11/04 10:13 AM Page 24 The researchers noted that, in the absence of any systematic promotion of organic products in Australia, consumers are likely to have a poor understanding of organic products and certification... markets’ by Gary Hullin, Austrade in The Australian Organic Industry A Profile, 2004 The Australian Organic Industry A Summary The Australian Organic Industry A Summary that supply the majority of organic processed food imported into Australia Prospective export markets7 33 BRS/All Organic Book.FA 24/11/04 10:13 AM Page 34 According to Austrade, the main opportunities for organic products in Japan include... marketing’ by Darren Halpin in The Australian Organic Industry A Profile, 2004 The Australian Organic Industry A Summary The Australian Organic Industry A Summary were prepared to make the switch to organic production However, he says it requires 13 BRS/All Organic Book.FA 24/11/04 10:13 AM Page 14 The survey suggested that most organic farmers deal with only one type of supply chain Collaborative marketing... Organic Industry A Summary The Australian Organic Industry A Summary National Organic Program, United States Department of Agriculture Australian Government 39 BRS/All Organic Book.FA 24/11/04 10:13 AM Page 40 New Industries Development Program South Australia http://www.daff.gov.au/agribiz Department of Primary Industries and Resources, South Australia http://www.pir.sa.gov.au Agriculture—Advancing Australia... processors and wholesalers, and the New Industries Development Program have provided valuable assistance during the development of the business Adapted from Australian Government Department of Agriculture, Fisheries and Forestry 2003, Made in Australia: Markets, Number 2, Series 3, pp.16–17 The Australian Organic Industry A Summary The Australian Organic Industry A Summary Some meat processors have also... in glass jars 32 Apples 31 Plain wholemeal wheat bread 29 Natural yoghurt 23 Minced pork 20 Oranges 17 The Australian Organic Industry A Summary industry The retail survey found that the average price premium for a basket of organic 20 Wheat biscuit cereal 4 This section is a summary of ‘Chapter 4 The retail pricing, labelling and promotion of organic food in Australia’ by Darren Halpin and Martin... The Australian Organic Industry A Summary The Australian Organic Industry A Summary only specific product categories, a greater difference would be expected between the total The farm survey indicated that 62 per cent of organic farmers converted their operations from conventional farms The remaining 38 per cent started farming as organic producers The majority of livestock and broadacre farmers had... consumes organic food in Australia’ by Stewart Lockie and Peter Donaghy in The Australian Organic Industry A Profile, 2004 Figures 5–8 are based on data provided in this chapter less than $20 000 $20 – 34 999 Source: National consumer survey, Lockie et al 2002 $35 – 49 999 $50 000 and over The Australian Organic Industry A Summary The Australian Organic Industry A Summary 10th grade Source: National consumer . Australia: • Australian Certified Organic (Biological Farmers of Australia) Phone: 07 3350 5706 http://www.australianorganic.com.au The Australian Organic Industry A Summary 2 The Australian. certified organic labels. The Australian Organic Industry A Summary 24 The Australian Organic Industry A Summary 25 BRS/All Organic Book.FA 24/11/04 10:13 AM Page 24 What are the characteristics of organic. enforced by AQIS. The Australian Organic Industry A Summary 4 The Australian Organic Industry A Summary 5 BRS/All Organic Book.FA 24/11/04 10:13 AM Page 4 How many organic farmers are there? There