Background Organic
Is there room for growth of organic farming?
The European Commission has expressed the ambition that by 2030 at least a quarter of the European agricultural area must be organic. Now it is 8,5% in the EU and 3,7% in the Netherlands. The Sustainable Food Monitor, which is produced annually by Wageningen Economic Research (WUR) on behalf of LNV, shows that the market share of organic products in retail is approximately 3%. Is there room for growth of organic farming?
Organic products remain a niche market for the time being. In Germany, the largest market for organic products in Europe, the market share is approximately 6%. Denmark and Sweden lead the way with 12% and 10% market share respectively. In the Netherlands, from 2015 to 2019, the turnover of organic products has increased between 5% and 8% annually. These are significant growth figures, but they do not come close to the ambition of the European Commission.
The European Commission wants to stimulate organic farming by offering more organic food in schools and government buildings, making more money available for farmers who want to switch and more advertising for organic products. The VAT rate for organic should also be reduced and people with low incomes should receive coupons for organic food.
Question is essential
More than 20 years ago, the Dutch government already tried to encourage farmers to switch to organic. In addition, the demand for organic products has not been stimulated. This caused an oversupply and low prices for organic products. And that while, according to WUR data, the cost price for many organic products for the farmer is at least 30% higher than for conventional ones.
In recent years, more attention has been paid to stimulating the demand for organic products. Partly as a result of this, the market has grown considerably in percentage terms, but it still remains a real niche. When choosing between expensive organic products or cheap conventional products, many consumers opt for the cheap alternative.
Locally produced food
What makes the sale of Dutch organic products even more difficult is the demand for locally produced food. Dutch agriculture is very dependent on exports. The conscious consumer who opts for expensive organic products generally wishes that they are also locally produced. For Dutch agriculture, this means that there will probably be hardly any extra demand from important markets, such as Germany and France, if these grow.
Organic marketed as conventional
In recent weeks, prices for organic and conventional carrots were at about the same level. A lot of organic carrots have been sold as conventional due to limited demand for organic. This does not only happen with carrots, but also with other products where the cost difference between organic and conventional is relatively small, such as celeriac. This means that there are higher costs, usually in combination with a more extensive building plan, but there is no extra payment. As a result, only limited growth appears to be possible for organic farming at the moment. Consumer demand for organic is the deciding factor.
Jurphaas Lugtenburg
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