Mainstream markets open up to organic

By Peter Huck

LOS ANGELES - Back in the 1970s, the heyday of the Green Revolution, when industrial farming promised to end world food shortages, Earl Butz, US Agriculture Secretary under President Nixon, summed up received thinking about organic food. "When you hear the word organic," he said, "think starvation."

Today doomsters are eating their words. Consumers are increasingly aware of the nutritional value of food, and wary of industrial farming practices, from the heavy use of pesticides to genetically modified food. Organic sales are going through the roof, with suppliers unable to meet demand.

In the United States organic farming, while only 2 per cent of total US food sales, is the fastest growing agricultural sector, averaging 20 per cent a year.

In 1997 sales soared to $US4 billion, and are expected to reach a4US6.6 billion by 2000.

A similar boom has swept Britain. In January 1999 Sainsbury's, the supermarket chain, reported that organic sales had passed the œ1 million-a-week mark, breaking out of the niche market into the mainstream.

This trend has benefited from repeated food scares, such as a 1997 E.Coli outbreak that prompted the largest beef recall in US history, or Britain's mad cow disease. When Monsanto, the American "life sciences" corporation, introduced genetically altered crops to Britain in 1998, there was a public outcry, notwithstanding official reassurances. People are also worried about the danger posed by pesticides, a timebomb forecast in 1963 by Rachel Carson's "Silent Spring".

Officials believe 90 per cent of American children are affected by dangerous levels of organophosphate insecticide residues. A US report released this month by Consumer Reports said American conventional produce often has higher toxicity levels than imports. Thus, American apples rated a toxicity score of 550, while New Zealand apples clocked in at 284; the recommended US limit is 100. A recent US Environmental Protection Agency brochure, "Pesticides and Food", even advises supermarket shoppers to buy organic.

This is good news for Whole Foods Market and Wild Oats, the dominant US organic national food chains. Run as upmarket supermarkets, with prices up to 50 percent higher than conventional foods, the chains are involved in an aggressive expansion campaign,with Texas-based Whole Foods holding the edge on its Colorado-based rival. With annual growth rates nudging 30 per cent, both have a bullish stock reputation of Wall Street.

"Nothing is sustainable at a 25 per cent to 30 per cent pace forever," Whole Foods head John Mackey conceded in 1998, "but I feel our revenue growth can be held at that level for at least the next five to 10 years, maybe even longer."

Corporate America evidently agrees. Mainstream supermarkets stock organic food, while food industry titans like H.J. Heinz and Mars have bought into organic companies. "They're responding to competition," says Dianna Bowen, executive director of the California Certified Organic Farmers Association. "They know they're losing market share to chains like Wholefoods."

As organic farming comes of age, producers have diversified into specialised products, such as processed foods and pasta.

In January the US Department of Agriculture approved the sale of organic meat.

The problem is that farmers can't meet demand. To qualify as organic - that is, produced without toxic pesticides, synthetic fertilisers, antibiotics or hormones - food has to be produced on land fed only with natural nutrients for at least three years. Livestock must be raised on organic feed and be free of hormones and drugs.

Some organic food is imported into the US, mostly from Latin America. Five per cent of New Zealand's organic exports, which include fresh and frozen vegetables, fresh fruit, dairy products, wine, meat, aquacultured seafood and honey, also go to the US.

Most is exported via Christchurch-based Organic Products Exporters Group, which represents 36 organic exporters. The biggest markets are Japan (60 per cent) and Europe (28 per cent). Executive director Samira Wohlfart says official exporters in 1997-98, based on information from members, totalled $NZ29 million.

But Ms Wohlfart thinks the real figures is more like $50 million.

Exports trebled between 1994-97. "The market's huge," she says.

"We expect exports to hit $65 million by 2001, although I think it will be bigger than that." Meanwhile, the pressure is on to find common organic standards.

High consumer demand has sparked several spectacular frauds, during which food grown with pesticides or antibiotics was sold as organic.

Some organic producers fear growing demand could lead to dilution of standards, following pressure from supermarket chains and agribusiness. Conventionally grown food has already been exported as "organic" to Britain from Eastern Europe and Latin America, by legally exploiting weak European Union standards.

Transition from conventional to organic farming is a key issue. Normally this takes three years. The EU has allowed farmers to convert in one year. The process isn't easy.

"It takes time to learn good organic practices," advises Ms Bowen, who says farmers need to go slowly to avoid financial risk.

"During the transition from feral to a complex biologically alive soil, productivity may drop for a while."

In the US, where state organic rules vary, with California boasting the toughest, the industry has also campaigned for a national standard.