Higher demand propels organic produce

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Higher demand propels organic produce

A few years ago, organic products were an extravagance of the elite. Today, consumers are more informed and have shown an interest in improving their diets and the environment. Consumers are demanding organic products, and the market is delivering.

The manager of the Organic Farming Association of Chile, Ligio Alarma, said that worldwide there are 60 million total hectares of organic production, and 31 million hectares for crops. In Chile, certified organic acreage is 170,000 hectares.

In Mexico, 80% of the products are exported to the United States, Europe and Asia, said Erika Schlebach and Raul Moreno of Aires de Campo de Mexico, an organic food company. That country is first in worldwide export of honey and ranks third in coffee exports.

“Australia and New Zealand are growing mainly in cereal and legume crops, as well as finished products such as wines, preserves, fresh fruit such as kiwi, and we believe they are focusing on exports,” Schlebach and Moreno said.

In South America, Argentina, Brazil and Chile are the fastest growing markets, especially in staple crops such as sugar, oils, wines and fruit.

Pedro Landa, technical director of the International Agricultural Association, which certifies foods in Argentina, said that South American countries are setting standards for organic produce.

“There is an increasing demand, including major markets such as Brazil, which will set its own organic standards for its domestic market. Chile, which has had a law since 2007, has signed trade agreements to export organic products to the U.S. and Japan.”

However, price continues to be a barrier to the spread of organic produce. Organics have historically been more expensive, in some cases twice the price of traditional produce.

According to Landa, “you can’t compare one to the other solely on price. That should not be accepted by producer, processor, or the consumer.” He added that to say that organic is more expensive is “to apply a conventional standard to something that is totally different.”

Landa says “the playing field is not level but tilted in favor of conventional products in direct and indirect subsidies.”

Alarma notes that faithful organic consumers are proud of their knowledge and diet.

“They have to argue with friends over the money they spent for something that costs half as much at the supermarket.” he said.

But prices for organics may start to fall, Alarma said, because of the increase in supply.

“Supermarket chains are getting stronger, leading to price competition,” he said.

Schlebach and Moreno said that in Mexico, there are situations that directly influence the price, such as producers’ investment in machines and technology, which would help reduce costs.

Other factors include the cost of certification by foreign companies. They also highlighted the low sales volume for exports. “To increase volume, you reduce the costs of production and optimize resources such as storage, transportation and distribution,” they said.

If organics were to cost the same as traditional products, "I believe that any consumer would choose to buy organic products, because in that way he would be contributing to the sustainability of the planet and its resources and would be consuming trusted products, knowing their origins,” Landa said.

Schlebach and Moreno agree, saying "the consumer, without a doubt or reservation, would choose organic products because he is more demanding and conscious of the origins and ingredients of the products he buys.”

There is a lot of worry about the increase in junk food, they added. “All of the increase in illnesses such as diabetes, heart conditions, metabolic [disorders], all originate with obesity and bad dietary habits,” they said. They can “identify organics as a way to eat healthily.”

If price for organic products were to drop, it would only be temporary as more consumption drove up prices, said Rolando Chateauneuf, agricultural engineer of the University of Chile.

"It would be a circumstance for a short time, because if prices drop, you will tend to eat more of them, therefore, markets will expand and demand will grow,” Chateauneuf said.  “As prices for organics decrease, the production tends to decrease, and that begins again rises in prices.”

He added that “in the long run, prices have to be related to the production costs, which will always be higher in organics, because with them, you get less yield, they’re affected by pests that are less controlled because you can’t use a wide range of pesticides. In addition, limits on the use of chemical fertilizers contribute to lower yield.”

Concumers will drive changes in the market for organic products, the experts said.

“The consumer is the engine for change,” Schlebach and Moreno said. “We should inform consumers about the processes, origin and composition of food, and they have to push for public policies that promote the benefits of a healthy diet.

Alarma said the sector has been in a long “incubation” period and the “bud” is about to flower. When this happens, he sees lower prices and a wider range of products. “This is going to happen in the next five years,” he said.

Photo: www.inta.gov.ar


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