The Global Organic Marketplace:
Overcoming Challenges and Planning For Future Growth

By Angela B. Caudle


Every year over the past decade the market for organic has grown at double-digit rates. According to “The World of Organic Agriculture: Statistics and Emerging Trends 2007” from the International Federation of Organic Agriculture Movements (IFOAM) and the Swiss Research Institute for Organic Agriculture (FiBL)—today there are over 120 countries involved in organic agriculture, with over 31 million hectares (76.5 million acres) being farmed organically on a global level. This is about triple the number that was reported in 2000, only seven years ago. Driving this growth is a booming consumer market that the Organic Monitor has reported to be worth over $40 billion worldwide.

This need for supply has led to a global organic marketplace. While this presents a world of new products and opportunities, it also comes with many challenges.

Supporting Growth of Organic Agriculture Around the World
Although the growth rates have been incredible, organic agriculture still only represents about 0.7 percent of all agriculture worldwide. As the market grows and supply continues to be a major challenge, the conversion to organic production will be crucial for maintaining momentum.

In the United States, all 50 states now participate in organic agriculture to some extent, and those in organic cross their fingers, hoping that the 2007 Farm Bill will provide more dollars for research and certification subsidies to help encourage conversion. The European Union has added a rural development program to offer incentive payments for farmers and has developed the European Action Plan on Organic Food and Farming, which includes a multi-annual EU-wide organic agriculture promotion campaign as well as a plan to improve farming standards and strengthen import and inspection requirements.

Throughout the rest of the world though, many of the countries that have the greatest potential for organic production don’t often have the knowledge, technology, or economical resources to enter the marketplace. For these key areas, many of which are developing countries, organic agriculture will not only help provide a livable income, but will also help build soil fertility on land threatened by erosion and degradation. In these countries there is an essential role for governments, as well as manufacturers, to play in assisting conversion so that it is done to the highest standards.

Latin America. This area, which represents about a quarter of all certified organic agricultural land in the world, has become one of the largest importers to the United States due to their tropical and subtropical growing regions. This growth has inspired several countries to step up their efforts to meet the demand.

Recently the Bolivian government passed legislation to develop organic agriculture emphasizing positive benefits to health, protection of the environment and the opportunity to gain access to markets. These efforts go so far as to redistribute land to indigenous communities for organic farming, as well as provide farmer field schools to teach organic methods. According to reports, the Bolivian organic export market is worth around $25 million, with over 364,100 certified hectares of crops including quinoa, coffee, cacao, chestnut, amaranth, soy, onion, peas, broad beans, peanuts, as well as Andean tubers, grains, fruits and other underexploited crops. The Association of Organic Producers of Bolivia predicts growth will top $450 million by 2016. The market for organic quinoa alone has grown to 5,000 tons already. And it’s expected that this grain, which can only be grown in the mountains with temperatures around 100ºF, will reach 30,000 tons in the next four years.

Bolivia’s neighbor Brazil has also been very proactive and has issued a Pro-Organic Plan to stimulate organic production, research, association building, marketing and trade. In addition, the Brazilian Export Promotion Agency (APEX) launched OrganicsBrasil, a project to promote the export of organic products, focusing on small to medium scale farmers. According to the minister of agriculture, Roberto Rodrigues, organic agriculture in Brazil represents less than 3 percent of the country’s total agricultural production. “There is enormous room for growth and we intend to achieve 20 percent organic in the next five to six years, stimulated mainly by small producers,” Rodrigues affirmed.

Through OrganicsBrasil, producers have brought their products to trade shows around the world, connecting them with major retailers such as Whole Foods. Since the project began, the number of Brazilian companies involved has more than doubled.

Most of the remaining parts of Latin America have developed their organic agriculture due to direct supplier/buyer relationships, however other countries are starting to get more involved. Costa Rica has approved funding for research and teaching. Argentina and Chile have official export agencies helping producers attend international fairs and print product catalogs. In Mexico, there is growing interest from national and state agencies as well.

Asia. This area has also had incredible growth in both their own standards and developing products for export. In India, the state of Uttaranchal was declared an “organic state” in 2003 and more recently over 3,000 women staged a demonstration in hopes of seeing another state, Orissa, declared organic as well. Women are often the biggest victims of industrial farming in developing areas, as they are the ones harvesting the pesticide-covered crops. In addition, indigenous traditional knowledge systems (ITKS), which are at the core of organic farming, are offically being validated by the Indian Council on Agriculture as recommended farming methods.

The Thai government reportedly spent 1.2 billion baht (about $35 million) on the National Organic Agenda and developed a National Action Plan for organic development with support from the International Trade Centre. “The Action Plan helped stakeholders in Thailand have a clear idea of the opportunities offered by organic agriculture for trade development and poverty reduction and helped the government coordinate their policies for the sector,” said Vitoon Panyakul of Green Net, a nonprofit organization in Bangkok. The Thai organic market is valued at $23 million, with main exports being rice, fruits and vegetables and herbs.

Then there is China…

China’s Creditably Crisis
From tainted toothpaste to contaminated pet foods, China had the largest number of import violations in the past year. Although none of these scares involved organic products, the Chinese organic industry faces many challenges to gain the trust of the global organic industry and to become a credible source of organic products.

One reason for the skepticism is China’s rapid conversion to organic. In 1997 China ranked 45th in organic production with a total of 4,000 hectares. By 2004, China jumped up to 13th with 301,295 hectares. Today, it’s ranked number three with 2,300,000 hectares in production. Currently, there are around 10 foreign certifiers in China. These certifiers account for 40 percent of all organic certificates issued in China and practically all the Chinese organic products exported to the EU, North America and Japan are given the green seal through foreign certifiers.

While China’s flawed import record and polluted environment do raise red flags, when it comes to organic the government has backed some key projects including the development and strict regulation of certified organic regions. One of these is WanZu in South China, which has over 45,000 acres of crops, with another 10,000 in transition, that are being certified organic to both EU and USDA standards. To ensure that no pesticides are used, vehicles are searched upon entry. And, in many of these areas, if one farm is caught breaking the rules then the field and the products of the whole group will be rejected or fined, said Zhou Zejiang, one of the Chinese organic movement pioneers as well as the chair of the Certification Committee of the Organic Food Development Center and IFOAM’s China representative.

One of the biggest concerns is that China prohibits surprise inspections. However, there is no such government rule in China. In fact, under China’s organic standards, certifiers are required to perform a certain number of unannounced inspections annually. Also, some of the foreign certifiers are starting to take measures to ensure the certification quality by including unannounced secondary inspections. Although these are not required by the USDA National Organic Program(NOP), Jeff See, executive director of the Organic Crop Improvement Association, which certifies farms in China, says their goal is to do verification inspections on 100 percent of new applicants in China, and close to 70 percent of renewal certifications. “With all the public concern we are stepping up the effort at our own expense,” he said. “We feel that it is our job to have that oversight.”

Another concern is the use of “night soil,” or human excrement, as a fertilizer. This is allowed in China, with many restrictions, including that it must be fully composted and it cannot be used on leafy, tuber or root crops. This practice, however, is strictly prohibited under USDA guidelines, and therefore anyone growing crops for export to the United States is banned from using this form of fertilizer.

Overall, Zejiang stresses that importing countries themselves should play an active role in ensuring the integrity of organic products coming from China. Japan, for example, has some of the highest quality imports due to the strict examination of organic products by the Japanese authorities.

Some Japanese companies send their staff members to supervise the organic production and processing in China, thereby encouraging best practices in organic production and maintaining a high level of integrity. Many U.S. companies that source from China also do their own verification inspections or lab tests to check for heavy metals.

Overall, China holds great potential as a major source of organic products given its vast agrogeographic diversity and its clear desire to be in the global organic market. From a strictly global perspective, credible organic production from China is crucial for addressing the shortages in supply, as it offers the ability to produce a variety of products in large quantities.

The integrity and credibility of organic products coming from China, or other developing countries, hinges on the active participation of those companies sourcing there as well as the diligence of the foreign certifiers operating in those countries.

Facilitating Global Sourcing
Today, there are over 60 government regulations worldwide on organic production. These regulations are an essential tool for differentiating products in the marketplace and often serve as an instrument of coordination, particularly in developing countries. While these regulations may lead to more organic farming, it doesn’t mean more supply for U.S. processors. Currently, the USDA certification is the only one accepted for products labeled organic in the United States.

To help provide processors with more sourcing options and give other countries a more effective way to do business with the United States, the NOP has developed recognition agreements with several countries, enabling their governments to accredit certifiers to the NOP standards. In other words, their government entity can play the role of the NOP within their country and the goods certified by these accredited agencies will be recognized as “USDA Organic.” Currently the NOP has recognition agreements with eight countries including British Columbia, Canada, Denmark, India, Israel, New Zealand and the United Kingdom. According to Brendan Hoare, IFOAM World Board member, the recognition agreement between the NOP and New Zealand has been a very positive development and has stimulated organic activity particularly in the animal, dairy and off-season fruit sectors. In fact, 250 dairy farmers have transitioned to organic with the major market being the United States.

A downside to recognition is that it does not work the other way around, meaning that products certified under the NOP are not recognized by the other governments. In this sense, the flow is only one way—into the United States. Farmers then either have to pay for multiple certifications or hope that all of their product will be bought by U.S. companies.

The ideal trade situation would be through equivalency, meaning that if a product is certified to an equivalent regulation then it may be sold in the United States without having to be recertified to USDA standards. The NOP has been working on this process with Japan and came up with a list of three production inputs that are not allowed in Japan, and thus USDA products are accepted as long as they do not use these. The NOP has attempted this process with the EU as well, but negotiations have failed thus far due to differences in regulations, such as the allowance of antibiotics for animals under certain conditions in Europe, which is not permitted in the NOP standards.

There are still high hopes for Canada though. This year, the NOP invited the Canadian Organic Office (COO) to send in the protocols for its new organic program for review, a step that will formally initiate talks on equivalencies between the two countries.

“At this early stage it sounds more like a recognition agreement than a comprehensive equivalency between the two programs. But, there is such strong trade in organic between the two countries; we hope that this is simply the first step towards full equivalency,” said Matthew Holmes, managing director of the Organic Trade Association in Canada.

On a global level, the International Task Force (ITF) on Harmonization and Equivalency in Organic Agriculture was developed to facilitate international trade and access of countries to international markets through both private sector and regulatory authorities. The ITF----which is convened by the Food and Agriculture Organization of the United Nations (FAO), IFOAM and the United Nations Conference on Trade and Development (UNCTAD)----is currently developing tools such as a common set of International Requirements for Organic Certification Bodies (IROCB) that will serve as a benchmark for equivalence.

IFOAM also maintains the Organic Guarantee System (OGS), an international certification designed to facilitate the development of worldwide organic standards and third-party certification. The OGS includes basic standards for processing and production as well as accreditation criteria. Currently IFOAM is revising the system and all those in the organic community are urged to offer their feedback regarding the proposed changes.

Up and Coming Challenges
Grower Group Certification. A grower group is typically a group of smaller producers that is regulated by an internal control system (ICS), which ensures the group’s compliance. IFOAM has established guidelines for this recognized as legitimate by the EU. However, the NOP announced this year that it would not continue to allow its accredited certifiers to certify grower groups because of a lack of direct third party (independent) verification on the farmer level. To solve this issue, IFOAM is working with the U.S. National Organic Standards Board to develop a recommendation for certifying grower groups that meets both the NOP needs and follows the IFOAM guidelines.

If group certification was completely ruled out, prices would go up dramatically for U.S. processors and consumers and smallholders and cooperatives would face an unbearable competitive disadvantage compared to large plantations.

Agrifuel Production. Agrifuel, also known as biofuel, has the potential to be a reliable source of renewable energy, however there are issues. At the forefront are worries that the high prices corn is fetching for agrifuel will woo farmers away from converting to organic (see “Organic Supply Challenges, New and Old,”). Also, these production practices rely heavily on pesticides and synthetic nitrogen fertilizers and require extremely high land requirements to produce sufficient amounts of biomass. An IFOAM background paper soon to be published outlines the different controversial issues surrounding agrifuel production at the technical, environmental and sociopolitical levels.

Food Miles. With the rise in “buy local” campaigns, the issue of food miles, or the distance that food travels before it reaches the consumer, has become an important topic. As the demand for organic products has increased, so has the amount of products sourced from distant places, thereby increasing the amount of food miles attached to organic foods. This practice has been criticized as unsustainable and inefficient on a per calorie basis. Others argue that organic’s carbon footprint is balanced out because it requires less energy from farm to plate overall. Research from The Rodale Institute shows that organic methods are far more effective than conventional methods at taking CO2 from the atmosphere and fixing it as beneficial organic matter in the soil.

Recently the Soil Association in the United Kingdom has gone so far as to consider not allowing products that are air-freighted into the country to be labeled organic under their logo or requiring labeling that distinctly marks them as air freighted products. BioSuisse goes even farther and does not accept transport by air. It is indeed important to source locally whenever possible and we must think of ways to reduce our carbon footprint, however such moves could dramatically decrease the global conversion to organic while simultaneously reducing sourcing options and the variety of organic products available.

Country of Origin Labeling (COOL). The United States will soon take steps to identify foreign imports as well. In 2002, legislation was passed requiring products to include the country of origin on labels for meats, fish, produce and peanuts. With the exception of seafood, implementation has been delayed until October 2008 but the Consumers Union is calling for immediate implementation due to recent safety concerns with imported products. A Consumer Reports poll found that 92 percent of Americans agree that imported foods should be labeled by their country of origin. A USA Today/Gallup poll found that more than half of consumers make an effort to buy U.S. food.

A World of Opportunity
The organic movement must address the current and up and coming challenges, beginning with ensuring organic integrity of products coming from developing countries. These issues have everything to do with the exceptionally high growth rates that have created such a high demand, where in turn buyers and traders put pressure on developing country producers to get supply. This doesn’t encourage best practices in organic agriculture. In fact, it seems like we’ve forgotten to nourish our roots, the farmers.

It is crucial that buyers sourcing from newly converted systems encourage best practice production using innovations that fit the values of organic and meet the expectations of consumers. Businesses should challenge themselves to look at practices and build relationships and trust with the producers that support and ensure the integrity of organic. If the organic industry is able to address the questions arising around the credibility of products coming from developing countries and put mechanisms and practices in place that support best practices, the potential for the growth of the organic marketplace is limitless.

As we grow this world marketplace, we must always be conscientious of our effect on issues such as the environment and social responsibility. Addressing environmental issues comes down to looking at things from more of a worldview. While we must reduce our carbon footprint as much as possible, when we step back and look at the positive impact that organic can have not only on the environment, but also the living conditions of farming communities around the world, it’s easy to see that the good outweighs the bad. Overall, when looking at organic from a worldview, there are indeed a world of opportunities if we are willing to continue to go the extra mile to ensure that the quality of our products is protected and the actions we take are responsible and for the good of the world.

Angela B. Caudle is the executive director of the International Federation of Organic Agriculture Movements (IFOAM). She has been active in both the United States and international organic industry, furthering the scope and acceptance of organics. You can contact her at a.caudle@ifoam.org.

Note from the Editor: This article references many studies. For a full list of references, please contact Organic Processing’s editor at kat@organicprocessing.com.