Organic supply chain Chapter 4
Retailers and wholesalers
A
response of 58 surveys was
received from organic retail
and wholesale traders, with
35 identifying as retailers, 37 as
wholesalers and 14 as both. The
breakdown of organic traders by State
is shown in Table 62. Most traders were
located in the mainland eastern States
and their distribution largely reflects
wider population trends.
The two major retailers in Australia,
Coles and Woolworths were unable
to complete the survey due to
commercially sensitive information,
however the researchers wish to
thank both retailers for providing in-
confidence commercial information
which has enabled cross checking and
verification of final industry value claims.
Total sales of organic products
reported by survey respondent retailers
and wholesalers were $39.7 million,
with about 90% being domestic sales
and 10% for exports. Table 63 shows
that fresh fruit and vegetables top the
list in terms of most domestically sold
produce. This is due to the fact that
they are the most common entry point
products for new organic consumers
and fresh food is perceived to be most
vulnerable to chemical residues. Further
information on consumer buying
patterns can be found in Chapter 5.
Retail sales were estimated using two
steps, (1) Farm gate value – exports =
domestic wholesale, and (2) domestic
wholesale + mark-up + imports =
Table 62. Number of organic retail and
wholesale trader respondents (n = 58)
categorised by State.
State Total %
NSW 15 26
VIC 12 21
QLD 12 21
SA 8 14
WA 7 12
TAS 3 5
Unknown 1 2
Australian Organic Market Report 2008 65
Chapter 4 Organic supply chain

PHOTO SUPPLIED BY THE ORGANIK STORE, GLENELG SA

Table 63. Sales of organic products reported by retailers and wholesalers.
Product Traders Domestic sales ($) Export sales ($) Total sales ($) % of all sales
Fruit & vegetables, fresh 11 13,254,895 579,421 13,834,316 35
Meat 10 3,435,600 3,000,000 6,435,600 16
Bread and baked goods 6 3,539,000 2,512 3,977,262 10
Sauces, condiments 9 2,971,027 182,367 3,153,394 8
Milling, cereals 8 1,993,428 36,985 2,030,413 5
Wine 7 1,312,368 211,055 1,523,423 4
Snack food, confectionery 6 1,303,427 1,303,427 3
Other products 9 1,055,895 26,392 1,077,287 3
Honey 9 970,629 3,212 973,841 2
Ready-meals, chilled foods 3 726,000 726,000 2
Fruit & vegetables, processed 9 629,338 629,338 2
Beverage, non-alcoholic 6 408,203 607,903 2
Health & beauty products 5 489,640 113,876 603,516 2
Pasta, noodles 4 512,495 512,495 1
Essential oils 2 503,000 8,500 511,500 1
Milk 4 473,041 20,865 493,906 1
Wholefoods 5 485,211 485,211 1
Yoghurt 3 266,041 20,865 286,906 1
Eggs 1 250,000 250,000 1
Textiles, wool, cotton 2 127,201 127,201
Other dairy products 2 103,000 103,000
Baby foods 1 12,000 3,000 15,000 <1
Beverage, alcoholic (not wine) 0
Fish 0

66 Australian Organic Market Report 2008


20%
42%
10%
7% 6%
Figure 11. Preferred retail outlets of Australian organic consumers (Nourish Foods 2005).
retail sales. Exports were assumed
to be higher than the 10% indicated,
and were calculated at 15% of farm
gate sales. A mark-up of 1.9 was used
(Wynen 2003), although a higher value
may be more realistic where higher
premiums are available or with greater
value-adding to raw products. Imports
were estimated to be 40% of organic
retail sales based on information
provided by several industry sources,
although it is acknowledged that
actual levels of imported products can
vary from almost zero for fresh food,
Organic supply chain Chapter 4
ORGANIC FOOD STORE
SUPERMARKET
FARMERS MARKET
HEALTH FOOD STORE
ONLINE RETAILER
up to about 80% for some processed
groceries. With these assumptions it
is conservatively estimated that retail
sales of organic produce in Australia
are about $623 million. Exports in 2007
were estimated to be $34.7 million and
imports considerably more at $231
million. Given the higher number of
smaller respondents, it is probable that
farm-gate sales and possibly exports
are under-estimated. Organic retail sales
were estimated to be worth $80 million
in 1995 (Hudson 1996) and $106.5
million in 2001 (Wynen 2003).
Australian Organic Market Report 2008 67
Organic wholesale profile
Eco Farms
Strengthening markets through better supply
E
co-Farms began as a small
business selling organic fruit and
vegetables to a niche market
in Sydney in 1986 and has risen to
become Australia’s largest wholesale
buyer and supplier of fresh produce to
key domestic metropolitan markets.
The company has diversified
operations significantly in recent
years. Business efforts are now split
between wholesaling and repacking;
groceries; and the development of their
own value-added retail grocery brand
Absolute Organic.
Eco-Farms has representatives in
QLD, NSW, VIC and SA and attributes
much of its success to strong supplier
relationships and a committed sales
team, as well as the development
of exceptional inter-supply chain
relationships.
They have been a dominant figure in
providing a more stable and consistent
platform for long term grower market
access, facilitating entry into all major
national retail grocery chains as well as
grocery independents, and health
food stores.
“We’ve been working with growers for
more than two decades. Our continued
68 Australian Organic Market Report 2008
expansion and diversification can
benefit both organic producers and
consumers” says Tenay Barker, sales and
business development manager.
The business has realised strong
and consistent annual growth with
increased turnover in volumes,
particularly for fresh produce.
They see key opportunities in
producing organic alternatives
for processed goods in Australian
supermarkets.
“Compared to overseas organic
markets, Australia is actually often
ahead in terms of fresh produce
quality, packaging and product
range. But in the packaged section
of overseas supermarkets there is an
alternative organic product for nearly
every conventional item. That is not
something we currently see in Australia
and offers significant expansion
potential”, says Tenay.
The company has realised particular
success recently with their new range
of Absolute Organic beetroot, sweet
potato and flavoured potato chips,
catering to growing consumer demand
for blended health and convenience
items.
They note key challenges to future
growth will be consistency of supply,
supply affected by variability in
growing conditions and subsequent
scarcity in specific product lines and
supply chain co-ordination.
Photo supplied by Green Grove Organics
Organic supply chain Chapter 4

Processors, manufacturers
and importers
T
he organic manufacturing/ overall industry.
processing market is growing Australian organic food
at a steady rate. AQIS data in manufacturers are already producing
Figure 12 shows that the amount of a wide range of products, including
organically certified manufacturers baby food, cereal products, cheeses,
has grown significantly over the past fruit juices, yoghurts, preserves, canned
few years, while Figure 13 shows that and jarred items, dried and frozen food,
manufacturers of organic food make up ready meals and other convenience
a considerable proportion (21%) of the foods. Increasing amounts of these

800
No. of manufacturers/processors

700
600
500
400
300
200
100
0
2002 2003 2004 2005 2006 2007
Year
Figure 12. Number of certified manufacturers/processors from 2002 to
2007 (AQIS 2008).

Australian Organic Market Report 2008 69

Chapter 4 Organic supply chain

products are exported to places such consisting of unspecified organically

as Asia, Europe and the US. Organic
processors, manufacturers and
importers tended to be located in VIC
and NSW (Table 64).
The proportion of organic processors,
manufacturers and importers using
various commodities is shown in Table
65. Grains and horticultural produce,
including herbs and spices and other
condiments, were the most common
commodities, followed by health
and beauty products containing or
Table 64. Number of organic processor,
manufacturer and importer survey
respondents (n = 115) categorised by
State.
State Total %
VIC 40 35
NSW 31 27
QLD 19 17
SA 9 8
WA 9 8
TAS 6 5
Unknown 1 1
produced ingredients.
Due to insufficient information it
was not possible to report in detail on
the value or volume of products sold
by the processors, manufacturers and
importers by sector.
Attitudes
Issues that were commented upon
by organic processors, manufacturers
and importers included, in order of
importance:
• insufficient supply of raw ingredients
such as milk, meat and grains
• inconsistent supply and quality of raw
ingredients during the year
• limited market outlets and, in some
cases, low prices
• limited access to abattoirs and other
processing facilities
• the drought
• skilled labour is difficult to find
and keep
Most respondents in this sector
were positive about the future for

Table 65. Proportion of organic processors, manufacturers and importers (n = 260) categorised by States and
commodities. Percentages are calculated separately for each State.
Proportion (%)
Commodity Total NSW VIC QLD WA TAS ACT SA NT Export
Grains 76 38 23 46 15 8 9 60 9
Vegetables 59 16 32 29 15 8 73 20 50 3
Condiment, other 37 13 5 10 15 51
Fruit 33 10 21 4 15 33 10 14
Health & beauty 18 7 5 4 8 8 17
Dairy 8 4 4 2 8 10
Meat 8 1 5 2 23
Farm input 6 2 8 8 9 50 3
Fertiliser 6 4 25
Nuts 6 4 4 2
Snack food 3 2 9 3
Responses 260 68 57 52 13 12 11 10 2 35

70 Australian Organic Market Report 2008

 Organic supply chain Chapter 4

organic produce with about two-thirds conditions to remain similar and only
expecting a marginal or significant 7% expecting sales to decrease
increase in sales, 14% expecting (Table 66).

73%
(1,734)
PRODUCER
MANUFACTURER
21% WHOLESALER
(505) OTHER

3% 3%
(67) (74)

Figure 13. Percentages of value-adding certified operators in 2007 categorised by

supply chain sector (AQIS 2008).

Table 66. Expected change in sales of organic products over the following year
reported by organic processors, manufacturers and importers.
Expected change in sales Total (n = 115) %
Significant increase 51 44
Marginal increase 22 19
Remain similar 16 14
Marginal decrease 6 5
Significant decrease 2 2
Not reported 18 16

Abattoirs
A
battoirs are an important part of
the organic supply chain, linking
primary producers with their
down-stream markets in the wholesale
and retail sectors. While the volume
of organic meat production doubled
between 2001 and 2005 (Wynen
2006), according to respondents this
growth has often been constrained by
the lack of organic abattoirs in close
proximity leading to uneconomical
transport costs. The development
of the processing sector has in turn
been constrained by the relatively low
volumes and seasonality of organic
livestock production.
Five abattoirs reported processing
organically produced livestock. A
number of abattoirs located in QLD
and TAS processed organically certified
or in-conversion beef, while abattoirs in
NSW and VIC processed poultry
and pigs respectively.

Australian Organic Market Report 2008 71

Allowed inputs profile
Managing Director Gary
Leeson in front of OCP
popular products
Eco-Oil Organic Miticide/
Insecticide and Eco-carb
Organic Fungicide.
72 Australian Organic Market Report 2008
Organic Crop Protectants
Input in the industrys’ best interests
S
oil inputs allowed for use in
certified organic production
systems (known as allowed
inputs) are a rapidly growing, high
value segment of the organic industry.
Used by farmers and home gardeners
to replenish soil health biologically,
allowed inputs are rapidly gaining
momentum in both organic and
conventional markets.
Organic Crop Protectants (OCP) have
manufactured and distributed certified
crop nutrition and protection products
in Australia since 1990. In Australia they
currently sell twenty registered organic
products including soil fertility and plant
bio-stimulant products, spraying oils,
natural insecticide/ fungicide alternatives,
and bio-inoculants (live microbial isolates)
to major home and garden retailers, and
direct to farm operations.
Business is focused primarily on
plant protection domestically and they
export proprietary products to Japan,
Korea and New Zealand.
Leyland Minter, OCP founder,
developed natural formulas in his youth
- “I began with a home-made insect
spray made from a mix of tea tree oil,
soap flakes and peanut oil” – gaining
interest in the use of emulsifiable
vegetable oils as pesticides, and in
the market opportunity inherent
in the environmentally sustainable
farming industry when he worked as a
researcher in the early eighties.
Gary Leeson, Managing Director
says OCP was created from the
desire to develop products with a
minimal impact on humans and their
environmental surrounds, without
detracting from necessary crop quality
and yield parameters.
The company recognises its wider role
in growing the organic industry and
emphasises the importance of rigorously
researched and tested input products in
sustained and ethical industry growth.
A strong team of around six key
employees have developed 25 products
over the past 17 years, eight of which
have been approved for registration by
the Australian Pesticide and Veterinary
Medicine Authority (APVMA).
“This is a major achievement for a
relatively small company considering
the necessary expertise and research
costs required to satisfy the APVMA and
Department of Health in the safety and
effectiveness of a product”, says Gary.
The company sees key opportunities
ahead for small and innovative
biologically based input suppliers in
both organic farming and conventional
agriculture. Gary says increased scarcity
of crude oil resources and rising costs
of petro-based products means small
input companies will take a leading role
in crop protection and nutrition product
development, as large multinationals
look towards GM technology and
countries like South America, India and
China for sales growth.
He says obstacles to future profitable
growth include regulatory barriers in
product development and the high cost
of product registration.
 Organic supply chain Chapter 4

Exports

T
he International Federation of (JAS) and several respondents using more
Organic Agriculture Movements than one overseas certifier (Table 67).
(IFOAM) estimates the global In 2007, there were 26,550 reports
organic market to be growing at a of commodities exported (AQIS 2008),
rate of 20 – 30% per annum, which consisting of 8.6 million units (kg or
suggests significant export business litres). Despite some very high export
opportunities for certified operators volumes earlier in the decade, the level
in Australia. As with the conventional of exports has been averaging about
market, Australian commodities such as 8.9 million units annually over the past
grain and beef produced and marketed five years (Figure 14).
as organic have a good reputation in Earlier industry estimates of organic
the overseas market. exports range from $30 million in 1997,
Survey respondents using overseas to $50 million in 2000 (cited in Halpin
certification schemes commonly used 2004). Despite the decline in total
National Organic Program (NOP) for the volume over the past decade, there has
USA or IFOAM, with a smaller number been a move towards more processed
using the Japanese Agriculture Standard and higher value commodities such

Table 67. Number of respondents using overseas organic certification schemes.

Certification scheme Respondents %
NOP (USA) 50 8
IFOAM (Europe, international) 28 4
JAS (Japan) 13 2
Skal (Netherlands) 1 0.2
Un-named 6 1
Not reported 548 85
Quantity exported (millions kg & litre)

40
35
30
25
20
15
10
5
0
1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Figure 14. Total quantity of organic produce exported by
AQIS-registered organic clients (AQIS 2008).

Australian Organic Market Report 2008 73

Chapter 4 Organic supply chain
as prepared food, dairy products and
fibres. We are exporting more of our
produce as value-added, e.g. flour rather
than wheat. However, AQIS figures are
collected as volumes, not in dollars, and
the categories are not precise enough
to allow reliable pricing.
The bulk of the exports in 2007
consisted of prepared food (33%),
cereal and legume grains (17%), beef
(15%) and oil seeds (11%). Other
important commodities for Australian
organic exporters included wine (5%),
fruit and vegetables (5%), honey (4%),
fibres (mostly wool) (2%), juices (2%)
and dairy (1%). Figure 15 shows the
variation in exports over time. Many
74 Australian Organic Market Report 2008
commodities have remained steady,
although dairy and grain legumes are
increasing and cereal grains have been
decreasing slightly.
Commodities exported in lesser
quantities included, in decreasing order,
fibre, health products, culinary herbs,
dairy, medicinal herbs, lamb meat,
nuts and all below 100,000 kilograms
or litres were essential oils, flowers,
processed fruit, beauty products, animal
feed, eggs, beverages, unspecified
meats and chicken meat.
Unlike the US and Japan, the EU is a
relatively simple market for Australian
organic businesses to export into. This
is due to the EU and AQIS having an
 Organic supply chain Chapter 4

100,000,000
Quantity exported (million kg & litres)

10,000,000
1,000,000
100,000

10,000

1000
PREPARED FOOD HONEY GRAINS, CEREAL
100 BEEF FIBRES WINE
OILSEED FRUIT, VEG DAIRY
10 GRAINS, LEGUME JUICE

1
1999 2000 2001 2002 2003 2004 2005 2006 2007

Figure 15. Quantity of organic produce exported by AQIS-

registered organic clients by year and commodity (AQIS 2008).
Note log scale to display small and large values.

JAPAN UK SWITZERLAND KOREA

FRANCE NEW ZEALAND USA SWEDEN
100,000,000 NETHERLANDS SINGAPORE GERMANY
MALAYSIA CHINA ITALY
Quantity exported (million kg & litres)

10,000,000
1,000,000
100,000

10,000

1000
100

10

1
1999 2000 2001 2002 2003 2004 2005 2006 2007

Figure 16. Quantity of organic produce exported by AQIS-registered organic

clients by year and target country (AQIS 2008). Only countries with export
values greater than $1 million are shown. Note log scale to display small and
large values.

equivalence agreement on organic these countries.

standards. The US and Japan on the While Italy and Switzerland have
other hand, respectively have NOP declined considerably as export target
(National Organic Programme) and JAS destinations, presumably due to high
(Japanese Agricultural Standard). These levels of organic production within
markets involve additional regulatory those countries (Willer et al. 2008),
work and compliance requirements for Korea and Sweden have increased in
exporters, through their whole supply importance and most other export
chain, further adding to the time and markets have remained fairly constant
cost involved in doing business in over time (Figure 16).

Australian Organic Market Report 2008 75

Organic retail profile
Organic Elements,
Uwe Wullfen
Selling the organic concept
T
he organic retail sector is the first
point of contact for first-time
organic consumers and Uwe
Wullfen, Director of Organic Elements
retail outlet in Victoria, says the sector
is essential in driving the organic
industry forward.
“Retailers influence everyone in the
supply chain. My vision is to make
organics accessible to everyone by
providing a reasonable price for
consumers and a fair return to growers.
To do that I have increased my buying
power” he says.
Operating under a unique business
structure, Organic Elements has grown
to become one of the largest buyers
of fresh produce in Victoria, and has
gained traction in local markets by
simultaneously managing two organic
retail outlets at the same time as
wholesaling to shops, restaurants and
76 Australian Organic Market Report 2008
food clubs in the Melbourne district.
Uwe says his status as a retailer gives
him an advantage when purchasing
direct from agents, and that wholesale
activities ensure the integrity of
certified organic product stocked in
his own stores, at Prahran and Queen
Victoria markets.
“This is a vital point of trust from the
view of the consumer. I know what I
retail is 99% certified organic of the
best quality because I buy it myself”,
he says.
Uwe says wholesale customers who
value the service are those who lack
the time, resources or skills to negotiate
high quality orders from agents.
Organic Elements also exports small
orders to Asia and the Pacific on a
seasonal basis. “I think it is important to
keep these contacts active and we are
interested in export for the future given
the strong ethical reputation of fresh
certified Australian organic produce
overseas” says Uwe.
He says one of his key advantages
is a dynamic and educated staff base.
“My business is run by a young and
energetic team who receive extensive
training. It’s crucial that you have the
knowledge to sell organic products.
Organic consumers put food first and
it’s amazing the amount of questions
people will ask”.
Major business obstacles in the
future are expected to include rising
petrol prices and increased wholesale
competition. Uwe says Organic
Elements will differentiate itself on
highest quality customer service while
keeping the price the consumer pays as
low as possible.
“I believe supplying high nutrition
organic food at a lower price is a
realistic business model” he says.

Who is the Australian organic
food consumer?
T
he consumption of organic
food is no longer the domain
of a marginal few. While 60%
of consumers buy only conventional
food the remaining 40% buy organic,
although not exclusively (Pearson
2003, Lockie et al. 2004). However, it is
only around 1% of consumers who are
regular or almost exclusive buyers of
organic products, with the remaining
39% purchasing organic food to varying
degrees and in varying amounts.
Organic consumers come from all
walks of life and all socio–demographic
groups. Research has failed to
consistently identify them as coming
from a particular income or age group
(Lockie and Donaghy 2004). There
has been some link found to higher
education but this too is not consistent
across all studies. The only certain factor
across most studies is that women are
the primary purchasers of organic foods
but this stems from the fact that they are
still primarily responsible for the food
sourcing and preparation in Australian
households (Lockie et al. 2004).
The amounts of organic food that
consumers buy vary from category to
category. However, it is organic fruit and
vegetables that are the most commonly
purchased of all organic products
The organic consumer Chapter 5
and are often the entry point for new
organic consumers. With nearly 70%
of organic consumers buying them at
least once a week (Nourish Foods 2005),
this demand is largely driven by the
perceived health benefits and chemical
free nature of organic fruits and
vegetables. Interestingly, consumers are
more likely to want to avoid chemical
residues in their fresh produce than in
their processed food.
In other organic categories, such
as frozen foods and meat, goods are
purchased less frequently.
Table68. Organic food purchased by
organic food consumers at least once
a week (Nourish Foods 2005).
Category %
Fresh fruit and vegetables 69
Dairy products 44
General grocery / packaged goods 34
Bakery / bread 30
Eggs 29
Meat / poultry 24
Non dairy beverages / drinks 14
Snacks / confectionary 13
Grain / pulses 10
Baby food 2
Frozen food <1
Australian Organic Market Report 2008 77
Chapter 5 The organic consumer

Shopping

W
here consumers shop for
organic food depends upon
their level of commitment to
purchasing organic. The majority of new
organic consumers start their organic
journey at the supermarket and as they
become more committed to organic
food, move their way to specialist shops
such as health food shops, organic
grocery stores or other specialty outlets.
The more committed the organic
consumer, the greater their likelihood
of shopping in specialty food stores and
farmers’ markets for organic food.
Nourish Foods (2005) segmented
organic consumers into three groups:
‘Experiential’, ‘Emerging’ and ‘Converted’.
Experiential consumers were those
that spent the lowest dollar amount of
the three groups on organic products.
Emerging and Converted consumers
were roughly the same size market
segments (38% and 39% respectively)
but the latter spent a higher amount on
organic products.
Supermarkets play a key role in
introducing consumers to organic food.
Supermarkets are increasingly providing
consumers with a larger range of fresh
and processed organic food allowing
shoppers who prefer one-stop-shopping
the opportunity to trial organic products
without going to the effort to seek them
out. This convenience is critical for new
users in particular.
The other growth area in terms of
retail channels is farmers’ markets.
These have experienced significant

Table 69. Source of organic products by various organic consumer segments (Nourish Foods 2005).
Retail channel Respondents Percent of segment
Supermarkets (including independent supermarkets)
Experiential 51
Emerging 19
Converted 6
Organic food shops
Experiential 18
Emerging 47
Converted 51
Health-food shops
Experiential 7
Emerging 9
Converted 5
Green grocers, fruit and vegetable shops
Experiential 7
Emerging 4
Converted 3
Home delivery, Internet
Experiential 6
Emerging 1
Converted 10
Farmers’ markets
Experiential 4
Emerging 12
Converted 12
Other (e.g. direct from grower, other general market)
Experiential 6
Emerging 8
Converted 10

78 Australian Organic Market Report 2008

 The organic consumer Chapter 5

growth in the past decade and have

been estimated to generate around
$40 million in annual turnover in
Australia (Guthrie et al. 2006). Whilst a
large amount of produce sold at these
markets is not certified organic, these
markets are a growing key source
of organic food and also a vehicle
for educating consumers about the
farming practices involved. They
provide a unique opportunity for
people to talk to growers and learn
about where food comes from, how it is
grown and the seasonal influences on
fresh produce.

What proportion of the diet

is organic?
The proportion of the diet which is
organic is something that has yet to be
measured definitively in Australia. One
study found that almost 21% of those
surveyed consumed at least half of
their diet as organic (Lockie et al. 2004).
This is a substantial consumer segment
and further research needs to be done
in order to understand this aspect of
organic consumer behaviour.
Nourish (2005) found that almost 40
% of organic consumers spent at least
50% of their average weekly shopping
budget on organic products, while
around 22% of organic consumers
spent only 10% or less of their weekly
budget on organic products (Figure 17).

38%
39%
OVER 50%
11 – 50%
22% 1%
UP TO 10%
NOT SURE/DON’T KNOW

Figure 17. Percent of average weekly shopping spent on organic products

(Nourish Foods 2005).

Australian Organic Market Report 2008 79

Chapter 5 The organic consumer
Consumer motivations for
purchasing organic products
There are many reasons why consumers
choose to buy organic food. The three
main reasons, in no particular order, are:
health; concern for the environment;
and a belief that organic food tastes
better. Health as a motivator stems from
the fact that organic food is perceived
to be chemical free as well as free from
genetic modification. Both factors are
seen to impact negatively on health.
Food that is free from chemicals and
GM is perceived to be more ‘natural’ and
thus healthier. There is also considerable
debate about the higher mineral, trace
element and vitamin content of organic
food. Recent studies by researchers
from the University of California-Davis
have found that organically grown
tomatoes contain more flavonoids
than their conventional counterparts 1,
while another study found that organic
kiwi fruit had much higher levels of
polyphenols and antioxidant activity.
(Polyphenols help to reduce cholesterol
and improve blood circulation, while
antioxidants help to neutralize free
radicals that can damage cells.) The
study also revealed that organic kiwi
fruit had higher levels of vitamin C 2.
In a study comparing a wide range of
peer-reviewed research findings, the
nutritional premium of organic food
was estimated to be an average of 25%
above conventionally produced food 3.
For some consumers, a political and
ecological perspective is what drives
them to purchase organic food. With
mounting public concern over climate
change, issues of land degradation,
soil salinity and drought, one way for
consumers to take action is via their
food purchases. By buying organic food,
consumers who are motivated by this
factor feel they are contributing to the
solution rather than the problem.
The experience of superior taste of
80 Australian Organic Market Report 2008
organic food is a major driver for some
organic consumers. Consumers driven
to purchase organic food based on
an experience of its superior taste are
quick to describe the taste difference
between organic and conventional
food.
There are also reasons which are not
cited as often but equally influence
some consumers. Animal welfare
for some consumers has led them
to seek out certified organic meat
where animal husbandry standards
are superior to their conventional
counterparts (Lockie et al. 2006). Eggs
are another category where consumers
actively source not only organic, but
free range produce in order to avoid
buying products that support the
perceived cruel practice of caging birds.
Organic consumers may hold one,
or a combination of, the motivations
described above. For example, someone
may be both motivated by taste and
believe that organic food is healthier
but not be overly concerned with the
environmental benefits of organic food
production. With so many competing
motivations, the challenge for the
industry remains how to utilise these
motivations in communicating with
potential and actual organic consumers.
1
Source: “Ten-Year Comparison of the Influences of
Organic and Conventional Crop Management Practices
on the Content of Flavonoids in Tomatoes” Authors:
Alyson E. Mitchell, Yun-Jeong Hong, Eunmi Koh, Diane M.
Barrett, D.E. Bryant, R. Ford Denison, and Stephen Kaffka.
Journal of Food and Agricultural Chemistry, published
online June 23, 2007
2
Organic kiwis win out.(Polyphenols/antioxidants)
(benefits of organically grown fruits). Lisa Richards.
Chemistry and Industry 6 (March 26, 2007): p8(1).
3
Benbrook, C., Zhao, X., Yanez, J., Davies, N. and Andrews, P.
2008. New Evidence Confirms the Nutritional Superiority
of Plant-Based Organic Foods. State of Science Review.
The Organic Center. www.organic-center.org/science.
latest.php?action=view&report_id=126
 The organic consumer Chapter 5

Barriers to organic purchase

The two main reasons that consumers
give for not buying organic food are
price and availability. Both of these
need to be considered carefully.
The premium price of organic food is
often given as a major reason for non
purchase. Organic food is perceived
by many to be more expensive and
consequently it is up to the industry to
communicate the reasons for the price
premium on organic food. For example,
Australians clearly value certain foods
over others with the average household
spending just $16 per week on fresh
fruit and vegetables and $43 on fast
food, confectionary, soft drinks and
junk food (ABS 2006). Clearly this is not
about affordability but about consumer
choice and values.
In the past, the poor appearance of
organic food was often cited as a reason
for not buying organic food, along with
inconsistent availability. However, these
factors are no longer mentioned to the
same degree as in previous studies. This
is partly due to the improved quality food is one of the two fastest growing
of organic fresh fruit and vegetables segments of the organic industry,
in specialist food shops and markets, the other being baby food (Soil
along with a significant improvement in Association 2007).
consistency of supply and availability The other trend is the increasing
of produce. consumer interest in natural foods. At
the 2007 Organic Expo in Melbourne,
Consumer trends Farmers’ Cooperative representatives
Australia mirrors the UK in that there reported that consumers were keen to
is evidence of a polarisation of food buy direct from farmers. Two reasons
trends. Seemingly contrasting trends were given: Firstly they felt this gave
are occurring: the increasing rise of them some control over their food
convenience foods and the return source and secondly, they were able
of consumer interest in natural and to provide greater financial support to
whole foods. Similarly while there has farmers by buying directly from them.
been a major rise in retail marketing of Major cities throughout Australia now
organic products, there has also been have farmers’ markets where similar
a significant movement towards more sentiments are being expressed.
farmers’ markets and direct marketing. The above trends bode well for an
The strong consumer interest in industry oriented toward bringing the
organic convenience food reflects the urban consumer closer to the Australian
UK experience and shows no signs farming environment and in turn closer
of lessening. In the UK convenience to organic farmers.

Australian Organic Market Report 2008 81

Organic profile

Biological Farmers of Australia

The Voice of Australian Organics

B
iological Farmers of Australia Co-op Ltd (BFA) represents over 3000 certified
organic businesses and members. For over 20 years the group has led by
example on matters relating to education, trade, promotion and advocacy.
This includes promoting an understanding about organics and organic market
premiums to consumers and retailers alike.

Australian
Organic Market Report 2008

Missing a link in your organic business?

BFA membership could be one of the best decisions you make this year.
Keep networked and informed as part of Australia’s largest organic network.
Some benefits include:
• Australian Certified Organic Magazine (quarterly);
• Australian Organic Market Report (bi-annual);
• Australian Organic Producer Magazine (quarterly);
• More than its dollar value in discounts on advertising, events, resources, products
and services;
• Technical advice and publicity materials;
• Invitations to workshops, events and networking meetings;
• And more.

Own the influence

Own one share in the co-operative and have your say as part of the largest voice for
Australian organics. Membership is for producers, processors, distributors, retailers,
consumers and all with an interest in organics.

The democratic structure of the group allows members to have ownership of the
future direction of the industry including involvement in standards setting and
market development via sectoral advisory groups.

Contact the BFA Group on: Phone: 07 3350 5716; Fax: 07 3350 5996
Email: info@bfa.com.au; Visit: www.bfa.com.au

82 Australian Organic Market Report 2008

PHOTO SUPPLIED BY THE ORGANIK STORE, GLENELG, SA
References

References
• ABS. 2006. Household Expenditure Survey, Australia: Detailed Expenditure Items
2003-04 (Reissue) (Catalogue Number 6535.0.55.001). Australian Bureau of Statistics,
Melbourne.
• AQIS. 2008. Certifiers Stats. Australian Quarantine and Inspection Service, Canberra.
• Dillman, D.A. 1991. The design and administration of mail surveys. Annual Review of
Sociology. 17: 225-249.
• Fowler, F.J. 2002. Survey Research Methods. Sage Publications, Newbury Park.
• Goodman, A. 2003. Introduction to Data Collection and Analysis. Deakin University
Press, Geelong.
• Guthrie, J., Guthrie, A., Lawson, R. and Cameron, A. 2006. Farmers’ markets: The small
business counter-revolution in food production and retailing. British Food Journal.
108(7): 560-573.
• Halpin, D. 2004. A farm-level view of the Australian organic industry. In: Halpin, D.
(ed.) The Australian Organic Industry. A Profile. Department of Agriculture, Fisheries
and Forestry, Canberra. pp. 1-29.
• Hudson, R.B. 1996. The Domestic Market for Australian Organic Produce - An Update.
Rural Industries Research and Development Corporation, Barton.
• Kristiansen, P., Sindel, B.M. and Jessop, R.S. 2007. Sustainable Weed Management in
Organic Herb & Vegetable Production. Rural Industries Research and Development
Corporation, Barton.
• Lockie, S. and Donaghy, P. 2004. Who consumes organic food in Australia? In:
Halpin, D. (ed.) The Australian Organic Industry. A Profile. Department of Agriculture,
Fisheries and Forestry, Canberra. pp. 94-105.
• Lockie, S., Halpin, D. and Pearson, D. 2006. Understanding the market for organic
food. In: Kristiansen, P., Taji, A. and Reganold, J. (eds.) Organic Agriculture: a Global
Perspective. CSIRO Publishing, Collingwood. pp. 245-258.
Australian Organic Market Report 2008 83
References

• Lockie, S., Lyons, K., Lawrence, G. and Grice, J. 2004. Choosing organics: A path
analysis of factors underlying the selection of organic food among Australian food
consumers. Appetite. 43: 135-146.
• MAQIR. 1999. Organic Certifiers – AQIS Charges Review. Final Report. Macarthur
Agribusiness Quarantine and Inspection Resources Pty Ltd., Brisbane.
• Nourish Foods. 2005. The Australian Organic Consumer Report. Profiling the Attitudes
and Behaviour of Organic Consumers. Nourish Foods Pty Ltd., South Melbourne.
• Pearson, D. 2003. Fresh fruits and vegetables: Why do so many of them remain
unbranded? Australian Agribusiness Review. 11(6): 1-9.
• Recke, G., Willer, H., Lampkin, N. and Vaughan, A. (eds.) 2004. Development of a
European Information System for Organic Markets - Improving the Scope and Quality
of Statistical Data. Proceedings of the 1st EISfOM European Seminar, held in Berlin,
Germany, 26-27 April, 2004. Forschungsinstitut für biologischen Landbau (Research
Institute of Organic Agriculture), Frick.
• Regional Development Victoria. 2007. Victorian Organic Food Products Directory
2007. Regional Development Victoria, Melbourne.
• Rippin, M., Vitulano, S., Zanoli, R. and Lampkin, N. (eds.) 2006a. Synthesis and Final
Recommendations on the Development of a European Information System for Organic
Markets. European Information System for Organic Markets, Bonn.
• Rippin, M., Willer, H., Lampkin, N. and Vaughan, A. (eds.) 2006b. Towards a European
Framework for Organic Market Information. Proceedings of the Second EISfOM
European Seminar, Brussels, November 10 & 11, 2005. Forschungsinstitut für
Biologischen Landbau (Research Institute of Organic Agriculture), Frick.
• RIRDC. 2006. Organic Industry Research and Development Plan 2006-2011. Rural
Industries Research and Development Corporation, Barton.
• Soil Association. 2006. Organic Works. Providing More Jobs Through Organic Farming
and Local Food Supply. Soil Association, Bristol.
• Soil Association. 2007. Organic Market Report 2007. Soil Association, Bristol.
• Willer, H., Yussefi-Menzler, M. and Sorenson, N. (eds.) 2008. The World of Organic
Agriculture. Statistics & Emerging Trends 2008. International Federation of Organic
Agriculture Movements and Research Institute of Organic Agriculture, Bonn and
Frick.
• Wolfert, S., Kramer, K.J., Richter, T., Hempfling, G., Lux, S. and Recke, G. 2004. Review
of Data Collection and Processing Systems for Organic and Conventional Markets.
European Information System for Organic Markets (EISfOM), Bonn.
• Wynen, E. 2003. Organic Agriculture in Australia - Levies and Expenditure. Rural
Industries Research and Development Corporation, Barton.Wynen, E. 2006. Organic
beef production and marketing in Australia. Journal of Organic Systems. 1(1): online.
• Wynen, E. 2008. Organic farming in Australia. In: Willer, H., Yussefi-Menzler, M. and
Sorenson, N. (eds.) The World of Organic Agriculture. Statistics & Emerging Trends
2008. International Federation of Organic Agriculture Movements and Research
Institute of Organic Agriculture, Bonn and Frick. pp. 118-125.

84 Australian Organic Market Report 2008


Methodology
Mail survey
The survey was designed to collect data
on the level of organic production and
sales in Australia in terms of volumes
produced and financial value, with a
focus on characterising the various
production sectors existing in Australia.
In addition, the survey sought to
capture a range of socio-demographic
factors associated with organic
operators. The questionnaire was
designed based on previous surveys
carried out over a number of years
by the Soil Association in the UK and
incorporated the principles of survey
design elaborated in social survey texts
(Dillman 1991, Fowler 2002).
An initial draft questionnaire was
sent out as a pilot study to at least ten
organic industry representatives and
a similar number of researchers with
experience in survey design and use.
Feedback received from the initial
assessment was then incorporated into
the final version of the questionnaire
sent out to the target population.
In order to collect the most data, a
stratified sampling approach was used
in which the total population of organic
Appendix 1
operators was stratified by certification
agency. Within that framework, all
certified operators associated with each
participating certifier were considered
part of the target population (Goodman
2003). This approach required close
cooperation with the certifiers in terms
of access to client lists and addresses.
The survey was distributed in the
week beginning 15 September 2007
by the following methods. ACO, OGA
and NASAA provided electronic mailing
lists of the certified (and in-conversion
or pre-certification) organic clients
and these lists were used to generate
mailing labels. A mail-out kit consisting
of a copy of the questionnaire, a
cover letter from their certifier and a
large reply paid envelope were sent
directly to each client by standard
post from the UNE. On the week
beginning 14 October 2007, a follow-
up was conducted by resending the
questionnaire, a new cover letter and a
reply paid envelope.
TOP organic clients were surveyed
in the week beginning 11 September
2007 by sending the mail-out kits to
the certifier who then applied their
Australian Organic Market Report 2008 85
Appendix 1

700

600

500
Responses

RESPONSES
400 FOLLOW UP

300

200

100

0
07

07

07

07

07

07

08

08
/0

/0

/0

/0

/0
9/

0/

1/

1/

2/

2/

2/

3/
10

11

/1

/1

/2
/0

/1

/1

/1

/1

/1

7/

/0
10

24

21
4/

1/
20

18

15

29

13

27

06
Date received
Figure 18. Number of responses received over time from initial survey mail-out.
The date of the follow-up mail-out is indicated by the triangle.

own labels and posted the kits to their entered into several spreadsheets
clients. This process was repeated for and an initial check for accuracy
a follow up in the week beginning 15 was made by randomly selecting 50
October 2007. questionnaires and double-checking
A small number of BDRI members all data entry. This data was then
listed on the organization’s website and normalised to standardise the response
via other available databases were also types (e.g. acres to hectares, text
targeted in the survey. A survey mail- removed from numeric fields) and to
out kit was sent to all members with ensure volume and price data was
publicly listed addresses. internally consistent. In almost all cases,
Past experience with national surveys the data was simply summed, averaged
of Australian organic growers indicates or, in the case of skewed (non-normal)
that repeated follow-ups are unlikely data, the median was calculated.
to yield further responses (Kristiansen Percentages were commonly used
et al. 2007). Figure 18 shows the rate to indicate relative proportions and
of returns over time, with the steepest frequency distribution plots were used
section of the curve occurring in the to display data relating to a certain
first two weeks and then becoming variable such as farming experience
less steep in the following fortnight, and farm size in order to characterise
regardless of the follow-up mail-out. the sampled population across
The responses reached a plateau by the variable.
about five weeks after the initial
mail-out, after which a few very late Other data sets
returns were received and included in AQIS collects data from the certifiers on
the survey. the number of organic operators in the
The returned questionnaires were supply chain, the area used for organic

86 Australian Organic Market Report 2008


agriculture and the volume and value
of exported organic produce. This data
is available at a cost from AQIS. The
data in this report is presented with
acknowledgement to AQIS for the raw
data. It is cited throughout the report as
AQIS 2008.
Given the more stringent and legally
binding reporting requirements of
AQIS, it is assumed that the data is
the most comprehensive and reliable
source on the organic industry.
Where appropriate, the proportions
and frequency distributions of this
data set are used as a benchmark for
determining its representativeness.
Certifier data was largely unavailable
due to confidentiality requirements
within some agencies. In general, the
Appendix 1
number of claimed certified operators
did not match the data from AQIS
(2008) exactly, the categories used to
classify operators and commodities
were inconsistent, and there were non-
trivial amounts of missing data. It was
therefore decided that this data would
not be used in this report, consistent
with the approach of Halpin (2004).
A summary of the survey results for
each commodity sector was presented
to a number of relevant industry
experts in each sector for verification
and comment. Where necessary, the
multiplier for calculating total national
sales was adjusted on the basis of this
feedback, usually where significant
under-reporting was apparent.
Australian Organic Market Report 2008 87
Appendix 2
Recommendations for future
national organic surveys
T
he organic industry in Australia is
not alone with its challenges of
data collection. Fortunately, there
has been considerable effort in Europe
to develop EU-wide data collection and
processing systems (DCPS), particularly
under the auspices of the European
Information System for Organic Markets
(EISfOM) (Wolfert et al. 2004, Rippin et
al. 2006a). EISfOM symposia in recent
years have highlighted the general
nature of problems national organic
industry bodies face in acquiring
useful and reliable market information
(Recke et al. 2004, Rippin et al. 2006b).
Despite the continental focus, these
compilations of reports and case
studies make several recommendations
for collecting farm-level production
data, farm-level financial data,
price data, consumption data and
international trade and supply chain
data. Most recommendations relate to
ensuring high response rates, avoiding
duplication of activities, harmonising
data collection categories and
processes, improving the quality of data
collected and minimising the burden
on organic operators, certifiers and
others in the industry. It is suggested
that a more complete analysis be
carried out to review the range of
models used for organic DCPS globally
and to evaluate their suitability for the
organic industry in Australia.
Halpin made the suggestion that “In
future, the only real solution to the lack
of detail … would be to conduct an
ABS Farm Survey-style census where
interviewers attend farms and take
down detailed data in predetermined
and detailed categories (which is very
expensive) or for the industry to agree
that adoption and implementation
of a national data collection system
88 Australian Organic Market Report 2008
would benefit the industry.” The option
of including specific questions about
organic farming in the standard ABS
Farm Survey was raised by a number of
respondents. While this may improve
the quality of on-farm data, other
activities will be needed to properly
survey and describe other sectors such
as input manufacturers and retailers.
The following recommendations are
based on ideas that have been raised
by respondents and contributors to the
project, discussed in the literature in
Australia and overseas, and observed by
the researchers throughout the project.
In order to improve the efficiency and
quality of organic data collection and
processing, it is recommended that
action is taken to:
• foster support from certifiers to
encourage maximum participation by
their membership;
• conduct sampling on a regular
basis (at least on a biennial basis) in
order to develop a solid timeline of
comparative data;
• use separate data collection tools and
processes for the various parts of the
supply chain;
• review the range of models used for
organic data collection and processing
systems globally and to evaluate their
suitability for the organic industry
in Australia;
• investigate avenues for centralising
and unifying organic data collection
and processing including:
- formalising and harmonising the
role of the certifiers in this process;
- making survey completion
obligatory as part of the
certification process;
- incorporating a number of organic-
specific questions in ABS’s farm and
other surveys.
Sponsers
Primary sponsor
Westpac
Barry Ruddy
National Manager Agribusiness
Level 2, 60/62 Mcnamara St
Orange NSW 2800
Email: bruddy@westpac.com.au
Phone: 0408 899 194
Web: www.westpac.com.au
Industry sponsors
Cleavers The Organic Meat Company
Phone: 02 4322 4528; Fax: 02 4322 4530
Email: nswsales@organicmeat.com.au
Web: www.organicmeat.com.au
Country Heritage Feeds
Phone: 07 4630 8571; Fax: 07 4630 8926
Email:katrina@organicstockfeed.com
Web: www.organicstockfeed.com
Eco-farms
Phone: 02 9764 2833; Fax: 02 9746 6174
Email:ecofarms@ecofarms.com.au
Web: www.ecofarms.com.au
Inglewood Organics
Phone: 07 4652 2890; Fax: 07 4652 2830
Email: info@inglewoodfarms.com
Web: www.inglewoodfarms.com
Natures Haven
Phone: 02 6954 1295; Fax: 02 6954 1295
Email: enquiries@natureshaven.com.au
Web: www.natureshaven.com.au
Organic Crop Protectants
Phone: 02 9810 4566; Fax: 02 9810 4674
Email: info@ocp.com.au
Web: www.ocp.com.au; www.ecoorganicgarden.com.au
Organic Elements
Phone: 03 9827 7779; Fax: 03 9923 6057
Email: info@organicelements.com.au
Web: www.organicelements.com.au
Sydney Essential Oil Co Pty Ltd
Phone: 02 9565 2828; Fax: 02 9519 8009
Email: eliza.mcgivern@seoc.com.au
Web: www.seoc.com.au
Government sponsors
Western Australia Department of Agriculture and Food
Locked Bag 4
Bentley Delivery Centre WA 6983
Phone: + 61 8 9368 3960; Fax: + 61 8 9367 7389
Web: www.agric.wa.gov.au
Victoria Department of Innovation,
Industry and Regional Development
PO Box 769
WARRAGUL VIC 3820
Phone: +61 3 5622 1612; Fax: +61 3 5622 1602
Email: diane.carson@rdv.vic.gov.au
Web: www.rdv.vic.gov.au
Queensland Department of Primary Industries
Primary Industries Building
GPO Box 46
Brisbane, Queensland, 4001
Phone: 13 25 23; Fax: +61 7 3404 6900
Email: callweb@dpi.qld.gov.au
Web: www.dpi.qld.gov.au
Tasmanian Department of Primary Industries and Water
Organic Industry Development
Regional and Business Development
Department of Primary Industries and Water
13 St Johns Avenue, Newtown, TASMANIA, 7008
Phone: +61 3 6233 2404
Web: www.dpiw.tas.gov.au
NSW Department of Primary Industries
Centre for Organic Farming Bathurst Agricultural Research
and Advisory Station
Research Station Drive Bathurst, NSW.
P.O.Box 1386, Bathurst NSW 2795
Phone: +61 2 6330 1200
Web: www.dpi.nsw.gov.au
Department of Primary Industries and Resources
of South Australia (PIRSA)
Level 9 Grenfell Centre
101 Grenfell St Adelaide SA 5000
Phone: +61 8 8226 0585
Email: pirsa.safood@saugov.sa.gov.au
Web: www.safoodcentre.com
Australian Organic Market Report 2008 89
Afterword

The definition of organic

(Codex Alimentarius, Food and Agriculture Organization of the United Nations,
Food Standard CAC/GL 32, 1999, Guidelines for the Production, Processing,
Labelling and Marketing of Organically Produced Foods)

“Organic” is a labelling term that denotes products
that have been produced in accordance with
organic production standards and certified by a duly
constituted certification body or authority. Organic
agriculture is based on minimizing the use of external
inputs, avoiding the use of synthetic fertilizers and
pesticides. Organic agriculture practices cannot ensure
that products are completely free of residues, due to
general environmental pollution. However, methods
are used to minimize pollution of air, soil and water.
Organic food handlers, processors and retailers adhere
to standards to maintain the integrity of organic
agriculture products. The primary goal of organic
agriculture is to optimize the health and productivity
of interdependent communities of soil life, plants,
animals and people.

90 Australian Organic Market Report 2008

Australian
Organic Market Report 2008

BFA Publication No. 08/01

© 2008 Biological Farmers of Australia Co-op Ltd. All rights reserved.